SCHRODER CAPITAL FUNDS INC, 485BPOS, 1996-01-09

SCHRODER CAPITAL FUNDS INC
485BPOS, 1996-01-09

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<PAGE>

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

File No. 2-34215
File No. 811-1911

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 46

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 27

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SCHRODER CAPITAL FUNDS (DELAWARE)
(Exact Name of Registrant as Specified in Charter)
(formerly SCHRODER CAPITAL FUNDS, INC.)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code: 207-879-1900

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Thomas G. Sheehan, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)

Copies of Communications to:
Scott M. Shepard, Esq.
Jacobs Persinger & Parker
77 Water Street, New York, New York 10005

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It is proposed that this filing will become effective:

X immediately upon filing pursuant to Rule 485, paragraph (b)
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on January 9, 1996 pursuant to Rule 485, paragraph (b)
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60 days after filing pursuant to Rule 485, paragraph (a)(i)
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on [ ] pursuant to Rule 485, paragraph (a)(i)
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75 days after filing pursuant to Rule 485, paragraph (a)(ii)
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on [ ] pursuant to Rule 485, paragraph (a)(ii)
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this post-effective amendment designates a new effective date for a
- ----- previously filed post-efffective amendment.

The Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 (the "1933 Act") pursuant to
Rule 24f-2 under the Investment Company Act of 1940 (the "1940 Act").
Accordingly, no fee is payable herewith. A Rule 24f-2 Notice for the
Registrant's fiscal year ended October 31,
<PAGE>

1995 was filed with the Commission on about December 28, 1995. INTERNATIONAL
EQUITY FUND AND SCHRODER EMERGING MARKETS FUND INSTITUTIONAL PORTFOLIO OF
REGISTRANT ARE STRUCTURED AS MASTER-FEEDER FUNDS. THIS AMENDMENT INCLUDES A
MANUALLY EXECUTED SIGNATURE PAGE FOR THE MASTER FUNDS.

Effective January 9, 1995, Schroder Capital Funds, Inc. (the "Company"), a
Maryland Corporation, reorganized as Schroder Capital Funds (Delaware) (the
"Trust"), a Delaware business trust. The Trust hereby files this Post-Effective
Amendment to the Registration Statement of the Company and expressly adopts the
Registration Statement of the Company as its own for all purposes of the 1933
Act, the Securities Exchange Act of 1934, and the 1940 Act.

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<PAGE>

SCHRODER CAPITAL FUNDS, INC.

FORM N-1A

CROSS REFERENCE SHEET

PART A

Form N-1A
Item No. (Caption) Location in Prospectus (Caption)
- --------- ---------------------- --------------------------------

1. Cover Page Cover Page

2. Synopsis The Fund

3. Condensed Financial Information Not Applicable

4. General Description of The Fund - Investment Objective;
Registrant Investment Policies; Investment
Restrictions; Special Risk
Considerations; Additional
Investment Policies

5. Management of the Fund Management of the Fund - Board
of Directors; Investment Adviser
and Portfolio Manager;
Administrative Services; Service
Organizations; Other Expenses;
Portfolio Transactions; Other
Information - Custodian and
Transfer Agent

5A. Management's Discussion of Not Applicable
Fund Performance

6. Capital Stock and Other Information -
Other Securities Capitalization and Voting;
Shareholder Inquiries; Dividends,
Distributions and Taxes

7. Purchase of Securities Investment in the Fund - Being
Offered Purchase of Shares;
Retirement Plans; Individual
Retirement Accounts; Net Asset
Value; Management of the Fund -
Distribution

8. Redemption or Repurchase Investment in the Fund -
Redemption of Shares; Net Asset
Value

9. Pending Legal Proceedings Not Applicable
<PAGE>

PART B

Form N-1A Location in Statement of
Item No. (Caption) Additional Information (Caption)
- --------- ---------------------- --------------------------------

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History Other Information - Organization

13. Investment Objectives and Policies Investment Policies; Investment
Restrictions

14. Management of the Fund Management - Officers and
Directors

15. Control Persons and Principal Not Applicable
Holders of Securities

16. Investment Advisory and Management - Investment Adviser;
Other Services Officers and Directors;
Administrative Services;
Distribution of Fund Shares; Fees
and Expenses; Portfolio
Transactions - Brokerage and
Research Services; Other
Information - Custodian and
Transfer Agent; Independent
Accountants

17. Brokerage Allocation and Portfolio Transactions
Other Practices

18. Capital Stock and Other Other Information -
Securities Capitalization and Voting

19. Purchase, Redemption and Pricing Determination of Net Asset Value
of Securities Being Offered Per Share

20. Tax Status Taxation

21. Underwriters Management - Distribution of Fund
Shares; Fees and Expenses

22. Calculation of Performance Data Other Information - Performance
Information

23. Financial Statements Financial Statements

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<PAGE>

INTERNATIONAL EQUITY FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101

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GENERAL INFORMATION: (207) 879 8903
ACCOUNT INFORMATION: (800) 344 8332
FAX: (207) 879 6206

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SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. - INVESTMENT ADVISER
SCHRODER FUND ADVISORS, INC. - ADMINISTRATOR & DISTRIBUTOR

International Equity Fund (the "Fund") is a separately-managed, diversified
portfolio of Schroder Capital Funds (Delaware) (the "Trust"), an open-end
management investment company currently consisting of five separate portfolios,
each of which has different investment objectives and policies. The Fund's
investment objective is capital appreciation through investment in securities
markets outside the United States. All international investments involve special
risks in addition to those risks associated with investments in general and
there can be no assurance that the Fund's objective will be achieved.

THE FUND CURRENTLY SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY HOLDING, AS ITS
ONLY INVESTMENT SECURITIES, THE SECURITIES OF INTERNATIONAL EQUITY FUND (THE
"PORTFOLIO"), A SEPARATE PORTFOLIO OF A REGISTERED OPEN-END MANAGEMENT
INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND POLICIES AS THE
FUND. SEE "OTHER INFORMATION - FUND STRUCTURE."

Shares of the Fund are offered for sale at net asset value with no sales charge
as an investment vehicle for individuals, institutions, corporations and
fiduciaries. The Fund is authorized to pay expenses related to the distribution
of its shares. The minimum initial investment is $2,500, except that the minimum
for an Individual Retirement Account is $250. The minimum subsequent investment
is $100.

This prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
(the "SAI") dated January 9, 1996 and as supplemented from time to time
containing additional and more detailed information about the Fund has been
filed with the Securities and Exchange Commission ("SEC") and is hereby
incorporated by reference into this Prospectus. It is available without charge
and may be obtained by writing or calling the Fund at the address and telephone
numbers printed above.

This prospectus should be read and retained for information about the Fund.

THE SHARES OFFERED HEREBY ARE NOT OBLIGATIONS, DEPOSITS, OR ACCOUNTS OF, OR
ENDORSED OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE OF A BANK AND ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE SYSTEM, OR ANY FEDERAL AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

This Prospectus is dated January 9, 1996.

<PAGE>

THE FUND

INTRODUCTION

The Fund is a separately-managed, diversified portfolio of the Trust, a Delaware
business trust registered as an open-end management investment company under the
Investment Company Act of 1940 (the "Act"). The Trust currently consists of five
separate portfolios, each of which has separate investment objectives and
policies.

Currently, the Fund invests exclusively in the Portfolio, a series of Schroder
Capital Funds ("Core Trust"), itself a registered open-end management investment
company. Accordingly, the investment experience of the Fund will correspond
directly with the investment experience of the Portfolio. See "Other Information
- - Fund Structure." The Portfolio has the same investment objective and policies
as the Fund.

The Fund's investment adviser is Schroder Capital Management International Inc.
("SCMI"). Schroder Fund Advisors Inc. ("Schroder Advisors") serves as
Administrator and Distributor of the Fund, and Forum Financial Services, Inc.
("Forum") is its Sub-Administrator. Effective July 5, 1995, Schroder Advisors
changed its name from Schroder Capital Distributors Inc.

SCMI will not receive an investment advisory fee with respect to the Fund so
long as the Fund remains completely invested in the Portfolio or any other
investment company. The Portfolio, however, pays an advisory fee to SCMI which
the Fund indirectly bears through investment in the Portfolio.

FEE TABLE

The table below shows the costs and expenses that an investor would incur
as a shareholder of the Fund, based upon the Fund's annual operating expenses
for the fiscal year ended October 31, 1995.

<TABLE>

<S> <C>

Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of the offering price) . . . . . . . . . . . . . . . . . . . . None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of the offering price). . . . . . . . . . . . . . . None
Deferred Sales Load (as a percentage of the redemption proceeds). . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees (as a percentage of the amount redeemed). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Annual Fund Operating Expenses (as a percentage of average net assets, after fee waivers and expense reimbursements)
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.71%
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.00%
Other Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.28%
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.99%
</TABLE>

This expense information has been restated to reflect the Fund's current fees
and includes the Fund's pro rata portion of all operating expenses of the
Portfolio, which will be borne indirectly by Fund shareholders. The Trust's
Board of Trustees believes that the aggregate per share expenses of the Fund
and the Portfolio will be approximately equal to the expenses the Fund would
incur if its assets

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<PAGE>

were invested directly in foreign securities. Investment advisory fees are those
incurred by the Portfolio; as long as its assets are invested in the Portfolio,
the Fund pays no investment advisory fees directly. Absent fee waivers and
expense reimbursements, Management Fees, Other Expenses and Total Operating
Expenses would be 0.80%, 0.30% and 1.10%, respectively.

The Fund has adopted a Distribution Plan under Rule 12b-1 of the Act generally
authorizing it to pay directly or reimburse Schroder Advisors for costs and
expenses incurred in connection with the distribution of Fund shares. Such
payment or reimbursement is subject to a limit of 0.50% per annum of the Fund's
average daily net assets. Costs or expenses in excess of this limit may not be
carried forward to future years. See "Management of the Fund - Distribution"
below. The Fund will make no payments under the Distribution Plan until the
Board of Trustees specifically further so authorizes. No payments have been made
under the Distribution Plan since the Fund became a portfolio of the Trust.

In addition to and distinct from payments authorized under the Rule 12b-1 Plan,
the Board has authorized the Fund generally to pay service organizations fees at
an annual rate of up to 0.25% of the Fund's daily net assets for administrative
services related to maintaining shareholder accounts. See "Management of the
Fund -- Service Organizations." The Fund will make no payments to Service
Organizations until the Board of Trustees further specifically so authorizes
such payments. Some Service Organizations may impose additional direct charges
on investors, such as a direct fee for servicing. If imposed, these charges
would be in addition to any amounts which might be paid to the Service
Organization by the Fund. For a description of the other types of expenses
included in the category "Other Expenses," see "Management of the Fund - Other
Expenses." In the event that the Board of Trustees specifically authorizes
payments under the Rule 12b-1 Plan and/or payments to Service Organizations,
long term shareholders of the Fund may pay aggregate sales charges totalling
more than the economic equivalent of the maximum front-end sales charge
permitted by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc.

SCMI and Schroder Advisors have voluntarily undertaken to waive a portion of
their fees and assume certain expenses of the Fund to the extent that the Fund's
total expenses exceed 0.99% of the Fund's average daily net assets. While SCMI
and Schroder Advisors have waived portions of their fees in prior fiscal years,
neither of them did so in the fiscal year ended October 31, 1995.

The purpose of this table is to assist the shareholder in understanding the
various costs and expenses that an investor in the Fund will bear.

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
gross annual return and (2) redemption at the end of each time period:

1 year. . . . . . . . . . .$10
3 years . . . . . . . . . .$32
5 years . . . . . . . . . .$55
10 years. . . . . . . . . $121

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<PAGE>

The example shown should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual return; the actual return may be greater or less than the assumed amount.

-4-

<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights of the Fund are presented to assist investors
in evaluating the performance of the Fund for the periods shown. The data shown
pertains to the portfolio of Fund Source prior to the August 1, 1989 effective
date of that portfolio's reorganization as a portfolio of the Trust, and to the
portfolio of the Trust thereafter. The financial highlights have been audited by
Coopers & Lybrand L.L.P., independent accountants to the Fund, for all periods
after the year ended September 30, 1988. The information for other periods is
not presented herein as audited. The Fund's financial statements for the year
ended October 31, 1995 and independent accountants' report thereon are contained
in the Fund's Annual Report to Shareholders and are incorporated by reference
into the SAI. Further information about the performance of the Fund is contained
in the Annual Report, which may be obtained without charge by writing or calling
the Fund at the address or telephone numbers appearing on the cover of this
Prospectus.

Financial Highlights - For a Share Outstanding Throughout the Year:

Year Year Year Year Year Year
ended ended ended ended ended ended
10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period 23.17 20.38 15.15 16.22 17.70 18.20

Investment Operations
Net Investment
Income 0.46 0.18 0.08 0.25 0.25 0.15
Net Realized Income (0.18) 2.69 5.27 (1.04) (0.25) (0.12)
Total from Investment
Operations 0.28 2.87 5.35 (0.79) 0.00 0.03

Distributions
Dividends from Net
Investment Income - (0.08) (0.12) (0.23) (0.25) (0.16)
Distribution from
Realized Capital
Gains (2.54) - - (0.05) (1.23) (0.37)
Total Distributions (2.54) (0.08) (0.12) (0.28) (1.48) (0.53)

Net Asset Value,
End of Period 20.91 23.17 20.38 15.15 16.22 17.70

Total Return 2.08% 14.10% 35.54% (4.93%) 0.45% (0.07%)

Ratio/Supplementary Data
Net Assets,
End of Period
(Thousands) 212,330 500,504 320,550 159,556 108,398 62,438
Ratio of Expenses to
Average Net Assets 0.91% 0.90% 0.91% 0.93% 1.07% 1.12%
Ratio of Net Investment
Income to Average
Net Assets 0.99% 0.94% 0.87% 1.62% 1.59% 0.83%
Portfolio Turnover
Rate 61.26% 25.17% 56.05% 49.42% 50.58% 55.91%

Month Year Year Year 12/20/85
ended ended ended ended to
10/31/89 9/30/89 9/30/88 9/30/87 9/30/86
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period 18.95 14.40 18.02 14.07 10.00

Investment Operations
Net Investment
Income 0.03 0.20 0.05 (0.07) 0.02
Net Realized Income (0.78) 4.44 (2.34) 4.71 4.05
Total from Investment
Operations (0.75) 4.64 (2.29) 4.64 4.07

Distributions
Dividends from Net
Investment Income 0.00 (0.04) 0.00 (0.02) 0.00
Distribution from
Realized Capital
Gains 0.00 (0.05) (1.33) (0.67) 0.00
Total Distributions 0.00 (0.09) (1.33) (0.69) 0.00
Net Asset Value,
End of Period 18.20 18.95 14.40 18.02 14.07

Total Return (4.01%) 32.2% (0.12%) 34.8% 39.2%

Ratio/Supplementary
Data
Net Assets,
End of Period
(Thousands) 49,740 48,655 29,917 32,553 9,152

Ratio of Expenses to
Average Net Assets 1.12%* 1.12% 1.30% 1.64% 2.47%*
Ratio of Net Investment
Income to Average
Net Assets 2.29%* 1.27% 0.38% (0.42%) (0.12%)*
Portfolio Turnover
Rate 21.98%* 72.25% 86.19% 84.97% 77.53%*

</TABLE>

*Annualized

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<PAGE>

INVESTMENT OBJECTIVE

The Fund is designed for U.S. investors who desire to achieve international
diversification of their investments by participating in foreign securities
markets. Because international investments generally involve risks in addition
to those risks associated with investments in the U.S., the Fund should be
considered only as a vehicle for international diversification and not as a
complete investment program. The investment objective of the Fund is long-term
capital appreciation through investment in securities markets outside the U.S.
Investment securities are selected on the basis of their potential for capital
appreciation without regard for current income. There is no assurance that the
Fund will achieve its objective.

The Fund currently seeks to achieve its investment objective by investing all of
its investment assets in the Portfolio, which has the same investment objective.
The Fund and the Portfolio have the same investment policies, which are
discussed below. As the Fund has the same investment policies as the Portfolio
and currently invests all of its assets in the Portfolio, investment policies
are discussed with respect to the Portfolio only. Additional information
concerning the investment policies of the Fund and Portfolio, including
additional fundamental policies, is contained in the SAI.

By investing solely in the Portfolio, the Fund may achieve certain efficiencies
and economies of scale. Nonetheless, this investment could also have potential
adverse effects on the Fund. Investors in the Fund should consider these risks,
as described under "Other Information - Fund Structure."

INVESTMENT POLICIES

The Fund has a fundamental investment policy that allows it to invest all of its
investment assets in the Portfolio. All other investment policies of the Fund
and the Portfolio are substantially the same. Therefore, although the following
discusses the investment policies of the Portfolio (and the responsibilities of
Core Trust's Board of Trustees), it applies equally to the Fund (and the Trust's
Board of Trustees).

The Portfolio will normally invest at least 65% of its total assets in equity
securities of companies domiciled outside the U.S. The Portfolio may also invest
in the securities of closed-end investment companies investing primarily in
foreign securities and in debt obligations of foreign governments, international
organizations and foreign corporations. Investment will be

-6-
<PAGE>

diversified among securities of many issuers in many countries including, but
not limited to, Japan, Germany, the United Kingdom, France, Italy, Belgium,
Switzerland, the Netherlands, Hong Kong, Singapore/Malaysia, and Australia.

The Portfolio may enter into forward contracts to purchase or sell foreign
currencies in anticipation of the currency requirements of the Portfolio and to
protect against possible adverse movements in foreign exchange rates. Although
such contracts may reduce the risk of loss to the Portfolio due to a decline in
the value of the currency which is sold, they also limit any possible gain which
might result should the value of such currency rise.

For temporary defensive purposes, the Portfolio may invest without limitation in
(or enter into repurchase agreements maturing in seven days or less with U.S.
banks and broker-dealers with respect to) short-term debt securities, including
U.S. Treasury bills, other short-term U.S. Government securities, certificates
of deposit and bankers' acceptances of U.S. banks. The Portfolio may hold cash
and time deposits in foreign banks denominated in any major foreign currency. In
transactions involving "repurchase agreements," the Portfolio purchases
securities from a bank or broker-dealer who agrees to repurchase the security at
the Portfolio's cost plus interest within a specified time. The securities
purchases by the Portfolio have a total value in excess of the value of the
repurchase agreement and are held by the Portfolio's custodian bank until
repurchased. See "Investment Policies" in the SAI for further information about
all these securities.

INVESTMENT RESTRICTIONS

The following investment restrictions of the Portfolio, which are the same as
those of the Fund, are designed to reduce the Portfolio's exposure in specific
situations. Pursuant to these restrictions, which are fundamental policies:

a) The Portfolio will not invest more than 5% of its assets in the securities
of any single issuer. (This restriction does not apply to securities issued by
the U.S. Government, its agencies or instrumentalities.)

b) The Portfolio will not purchase more than 10% of the voting securities of
any one issuer. Moreover, the Portfolio will not purchase more than 3% of the
outstanding securities of any closed-end investment company. (Any such purchase
of securities issued by a closed-end investment company will otherwise be made
in full compliance with Sections 12(d)(1)(a)(i), (ii) and (iii) of the Act.)

c) The Portfolio will not invest more than 10% of its assets in "restricted
securities" which include (i) securities which are not readily marketable and
(ii) securities of issuers having a record (together with all predecessors) of
less than three years of continuous operation.

d) The Portfolio will not invest 25% or more of its total assets in any one
industry.

-7-
<PAGE>

e) The Portfolio will not borrow money, except from banks for temporary
emergency purposes and then only in an amount not exceeding 5% of the value of
the total assets of the Portfolio.

f) The Portfolio will not pledge, mortgage or hypothecate its assets to an
extent greater than 10% of the value of the total assets of the Portfolio.

As a non-fundamental policy, which may be changed by Core Trust's Board of
Trustees without prior shareholder approval, the Portfolio will not invest in
securities that are not readily marketable. This policy does not include
restricted securities eligible for resale to qualified institutional purchasers
pursuant to Rule 144A under the Securities Act of 1933 that are determined to be
liquid by SCMI pursuant to guidelines adopted by Core Trust's Board of Trustees.
Such guidelines take into account trading activity for such securities and the
availability of reliable pricing information, among other factors. If there is a
lack of trading interest in particular Rule 144A securities, the Portfolio's
holdings of those securities may be illiquid.

SPECIAL RISK CONSIDERATIONS

All investments, domestic and foreign, involve certain risks. Investment in the
securities of foreign issuers may involve risks in addition to those normally
associated with investments in the securities of U.S. issuers. In general, the
Portfolio will invest only in securities of companies and governments in
countries which SCMI, in its judgment, considers both politically and
economically stable. Nevertheless, all foreign investments are subject to risks
of foreign political and economic instability, adverse movements in foreign
exchange rates, the imposition or tightening of exchange controls or other
limitations on repatriation of foreign capital and changes in foreign
governmental attitudes towards private investment possibly leading to
nationalization, increased taxation or confiscation of Portfolio assets.

Moreover, dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income available for distribution to the
Portfolio's, and thus the Fund's, shareholders; commission rates payable on
foreign portfolio transactions are generally higher than in the U.S.;
accounting, auditing and financial reporting standards differ from those in the
U.S. and this may mean that less information about foreign companies may be
available than is generally available about issuers of comparable securities in
the U.S.; and foreign securities often trade less frequently and with less
volume than U.S. securities and consequently may exhibit greater price
volatility.

Changes in foreign exchange rates will also affect the value in the U.S. dollars
of all foreign currency-denominated securities held by the Portfolio. Exchange
rates are influenced generally by the forces of supply and demand in the foreign
currency markets and by numerous other political and economic events occurring
outside the U.S., many of which may be difficult if not impossible to predict.

-8-
<PAGE>

Because most of the Portfolio's income will be received and realized in foreign
currencies and the Portfolio will be required to compute and distribute income
in U.S. dollars, a decline in the value of a particular foreign currency against
the U.S. dollar occurring after the Portfolio's income has been earned and
thereafter computed into U.S. dollars may require the Portfolio to liquidate
some portfolio securities to acquire sufficient U.S. dollars to make such
distributions. Similarly, if the exchange rate declines between the time the
Portfolio incurs expenses in U.S. dollars and the time such expenses are paid,
the Portfolio may be required to liquidate additional foreign securities to
purchase the U.S. dollars required to meet such expenses.

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

The business and affairs of the Fund are managed under the direction of the
Board of Trustees of the Trust. The Trustees are Peter E. Guernsey, Ralph E.
Hansmann, John I. Howell, Laura E. Luckyn-Malone, Clarence F. Michalis, Hermann
C. Schwab and Mark J. Smith. The business and affairs of the Portfolio are
managed under the direction of the board of trustees of Core Trust. Additional
information regarding the Trustees and executive officers of the Trust, as well
as Core Trust's trustees and executive officers, may be found in the SAI under
the heading "Management - Trustees and Officers."

INVESTMENT ADVISER AND PORTFOLIO MANAGER

The Fund currently invests all of its assets in the Portfolio. Schroder Capital
Management International Inc. ("SCMI"), 787 Seventh Avenue, New York, New York
10019, serves as investment adviser to the Portfolio pursuant to an Investment
Advisory Contract. Through its London, England branch SCMI manages the
investment and reinvestment of the assets included in the Portfolio's investment
portfolio and continuously reviews, supervises and administers the Portfolio's
investments. In this regard, it is the responsibility of SCMI to make decisions
relating to the Portfolio's investments and to place purchase and sale orders
regarding such investments with brokers or dealers selected by it in its
discretion.

SCMI is a wholly-owned U.S. subsidiary of Schroders Incorporated, the wholly-
owned U.S. holding company subsidiary of Schroders plc. Schroders plc is the
holding company parent of a large world-wide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in seventeen countries
world-wide. The Schroder Group specializes in providing investment management
services with assets under management currently in excess of $90 billion.

The Fund may withdraw its investment from the Portfolio at any time if the Board
of Trustees determines that it is in the best interests of the Fund and its
shareholders to do so. See "Other Information - Fund Structure." Accordingly,
the Fund has retained SCMI as its investment adviser to manage the Fund's assets
in the event the Fund so withdraws its investment. For its services with respect
to advisory services it performs directly for the Fund, the Fund pays SCMI a
monthly advisory fee equal on an annual basis to 0.50% of the first $100 million
of its average

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<PAGE>

daily net assets; 0.40% of the next $150 million of average daily net assets and
0.35% of average daily net assets in excess of $250 million. SCMI will not
receive an investment advisory fee with respect to the Fund so long as the Fund
remains completely invested in the Portfolio or any other investment company.
The Fund began pursuing its investment objective through investment in the
Portfolio on November 1, 1995. For the fiscal year ended October 31, 1995, the
Fund paid SCMI an advisory fee of 0.45% of its average net assets.

For its services with respect to the Portfolio, SCMI receives a monthly advisory
fee equal on an annual basis to 0.45% of the average daily net assets of the
Portfolio, which the Fund indirectly bears through investment in the Portfolio.
The investment advisory contract between SCMI and Core Trust with respect to the
Fund is the same in all material respects as the Portfolio's Investment Advisory
Contract except as to the parties, the fees payable thereunder, the
circumstances under which fees will be paid and the jurisdiction whose laws
govern the agreement.

The Fund invests all of its assets in the Portfolio and, accordingly, there is
currently no portfolio manager for the Fund. The investment management team of
Mark J. Smith, a Trustee and Vice President of the Trust, and Laura Luckyn-
Malone, a Trustee and President of the Trust, with the assistance of an
investment committee, is primarily responsible for managing the day-to-day
operations of the Portfolio's investment portfolio. Mr. Smith, who has managed
the Fund's portfolio since October 1989, has been a First Vice President of SCMI
since April 1990 and a Director thereof since April 1993. He has been employed
by various Schroder Group companies in the investment research and portfolio
management areas since 1983. Ms. Luckyn-Malone, who joined the Fund's investment
management team in 1995, has been a Senior Vice President and Director of SCMI
since 1990. Prior to joining the Schroder Group, she was a Principal of Scudder,
Stevens & Clark, Inc.

ADMINISTRATIVE SERVICES

On behalf of the Fund, the Trust has entered into an Administrative Services
Contract with Schroder Advisors, 787 Seventh Avenue, New York, New York 10019.
The Trust and Schroder Advisors have entered into a Sub-Administration Agreement
with Forum. Pursuant to their agreements, Schroder Advisors and Forum provide
certain management and administrative services necessary for the Fund's
operations, other than the investment management and administrative services
provided to the Fund by SCMI pursuant to the Investment Advisory Contract.
Schroder Advisors is a wholly-owned subsidiary of SCMI. For these services,
Schroder Advisors receives from the Fund a fee, payable monthly, at the annual
rate of 0.20% of the average daily net assets of the Fund. Payment for Forum's
services is made by Schroder Advisors and is not a separate expense of the Fund.
Schroder Advisors and Forum provide similar services to the Portfolio, for which
Schroder Advisors is separately compensated at an annual rate of 0.15 % of the
average daily net assets of the Portfolio, a portion of which Forum receives for
its services with respect to the Portfolio.

For the fiscal year ended October 31, 1995, the Fund paid Schroder Advisors a
fee of 0.22% of its average net assets.

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<PAGE>

CODE OF ETHICS

The Fund, the Portfolio, the Trust, SCMI, Schroder Advisors, and Schroders
Incorporated have adopted a code of ethics which contains a policy on personal
securities transactions by "access persons," including portfolio managers and
investment analysts. That policy complies in all material respects with the
recommendations set forth in the May 9, 1994 Report of the Advisory Group on
Personal Investing of the Investment Company Institute.

DISTRIBUTION

Schroder Advisors acts as distributor of the Fund's shares. Schroder Advisors
was organized in 1989 and registered as a broker-dealer to serve as an
administrator and distributor of the Fund and other mutual funds. Under the
Distribution Plan (the "Plan") adopted by the Trust on behalf of the Fund, the
Trust is authorized generally to pay directly or reimburse Schroder Advisors,
the "Distributor" of Fund shares, monthly for costs and expenses incurred in
connection with the distribution of Fund shares. Such payment or reimbursement
is subject to a limit of 0.50% per annum of the Fund's average daily net assets.
Payment or reimbursement may be for various types of costs, including: (1)
advertising expenses, including advertising by radio, television, newspapers,
magazines, brochures, sales literature, or direct mail, (2) costs of printing
prospectuses and other materials to be given or sent to prospective investors,
(3) expenses of sales employees or agents of the Distributor, including salary,
commissions, travel and related expenses in connection with the distribution of
Fund shares and (4) payments to broker-dealers who advise shareholders regarding
the purchase, sale, or retention of Fund shares ("trail fees"). Such payments to
broker-dealers may be in amounts up to 0.50% per annum of the Fund's average
daily net assets. The Fund will not be liable for distribution expenditures made
by the Distributor in any given year in excess of the maximum amount (0.50% per
annum of the Fund's average daily net assets) payable under the Plan in that
year. Costs or expenses in excess of the 0.50% per annum limit may not be
carried forward to future years. Salary expenses of salesmen who are responsible
for marketing shares of the Fund may be allocated to various portfolios of the
Trust that have adopted a Plan similar to that of the Fund on the basis of
average net assets; travel expenses may be allocated to, or divided among, the
particular portfolios of the Trust for which they are incurred. The Fund will
make no payments under the Distribution Plan until the Board of Trustees
specifically further so authorizes.

SERVICE ORGANIZATIONS

Various banks, trust companies, broker-dealers (other than Schroder Advisors) or
other financial organizations (collectively, "Service Organizations") also may
provide administrative services for the Fund, such as maintaining shareholder
accounts and records. The Fund may pay fees to Service Organizations (which may
vary depending upon the services provided) in amounts up to an annual rate of
0.25% of the daily net asset value of the Fund's shares owned by shareholders
with whom the Service Organization has a servicing relationship.

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<PAGE>

Some Service Organizations may impose additional or different conditions on
their clients, such as requiring their clients to invest more than the minimum
or subsequent investments specified by the Fund or charging a direct fee for
servicing. If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Fund. Each Service Organization
has agreed to transmit to its clients a schedule of any such fees. Shareholders
using Service Organizations are urged to consult them regarding any such fees or
conditions.

The Glass-Steagall Act and other applicable laws and regulations provide that
banks may not engage in the business of underwriting, selling or distributing
securities. There is currently no precedent prohibiting banks from performing
administrative and shareholder servicing functions as Service Organizations.
However, judicial or administrative decisions or interpretations of such laws,
as well as changes in either Federal or state regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, could
prevent a bank Service Organization from continuing to perform all or part of
its servicing activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders of the Fund and
alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

OTHER EXPENSES

The Fund bears all costs of its operations other than expenses specifically
assumed by Schroder Advisors or SCMI, including those expenses it indirectly
bears through its investment in the Portfolio. The costs borne by the Fund
include legal and accounting expenses; Trustees' fees and expenses; insurance
premiums, custodian and transfer agent fees and expenses; expenses incurred in
acquiring or disposing of the Fund's portfolio securities; expenses of
registering and qualifying the Fund's shares for sale with the SEC and with
various state securities commissions; expenses of obtaining quotations on the
Fund's portfolio securities and pricing of the Fund's shares; expenses of
maintaining the Fund's legal existence and of shareholders' meetings; and
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. See "Management" in the SAI. Trust expenses directly
attributed to the Fund are charged to the Fund; other expenses are allocated
proportionately among all the portfolios of the Trust in relation to the net
assets of each portfolio. For the fiscal year ended October 31, 1995, the Fund's
expenses were 0.91% of its average net assets. During the early part of fiscal
year 1995 there was a significant redemption from the Fund by an institutional
investor, who invested the proceeds thereof into other funds advised by SCMI,
which increased the Fund's expense ratio.

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<PAGE>

the Independent Trustees. If expense reimbursements are
required, they will be made on a monthly basis. SCMI will
reimburse the Fund for four-fifths of the amount required and
Schroder Advisors, the remaining one-fifth; provided, however,
that neither SCMI nor Schroder Advisors will be required to
make any reimbursements or waive any fees in excess of the
fees payable to them by the Fund on a monthly basis for their
respective advisory and administrative services. This
undertaking to reimburse or waive expenses supplements any
applicable state expense limitation.

PORTFOLIO TRANSACTIONS

The Investment Advisory Contract authorizes and directs SCMI to place orders for
the purchase and sale of the Portfolio's investments with brokers and dealers
selected by SCMI in its discretion and to seek "best execution" of such
portfolio transactions. The Portfolio may pay higher than the lowest available
commission rates when SCMI believes it is reasonable to do so in light of the
value of the brokerage and research services provided by the broker effecting
the transaction. Commission rates for brokerage transactions are fixed on many
foreign securities exchanges, and this may cause higher brokerage expenses to
accrue to the Portfolio than would be the case for comparable transactions
effected on U.S. securities exchanges.

Subject to the Portfolio's policy of obtaining the best price consistent with
quality of execution on transactions, SCMI may employ Schroder Securities
Limited and its affiliates (collectively, "Schroder Securities"), affiliates of
SCMI, to effect transactions of the Portfolio on certain foreign securities
exchanges. Because of the affiliation between SCMI and Schroder Securities, the
Portfolio's payment of commissions to Schroder Securities is subject to
procedures adopted by Core Trust's board of trustees to provide that such
commissions will not exceed the usual and customary brokers' commissions. No
specific portion of the Portfolio's brokerage will be directed to Schroder
Securities and in no event will Schroder Securities receive such brokerage in
recognition of research services.

INVESTMENT IN THE FUND

PURCHASE OF SHARES

Investors wishing to purchase shares through their accounts at a Service
Organization should contact that organization directly for appropriate
instructions. Shares of the Fund are offered at the net asset value next
determined after receipt of a Purchase Order (at the address set forth below)
without any sales charge as an investment vehicle for individuals, institutions,
corporations and fiduciaries. Prospectuses, sales material and applications can
be obtained from the Trust or Forum Financial Corp., the Fund's Transfer Agent.
See "Other Information -Shareholder Inquires."

The minimum initial investment is $2,500, except that the minimum initial
investment for an Individual Retirement Account is $250. The minimum subsequent
investment is $100. All purchase payments are invested in full and fractional
shares. The Fund is authorized to reject any purchase order.

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<PAGE>

Initial and subsequent purchases may be made by mailing a check (in U.S.
dollars), payable to International Equity Fund, to:

International Equity Fund
P.O. Box 446
Portland, Maine 04112

In the case of an initial purchase, the check must be accompanied by a completed
Account Application.

Service Organizations (on behalf of customers) may transmit purchase payments by
Federal Reserve Bank wire directly to the Fund at the following address:

Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Financial Corp.
Acct. No.: 910-2-718187
Ref.: International Equity Fund
Account of: (shareholder name)
Account Number: (shareholder account number)

The wire order must specify the name of the Fund, 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. Where the initial purchase is by wire, an account number will be assigned
and a Account Application must be completed and mailed to the Fund. Purchase
requests by wire that are received prior to 4:00 p.m. (New York City Time) will
be processed at the net asset value determined as of that day. Purchase requests
by wire that are received after 4:00 p.m. (New York City Time) will be processed
at the net asset value determined as of the next day that the New York Stock
Exchange is open for trading.

For each shareholder of record, the Fund's Transfer Agent, as the shareholder's
agent, establishes an open account to which all shares purchased are credited,
together with any dividends and capital gains distributions which are paid in
additional shares. Although most shareholders elect not to receive share
certificates, certificates for full shares can be obtained by specific written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.

Purchases may also be made through broker-dealers who assist their customers in
purchasing shares of the Fund. Such broker-dealers may charge their customers a
service fee for processing orders to purchase or sell shares of the Fund.

RETIREMENT PLANS

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<PAGE>

Shares of the Fund are offered in connection with tax-deferred retirement plans.
Applications forms and further information about these plans, including
applicable fees, are available upon request. The Federal Income tax treatment of
contributions to retirement plans has been substantially affected by recently
enacted Federal tax legislation. Before investing in the Fund through one of
these plans, an investor should consult his or her tax advisor.

INDIVIDUAL RETIREMENT ACCOUNTS

Shares of the Fund may be used as a funding medium for an Individual Retirement
Account ("IRA"). An Internal Revenue Service-approved IRA plan naming The First
National Bank of Boston as custodian is available from the Trust or the Fund's
Transfer Agent. The minimum initial investment for an IRA is $250; the minimum
subsequent investment is $100. IRAs are available to individuals who receive
compensation or earned income, and their spouses, whether or not they are active
participants in a tax-qualified or Government-approved retirement plan. An IRA
contribution by an individual who participates, or whose spouse participates, in
a tax-qualified or Government-approved retirement plan may not be deductible
depending upon the individual's income. Individuals also may establish an IRA to
receive a "rollover" contribution of distributions from another IRA or a
qualified plan. Tax advice should be obtained before planning a rollover.

REDEMPTION OF SHARES

Shares of the Fund will be redeemed at their next determined net asset value
following receipt by the Fund (at the address set forth above under "Purchase of
Shares") of a redemption request in proper form. See "Net Asset Value."
Redemption requests by telephone or wire may be made between the hours of 9:00
a.m. and 6:00 p.m. (New York City Time) on each day that the New York Stock
Exchange is open for trading. Redemption requests by telephone or wire that are
received prior to 4:00 p.m. (New York City Time) will be processed at the net
asset value determined as of that day. Redemption requests by telephone or wire
that are received after 4:00 p.m. (New York City Time) will be processed at the
net asset value determined as of the next day that the New York Stock Exchange
is open for trading.

BY TELEPHONE. Redemption requests may be made by telephoning the Transfer Agent
at 800-344-8332. Shareholders must provide the Transfer Agent with the
shareholder's account number, the exact name in which the shares are registered
and some additional form of identification such as a password. A redemption by
telephone may be made only if the telephone redemption privilege option has been
elected on the Account Application. In an effort to prevent unauthorized or
fraudulent redemption requests by telephone, reasonable procedures will be
followed by Forum to confirm that such instructions are genuine. If such
procedures are followed, neither Forum nor the Trust will be liable for any
losses due to unauthorized or fraudulent redemption requests. Shares for which
certificates have been issued may not be redeemed by telephone. In times of
drastic economic or market changes, it may be difficult to make redemptions by
telephone. If a shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the Transfer Agent.

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<PAGE>

WRITTEN REQUESTS. Redemptions may be made by letter to the Fund, specifying the
dollar amount or number of shares to be redeemed and account number, and sent
to:

International Equity Fund
P.O. Box 446
Portland, Maine 04112

The letter must be signed in exactly the same way the account is registered (if
there is more than one owner of the shares, all must sign) and, in certain
cases, signatures must be guaranteed by an institution that is acceptable to the
Fund's Transfer Agent. Such institutions may include certain banks, broker-
dealers (including municipal and government securities brokers and dealers),
credit unions, securities exchanges and associations, clearing agencies and
savings associations. (Notaries public are not acceptable.) Further
documentation, such as copies of corporate resolutions and instruments of
authority, may be requested from corporations, administrators, executors,
personal representatives, directors or custodians to evidence the authority of
the person or entity making the redemption request. Questions concerning the
need for signature guarantees or documentation of authority should be directed
to the Fund at the above address or by calling the Account Information telephone
number appearing on the cover of this Prospectus.

If shares to be redeemed are held in certificate form, the certificates must be
enclosed with the letter and the assignment form on the back of the
certificates, or an assignment separate from the certificates (but accompanied
by the certificates), must be signed by all owners in exactly the same way the
name or names are written on the face of the certificates. Requirements for
signature guarantees and/or documentation of authority as described above could
also apply. For your protection, the Fund suggests that certificates be sent by
registered mail.

Checks for redemption proceeds will normally be mailed within seven days but
will not be mailed until all checks in payment for the purchase of the shares to
be redeemed have been cleared, which may take up to 15 calendar days. Unless
other instructions are given in proper form, a check for the proceeds of a
redemption will be sent to the shareholder's address of record.

The Fund may suspend the right of redemption during any period when (i) trading
on the New York Stock Exchange is restricted or that Exchange is closed, other
than customary weekend and holiday closings, (ii) the SEC has by order permitted
such suspension, or (iii) an emergency, as defined by rules of the SEC, exists
making disposal of portfolio investments or determination of the value of the
net assets of the Fund not reasonably practicable.

If the Board of Trustees should determine that it would be detrimental to the
best interest of the remaining shareholders of the Fund to make payment wholly
or partly in cash, the Fund may pay the redemption price in whole or in part by
a distribution in kind of securities from the portfolio of the Fund, in lieu of
cash, in conformity with applicable rules of the SEC. The Fund will, however,
redeem shares solely in cash up to the lesser of $250,000 or 1% of net assets
during any 90-day period for any one shareholder. In the event that payment for
redeemed shares is made wholly or partly in portfolio securities, the
shareholder may be subject to additional risks and

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<PAGE>

costs in converting the securities to cash. See "Additional Purchase and
Redemption Information - Redemption in Kind" in the SAI.

The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for Federal income tax
purposes.

Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem shares in any account (other than an IRA) if at any
time the total investment does not have a value of at least $2,000 unless the
value of the account shall have fallen below such amount solely as a result of
market activity. An affected shareholder would be notified that the value of his
account was less than $2,000 and be allowed at least 30 days to make an
additional investment to increase the account balance to at least the $2,000
level.

NET ASSET VALUE

The net asset value per share of the Fund is calculated at 4:00 p.m. (New York
City Time), Monday through Friday, on each day that the New York Stock Exchange
is open for trading (which excludes the following national business holidays:
New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day). Net asset value per share is
calculated by dividing the aggregate value of the Fund's assets less all
liabilities by the number of shares of the Fund outstanding. Portfolio
securities listed on the recognized stock exchanges are valued at the last
reported trade price, prior to the time when the assets are valued, on the
exchange on which the securities are principally traded. Listed securities
traded on recognized stock exchanges where last trade prices are not available
are valued at mid-market prices. Securities traded in over-the-counter markets,
or listed securities for which no trade is reported on the valuation date, are
valued at the most recent reported mid-market price. Other securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith using methods approved by the Board of Trustees.

Trading in securities on European and Far Eastern Securities exchanges and over-
the-counter markets may not take place on every day that the New York Stock
Exchange is open for trading. Furthermore, trading takes place in various
foreign markets on days on which the Fund's net asset value is not calculated.
If events materially affecting the value of foreign securities occur between the
time when their price is determined and the time when net asset value is
calculated, such securities will be valued at fair value as determined in good
faith by the Board of Trustees.

All assets and liabilities of the Fund denominated in foreign currencies are
converted to U.S. dollars at the mid price of such currencies against U.S.
dollars last quoted by a major bank prior to the time when the net asset value
of the Fund is calculated.

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<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

THE FUND

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

The Fund intends to elect, pursuant to Section 853 of the Code if the Fund is
eligible to do so, to permit shareholders to take a credit (or a deduction) for
foreign income taxes paid by the Fund. Each shareholder should include in his
report of gross income in his Federal income tax return both cash dividends
received by him from the Fund and also the amount which the Fund advises him is
his pro rata portion of foreign income taxes paid with respect to, or withheld
from, dividends and interest paid to the Fund from its foreign investments. Each
shareholder then would be entitled, subject to certain limitations, to take a
foreign tax credit against his Federal income tax liability for the amount of
such foreign taxes or else to deduct such foreign taxes as an itemized deduction
from gross income.

The Fund intends to declare and pay as a dividend substantially all of its net
investment income annually and to distribute any net realized long-term capital
gains at least annually. Dividend and capital gains distributions will be
reinvested automatically in additional shares of the Fund at net asset value
unless the shareholder has notified the Fund in his Account Application or
otherwise in writing of his election to receive distributions in cash.

Dividend and capital gains distributions are made on a per share basis. After
every distribution the value of a share declines by the amount of the
distribution. Purchases made shortly before a distribution include in the
purchase price the amount of the distribution which will be returned to the
investor in the form of a taxable dividend or capital gains distribution.

For Federal income tax purposes, distributions of the Fund's net taxable income
will be taxable to shareholders as ordinary income whether they are invested in
additional shares or received in cash. Distributions of any net capital gains
designated by the Fund as capital gains dividends will be taxable as long-term
capital gains, regardless of how long a shareholder has held the shares and
whether they are invested in additional shares or received in cash. Each year
the Trust will notify shareholders of the tax status of dividends and
distributions.

Earnings of the Fund not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a non-deductible 4% excise
tax. To prevent imposition of this tax, the Fund intends to comply with this
distribution requirement.

The Fund generally will be required to withhold Federal income tax at a rate of
31% ("backup withholding") from dividends paid to shareholders if (a) the payee
fails to furnish and to certify

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<PAGE>

the payee's correct taxpayer identification number or social security number,
(b) the IRS notifies the Fund that the payee has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect or (c) when required to do so, the payee fails to certify that he is
not subject to backup withholding.

Depending on the residence of the shareholder for tax purposes, distributions
may also be subject to state and local taxes, including withholding taxes.
Shareholders should consult their own tax advisors as to the tax consequences of
ownership of shares of the Fund in their particular circumstances.

THE PORTFOLIO

The Portfolio is not required to pay Federal income taxes on its net investment
income and capital gain, as it is treated as a partnership for Federal income
tax purposes. All interest, dividends and gains and losses of the Portfolio are
deemed to have been "passed through" to the Fund in proportion to its holdings
of the Portfolio, regardless of whether such interest, dividends or gains have
been distributed by the Portfolio or losses have been realized by the Portfolio.
Investment income received by the Fund from sources within foreign countries may
be subject to foreign income or other taxes. The Fund intends to elect, if
eligible to do so, to permit its shareholders to take a credit (or a deduction)
for foreign income and other taxes paid by the Portfolio. Shareholders of the
Fund will be notified of their share of those taxes and will be required to
include that amount as income. In that event, the shareholder may be entitled to
claim a credit or deduction for those taxes.

OTHER INFORMATION

CAPITALIZATION AND VOTING

The Trust was originally organized as a Maryland corporation on July 30, 1969
and on January 9, 1996 was reorganized as a Delaware business trust. The Trust
was formerly known as "Schroder Capital Funds, Inc." The Trust is registered as
an open-end management investment company under the Act and has an unlimited
number of authorized shares of beneficial interest. The Board may, without
shareholder approval, divide the authorized shares into an unlimited number of
separate portfolios or series (such as the Fund) and may divide portfolios or
series into classes of shares, and the costs of doing so will be borne by the
Trust. The Trust currently consists of five separate portfolios, each of which
has separate investment objectives and policies, and five classes, one of which
pertains to the Fund.

The shares of the Trust are fully paid and non-assessable, and have no
preferences as to conversion, exchange, dividends, retirement or other features.
The shares have no pre-emptive rights. They have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting for the
election of Trustees can elect 100% of the Trustees if they choose to do so. A
shareholder is entitled to one vote for each full share held (and a fractional
vote for each fractional share held), then standing in his name on the books of
the Trust. On matters requiring

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<PAGE>

shareholder approval, shareholders are entitled to vote only with respect to
matters which affect the interest of the class they hold, except as otherwise
required by applicable law.

There will normally be no meetings of shareholders to elect Trustees unless and
until such time as less than a majority of the Trustees holding office have been
elected by shareholders. However, the holders of not less than a majority of the
outstanding shares of the Trust may remove any person serving as a Trustee and
the Board of Trustees will call a special meeting of shareholders to consider
removal of one or more Trustees if requested in writing to do so by the holders
of not less than 10% of the outstanding shares of the Trust.

From time to time, certain shareholders may own a large percentage of the shares
of the Fund. Accordingly, those shareholders may be able to greatly affect (if
not determine) the outcome of a shareholder vote.

REPORTS

The Trust sends to each shareholder of the Fund a semi-annual report and an
audited annual report, each of which includes a list of the investment
securities held by the Fund.

PERFORMANCE INFORMATION

The Fund may, from time to time include quotations of its total return in
advertisements or reports to shareholders or prospective investors. Quotations
of average annual total return for the Fund will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund over a period of 1, 5 and 10 years (up to the life of the Fund). Total
return quotations reflect the deduction of a proportional share of Fund expenses
(on an annual basis), and assume that all dividends and distributions are
reinvested when paid.

Performance information for the Fund may be compared to various unmanaged
securities indices, groups of mutual funds tracked by mutual fund ratings
services, or other general economic indicators. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.

Performance information for the Fund represents only the performance of a
hypothetical investment in the Fund during the particular time period on which
the calculations are based. Performance information should be considered in
light of the Fund's investment objectives and policies, characteristics and
quality of the Fund's portfolio, and the market conditions during the given time
period, and should not be considered as a representation of what may be achieved
in the future. For a description of the methods used to determine total return
for the Fund, see the SAI.

CUSTODIAN AND TRANSFER AGENT

Securities of the Fund are held by The Chase Manhattan Bank, N.A. as Custodian
for the Fund. Forum Financial Corp. serves as the Fund's Transfer and Dividend
Disbursing Agent.

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<PAGE>

SHAREHOLDER INQUIRIES

Inquiries about the Fund's investment policies and past performance should be
directed to:

International Equity Fund
P.O. Box 446
Portland, Maine 04112

Information about specific shareholder accounts may be obtained from the
Transfer Agent by calling (800) 344-8332.

FUND STRUCTURE

The Fund invests all of its assets in the Portfolio, a separate series of Core
Trust, a business trust organized under the laws of the State of Delaware in
September 1995. Core Trust is registered under the Act as an open-end management
investment company and currently has two separate portfolios. The assets of the
Portfolio, a diversified portfolio, belong only to, and the liabilities of the
Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust.

THE PORTFOLIO. The Fund seeks to achieve its investment objective by investing
all of its investable assets in the Portfolio, which has the same investment
objective and policies as the Fund. Accordingly, the Portfolio directly acquires
its own securities and the Fund acquires an indirect interest in those
securities. The investment objective and fundamental investment policies of the
Fund and the Portfolio can be changed only with shareholder approval. See
"Investment Objective," "Investment Policies," and "Management of the Fund" for
a complete description of the Portfolio's investment objective, policies,
restrictions, management, and expenses.

The Fund's investment in the Portfolio is in the form of a non-transferable
beneficial interest. As of the date of this Prospectus, the Fund is the only
institutional investor that has invested all of its assets in the Portfolio. The
Portfolio may permit other investment companies or institutional investors to
invest in it. All investors in the Portfolio will invest on the same terms and
conditions as the Fund and will pay a proportionate share of the Portfolio's
expenses.

The Portfolio normally will not hold meetings of investors except as required by
the Act. Each investor in the Portfolio will be entitled to vote in proportion
to its relative beneficial interest in the Portfolio. On most issues subject to
a vote of investors, as required by the Act and other applicable law, the Fund
will solicit proxies from shareholders of the Fund and will vote its interest in
the Portfolio in proportion to the votes cast by its shareholders. If there are
other investors in the Portfolio, there can be no assurance that any issue that
receives a majority of the votes cast by Fund shareholders will receive a
majority of votes cast by all investors in the Portfolio; indeed, if other
investors hold a majority interest in the Portfolio, they could hold have voting
control of the Portfolio.

-21-
<PAGE>

The Portfolio will not sell its shares directly to members of the general
public. Another investor in the Portfolio, such as an investment company, that
might sell its shares to members of the general public would not be required to
sell its shares at the same public offering price as the Fund, could have
different advisory and other fees and expenses than the Fund. Therefore, Fund
shareholders may have different returns than shareholders in another investment
company that invests exclusively in the Portfolio. There is currently no such
other investment company that offers its shares to members of the general
public. Information regarding any such funds in the future will be available
from Core Trust by calling 207-879-8903.

CERTAIN RISKS OF INVESTING IN THE PORTFOLIO. The Fund's investment in the
Portfolio may be affected by the actions of other large investors in the
Portfolio, if any. For example, if the Portfolio had a large investor other than
the Fund that redeemed its interest in the Portfolio, the Portfolio's remaining
investors (including the Fund) might, as a result, experience higher pro rata
operating expenses, thereby producing lower returns.

The Fund may withdraw its entire investment from the Portfolio at any time, if
the Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if there were other
investors in the Portfolio with power to, and who did by a vote of the
shareholders of all investors (including the Fund), change the investment
objective or policies of the Portfolio in a manner not acceptable to the Board.
A withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio. That distribution could result
in a less diversified portfolio of investments for the Fund and could affect
adversely the liquidity of the Fund's portfolio. If the Fund decided to convert
those securities to cash, it usually would incur brokerage fees or other
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
Adviser and Schroder, the Fund's investment adviser and subadviser,
respectively, or the investment of all of the Fund's investable assets in
another pooled investment entity having substantially the same investment
objective as the Fund. The inability of the Fund to find a suitable replacement
investment, in the event the Board decided not to permit the Adviser and
Schroder to manage the Fund's assets, could have a significant impact on
shareholders of the Fund.

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

-22-
<PAGE>

INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019

ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019

SUB-ADMINISTRATOR
Forum Financial Services, Inc.
61 Broadway, Suite 2770
New York, New York 10006

CUSTODIAN
The Chase Manhattan Bank, N.A.
Global Custody Division
Woolgate House, Coleman Street
London EC2P 2HD, United Kingdom

TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112

COUNSEL
Jacobs Persinger & Parker
77 Water Street
New York, New York 10005

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109

-23-
<PAGE>

Table of Contents
THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . .
Fee Table. . . . . . . . . . . . . . . . . . . . . . . . . .
Financial History. . . . . . . . . . . . . . . . . . . . . .
Investment Objective . . . . . . . . . . . . . . . . . . . .
Investment Policies. . . . . . . . . . . . . . . . . . . . .
Investment Restrictions. . . . . . . . . . . . . . . . . . .
Special Considerations . . . . . . . . . . . . . . . . . . .
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . .
Board of Trustees. . . . . . . . . . . . . . . . . . . . . .
Investment Adviser and Portfolio Manager . . . . . . . . . .
Administrative Services. . . . . . . . . . . . . . . . . . .
Distribution . . . . . . . . . . . . . . . . . . . . . . . .
Code of Ethics . . . . . . . . . . . . . . . . . . . . . . .
Service Organizations. . . . . . . . . . . . . . . . . . . .
Other Expenses . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions . . . . . . . . . . . . . . . . . . .
INVESTMENT IN THE FUND . . . . . . . . . . . . . . . . . . .
Purchase of Shares . . . . . . . . . . . . . . . . . . . . .
Retirement Plans . . . . . . . . . . . . . . . . . . . . . .
Individual Retirement Accounts . . . . . . . . . . . . . . .
Redemption of Shares . . . . . . . . . . . . . . . . . . . .
Net Asset Value. . . . . . . . . . . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . .
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . .
Capitalization and Voting. . . . . . . . . . . . . . . . . .
Reports. . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Information. . . . . . . . . . . . . . . . . . .
Custodian and Transfer Agent . . . . . . . . . . . . . . . .
Shareholder Inquires . . . . . . . . . . . . . . . . . . . .

-24-
<PAGE>

SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101

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

GENERAL INFORMATION: (207) 879 8903
ACCOUNT INFORMATION: (800) 344 8332
FAX: (207) 879 6206

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

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. - INVESTMENT ADVISER
SCHRODER FUND ADVISORS INC. - DISTRIBUTOR

Schroder U.S. Equity Fund and Schroder U.S. Smaller Companies Fund (each a
"Fund" and collectively the "Funds") are separately-managed, diversified
portfolios of Schroder Capital Funds (Delaware) (the "Trust"), an open-end
management investment company currently consisting of five separate portfolios,
each of which has different investment objectives and policies.

Schroder U.S. Equity Fund seeks growth of capital by investing substantially all
of its assets in common stock and securities convertible into common stock.
Income, while a factor in portfolio selection, is secondary to the principal
objective of growth of capital. The Fund also may invest in warrants or other
rights to purchase common stock, and to a lesser extent in non-convertible
preferred and debt securities.

Schroder U.S. Smaller Companies Fund seeks capital appreciation through
investments in a diversified portfolio which under normal conditions will have
at least 65% of its total assets invested in equity securities of companies
having market capitalizations under $1 billion. Current income will be
incidental to the objective of capital appreciation. Investments in smaller
capitalization companies involve greater risks than those risks associated with
investments in larger capitalization companies.

This Prospectus sets forth concisely the information concerning the Funds that a
prospective investor should know before investing. A Statement of Additional
Information (the "SAI") for each Fund, dated January 9, 1996, as supplemented
from time to time and containing additional and more detailed information about
the Fund, has been filed with the Securities and Exchange Commission ("SEC") and
is hereby incorporated by reference into this Prospectus. Each Fund's SAI is
available without charge and may be obtained by writing or calling the Funds at
the address and telephone numbers printed above.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus is dated January 9, 1996

<PAGE>
PROSPECTUS SUMMARY

THE FUNDS

The Funds are separately-managed, diversified no-load portfolios of the Trust, a
Delaware business trust registered as an open-end management investment company
under the Investment Company Act of 1940 (the "Act"). The Trust currently
consists of five separate portfolios, each of which has separate investment
objectives and policies.

The primary investment objective of Schroder U.S. Equity Fund is to seek growth
of capital. Income, while a factor in portfolio selection, is secondary to this
principal objective. Schroder U.S. Smaller Companies Fund's investment
objective is capital appreciation through investment in a diversified portfolio
which under normal conditions will have at least 65% of its total assets
invested in equity securities of companies having market capitalizations under
$1 billion. Current income will be incidental to the Fund's objective.

INVESTMENT ADVISER

The Funds' Investment Adviser is Schroder Capital Management International Inc.
("SCMI"), 787 Seventh Avenue, New York, New York, 10019. See "Management of the
Funds - Investment Adviser and Portfolio Managers."

ADMINISTRATIVE SERVICES

The Administrator of Schroder U.S. Smaller Companies Fund is Schroder Fund
Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York, New York
10019, a wholly-owned subsidiary of SCMI. Effective July 5, 1995, Schroder
Advisors changed its name from Schroder Capital Distributors Inc. SCMI provides
similar administrative services for Schroder U.S. Equity Fund through its
Investment Advisory Contract with that Fund. The Trust and SCMI, with respect
to Schroder U.S. Equity Fund, and the Trust and Schroder Advisors, with respect
to Schroder U.S. Smaller Companies Fund, have entered into Sub-Administration
Agreements with Forum Financial Services, Inc. ("Forum"). In these capacities,
Schroder Advisors and Forum provide certain management and administrative
services necessary for the Funds' operations, other than the investment
management and administrative services provided to the Funds by SCMI pursuant to
its Investment Advisory Contracts with the Funds. See "Management of the
Funds - Administrative Services."

PURCHASES AND REDEMPTIONS OF SHARES

Shares of the Funds may be purchased directly through the Funds' Transfer Agent,
Forum Financial Corp., through certain broker-dealers who assist their customers
in purchasing shares of the Funds and through certain other financial
organizations. The minimum initial investment for Schroder U.S. Equity Fund is
$500 and for Schroder U.S. Smaller Companies Fund is $2,500. The minimum
subsequent investment is $100 for each Fund. See "Investment in the Funds -
Purchase of Shares." Redemptions may be made by telephone or by letter to the
Funds,
<PAGE>

specifying the dollar amount or number of shares to be redeemed and account
number. See "Investment in the Funds - Redemption of Shares."

DIVIDENDS AND DISTRIBUTIONS

The Funds intend to declare and pay as a dividend substantially all of their net
investment income annually and to distribute any net realized long-term capital
gain at least annually. Dividend and capital gain distributions will be
reinvested automatically in additional shares of a Fund unless the shareholder
has notified the Fund in the shareholder's Account Application or otherwise in
writing of the shareholder's election to receive distributions in cash. See
"Dividends, Distributions and Taxes."

SPECIAL RISK CONSIDERATIONS

There can be no assurance that either Fund will achieve its investment
objective. A Fund's net asset value and total return will fluctuate based upon
changes in the value of its portfolio securities so that, upon redemption, an
investment in a Fund may be worth more or less than its original value.

All investments by the Funds entail risk. Schroder U.S. Smaller Companies
Fund's policy of investing in smaller companies entails certain risks in
addition to those normally associated with investments in equity securities.
See "Investment Objectives and Policies - Schroder U.S. Smaller Companies Fund -
Certain Risk Considerations."

FEE TABLE

The foregoing table shows the costs and expenses that an investor would incur as
a shareholder of a Fund, based upon that Fund's annual operating expenses for
the fiscal year ended October 31, 1994.

Shareholder Transaction Expenses
Schroder
Schroder U.S. U.S. Smaller
Equity Fund Companies Fund
<S> <C> <C>

Maximum Sales Load Imposed on Purchase
(as a percentage of the offering price) None None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of the offering price) None None
Deferred Sales Load (as a percentage of the redemption proceeds) None None
Redemption Fees (as a percentage of the amount redeemed) None None
Exchange Fees None None
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees* 0.75% 0.75%
12b-1 Fees** None None
Other Expenses*** 0.65% 0.74%
Total Fund Operating Expenses 1.40% 1.49%

</TABLE>

<PAGE>

* Management Fees for the Funds reflect the fees paid by the Funds for
investment and administrative services. Management Fees for the Funds are
higher than those generally charged to most investment companies; they are
not necessarily higher than those charged to funds with investment
objectives similar to those of the Fund.

** Pursuant to Rule 12b-1 under the Act, Schroder U.S. Smaller Companies Fund
has adopted a Distribution Plan generally authorizing it to pay directly,
or reimburse the distributor for, costs and expenses incurred in connection
with distribution of Fund shares. These payments or reimbursements are
limited to an annual rate of 0.50% of the Fund's average daily net assets.
Costs or expenses in excess of this limit may not be carried forward to
future years. See "Management of the Funds - Distribution." The Fund has
no current intention of implementing the Distribution Plan, and in any
event will make no payments under the Distribution Plan until further
authorized by the Board of Trustees. If the Distribution Plan is
implemented, long term shareholders of the Fund may pay aggregate sales
charges totalling more than the economic equivalent of the maximum front-
end sales charge permitted by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. In the event that the Fund were to
make payments under the Distribution Plan, 12b-1 Fees and Total Operating
Expenses would be higher.

*** In addition to and distinct from payments authorized under the Distribution
Plan, the Board of Trustees has authorized each Fund generally to pay
Service Organizations fees at an annual rate of up to 0.25% of the Fund's
average daily net assets for administrative services related to maintaining
shareholder accounts. See "Management of the Funds - Service
Organizations." The Funds have no intention of making any such payments,
and in any event will make no such payments until further authorized by the
Board of Trustees. In the event that a Fund were to make payments to
Service Organizations, Other Expenses and Total Operating Expenses would be
higher. For a description of the other types of expenses for each Fund
included in the category "Other Expenses," see "Management of the Funds -
Other Expenses."

EXAMPLE

You would pay the following expenses on a $1,000 investment in a Fund, assuming
(1) 5% annual return and (2) redemption at the end of each time period:

1 Year 3 Years 5 Years 10 Years
Schroder U.S. Equity Fund $14 $44 $77 $168
Schroder U.S. Smaller Companies Fund $15 $47 $81 $178

The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that shareholders in the Funds will bear. The
Example should not be considered a representation of future expenses which may
be more or less than those shown. The assumed 5% annual return is hypothetical
and should not be considered a representation of past or future annual return;
the actual return may be greater or less than the assumed amount.
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights are presented to assist investors in
evaluating the performance of the Funds for the periods shown. This information
is part of the Funds' financial statements and has been audited by Coopers &
Lybrand L.L.P., independent accountants. The data in the table should be read
in conjunction with the financial statements, notes thereto and independent
accountants' report thereon contained in each Fund's annual report, which is
incorporated by reference into that Fund's SAI. Further information about each
Fund's performance also is contained in the annual report, which may be obtained
by shareholders free of charge upon request.

SCHRODER U.S. EQUITY FUND

Year ended October 31
1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>

NET ASSET VALUE, BEGINNING OF YEAR 8.52 11.28 10.51 9.56 7.05 8.35 7.49

INVESTMENT OPERATIONS
Net Investment Income 0.07 0.04 0.05 0.02 0.09 0.11 0.17
Net Realized Income and Unrealized
Gain (Loss) on Investments 1.33 (0.27) 1.86 1.61 2.57 (0.77) 1.30

Total from Investment Operations 1.40 (0.23) 1.91 1.63 2.66 (0.66) 1.47
DISTRIBUTIONS
from Net Investment Income (0.05) (0.01) (0.04) (0.04) (0.11) (0.11) (0.15)
from Realized Capital Gain (0.46) (2.52) (1.10) (0.58) -- (0.53) (0.46)
from Capital Paid-In -- -- -- (0.06) (0.04) -- --

Total Distributions (0.51) (2.53) (1.14) (0.68) (0.15) (0.64) (0.61)

NET ASSET VALUE, END OF YEAR $9.41 $8.52 $11.28 $10.51 $9.56 $7.05 $8.35

TOTAL RETURN 17.68% (2.01)% 19.49% 17.74% 38.16% (8.78%) 21.05%

RATIO/SUPPLEMENTARY DATA:
Net Assets, End of Year (Thousands) 19,688 18,483 21,865 19,882 20,234 18,290 23,838
Ratio of Expenses to Average Net Assets 1.40% 1.31% 1.18% 1.40% 1.39% 1.34% 1.49%
Ratio of Net Investment
Income to Average Net Assets 0.78% 0.41% 0.51% 0.42% 1.30% 1.59% 1.99%
Portfolio Turnover Rate 57.21% 27.43% 57.78% 31.33% 29.98% 28.31% 40.35%

<PAGE>

SCHRODER U.S. EQUITY FUND SCHRODER U.S. SMALLER
(CONTINUED) COMPANIES FUND

Year ended October 31 Year ended October 31
1988 1987 1986 1995 1994 1993(a)

NET ASSET VALUE, BEGINNING OF YEAR 10.15 12.55 10.86 11.81 10.99 10.00

INVESTMENT OPERATIONS
Net Investment Income 0.18 0.20 0.28 (0.04) (0.07) (0.02)
Net Realized Income and Unrealized
Gain (Loss) on Investments 0.28 0.18 2.38 3.78 0.97 1.01
Total from Investment Operations 0.46 0.38 2.66 3.74 0.90 0.99
DISTRIBUTIONS
from Net Investment Income (0.18) (0.25) (0.24) - -- --
from Realized Capital Gain (2.94) (2.53) (0.73) (0.41) (0.08) --
from Capital Paid-In -- -- -- - -- --
Total Distributions (3.12) (2.78) (0.97) (0.41) (0.08) --

NET ASSET VALUE, END OF YEAR $7.49 $10.15 $12.55 $15.14 $11.81 $10.99
TOTAL RETURN 7.74% 2.55% 25.43% 32.84% 8.26% 9.90%

RATIO/SUPPLEMENTARY DATA:
Net Assets, End of Year (Thousands) 25,569 29,749 46,641 15,287 13,324 12,489
Ratio of Expenses to Average Net Assets 1.60% 1.30% 1.16% 1.49% 1.45% 2.03%(b)
Ratio of Net Investment
Income to Average Net Assets 1.89% 1.60% 2.25% (0.30%) (0.58%) (0.99%)(b)
Portfolio Turnover Rate 18.42% 43.11% 40.51% 92.68% 70.82% 12.58%(b)

</TABLE>

(a) The Fund commenced operations on August 6, 1993.
(b) Annualized

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

SCHRODER U.S. EQUITY FUND

INVESTMENT OBJECTIVES. The primary investment objective of the Fund is to seek
growth of capital. Income, while a factor in portfolio selection, is secondary
to the principal objective.

These investment objectives are fundamental policies of the Fund and as such
cannot be changed without the majority approval of the Fund's shareholders. A
non-fundamental policy could be changed by the Board of Trustees without prior
shareholder approval. Unless otherwise indicated, all of the investment
policies of the Fund described below are also fundamental policies.

There can be no assurance that the Fund's objective will be achieved. The Fund
is not intended for investors whose objective is assured income or preservation
of capital.

The Fund in the future may seek to achieve its investment objective by holding,
as its only investment securities, the securities of another investment company
having identical investment objectives and policies as the Fund in accordance
with the provisions of the Act or any orders, rules or regulations thereunder
adopted by the Securities and Exchange Commission.

INVESTMENT POLICIES. The Fund will normally invest substantially all of its
assets in common stock and securities convertible into common stock. As part of
this policy, the Fund may also invest in other securities with common stock
purchase warrants attached, in such warrants themselves or in other rights to
purchase common stock.

The Fund may also invest to a limited degree in non-convertible preferred and
debt securities. Such investments might be made when management believes that
greater yields could be earned on these types of securities of investment grade
than on U.S. Government securities or bank certificates of deposit. As a non-
fundamental policy, the Fund will not invest more than 15% of its total assets
in non-convertible preferred and debt securities.

The Fund will generally purchase securities which are believed to have potential
for capital appreciation. However, securities will be disposed of when the Fund
believes that such potential is no longer feasible or the risk of decline in
market price is too great.

As an operating, non-fundamental policy, the Fund may also invest temporarily in
certain short-term fixed income securities. Such securities may be used to
invest uncommitted cash balances or to maintain liquidity to meet shareholder
redemptions or other Fund obligations. These securities may include U.S.
Government securities, commercial paper, bank certificates of deposit and
bankers' acceptances, and repurchase agreements collateralized by these
securities. The Fund will limit its total investment at any time in these
securities for this operating purpose to not more than 25% of its total assets.

The Fund may from time to time acquire securities which are subject to legal or
contractual restrictions on resale. The risk involved in such investments is
that a considerable period might elapse between the time a decision is made to
sell such securities and the time the Fund might be permitted to sell all or
part of such securities publicly under a registration statement or an exemption
from registration or privately to a suitable purchaser. The delay might
adversely affect the price which the Fund could obtain for the securities and,
in a registration, the Fund could be required to pay registration expenses.

The Fund's authority to borrow is subject to limitations. Any borrowing (i)
would not exceed one-third of the value of the Fund's total assets after the
borrowing, (ii) if at any time it exceeded the one-third limitation, the Fund
would within three days thereafter (not including Sundays or holidays) or such
longer period as the SEC may prescribe by rules and regulations, reduce its
borrowings to the limitation, and (iii) might or might not be secured and, if
secured, all or any part of the Fund's assets could be pledged. To comply with
these limitations, the Fund might be required to dispose of certain of its
assets when it might be disadvantageous to do so. Any borrowings would be
subject to Federal Reserve Board regulations. The Fund has not borrowed for
investment or any other purpose during the last ten years and, as a non-
fundamental policy, will not borrow for investment in the future.

SCHRODER U.S. SMALLER COMPANIES FUND

INVESTMENT OBJECTIVES. The Fund's investment objective is capital appreciation
through investment in a diversified portfolio which under normal conditions will
have at least 65% of its total assets invested in equity securities of companies
having market capitalizations under $1 billion. Current income will be
incidental to the objective of capital appreciation.

indicated, all of the investment policies of the Fund described below are also
fundamental policies.

There can be no assurance that the Fund's objective will be achieved. The Fund
is not intended for investors whose objective is assured income or preservation
of capital.

INVESTMENT POLICIES. The Fund is designed for the investment of that portion of
an investor's funds which can appropriately bear the special risks associated
with investment in smaller capitalization companies with the aim of capital
appreciation. In its investment approach, SCMI will attempt to identify
securities of companies which it believes can generate above average earnings
growth, selling at favorable prices in relation to book values and earnings. As
part of the investment decision the investment adviser's assessment of the
competency of an issuer's management will be an important consideration. These
criteria are not rigid, and other investments may be included in the Fund's
portfolio if they may help the Fund to attain its objective. These criteria can
be changed by the Board of Trustees.

The Fund will invest principally in equity securities (common stocks, securities
convertible into common stocks or, subject to special limitations, rights or
warrants to subscribe for or purchase common stocks). However, the Fund may
also invest to a limited degree in non-convertible debt securities and preferred
stocks when, in the opinion of SCMI, such investments are warranted to achieve
the Fund's investment objective. A convertible security is a bond, debenture,
note, preferred stock or other security that may be converted into or exchanged
for a prescribed amount of common stock of the same or a different issuer within
a particular period of time at a specified price or formula. Investments in
warrants or rights to subscribe for or purchase common stocks will not be
counted in determining the 65% of total assets test set forth above but are
subject to the limitations described below in "Additional Investment Policies -
Warrants".

The Fund may invest in securities of small, unseasoned companies (which,
together with any predecessors, have been in operation for less than three
years), as well as in securities of more established companies. In view of the
volatility of price movements of the former, as a non-fundamental policy, the
Fund currently intends to invest no more than 10% of its total assets in
securities of small, unseasoned issuers, while reserving the right to invest up
to 20% of its total assets in such issuers.

Although there is no minimum rating for debt securities (convertible or non-
convertible) in which the Fund may invest, it is the present intention of the
Fund to invest no more than 5% of its net assets in debt securities rated below
Baa by Moody's Investors Service Inc. ("Moody's") or BBB by Standard & Poor's
Corporation ("S&P"), such securities being commonly known as "high yield/high
risk" securities or "junk bonds," and it will not invest in debt securities
which are in default. High yield/high risk securities are predominantly
speculative with respect to the
<PAGE>

capacity to pay interest and repay principal and generally involve a greater
volatility of price than securities in higher rated categories. In the event
the Fund intends in the future to invest more than 5% of its net assets in junk
bonds, appropriate disclosures will be made to existing and prospective
shareholders. It should be noted that even bonds rated Baa by Moody's or BBB by
S&P are described by those rating agencies as having speculative characteristics
and that changes in economic conditions or other circumstances are more likely
to lead to a weakened capacity of issuers of such bonds to make principal and
interest payments than is the case with higher grade bonds. The Fund is not
obligated to dispose of securities due to changes by the rating agencies. See
the SAI for information about the risks associated with investing in junk bonds.

For temporary defensive purposes, the Fund may invest without limitation in (or
enter into repurchase agreements maturing in seven days or less with U.S. banks
and broker-dealers with respect to) short-term debt securities, including
commercial paper, U.S. Treasury bills, other short-term U.S. Government
securities, certificates of deposit and bankers' acceptances of U.S. banks. The
Fund also may hold cash and time deposits in U.S. banks. See "Investment
Policies" in the SAI for further information about all these securities.

CERTAIN RISK CONSIDERATIONS. All investments involve certain risks.
Investments in smaller capitalization companies involve greater risks than those
risks associated with investments in larger capitalization companies. Smaller
capitalization companies generally experience higher growth rates and higher
failure rates than do larger capitalization companies. The trading volume of
securities of smaller capitalization companies is normally less than that of
larger capitalization companies and, consequently, generally have a
disproportionate effect on their market price, tending to make them rise more in
response to buying demand and fall more in response to selling pressure than is
the case with larger capitalization companies.

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

ADDITIONAL INVESTMENT POLICIES

REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements. A
repurchase agreement is a means of investing monies for a short period. In a
repurchase agreement, a seller - a U.S. bank or recognized broker-dealer - sells
securities to the Fund and agrees to repurchase the securities at the Fund's
cost plus interest within a specified period (normally one day). In these
transactions, the values of the underlying securities purchased by the Fund are
monitored at all times by SCMI to insure that the total value of the securities
equals or exceeds the value of the repurchase agreement, and the Fund's
custodian bank holds the securities until they are
<PAGE>

repurchased. In the event of default by the seller under the repurchase
agreement, the Fund may have difficulties in exercising its rights to the
underlying securities and may incur costs and experience time delays in
disposing of them. To evaluate potential risks, SCMI reviews the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements.

WARRANTS. As a non-fundamental policy, the Funds may not invest more than 5% of
their net assets (at the time of investment) in warrants (other than those that
have been acquired in units or attached to other securities). No more than 2%
of a Fund's net assets (at the time of investment) may be invested in warrants
that are not listed on the New York or American Stock Exchanges. Warrants are
options to purchase equity securities at specific prices valid for a specific
period of time. Their prices do not necessarily move parallel to the prices of
the underlying securities. Warrants have no voting rights, receive no dividends
and have no rights with respect to the assets of the issuer.

ILLIQUID AND RESTRICTED SECURITIES. As a non-fundamental policy, Schroder U.S.
Equity Fund may not purchase or otherwise acquire any security if, as a result,
more than 10% of its total assets would be invested in securities that are
illiquid by virtue of the absence of a readily available market ("illiquid
securities"). Securities subject to legal or contractual restrictions on resale
("restricted securities") and evidences of indebtedness of a type distributed
privately to financial institutions are included in Schroder U.S. Equity Fund's
10% limit. As a non-fundamental policy, Schroder U.S. Smaller Companies Fund
may not purchase or otherwise acquire any security if, as a result, more than
15% of its net assets (taken at current value) would be invested in illiquid
securities. There may be undesirable delays in selling illiquid securities at
prices representing their fair value. This policy includes over-the-counter
options held by Schroder U.S. Smaller Companies Fund and a portion of assets
used to cover such options as well as repurchase agreements maturing in more
than seven days. Schroder U.S. Smaller Companies Fund's limit on investment in
illiquid securities does not include restricted securities 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 Board of Trustees or SCMI
under Board-approved guidelines. Such guidelines take into account trading
activity for such securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest in
particular Rule 144A securities, the Fund's holdings of those securities may be
illiquid. See "Illiquid and Restricted Securities" in the SAI for further
details.

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

The Fund may lend securities from its portfolio if liquid assets in an amount at
least equal to the current market value of the securities loaned (including
accrued interest thereon) plus the interest payable to the Fund with respect to
the loan is maintained as collateral by the Fund in a segregated account. Any
securities that the Fund may receive as collateral will not become a part of its
portfolio at the time of the loan, and, in the event of a default by the
borrower, the Fund will, if permitted by law, dispose of such collateral except
for such part thereof that is a security in which the Fund is permitted to
invest. During the time that the securities are on loan, the borrower will pay
the Fund any accrued income on those securities, and the Fund may invest the
cash collateral and earn income or receive an agreed upon fee from a borrower
that has delivered cash equivalent collateral. Cash collateral received by the
Fund will be invested in U.S. Government securities and liquid high grade debt
obligations. The value of securities loaned will be marked to market daily.
Portfolio securities purchased with cash collateral are subject to possible
depreciation. Loans of securities by the Fund will be subject to termination at
the Fund's or the borrower's option. The Fund may pay reasonable negotiated
fees in connection with loaned securities, so long as such fees are set forth in
a written contract and approved by the Trust's Board of Trustees.

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

SHORT SALES AGAINST-THE-BOX. Schroder U.S. Smaller Companies Fund may not sell
securities short except in "short sales against-the-box". For Federal income
tax purposes, short sales against-the-box may be made to defer recognition of
gain or loss on the sale of securities "in the box" and no income can result and
no gain can be realized from securities sold short against-the-box until the
short position is closed out. Such short sales are subject to the limits
described in "Investment Restrictions," below. See "Short Sales Against-the-
Box" in the SAI for further details.
<PAGE>

PORTFOLIO TURNOVER. The Funds may engage in short-term trading but their
portfolio turnover rates are not expected to exceed 100%. High portfolio
turnover and short-term trading involve correspondingly greater commission
expenses and transaction costs. Also, higher portfolio turnover rates can make
it more difficult for a Fund to qualify as a regulated investment company for
federal income tax purposes and may cause shareholders of a Fund to recognize
gains for federal income tax purposes. See "Taxation" in the SAI.

INVESTMENT RESTRICTIONS

SCHRODER U.S. EQUITY FUND. The Fund has adopted certain investment restrictions
designed to reduce its exposure in specific situations which are fundamental
policies of the Fund. Under some of those restrictions the Fund cannot:

(1) Acquire more than 10% of the voting securities of any one issuer;

(2) Invest 25% or more of its total assets in any one industry;

(3) Invest in companies for the purpose of exercising control or management;

(4) Invest more than 10% of its total assets in "restricted securities";

(5) Make loans to other persons except that it may invest up to 10% of its
total assets in evidences of indebtedness of a type distributed privately to
financial institutions;

(6) Invest, in the aggregate, more than 10% of its total assets in securities
described in 4 and 5 above;

(7) Invest in other investment companies.

As a non-fundamental policy, the Fund will not engage in writing, buying or
selling of stock index futures, options on stock index futures, financial
futures contracts or options thereon.

The percentage restrictions described above and in the SAI apply only at the
time of investment and require no action by the Fund as a result of subsequent
changes in value of the investments or the size of the Fund. A supplementary
list of investment restrictions is contained in the SAI.

SCHRODER U.S. SMALLER COMPANIES FUND. The Fund has adopted certain investment
restrictions designed to reduce its exposure in specific situations which are
fundamental policies of the Fund. Under some of those restrictions the Fund
cannot:

(1) Invest in securities (except those of the U.S. Government or its agencies
or instrumentalities) or any issuer if immediately thereafter (a) more than 5%
of the Fund's total assets would be invested in securities of that issuer, or
(b) the Fund would then own more than 10% of that issuer's voting securities;
<PAGE>

(2) Make short sales of securities except "short sales against-the-box"; in
such short sales, at all times during which a short position is open, the Fund
must own an equal amount of such securities, or by virtue of ownership of
securities have the right, without payment of further consideration, to obtain
an equal amount of the securities sold short; no more than 15% of the Fund's net
assets will be held as collateral for such short sales at any one time;

(3) Concentrate investments in any particular industry; therefore the Fund will
not purchase the securities of companies in any one industry if, thereafter, 25%
or more of the Fund's total assets would consist of securities of companies in
that industry;

(4) Borrow money except from banks for temporary emergency purposes and then
only in an amount not exceeding 5% of the value of the total assets of the Fund;

(5) Pledge, mortgage or hypothecate its assets to any extent greater than 10%
of the value of the total assets of the Fund;

(6) Deviate from the percentage requirements listed under "Investment Policies"
and "Additional Investment Policies"; or

(7) Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization, or by purchase of
securities of closed-end investment companies and only if immediately thereafter
not more than (i) 3% of the total outstanding voting stock of such company is
owned by the Fund, (ii) 5% of the Fund's total assets, taken at market value,
would be invested in any one such company, or (iii) 10% of the Fund's total
assets, taken at market value, would be invested in such securities. It should
be noted that as a shareholder in an investment company, the Fund would bear its
ratable share of that investment company's expenses, including its advisory and
administration fees. At the same time, the Fund would continue to pay its own
management and advisory fees and other expenses.

MANAGEMENT OF THE FUNDS

BOARD OF TRUSTEES

The business and affairs of the Funds are managed under the direction of the
Board of Trustees of the Trust. The Trustees are Peter E. Guernsey, Ralph E.
Hansmann, John I. Howell, Laura E. Luckyn-Malone, Clarence F. Michalis, Hermann
C. Schwab and Mark J. Smith. Additional information regarding the Trustees, as
well as the Trust's executive officers, may be found in each SAI under the
heading "Management - Trustees and Officers."
<PAGE>

INVESTMENT ADVISER AND PORTFOLIO MANAGERS

Schroder Capital Management International Inc. ("SCMI"), 787 Seventh Avenue, New
York, New York 10019, serves as investment adviser to the Funds pursuant to
separate Investment Advisory Contracts. SCMI manages the investment and
reinvestment of the assets included in each Fund's portfolio and continuously
reviews, supervises and administers the Funds' investments. In this regard, it
is the responsibility of SCMI to make decisions relating to the Fund's
investments and to place purchase and sale orders regarding such investments
with brokers or dealers selected by it in its discretion.

SCMI is a wholly-owned U.S. subsidiary of Schroders Incorporated, the wholly-
owned U.S. holding company subsidiary of Schroders plc. Schroders plc is the
holding company parent of a large worldwide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in seventeen countries
worldwide. The Schroder Group specializes in providing investment management
services with assets under management currently in excess of $90 billion.

For its advisory services with respect to Schroder U.S. Equity Fund, SCMI
receives from that Fund a fee, payable monthly, at the annual rate of 0.75% of
the Fund's average daily net assets of the first $100 million and 0.50% of the
Fund's average daily net assets in excess of $100 million. For the fiscal year
ended October 31, 1995, the total advisory fees paid by Schroder U.S. Equity
Fund to SCMI represented an annual effective rate of 0.75% of the Fund's average
daily net assets.

For its advisory services with respect to Schroder U.S. Smaller Companies Fund,
SCMI receives a monthly advisory fee equal on an annual basis to 0.50% of the
Fund's average daily net assets of the first $100 million, 0.40% of the next
$150 million the Fund's average daily net assets and 0.35% of the Fund's average
daily net assets in excess of $250 million. For the fiscal year ended October
31, 1995, the total advisory fees paid by Schroder U.S. Smaller Companies Fund
to SCMI represented an annual effective rate of 0.50% of the Fund's average
daily net assets.

It is the Trust's understanding that although other mutual funds pay investment
advisory fees at annual rates of 0.75% or more of their average net assets (or a
portion thereof), the majority of other mutual funds, regardless of size, pay
advisory fees at rates lower than 0.75% of any portion of their average net
assets.

Fariba Talebi, a Vice President of the Trust and a First Vice President of SCMI,
with the assistance of an investment committee, is primarily responsible for the
day-to-day management of Schroder U.S. Equity Fund's investment portfolio, a
responsibility she has held since April, 1991. The investment management team of
Ms. Talebi and Ira Unschuld, a Vice President of the Trust and of SCMI, with the
assistance of an investment committee, is primarily responsible for the day-to-
day management of Schroder U.S. Smaller Companies Fund's investment portfolio,
and has so managed the Fund since its inception. Ms. Talebi and Mr. Unschuld
have been employed by SCMI in the investment research and portfolio management
areas since 1987 and 1990, respectively.
<PAGE>

ADMINISTRATIVE SERVICES

On behalf of Schroder U.S. Smaller Companies Fund, the Trust has entered into an
Administrative Services Contract with Schroder Advisors. SCMI provides similar
administrative services for Schroder U.S. Equity Fund through its Investment
Advisory Contract with that Fund. The Trust and SCMI, with respect to Schroder
U.S. Equity Fund, and the Trust and Schroder Advisors, with respect to Schroder
U.S. Smaller Companies Fund, have entered into Sub-Administration Agreements
with Forum. Schroder Advisors (with respect to Schroder U.S. Smaller Companies
Fund) and Forum (with respect to each Fund) provide certain management and
administrative services necessary for the Funds' operations, other than the
investment management and administrative services provided to the Funds by SCMI
pursuant to its Investment Advisory Contracts.

Schroder Advisors is a wholly-owned subsidiary of SCMI. For its administrative
services with respect to Schroder U.S. Smaller Companies Fund, Schroder Advisors
receives from that Fund a fee, payable monthly, at the annual rate of 0.25% of
the first $100 million of the Fund's average daily net assets, 0.20% of the next
$150 million of the Fund's average daily net assets and 0.175% of average daily
net assets in excess of $250 million. For the fiscal year ended October 31,
1995, the Fund paid Schroder Advisors fees representing an effective rate of
0.25% of the Fund's average daily net assets. Payment for Forum's services is
not a separate expense of either Fund but is made by SCMI, with respect to
Schroder U.S. Equity Fund, and Schroder Advisors, with respect to Schroder U.S.
Smaller Companies Fund.

CODE OF ETHICS

The Funds, the Trust, SCMI, Schroder Advisors, and Schroders Incorporated have
adopted a code of ethics which contains a policy on personal securities
transactions by "access persons," including portfolio managers and investment
analysts. That policy complies in all material respects with the
recommendations set forth in the May 9, 1994 Report of the Advisory Group on
Personal Investing of the Investment Company Institute.

DISTRIBUTION

Schroder Advisors acts as distributor of each Fund's shares. Schroder Advisors
was organized in 1989 and registered as a broker-dealer to serve as an
administrator and distributor of mutual funds. Under the Distribution Plan (the
"Plan") adopted by the Trust on behalf of Schroder U.S. Smaller Companies Fund,
which is in the form of a reimbursement plan, the Trust is authorized to pay
directly or reimburse Schroder Advisors monthly for costs and expenses incurred
in connection with the distribution of Fund shares. Such payment or
reimbursement is subject to a limit of 0.50% per annum of the Fund's average
daily net assets. Payment or reimbursement may be for various types of costs,
including: (1) advertising expenses, including advertising by radio,
television, newspapers, magazines, brochures, sales literature, or direct mail,
(2) costs of printing prospectuses and other materials to be given or sent to
prospective investors, (3) expenses of sales employees or agents of Schroder
Advisors, including salary, commissions,
<PAGE>

travel and related expenses in connection with the distribution of Fund shares
and (4) payments to broker-dealers who advise shareholders regarding the
purchase, sale, or retention of Fund shares ("trail fees"). Such payments to
broker-dealers may be in amounts up to 0.50% per annum of the Fund's average
daily net assets. The Fund will not be liable for distribution expenditures
made by the distributor in any given year in excess of the maximum amount (0.50%
per annum of the Fund's average daily net assets) payable under the Plan in that
year. Costs or expenses in excess of the 0.50% per annum limit may not be
carried forward to future years. Salary expense of salesmen who are responsible
for marketing shares of the Fund may be allocated to various portfolios of the
Trust that have adopted a Plan similar to that of the Fund on the basis of
average net assets; travel expense may be allocated to, or divided among, the
particular portfolios of the Trust for which it is incurred. The Fund will make
no payments under the Distribution Plan until the Board of Trustees specifically
further so authorizes.

Under the Distribution Contract between the Fund and Schroder Advisors, Schroder
Advisors provides its services to Schroder U.S. Equity Fund without compensation
and bears all the costs and expenses associated with the distribution of Fund
shares. Under the Distribution Contract between the Fund and Schroder Advisors,
Schroder Advisors provides its services to Schroder U.S. Smaller Companies Fund
without compensation other than any payments made pursuant to the Plan.

SERVICE ORGANIZATIONS

Various banks, trust companies, broker-dealers (other than Schroder Advisors) or
other financial organizations (collectively, "Service Organizations") also may
provide administrative services for the Funds, such as maintaining shareholder
accounts and records. Each Fund may pay fees to Service Organizations (which
may vary depending upon the services provided) in amounts up to an annual rate
of 0.25% of the daily net asset value of the Fund's shares owned by shareholders
with whom the Service Organization has a servicing relationship.

Some Service Organizations may impose additional or different conditions on
their clients, such as requiring their clients to invest more than the minimum
initial or subsequent investments specified by the Fund or charging a direct fee
for servicing. If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Fund. Each Service
Organization has agreed to transmit to its clients a schedule of any such fees.
Shareholders using Service Organizations are urged to consult them regarding any
such fees or conditions.

alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

OTHER EXPENSES

The Funds bear all costs of their operations other than expenses specifically
assumed by Schroder Advisors or SCMI. The costs borne by the Funds include
legal and accounting expenses; Trustees' fees and expenses; insurance premiums,
custodian and transfer agent fees and expenses; expenses incurred in acquiring
or disposing of the Fund's portfolio securities; expenses of registering and
qualifying the Fund's shares for sale with the SEC and with various state
securities commissions; expenses of obtaining quotations on the Fund's portfolio
securities and pricing of the Fund's shares; a portion of the expenses of
maintaining the Fund's legal existence and of shareholders' meetings; and
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. Trust expenses directly attributed to a Fund are
charged to that Fund; other expenses are allocated proportionately among all the
portfolios of the Trust in relation to the net assets of each portfolio. See
"Management - Fees and Expenses" in the SAI.

For the fiscal year ended October 31, 1995, Fund expenses (other than advisory
and administrative fees) as a percentage of average net assets for Schroder U.S.
Equity Fund and Schroder U.S. Smaller Companies Fund were 0.65% and 0.74%,
respectively.

PORTFOLIO TRANSACTIONS

Decisions with respect to allocation of Schroder U.S. Equity Fund's portfolio
brokerage are made by the Trust's President, a Vice President or Treasurer. It
is Schroder U.S. Equity Fund's policy, consistent with best execution, to secure
the highest possible price on sales and the lowest possible price on purchases
of securities. Schroder U.S. Smaller Companies Fund's Investment Advisory
Contract with SCMI authorizes and directs SCMI to place orders for the purchase
and sale of the Fund's investments with brokers and dealers selected by SCMI in
its discretion and to seek best execution of these portfolio transactions. Each
Fund may pay higher than the lowest available commission rates when such
brokerage allocation is believed reasonable in light of the value of the
brokerage and research services provided by the broker effecting the
transaction.

Subject to each Fund's policy of obtaining the best price consistent with
quality of execution on transactions, each Fund may employ Schroder Wertheim &
Company, Incorporated ("Schroder Wertheim"), an affiliate of SCMI, to effect
transactions of the Fund on the New York Stock Exchange only. Because of the
affiliation between SCMI and Schroder Wertheim, a Fund's payment of commissions
to Schroder Wertheim is subject to procedures adopted by the Trust's Board of
Trustees to provide that such commissions will not exceed the usual and
customary brokers' commissions. No specific portion of a Fund's brokerage will
be directed to Schroder Wertheim and in no event will Schroder Wertheim receive
such brokerage in recognition of research services.

<PAGE>

INVESTMENT IN THE FUNDS

PURCHASE OF SHARES

Shares of the Funds are offered at the net asset value next determined after
receipt of a Purchase Order (at the address set forth below) without any sales
charge as an investment vehicle for individuals, institutions, corporations and
fiduciaries. See "Investment in the Funds - Net Asset Value" for a description
of the times when net asset value is determined. Prospectuses, sales material
and applications can be obtained from the Trust or Forum Financial Corp., the
Fund's Transfer Agent. See "Other Information - Shareholder Inquiries".

The minimum initial investment is $500 with respect to Schroder U.S. Equity Fund
and $2,500 with respect to Schroder U.S. Smaller Companies Fund, except that the
minimum initial investment for each Fund for an Individual Retirement Account is
$250. The minimum subsequent investment for each Fund is $100. All purchase
payments are invested in full and fractional shares. The Fund is authorized to
reject any purchase order.

Initial and subsequent purchases may be made by mailing a check (in U.S.
dollars), payable to the Fund, to:

(Name of Fund)
P.O. Box 446
Portland, Maine 04112

In the case of an initial purchase, the check must be accompanied by a completed
Account Application.

Service Organizations (on behalf of customers) may transmit purchase payments by
Federal Reserve Bank wire directly to the Fund at the following address:

Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Financial Corp.
Acct. No.: 910-2-718187
Ref.: (name of fund)
Account of: (shareholder name)
Account Number: (shareholder account number)

For each shareholder of record, the Fund's Transfer Agent, as the shareholder's
agent, establishes an open account to which all shares purchased are credited,
together with any dividends and capital gain distributions which are paid in
additional shares. Although most shareholders elect not to receive share
certificates, certificates for full shares can be obtained by specific written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.

RETIREMENT PLANS

Shares of the Funds are offered in connection with tax-deferred retirement
plans. Application forms and further information about these plans, including
applicable fees, are available upon request. Before investing in a Fund through
one of these plans, an investor should consult the investor's tax adviser.

INDIVIDUAL RETIREMENT ACCOUNTS

Shares of the Funds may be used as a funding medium for an Individual Retirement
Account ("IRA"). An Internal Revenue Service-approved IRA plan naming The First
National Bank of Boston as custodian is available from the Trust or the Funds'
Transfer Agent. The minimum initial investment for an IRA is $250; the minimum
subsequent investment is $100. IRAs are available to individuals who receive
compensation or earned income, and their spouses, whether or not they are active
participants in a tax-qualified or Government-approved retirement plan. An IRA
contribution by an individual who participates, or whose spouse participates, in
a tax-qualified or Government-approved retirement plan may not be deductible
depending upon the individual's income. Individuals also may establish an IRA
to receive a "rollover" contribution of distributions from another IRA or a
qualified plan. Tax advice should be obtained before planning a rollover.

REDEMPTION OF SHARES

Shares of the Funds will be redeemed at their next determined net asset value
following receipt by the Fund (at the address set forth below) of a redemption
request in proper form. See "Investment in the Funds - Net Asset Value".
Redemption requests by telephone or wire may be made between the hours of 9:00
a.m. and 6:00 p.m. (New York City Time) on each day that the New York Stock
Exchange is open for trading.

followed by Forum to confirm that such instructions are genuine. If such
procedures are followed, neither Forum nor the Trust will be liable for any
losses due to unauthorized or fraudulent redemption requests. Shares for which
certificates have been issued may not be redeemed by telephone. In times of
drastic economic or market changes, it may be difficult to make redemptions by
telephone. If a shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the Transfer Agent.

WRITTEN REQUESTS. Redemptions may be made by letter to the Fund, specifying the
dollar amount or number of shares to be redeemed and account number, and sent
to:

(Name of Fund)
P.O. Box 446
Portland, Maine 04112

Each Fund may suspend the right of redemption during any period when (i) trading
on the New York Stock Exchange is restricted or that Exchange is closed, other
than customary weekend and holiday closings, (ii) the SEC has by order permitted
such suspension, or (iii) an emergency, as defined by rules of the SEC, exists
making disposal of portfolio investments or determination of the value of the
net assets of the Fund not reasonably practicable.
<PAGE>

If the Board of Trustees should determine that it would be detrimental to the
best interest of the remaining shareholders of a Fund to make payment wholly or
partly in cash, the Fund may pay the redemption price in whole or in part by a
distribution in kind of securities from the portfolio of the Fund, in lieu of
cash, in conformity with applicable rules of the SEC. The Funds will, however,
redeem shares solely in cash up to the lesser of $250,000 or 1% of net assets
during any 90-day period for any one shareholder. In the event that payment for
redeemed shares is made wholly or partly in portfolio securities, the
shareholder may be subject to additional risks and costs in converting the
securities to cash. See "Additional Purchase and Redemption Information -
Redemption in Kind" in the SAI.

The proceeds of a redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for Federal income tax
purposes.

Due to the relatively high cost of maintaining smaller accounts, each Fund
reserves the right to redeem shares in any account (other than an IRA) if at any
time the total investment does not have a certain account value - $400 in the
case of Schroder U.S. Equity Fund and $2,000 in the case of Schroder U.S.
Smaller Companies Fund - unless the account value has fallen below such amount
solely as a result of market activity. An affected shareholder would be
notified that the value of the shareholder's account was less than the specified
amount and be allowed at least 30 days to make an additional investment to
increase the account value to at least this amount.

NET ASSET VALUE

The net asset value per share of each Fund is calculated at 4:00 p.m. (New York
City Time), Monday through Friday, on each day that the New York Stock Exchange
is open for trading (which excludes the following national business holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day). Net asset value per share is
calculated by dividing the aggregate value of the Fund's assets less all
liabilities by the number of shares of the Fund outstanding. The Board of
Trustees has established procedures for the valuation of each Fund's securities.
In general, those valuations are based on market value, with special provisions
being made for securities which do not have readily available market quotations,
short-term debt securities and Hedging Instruments. For further information,
see "Determination of Net Asset Value Per Share" in the SAI.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund intends to comply with the provisions of Subchapter M of the Internal
Revenue Code of 1986 (the "Code") applicable to regulated investment companies.
As a regulated investment company, each Fund will distribute substantially all
of its "investment company taxable income" and its "net capital gains" at least
annually, as defined in the Code, and, therefore, will not be subject to Federal
income tax to the extent the Fund distributes such income and capital gains in
the manner required under the Code.
<PAGE>

Dividend and capital gains distributions will be reinvested automatically in
additional shares of the Fund at net asset value unless the shareholder has
notified the Fund in the shareholder's Account Application or otherwise in
writing of his selection to receive distributions in cash.

Dividend and capital gains distributions are made on a per-share basis. After
every distribution the value of a share declines by the amount of the
distribution. Purchases made shortly before a distribution include in the
purchase price the amount of the distribution which will be returned to the
investor in the form of a taxable dividend or capital gains distribution.

Earnings of a Fund not distributed on a timely basis in accordance with a
calendar year distribution requirement will subject the Fund to a nondeductible
4% excise tax. To prevent imposition of this tax, each Fund intends to comply
with this distribution requirement. A distribution will be treated as paid
during the calendar year if it is declared by the Fund in October, November or
December of that year with a record date in such month and paid by the Fund
during January of the following year. Such distributions will be taxable to
shareholders in the calendar year in which declared rather than the calendar
year in which received.

For Federal income tax purposes, distribution of each Fund's investment company
taxable income (including net short-term capital gains) will be taxable to
shareholders at ordinary income rates whether they are invested in additional
shares or received in cash. Distributions of any net capital gains designated
by the Fund as capital gain dividends will be taxable as long-term capital gain,
regardless of how long a shareholder has held the shares and whether they are
invested in additional shares or received in cash. Each year the Trust will
notify shareholders of each Fund of the tax status of dividends and
distributions.

For corporate investors, dividends from investment income (not capital gains)
will generally qualify in part for the intercorporate dividends-received
deduction provided certain holding period requirements are satisfied. However,
the portion of the dividends so qualified depends on the aggregate taxable
qualifying dividend income received by each Fund from domestic (U.S.) sources.

The Trust will be required to withhold Federal income tax at a rate of 31%
("backup withholding") from dividends paid to non-corporate shareholders if (a)
the payee fails to furnish the payee's correct taxpayer identification number or
social security number, (b) the Internal Revenue Service (the "IRS") notifies
the Trust that the payee has failed to report properly certain interest and
dividend income to the IRS and to respond to notices to that effect or (c) when
required to do so, the payee fails to certify that he is not subject to backup
withholding.

Depending on the residence of the shareholder for tax purposes, distributions
also may be subject to state and local taxes, including withholding taxes.
Shareholders should consult their own tax advisers as to the Federal, state and
local tax consequences of ownership of shares of the Fund in their particular
circumstances.
<PAGE>

OTHER INFORMATION

CAPITALIZATION AND VOTING

The shares of the Trust are fully paid and nonassessable, and have no
preferences as to conversion, exchange, dividends, retirement or other features.
The shares have no pre-emptive rights. They have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting for the
election of Trustees can elect 100% of the Trustees if they choose to do so. A
shareholder is entitled to one vote for each full share held (and a fractional
vote for each fractional share held), then standing in his name on the books of
the Trust. On matters requiring shareholder approval, shareholders are entitled
to vote only with respect to matters which affect the interest of the class they
hold, except as otherwise required by applicable law.

There will normally be no meetings of shareholders to elect Trustees unless and
until such time as less than a majority of the Trustees holding office have been
elected by shareholders. However, the holders of not less than a majority of
the outstanding shares of the Trust may remove any person serving as a Trustee
and the Board of Trustees will call a special meeting of shareholders to
consider removal of one or more Trustees if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the Trust.

As of December 22, 1995, Schroder Nominees Limited may be deemed to control
Schroder U.S. Smaller Companies Fund for purposes of the Act. From time to
time, certain shareholders may own a large percentage of the shares of a
Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote.

REPORTS

The Trust sends to shareholders of each Fund a semi-annual report and an audited
annual report, which includes a list of the investment securities held by the
Fund.

PERFORMANCE INFORMATION

Each Fund may, from time to time include quotations of its average annual total
return in advertisements or reports to shareholders or prospective investors.
Quotations of average annual total return for each Fund will be expressed in
terms of the average annual compounded rate of
<PAGE>

return of a hypothetical investment in the Fund over a period of 1, 5 and 10
years (up to the life of the Fund). Average annual total return quotations
reflect the deduction of a proportional share of Fund expenses (on an annual
basis), and assume that all dividends and distributions are reinvested when
paid.

Performance information for each Fund may be compared to various unmanaged
securities indices, groups of mutual funds tracked by mutual fund ratings
services, or other general economic indicators. Unmanaged indices may assume
the reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.

Performance information for each Fund represents only the performance of a
hypothetical investment in the Fund during the particular time period on which
the calculations are based. Performance information should be considered in
light of the Fund's investment objectives and policies, characteristics and
quality of the Fund's portfolio, and the market conditions during the given time
period, and should not be considered as a representation of what may be achieved
in the future. For a description of the methods used to determine total return
for each Fund, see the SAI.

CUSTODIAN AND TRANSFER AGENT

All securities and cash of the Funds are held by The Chase Manhattan Bank, N.A.,
Brooklyn, New York. Forum Financial Corp. serves as the Funds' Transfer and
Dividend Disbursing Agent.

SHAREHOLDER INQUIRIES

Inquiries about each Fund's investment policies and past performance should be
directed to:

(Name of Fund)
P.O. Box 446
Portland, Maine 04112

Information about specific shareholder accounts may be obtained from the Funds'
Transfer Agent by calling (800) 344-8332.
<PAGE>

INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019
DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
ADMINISTRATOR - SCHRODER U.S. SMALLER COMPANIES FUND
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019
SUB-ADMINISTRATOR
Forum Financial Services, Inc.
61 Broadway, Suite 2770
New York, New York 10006
CUSTODIAN
The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, New York 11245
TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112
COUNSEL
Jacobs Persinger & Parker
77 Water Street
New York, New York 10005

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109

Table of Contents
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . .
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . .
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . .
INVESTMENT IN THE FUNDS. . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . .
OTHER INFORMATION. . . . . . . . . . . . . . . . .

<PAGE>

SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101

GENERAL INFORMATION: (207) 879 8903
ACCOUNT INFORMATION: (800) 344 8332
FAX: (207) 879 6206

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. - INVESTMENT ADVISER
SCHRODER FUND ADVISORS INC. - ADMINISTRATOR AND DISTRIBUTOR

Schroder Emerging Markets Fund Institutional Portfolio (the "Fund") is a
separately-managed, non-diversified portfolio of Schroder Funds (the "Trust") an
open-end management investment company. The Fund's investment objective is to
achieve long-term capital appreciation through direct or indirect investment in
equity and debt securities of issuers domiciled or doing business in emerging
market countries in regions such as Southeast Asia, Latin America, and Eastern
and Southern Europe. There is no assurance that the Fund will achieve this
objective. Investing in securities of emerging market issuers involves special
risks in addition to those associated with investments in securities of U.S.
issuers. See "The Fund - Special Risk Considerations."

THE FUND CURRENTLY SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY HOLDING, AS ITS
ONLY INVESTMENT SECURITIES, THE SECURITIES OF SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO (THE "PORTFOLIO"), A SEPARATE PORTFOLIO OF A REGISTERED
OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
POLICIES AS THE FUND. SEE "OTHER INFORMATION - FUND STRUCTURE."

This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
(the "SAI") dated January 9, 1996 and as supplemented from time to time
containing additional and more detailed information about the Fund has been
filed with the Securities and Exchange Commission (the "SEC") and is hereby
incorporated by reference into this Prospectus. It is available without charge
and may be obtained by writing or calling the Fund at the address and telephone
numbers printed above.

_________________________

This Prospectus should be read and retained for information about the Fund.
_________________________

This Prospectus is dated January 9, 1996

<PAGE>

PROSPECTUS SUMMARY

THE FUND. The Fund is a separately-managed, non-diversified no-load portfolio
of the Trust, a Delaware business trust registered as an open-end management
investment company under the Investment Company Act of 1940 (the "Act"). The
Trust currently consists of five separate portfolios, each of which has separate
investment objectives and policies.

The Fund's investment objective is to achieve long-term capital appreciation
through direct or indirect investment in equity and debt securities of issuers
domiciled or doing business in emerging market countries in regions such as
Southeast Asia, Latin America, and Eastern and Southern Europe. Currently, the
Fund invests exclusively in the Portfolio, a series of Schroder Capital Funds
("Core Trust"), itself a registered open-end management investment company.
Accordingly, the investment experience of the Fund will correspond directly with
the investment experience of the Portfolio. See "Other Information - Fund
Structure." The Portfolio has the same investment objective and policies as the
Fund.

SPECIAL RISK CONSIDERATIONS. Investments in securities of foreign issuers,
particularly in countries with smaller, emerging capital markets, involve
certain risks not associated with domestic investing, including fluctuations in
foreign exchange rates, uncertain political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws or
restrictions. The Fund is not intended for investors whose objective is assured
income or preservation of capital. The Fund should be considered a means of
diversifying an investment portfolio and not in itself a balanced investment
program.

INVESTMENT ADVISER. The Portfolio's Investment Adviser is Schroder Capital
Management International Inc. ("SCMI"), 787 Seventh Avenue, New York, New York
10019. See "Management of the Fund - Investment Adviser and Portfolio Manager."

ADMINISTRATIVE SERVICES. The Administrator of the Fund is Schroder Fund
Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York, New York
10019, a wholly-owned subsidiary of SCMI. Effective July 5, 1995, Schroder
Advisors changed its name from Schroder Capital Distributors Inc. The Trust and
Schroder Advisors have entered into a Sub-Administration Agreement with Forum
Financial Services, Inc. ("Forum"). Pursuant to their agreements, Schroder
Advisors and Forum provide certain management and administrative services
necessary for the Fund's operations, other than the investment management and

<PAGE>

administrative services provided to the Fund by SCMI pursuant to the Investment
Advisory Contract. See "Management of the Fund - Administrative Services."

PURCHASES AND REDEMPTIONS OF SHARES. Shares of the Fund may be purchased
directly through the Fund's transfer agent, Forum Financial Corp., through
Service Organizations, or through certain broker-dealers who assist their
customers in purchasing shares of the Fund. The minimum initial investment is
$250,000. Purchases of Fund shares are subject to a purchase charge of 0.50% of
the amount invested. See "Investment In The Fund - Purchase of Shares."
Redemptions may be made by telephone or by letter to the Fund, specifying the
dollar amount or number of shares to be redeemed and account number.
Redemptions are subject to a redemption charge of 0.50% of the net asset value
of the shares redeemed. See "Investment in the Fund - Redemption of Shares."
All purchase and redemption charges are paid to the Fund and are not sales
charges.

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay as a dividend
substantially all of its net investment income annually and to distribute any
net realized long-term capital gains at least annually. Dividend and capital
gains distributions will be reinvested automatically in additional shares of the
Fund at net asset value unless the shareholder has notified the Fund in his
Purchase Application or otherwise in writing of his election to receive
distributions in cash. See "Dividends, Distributions and Taxes."

FEE TABLE

The table below shows the costs and expenses that an investor would incur as a
shareholder of the Fund, based upon the Fund's projected annual operating
expenses.

SHAREHOLDER TRANSACTION EXPENSES

Maximum Sales Load Imposed on Purchase . . . . . . . . . . . . . . . None
Maximum Sales Load Imposed on Reinvested Dividends . . . . . . . . . None
Deferred Sales Load. . . . . . . . . . . . . . . . . . . . . . . . . None
Purchase Charge (based on amount invested)*. . . . . . . . . . . . . 0.50%
Redemption Charge (based on net asset value of shares redeemed)* . . 0.50%
Exchange Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . None

ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets, after fee
waivers and expense reimbursements)**

Management Fees*** . . . . . . . . . . . . . . . . . . . . . . . . . 0.36%
12b-1 Fees**** . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%
Other Expenses*****. . . . . . . . . . . . . . . . . . . . . . . . . 1.24%
-----
Total Fund Operating Expenses. . . . . . . . . . . . . . . . . . . . 1.60%
-----
-----
________________

* The Purchase Charge and the Redemption Charge are imposed on all purchases
and redemptions of Fund shares, respectively, other than with respect to
shares purchased through the reinvestment of dividends or distributions.
These charges, which are paid to the Fund, are not sales charges but are
designed to help

-3-
<PAGE>

compensate the Fund for transaction costs it incurs in issuing and
redeeming Fund shares. See "Investment in the Fund - Purchase of Shares"
and "- Redemption of Shares."

** The Fund's expenses as listed above include the Fund's pro rata portion of
all operating expenses of the Portfolio, which will be borne indirectly by
Fund shareholders. The Trust's Board of Trustees believes that the
aggregate per share expenses of the Fund and the Portfolio will be
approximately equal to the expenses the Fund would incur if its assets
were invested directly in foreign securities. Investment advisory fees
are those incurred by the Portfolio; as long as its assets are invested in
the Portfolio, the Fund pays no investment advisory fees directly. SCMI
and Schroder Advisors have voluntarily undertaken to waive a portion of
their fees and assume certain expenses of the Fund to the extent

*** Management Fees for the Fund reflect the annual fee rate that the Fund
pays for investment advisory (1.00%) and administrative (0.25%) services.
Management Fees charged to the Fund are higher than those charged to most
other mutual funds. However, the Fund's investment adviser believes that
while such fees are higher than those charged to most funds which invest
primarily in U.S. securities, they are not necessarily higher than those
charged to funds with investment objectives similar to those of the Fund.

SCMI and Schroder Advisors have voluntarily undertaken to waive a
portion of their fees and assume certain expenses of the Fund to the
extent that the Fund's total expenses exceed 1.60% of the Fund's
average daily net assets. In the absence of estimated expense
reimbursements and fee waivers, Management Fees and Total Fund
Operating Expenses would have been 1.25% and 2.49%, respectively. For
a further description of the various expenses incurred in the operation
of the Fund, see "Management of the Fund."

**** Pursuant to Rule 12b-1 under the Act, the Fund has adopted a Distribution
Plan generally authorizing it to pay directly, or reimburse the
distributor for, costs and expenses incurred in connection with
distribution of Fund shares. These payments or reimbursements are limited
to an annual rate of 0.50% of the Fund's average daily net assets. Costs
or expenses in excess of this limit may not be carried forward to future
years. See "Management of the Fund - Distribution." The Fund has no
current intention of implementing the Distribution Plan, and in any event
will make no payments under the Distribution Plan until further authorized
by the Board. If the Distribution Plan is implemented, long term
shareholders of the Fund may pay aggregate sales charges totalling more
than the economic equivalent of the maximum front-end sales charge
permitted by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. In the event that the Fund were to make payments
under the Distribution Plan, 12b-1 Fees and Total Operating Expenses would
be higher.

***** In addition to and distinct from payments authorized under the
Distribution Plan, the Board has authorized the Fund generally to pay
Service Organizations fees at an annual rate of up to 0.25% of the Fund's
average daily net assets for administrative services related to
maintaining shareholder accounts. See "Management of the Fund - Service
Organizations." The Fund has no intention of making any such payments,
and in any event will make no such payments until further authorized by
the Board. In the event that the Fund were to make payments to Service
Organizations, Other Expenses and Total Operating Expenses would be
higher.

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
gross annual return and (2) redemption at the end of each time period:

1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>

-4-
<PAGE>

Assuming redemption
at the end of the period $21 $56 $93 $197
Assuming no redemption $16 $50 $87 $190
</TABLE>

THE PURPOSE OF THE FOREGOING TABLE IS TO ASSIST THE SHAREHOLDER IN UNDERSTANDING
THE VARIOUS COSTS AND EXPENSES THAT AN INVESTOR IN THE FUND WILL BEAR. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; THE ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.

-5-
<PAGE>

FINANCIAL HIGHLIGHTS
The following financial highlights are presented to assist investors in
evaluating the performance of the Funds for its first fiscal year. This
information is part of the Fund's financial statements and has been audited by
Coopers & Lybrand L.L.P., independent accountants. The data in the table should
be read in conjunction with the financial statements, notes thereto and
independent accountants' report thereon contained in the Fund's annual report,
which is incorporated by reference into the Fund's SAI. Further information
about the Fund's performance also is contained in the annual report, which may
be obtained by shareholders free of charge upon request.

March 31, 1995*
through
October 31, 1995

NET ASSET VALUE, BEGINNING OF YEAR 10.00

INVESTMENT OPERATIONS
Net Investment Income 0.02
Net Realized and Unrealized
Gain on Investments 0.61

Total from Investment Operations 0.63

NET ASSET VALUE, END OF PERIOD $10.63

TOTAL RETURN 6.30%

RATIO/SUPPLEMENTARY DATA:

Net Assets, End of Year (Thousands) 18,423
Ratio of Expenses to Average Net Assets 1.58%(a)(b)
Ratio of Net Investment
Income to Average Net Assets 0.46%(a)
Portfolio Turnover Rate 44.10%

* Commencement of operations
(a) Annualized
(b) During the period, various fees and expenses were reimbursed,
respectively. Had such waiver and reimbursement not occcurred, the
ratio of expenses to average net assets would have been:
2.45%(a)

-6-
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

The Fund is designed for investors who seek the aggressive growth potential of
emerging world markets and are willing to bear the special risks of investing a
portion of their assets in those markets. The Fund's fundamental objective is
to achieve long-term capital appreciation through direct or indirect investment
in equity and debt securities of issuers domiciled or doing business in emerging
market countries in regions such as Southeast Asia, Latin America, and Eastern
and Southern Europe. This objective may not be changed without shareholder
approval. Current income will be incidental to the objective of capital
appreciation. There is no assurance that the Fund will achieve its objective.
The Fund is not intended for investors whose objective is assured income or
preservation of capital. The Fund should be considered a means of diversifying
an investment portfolio and not in itself a balanced investment program.

INVESTMENT POLICIES

Under normal conditions, the Portfolio will invest at least 65% of its total
assets in emerging market equity and debt securities, including common stocks,
preferred stocks, convertible preferred stocks, stock rights and warrants,
convertible debt securities and non-convertible debt securities. The Portfolio
may invest less than 35% of its net assets in high risk debt securities which
are unrated or rated below investment grade. See "Certain Risks of Debt
Securities" below. Investments in stock rights and warrants will not be
considered in the 65% of total assets determination but are subject to the
limitations described below in "Special Investment Methods - Warrants and Stock
Rights." Under certain circumstances, the Portfolio may invest indirectly in
these securities by investing in other investment companies or vehicles. See
"Other Investment Vehicles" below.

In recent years, many emerging market countries have begun programs of economic
reform: removing import tariffs, dismantling trade barriers, deregulating
foreign investment, privatizing state owned industries, permitting the value of
their currencies to float against the dollar and other major currencies, and
generally reducing the level of state intervention in industry and commerce.
Important intra-regional economic integration also holds the promise of greater
trade and growth. At the same time, significant progress has been made in
restructuring the heavy external debt burden that certain emerging market
countries accumulated during the 1970s and 1980s. While there is no assurance
that these trends will continue, the Portfolio's investment adviser will seek
out attractive investment opportunities in these countries.

-7-
<PAGE>

"Emerging market" countries generally include all countries in the world other
than those contained in the Morgan Stanley Capital International World Index
("MSCI World") of major world economies. Where the investment adviser
determines that the economy of a particular country included in the MSCI World
more appropriately reflects an emerging market economy, however, the adviser may
include such country in the emerging market category. The following countries
currently are excluded from the Portfolio's emerging market category: Australia;
Austria; Belgium; Canada; Denmark; Finland; France; Germany; Hong Kong; Ireland;
Italy; Japan; Malaysia; Netherlands; New Zealand; Norway; Singapore; Spain;
Sweden; Switzerland; United Kingdom; United States of America. The Portfolio
will not necessarily seek to diversify investments on a geographic basis within
the emerging market category and, in this regard, the Portfolio may invest more
than 25% of its total assets in issuers located in any one country. To the
extent it invests in issuers located in one country, the Portfolio is
susceptible to factors adversely affecting that country. See "Special Risk
Considerations - Geographic Concentration" below.

A security ordinarily will be considered to be an emerging market security when
(1) its issuer is organized in an emerging market country; (2) the issuer's
primary trading market is located in an emerging market country; or (3) in the
judgment of the investment adviser, at least 50% of the issuer's revenues or
profits are derived from goods produced or sold, investments made, or services
performed in emerging market countries or which have at least 50% of their
assets situated in such countries. The Portfolio may acquire emerging market
securities that are denominated in currencies other than a currency of an
emerging market country. The Portfolio may consider investment companies to be
located in the country or countries in which they primarily make their portfolio
investments.

In anticipation of the currency requirements of the Portfolio and to attempt to
protect against possible adverse movements in foreign exchange rates, the
Portfolio may enter into forward contracts to purchase or sell foreign
currencies. Although such contracts may reduce the risk of loss to the
Portfolio due to a decline in the value of the currency which is sold, they also
limit any possible gain which might result should the value of such currency
rise.

INVESTMENT RESTRICTIONS

The following investment restrictions of the Portfolio, which are the same as
those of the Fund, were designed to reduce the Portfolio's exposure in specific
situations. Pursuant to these restrictions, which are fundamental policies, the
Portfolio will not:

(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
United States Government, its agencies or instrumentalities.)

-8-
<PAGE>

(2) Issue senior securities, borrow money or pledge its assets in
excess of 10% 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. Usually only "leveraged"
investment companies may borrow in excess of 5% of their assets;
however, the Portfolio will not borrow to increase income but only as
a temporary measure for extraordinary or emergency purposes, including
to meet redemptions or to settle securities transactions which may
otherwise require untimely dispositions of Portfolio securities. The
Portfolio will not purchase securities while borrowings exceed 5% of
total assets. (For the purpose of this restriction, collateral
arrangements with respect to the writing of options, futures
contracts, options on futures contracts, and collateral arrangements
with respect to initial and variation margin are not deemed to be a
pledge of assets and neither such arrangements nor the purchase or
sale of futures or related options are deemed to be the issuance of a
senior security.)

(3) Make investments for the purpose of exercising control or
management. Investments by the Portfolio in wholly-owned investment
entities created under the laws of certain countries will not be
deemed the making of investments for the purpose of exercising control
or management.

The percentage restrictions described above and in the SAI apply only at the
time of investment and require no action by the Portfolio as a result of
subsequent changes in value of the investments or the size of the Portfolio. A
supplementary list of investment restrictions is contained in the SAI.

SPECIAL RISK CONSIDERATIONS

All investments, domestic and foreign, involve certain risks. Investments in
securities of foreign issuers, particularly in countries with smaller, emerging
capital markets, involve certain risks not associated with domestic investing,
including fluctuations in foreign exchange rates, uncertain political and
economic developments, and the possible imposition of exchange controls or other
foreign governmental laws or restrictions.

POLITICAL AND ECONOMIC RISKS. In any emerging market country, there is the
possibility of expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments which could affect investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as economic growth rates,
rates of inflation, capital reinvestment, resources, self-sufficiency and
balance of payments positions. Certain foreign investments may also be subject
to foreign withholding taxes.

Certain emerging market countries may restrict investment by foreign entities.
For example, some of these countries may limit the size of foreign investment in
certain issuers, require prior approval of foreign investment by the government,
impose additional tax on foreign investors or limit foreign investors to
specific classes of securities of an issuer that have less

-9-
<PAGE>

advantageous rights (with regard to convertibility, for example) than classes
available to domiciliaries of the country.

Substantial limitations may also exist in certain countries with respect to a
foreign investor's ability to repatriate investment income, capital or the
proceeds of sales of securities. The Portfolio could be adversely affected by
delays in, or refusals to grant, any required governmental approvals for
repatriation of capital. No more than 15% of the Portfolio's net assets will
comprise, in the aggregate, assets which are (i) subject to material legal
restrictions on repatriation or (ii) invested in illiquid securities.

FINANCIAL INFORMATION AND STANDARDS. Often the regulation of, and available
information about, issuers and their securities is less extensive in emerging
market countries than in the United States. Foreign companies may not be
subject to uniform accounting, auditing and financial reporting standards or to
requirements or practices comparable to those applicable to U.S. companies.

REGULATION AND LIQUIDITY OF MARKETS. Government supervision and regulation of
exchanges and brokers in emerging market countries is frequently less extensive
than in the United States. These markets may have different clearance and
settlement procedures. In certain cases, settlements have not kept pace with
the volume of securities transactions, making it difficult to conduct such
transactions. Delays in settlement could adversely affect or interrupt the
Portfolio's intended investment program or result in investment losses due to
intervening declines in security values.

Securities markets in emerging market countries are substantially smaller than
U.S. securities markets and have substantially less trading volume, resulting in
diminished liquidity and greater price volatility. Reduced secondary market
liquidity may make it more difficult for the Portfolio to determine the value of
its portfolio securities or dispose of particular instruments when necessary.
Brokerage commissions and other transaction costs on foreign securities
exchanges are generally higher as well.

CURRENCY FLUCTUATIONS AND DEVALUATIONS. Because the Portfolio will invest
heavily in non-U.S. currency denominated securities, changes in foreign currency
exchange rates will affect the value of the Portfolio's investments. A decline
in the value of currencies in which the Portfolio's investments are denominated
against the dollar will result in a corresponding decline in the dollar value of
the Portfolio's assets. This risk tends to be heightened in the case of
investing in certain emerging market countries. For example, some currencies of
emerging market countries have experienced steady devaluations relative to the
U.S. dollar, and major adjustments have been made in certain of such currencies
periodically. Some emerging market countries may also have managed currencies
which do not freely float against the dollar.

INFLATION. Several emerging market countries have experienced substantial, and
in some periods extremely high, rates of inflation in recent years. Inflation
and rapid fluctuations in inflation rates may have very negative effects on the
economies and securities markets of certain emerging market countries. Further,
inflation accounting rules in some emerging

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<PAGE>

market countries require, for companies that keep accounting records in the
local currency, that certain assets and liabilities be restated on the company's
balance sheet in order to express items in terms of currency of constant
purchasing power. Inflation accounting may indirectly generate losses or
profits for certain emerging market companies.

NON-DIVERSIFIED INVESTMENTS. Because suitable investments in emerging market
countries may be limited, the Portfolio, like the Fund, has classified itself as
a "non-diversified investment company" under the Act so that it may invest more
than 5% of its total assets in the securities of any one issuer. To the extent
the Portfolio makes investments in excess of 5% of its assets in a particular
issuer, its exposure to credit and market risks associated with that issuer is
increased. Also, since a relatively high percentage of the Portfolio's assets
may be invested in the securities of a limited number of issuers, the Portfolio
may be more susceptible to any single economic, political or regulatory
occurrence than a diversified investment company.

GEOGRAPHIC CONCENTRATION. The Portfolio may invest more than 25% of its total
assets in issuers located in any one country. To the extent it invests in
issuers located in one country, the Portfolio is susceptible to factors
adversely affecting that country. In particular, these factors may include the
political and economic developments and foreign exchange rate fluctuations
discussed above. As a result of investing substantially in one country, the
value of the Portfolio's assets may fluctuate more widely than the value of
shares of a comparable Portfolio having a lesser degree of geographic
concentration.

ADDITIONAL INVESTMENT POLICIES

The investment objective and all investment policies of each of the Fund and the
Portfolio that are designated as fundamental may not be changed without approval
of the holders of a majority of the outstanding voting securities of the Fund or
the Portfolio, as applicable. A majority of outstanding voting securities means
the lesser of 67% of the shares present or represented at a shareholder meeting
at which the holders of more than 50% of the outstanding shares are present or
represented, or more than 50% of outstanding shares. Except as otherwise
indicated, investment policies of the Fund may be changed by the Trust's Board
of Trustees (the "Board") without shareholder approval. Likewise,
nonfundamental investment policies of the Portfolio may be changed by Core
Trust's board of trustees without shareholder approval. For more information
concerning shareholder voting, see "Other Information - Capitalization and
Voting" and "Other Information - Fund Structure." The investment policies of
the Portfolio discussed below are the same as those of the Fund.

EQUITY SECURITIES. The Portfolio's emerging market investments will comprise
primarily equity securities. Such investments will consist predominantly of
common stock or preferred stock of established companies listed on recognized
securities exchanges or traded in other established markets. However, the
Portfolio may invest to a limited extent in convertible preferred stock,
warrants and stock rights. Due to the absence of established securities markets
in certain emerging market countries and restrictions in certain countries on
direct investment by foreign entities, the Portfolio may invest in certain
emerging market issuers exclusively or primarily through the purchase of
sponsored and unsponsored American Depository Receipts

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<PAGE>

("ADRs") or other similar securities, such as American Depository Shares, Global
Depository Shares or International Depository Receipts; or through investment in
government approved investment companies or other vehicles. ADRs are receipts
typically issued by U.S. banks evidencing ownership of the underlying
securities, into which they are convertible. These securities may or may not be
denominated in the same currency as the underlying securities. Unsponsored ADRs
may be created without the participation of the foreign issuer. Holders of
these ADRs generally bear all the costs of the ADR facility, whereas foreign
issuers typically bear certain costs in a sponsored ADR. The bank or trust
company depository of an unsponsored ADR may be under no obligation to
distribute shareholder communications received from the foreign issuer or to
pass through voting rights.

DEBT SECURITIES. The Portfolio may also seek capital appreciation through
investment in emerging market convertible or non-convertible debt securities.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, in relative interest rate levels, or
in the creditworthiness of issuers. The receipt of income from such debt
securities is incidental to the Portfolio's objective of long-term capital
appreciation. Such income can be used, however, to offset the operating
expenses of the Portfolio. In accordance with its investment objective, the
Portfolio will not seek to benefit from anticipated short-term fluctuations in
currency exchange rates. The Portfolio may, from time to time, invest in debt
securities with relatively high risk and high yields (as compared to other debt
securities meeting the Portfolio's investment criteria), notwithstanding that
the Portfolio may not anticipate that such securities will experience
substantial capital appreciation. The debt securities in which the Portfolio
invests may be unrated, but will not be in default at the time of purchase. The
Portfolio also may invest to a certain extent in debt securities in order to
participate in debt-to-equity conversion programs sponsored by certain emerging
market countries or corporate reorganizations.

The Portfolio may invest in debt securities ("sovereign debt") issued or
guaranteed by emerging market governments (including countries, provinces and
municipalities) or their agencies and instrumentalities ("governmental
entities"), debt securities issued or guaranteed by international organizations
designated or supported by multiple foreign governmental entities (which are not
obligations of foreign governments) to promote economic reconstruction or
development, and debt securities issued by corporations or financial
institutions.

The Portfolio may invest a portion of its assets in certain debt obligations
known as "Brady Bonds." Brady Bonds are created through the exchange of existing
commercial bank loans to sovereign entities for new obligations in connection
with debt restructurings implemented pursuant to a plan introduced by Nicholas
F. Brady, former U.S. Secretary of the Treasury. To date, debt restructurings
utilizing Brady Bonds have been undertaken in Mexico, Venezuela, Argentina,
Costa Rica, Brazil, Nigeria, and the Philippines. Other countries, including
Ecuador, Panama, Peru, Bulgaria and Poland, are expected to implement Brady Bond
debt restructurings in the future.

Brady Bonds are of recent origin, and accordingly do not have a long payment
history. Brady Bonds are actively traded in the over-the-counter secondary
market, and may be collateralized

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<PAGE>

or uncollateralized. Although most Brady Bonds are denominated in U.S. dollars,
they are issued in various currencies. U.S. dollar denominated Brady Bonds may
be fixed rate par bonds or floating rate discount bonds. They are generally
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the Brady Bonds. Interest payments on U.S. dollar
denominated Brady Bonds generally are collateralized on a one year or longer
rolling forward basis by cash or securities in an amount, in the case of fixed
rate bonds, that is equal to at least one year of interest payments or, in the
case of floating rate bonds, that is initially equal to at least one years
interest payments based on the current interest rate and is thereafter adjusted
at regular intervals. Certain Brady Bonds are entitled to "value recovery
payments" in certain circumstances, which in effect are supplemental interest
payments but are not generally collateralized. Brady Bonds are often viewed as
having three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) collateralized interest payments; (iii) any
uncollateralized repayment of principal at maturity; and (iv) any
uncollateralized interest payments. These uncollateralized amounts are referred
to as "residual risk." Because of their residual risk and, among other factors,
the history of defaults in commercial bank loans in countries issuing Brady
Bonds, investments in Brady Bonds are considered speculative.

CERTAIN RISKS OF DEBT SECURITIES. Emerging market debt securities in which the
Portfolio may invest may be rated below investment grade or may not be rated at
all. The Portfolio may invest these debt securities to the extent that such
investment represents less than 35% of the Portfolio's net assets. Securities
below investment grade, i.e. those rated in the medium to lower rating
categories of nationally recognized statistical rating organizations such as
Standard & Poor's Corporation ("S&P") and Moody's Investors Service, Inc.
("Moody's") and unrated securities of comparable quality ("high yield/high risk
securities"), are predominantly speculative with respect to the capacity to pay
interest and repay principal, and generally involve a greater volatility of
price than securities in higher rating categories. These securities are
commonly referred to as "junk" bonds.

The risks associated with high yield/high risk securities are generally greater
than those associated with higher-rated securities. It should be noted that
even bonds rated BBB by S&P or Baa by Moody's, i.e., the lowest investment-grade
categories assigned by those rating agencies, are described by them as having
speculative characteristics and that changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of issuers of such
bonds to make principal and interest payments than is the case with higher grade
bonds. The Portfolio is not obligated to dispose of securities due to changes
by the rating agencies. A description of S&P's and Moody's fixed-income
securities ratings is contained in the Appendix to the SAI.

In purchasing high yield/high risk securities, the Portfolio will rely on the
investment adviser's judgment, analysis and experience in evaluating the
creditworthiness of an issuer of such securities. Nonetheless, investors should
carefully review the investment objective and policies of the Portfolio and
consider their ability to assume the investment risks involved before making an
investment. The Portfolio is not authorized to purchase debt securities that
are in

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<PAGE>

default, except for sovereign debt (discussed below) in which the Portfolio may
invest no more than 5% of its total assets while such sovereign debt securities
are in default.

The market values of high yield/high risk securities tend to reflect individual
issuer developments and to exhibit sensitivity to adverse economic changes to a
greater extent than do higher-rated securities, which react primarily to
fluctuations in the general level of interest rates. Issuers of high yield/high
risk securities may be highly leveraged and may not have available to them more
traditional methods of financing. During economic downturns or substantial
periods of rising interest rates, issuers of high yield/high risk securities,
especially those which are highly leveraged, may be less able to service their
principal and interest payment obligations, meet their projected business goals
or obtain additional financing. The risk of loss due to default by the issuer
is significantly greater for holders of high yield/high risk securities because
such securities may be unsecured and may be subordinated to other creditors of
the issuer. In addition, the Portfolio may incur additional expenses to the
extent it is required to seek recovery upon a default by the issuer of such an
obligation or participate in the restructuring of such obligation.

Periods of economic uncertainty and change can be expected to result in
increased volatility of market prices of high yield/high risk securities and,
correspondingly, the Portfolio's net asset value to the extent it invests in
such securities. Further, market prices of such securities structured as zero
coupon or pay-in-kind securities are affected to a greater extent by interest
rate changes and thereby tend to be more volatile than any securities which pay
interest periodically and in cash.

High yield/high risk securities may have call or redemption features which would
permit an issuer to repurchase the securities from the Portfolio. If a call
were exercised by the issuer during a period of declining interest rates, the
Portfolio likely would have to replace such called securities with lower
yielding securities, thus decreasing the net investment income to the Portfolio
and dividends to shareholders.

While a secondary trading market for high yield/high risk securities does exist,
it is generally not as liquid as the secondary market for higher rated
securities. In periods of reduced secondary market liquidity, prices of high
yield/high risk securities may become volatile and experience sudden and
substantial price declines, and the Portfolio may have difficulty in disposing
of particular issues when necessary to meet the Portfolio's liquidity needs or
in response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. Reduced secondary market liquidity for certain
high yield/high risk securities also may make it more difficult for the
Portfolio to obtain accurate market quotations for purposes of valuing the
Portfolio's investment portfolio. Market quotations are generally available on
many high yield/high risk securities only from a limited number of dealers and
may not necessarily represent firm bids of such dealers or prices for actual
sales. Under such conditions, the Portfolio may have to rely more heavily on
the judgment of the Board to value such securities accurately.

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<PAGE>

Adverse publicity and investor perceptions, which may not be based on
fundamental analysis, also may decrease the value and liquidity of high
yield/high risk securities, particularly in a thinly traded market. Factors
adversely affecting the market value of high yield/high risk securities are
likely to adversely affect the Portfolio's, and thus the Fund's, net asset
value.

Investment in sovereign debt involves a high degree of risk. Certain emerging
market countries such as Argentina, Brazil and Mexico are among the largest
debtors to commercial banks and foreign governments. At times, certain emerging
market countries have declared moratoria on the payment of principal and/or
interest on outstanding debt. The governmental entity that controls the
repayment of sovereign debt may not be able or willing to repay the principal
and/or interest when due in accordance with the terms of such debt. A
governmental entity's willingness or ability to repay principal and interest
when it is due may be affected by many factors such as its cash flow situation,
the extent of its foreign reserves, the availability of sufficient foreign
exchange, the relative size of the debt service burden to the economy as a
whole, and political restraints. The Portfolio, as a holder of sovereign debt,
may be requested to participate in the rescheduling of such debt and to extend
further loans to governmental entities. There is no bankruptcy proceeding by
which defaulted sovereign debt may be collected in whole or in part.

The sovereign debt instruments in which the Portfolio may invest involve great
risk and are deemed to be the equivalent in terms of quality to high yield/high
risk securities discussed above and are subject to many of the same risks as
such securities. Similarly, the Portfolio may have difficulty disposing of
certain sovereign debt obligations because there may be a thin trading market
for such securities. The Portfolio will not invest more than 5% of its total
assets in sovereign debt which in default.

DEBT-TO-EQUITY CONVERSIONS. The Portfolio may participate in up to 5% of its
net assets in debt-to-equity conversions. Debt-to-equity conversion programs
are sponsored in varying degrees by certain emerging market countries,
particularly in Latin America, and permit investors to use external debt of a
country to make equity investments in local companies. The terms of the
programs vary from country to country, but include significant restrictions on
the application of the proceeds received in the conversion and on the
repatriation of investment profits and capital. In inviting conversion
applications by holders of eligible debt, a government will usually specify a
minimum discount from par value that it will accept for conversion. The
investment adviser believes that debt-to-equity conversion programs may offer
investors opportunities to invest in otherwise restricted equity securities with
a potential for significant capital appreciation and, to a limited extent,
intends to invest assets of the Portfolio in such programs in appropriate
circumstances. There can be no assurance that debt-to-equity conversion
programs will continue or be successful or that the Portfolio will be able to
convert all or any of its emerging market debt portfolio into equity
investments.

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

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<PAGE>

of deposit and bankers' acceptances of U.S. banks. The Portfolio also may hold
cash and time deposits in U.S. banks. In transactions involving "repurchase
agreements," the Portfolio purchases securities from a bank or broker-dealer who
agrees to repurchase the security at the Portfolio's cost plus interest within a
specified time. The securities purchased by the Portfolio have a total value in
excess of the value of the repurchase agreement and are held by the Portfolio's
custodian bank until repurchased. See "Investment Policies" in the SAI for
further information about all these securities.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. To hedge against adverse price
movements in the securities held in its portfolio and the currencies in which
they are denominated (as well as in the securities it might wish to purchase and
their denominated currencies), the Portfolio may engage in transactions in
forward foreign currency contracts. A forward foreign currency exchange
contract ("forward contract") involves an obligation to purchase or sell a
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. The Portfolio will generally not enter into a forward contract with a
term of greater than one year. Forward contracts are not exchange traded, and
there can be no assurance that a liquid market will exist at a time when the
Portfolio seeks to close out a forward contract. Nor is there any assurance
that a counterparty in an over-the-counter transaction will be able to perform
its obligations. Currently, only a limited market, if any, exists for hedging
transactions relating to currencies in certain emerging markets or to securities
of issuers domiciled or principally engaged in business in certain emerging
markets. This may limit the Portfolio's ability to effectively hedge its
investments in those markets. Hedging against a decline in the value of a
currency does not eliminate fluctuations in the prices of portfolio securities
or prevent losses if the prices of such securities decline. Such transactions
also limit the opportunity for gain if the value of the hedged currencies should
rise. In addition, it may not be possible for the Portfolio to hedge against a
devaluation that is so generally anticipated that the Portfolio is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. See "Investment Policies - Forward Foreign Currency Exchange
Contracts" in the SAI.

WARRANTS AND STOCK RIGHTS. The Portfolio may invest in warrants, which are
options to purchase an equity security at a specified price (usually
representing a premium over the applicable market value of the underlying equity
security at the time of the warrant's issuance). The Portfolio may not invest
more than 5% of its net assets (at the time of investment) in warrants (other
than those that have been acquired in units or attached to other securities).
No more than 2% of the Portfolio's net assets (at the time of investment) may be
invested in warrants that are not listed on the New York or American Stock
Exchanges. Investments in warrants involve certain risks, including the possible
lack of a liquid market for the resale of the warrants, potential price
fluctuations as a result of speculation or other factors and failure of the
price of the underlying security to reach a level at which the warrant can be
prudently exercised (in which case the warrant may expire without being
exercised, resulting in the loss of the Portfolio's entire investment therein).
The prices of warrants do not necessarily move parallel to the prices of the
underlying securities. Warrants have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.

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<PAGE>

In addition, the Portfolio may invest up to 5% of its assets (at the time of
investment) in stock rights. A stock right is an option given to a shareholder
to buy additional shares at a predetermined price during a specified time
period.

ILLIQUID AND RESTRICTED SECURITIES. The Portfolio will not purchase or
otherwise acquire any security if, as a result, more than 15% of its net assets
(taken at current value) would be invested in securities that are illiquid by
virtue of the absence of a readily available market or because of legal or
contractual restrictions on resale ("restricted securities"). There may be
undesirable delays in selling illiquid securities at prices representing their
fair value. This policy includes over-the-counter options held by the Portfolio
and the "in the money" portion of the assets used to cover such options. As
stated above, this policy also includes assets which are subject to material
legal restrictions on repatriation. This policy does not include restricted
securities 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 Board or the investment adviser under Board-approved guidelines. Such
guidelines take into account trading activity for such securities and the
availability of reliable pricing information, among other factors. If there is
a lack of trading interest in particular Rule 144A securities, the Portfolio's
holdings of those securities may be illiquid. See "Investment Policies -
Illiquid and Restricted Securities" in the SAI for further details.

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

The Portfolio may lend securities from its portfolio if liquid assets in an
amount at least equal to the current market value of the securities loaned
(including accrued interest thereon) plus the interest payable to the Portfolio
with respect to the loan is maintained by the Portfolio in a segregated account.
Any securities that the Portfolio may receive as collateral will not become a
part of its portfolio at the time of the loan, and, in the event of a default by
the borrower, the Portfolio will, if permitted by law, dispose of such
collateral except for such part thereof that is a security in which the
Portfolio is permitted to invest. During the time that the securities are on
loan, the borrower will pay the Portfolio any accrued income on those
securities, and the Portfolio may invest the cash collateral and earn income or
receive an agreed upon fee from a borrower that has delivered cash equivalent
collateral. Cash collateral received by the Portfolio will be invested in U.S.
Government securities and liquid high grade debt obligations. The value of
securities loaned will be marked to market daily. Portfolio securities
purchased with cash collateral are subject to possible depreciation. Loans of
securities by the Portfolio will be subject to termination at the Portfolio's or
the borrower's option. The Portfolio may pay reasonable negotiated fees in
connection with loaned securities, so long as such fees are set forth in a
written

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<PAGE>

contract and approved by the Portfolio's board of trustees. See "Loans of
Portfolio Securities" in the SAI for further information on securities loans.

OPTIONS AND HEDGING. While the Portfolio does not presently intend to do so, it
may (a) write covered call options on portfolio securities and the U.S. dollar
and emerging market currencies, without limit; (b) write covered put options on
portfolio securities and the U.S. dollar and emerging market currencies with the
limitation that the aggregate value of the obligations underlying the puts
determined as of the date the options are sold will not exceed 50% of the
Portfolio's net assets; (c) purchase call and put options in amounts equaling up
to 5% of its total assets; and (d)(i) purchase and sell futures contracts that
are currently traded, or may in the future be traded, on U.S. and foreign
commodity exchanges on underlying portfolio securities, any emerging market
currency, U.S. and emerging market fixed-income securities and such indices of
U.S. or emerging market equity or fixed-income securities as may exist or come
into being and (ii) purchase and write call and put options on such futures
contracts, in all cases involving such futures contracts or options on futures
contracts for hedging purposes only, and without limit, except that the
Portfolio may not enter into futures contracts or purchase related options if,
immediately thereafter, the amount committed to margin plus the amount paid for
premiums for unexpired options on futures contracts generally exceeds 5% of the
value of the Portfolio's total assets. All of the foregoing are referred to as
"Hedging Instruments."

In general, the Portfolio may use Hedging Instruments: (1) to attempt to protect
against declines in the market value of the Portfolio's portfolio securities or
stock index futures, and the currencies in which they are denominated and thus
protect the Portfolio's net asset value per share against downward market
trends, or (2) to establish a position in securities markets as a temporary
substitute for purchasing particular equity securities. The Portfolio will not
use Hedging Instruments for speculation. The Hedging Instruments which the
Portfolio is authorized to use have certain risks associated with them.
Principal among such risks are: (a) the possible failure of such instruments as
hedging techniques in cases where the price movement of the securities
underlying the options or futures do not follow the price movements of the
portfolio securities subject to the hedge; (b) potentially unlimited loss
associated with futures transactions and the possible lack of a liquid secondary
market for closing out a futures position; and (c) possible losses resulting
from the inability of the Portfolio's investment adviser to correctly predict
the direction of stock prices, interest rates and other economic factors. In
addition, currently only a limited market, if any, exists for hedging
transactions relating to currencies in many emerging markets or to securities of
issuers domiciled or principally engaged in business in emerging markets. This
may limit the Portfolio's ability to effectively hedge its investments in such
emerging market countries. The Hedging Instruments the Portfolio may use and
the risks associated with them are described in greater detail under "Options
and Hedging" in the SAI.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. From time
to time, in the ordinary course of business, the Portfolio may purchase
securities on a when-issued or delayed delivery basis or may purchase or sell
securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery and
payment can take place a month or more after the date of the commitment. There

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<PAGE>

is no overall limit on the percentage of the Portfolio's assets which may be
committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis. An increase in the percentage of the Portfolio's
assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of the
Portfolio's net asset value.

WHEN, AS AND IF ISSUED SECURITIES. The Portfolio may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization, leveraged buyout or debt restructuring. If the
anticipated event does not occur and the securities are not issued, the
Portfolio will have lost an investment opportunity. There is no overall limit
on the percentage of the Portfolio's assets which may be committed to the
purchase of securities on a "when, as and if issued" basis. An increase in the
percentage of the Portfolio's assets committed to the purchase of securities on
a "when, as and if issued" basis may increase the volatility of its net asset
value.

PORTFOLIO TURNOVER. The Portfolio may engage in short-term trading but its
portfolio turnover rate is not expected to exceed 100%. High portfolio turnover
and short-term trading involve correspondingly greater commission expenses and
transaction costs. Also, higher portfolio turnover rates can make it more
difficult for the Portfolio to qualify as a regulated investment company for
federal income tax purposes and may cause shareholders of the Portfolio to
recognize gains for federal income tax purposes. See "Taxation" in the SAI.

NON-DIVERSIFICATION. The Portfolio, like the Fund, is classified as a "non-
diversified" investment company under the Act. In contrast to a "diversified"
company, a non-diversified investment company may invest more than 5% of its
total assets in the securities of any one issuer. This classification may not
be changed without a shareholder vote. However, so that the Fund may continue
to qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), the Portfolio will limit
its investments so that at the close of each quarter of the taxable year, (i)
not more than 25% of the market value of the Portfolio's total assets will be
invested in the securities of a single issuer, and (ii) with respect to 50% of
the market value of its total assets not more than 5% will be invested in the
securities of a single issuer and the Portfolio will not own more than 10% of
the outstanding voting securities of a single issuer. See "Dividends,
Distributions and Taxes."

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

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<PAGE>

well as Core Trust's trustees and executive officers, may be found in the SAI
under the heading "Management - Trustees and Officers."

INVESTMENT ADVISER AND PORTFOLIO MANAGER

The Fund currently invests all of its assets in the Portfolio. Schroder Capital
Management International Inc. ("SCMI"), 787 Seventh Avenue, New York, New York
10019, serves as investment adviser to the Portfolio pursuant to an Investment
Advisory Contract. SCMI manages the investment and reinvestment of the assets
included in the Portfolio's investment portfolio and continuously reviews,
supervises and administers the Portfolio's investments. In this regard, it is
the responsibility of SCMI to make decisions relating to the Portfolio's
investments and to place purchase and sale orders regarding such investments
with brokers or dealers selected by it in its discretion.

SCMI is a wholly-owned U.S. subsidiary of Schroders Incorporated, the wholly-
owned U.S. holding company subsidiary of Schroders plc. Schroders plc is the
holding company parent of a large worldwide group of banks and financial
services companies (referred to as the "Schroder Group"), with associated
companies and branch and representative offices located in seventeen countries
worldwide. The Schroder Group specializes in providing investment management
services with assets under management currently in excess of $90 billion.

The Fund may withdraw its investment from the Portfolio at any time if the Board
determines that it is in the best interests of the Fund and its shareholders to
do so. See "Other Information - Fund Structure." Accordingly, the Fund has
retained SCMI as its investment adviser to manage the Fund's assets in the event
the Fund so withdraws its investment. SCMI will not receive an investment
advisory fee with respect to the Fund so long as the Fund remains completely
invested in the Portfolio or any other investment company. The investment
advisory contract between SCMI and Core Trust with respect to the Fund is the
same in all material respects as the Portfolio's Investment Advisory Contract
except as to the parties, the circumstances under which fees will be paid and
the jurisdiction whose laws govern the agreement.

For its services, SCMI receives a monthly advisory fee equal on an annual basis
to 1.00% of the average daily net assets of the Portfolio. The investment
advisory fee, in combination with the administrative services fees set forth in
"Administrative Services" below, is higher than advisory and management fees
charged to mutual funds which invest primarily in U.S. securities but not
necessarily higher than those charged to funds with investment objectives
similar to those of the Portfolio.

The Fund invests all of its assets in the Portfolio and, accordingly, there is
currently no portfolio manager for the Fund. The Portfolio's investment
management team consists of John A. Troiano and Laura E. Luckyn-Malone. Mr.
Troiano, a Senior Vice President of SCMI since 1991, is also a Vice President of
the Trust, and has been employed by various Schroder Group companies in the
portfolio management area since 1988. Ms. Luckyn-Malone, a Trustee and
President of the Trust, has been a Senior Vice-President and Director of SCMI
since February,

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<PAGE>

1990. Prior to joining the Schroder Group, she was a Principal with Scudder,
Stevens and Clark, Inc., which she joined in 1985.

ADMINISTRATIVE SERVICES

On behalf of the Fund, the Trust has entered into an Administrative Services
Contract with Schroder Advisors, 787 Seventh Avenue, New York, New York 10019.
In addition, the Trust and Schroder Advisors have entered into a Sub-
Administration Agreement with Forum. Pursuant to their agreements, Schroder
Advisors and Forum provide certain management and administrative services
necessary for the Fund's operations, other than the investment management and
administrative services provided to the Fund by SCMI pursuant to the Investment
Advisory Contract. Schroder Advisors is a wholly-owned subsidiary of SCMI. For
these services, Schroder Advisors receives from the Fund a fee, payable monthly,
at the annual rate of 0.10% of the average daily net assets of the Fund.
Payment for Forum's services is made by Schroder Advisors and is not a separate
expense of the Fund. Schroder Advisors and Forum provide similar services to
the Portfolio, for which Schroder Advisors is separately compensated at an
annual rate of 0.15% of the average daily net assets of the Portfolio, a portion
of which Forum receives for its services with respect to the Portfolio.

CODE OF ETHICS

DISTRIBUTION

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<PAGE>

of the maximum amount (0.50% per annum of the Fund's average daily net assets)
payable under the Plan in that year. Costs or expenses in excess of the 0.50%
per annum limit may not be carried forward to future years. Salary expense of
salesmen who are responsible for marketing shares of the Fund may be allocated
to various portfolios of the Trust that have adopted a Plan similar to that of
the Fund on the basis of average net assets; travel expense may be allocated to,
or divided among, the particular portfolios of the Trust for which it is
incurred. The Fund has no intention of implementing the Distribution Plan with
respect to institutional investors, and in any event will make no payments under
the Distribution Plan until the Board specifically further so authorizes.

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, SCMI
may consider sales of shares of the Fund as a factor in the selection of broker-
dealers to execute portfolio transactions for the Fund.

Although the Portfolio does not currently engage in directed brokerage
arrangements to pay expenses, it may do so in the future. These arrangements,
whereby brokers executing the Portfolio's portfolio transactions would agree to
pay designated expenses of the Portfolio if brokerage commissions generated by
the Portfolio reached certain levels, might reduce these expenses. As
anticipated, these arrangements would not materially increase the brokerage
commissions paid by the Portfolio. Because brokerage commissions are not
reflected in Fund expenses, however, certain expenses might not be fully set
forth in the Fund's fee table, per share table, and financial statements, and
might therefore appear lower than actual expenses incurred.

SERVICE ORGANIZATIONS

Various banks, trust companies, broker-dealers (other than Forum) or other
financial organizations (collectively, "Service Organizations") also may provide
administrative services for the Fund, such as maintaining shareholder accounts
and records. In addition to and distinct from payments authorized under the
Rule 12b-1 Plan, the Fund is generally authorized to pay fees to Service
Organizations (which may vary depending upon the services provided) in amounts
up to an annual rate of 0.25% of the daily net asset value of the Fund's shares
owned by shareholders with whom the Service Organization has a servicing
relationship. The Fund has no intention of making any such payments to service
organizations with respect to accounts of institutional investors, and in any
event will make no such payments until the Board specifically further so
authorizes.

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<PAGE>

OTHER EXPENSES

The Fund bears all costs of its operations other than expenses specifically
assumed by Schroder Advisors or SCMI, including those expenses it indirectly
bears through its investment in the Portfolio. The costs borne by the Fund
include legal and accounting expenses; Trustees' fees and expenses; insurance
premiums, custodian and transfer agent fees and expenses; brokerage fees and
expenses; expenses of registering and qualifying the Fund's shares for sale with
the SEC and with various state securities commissions; expenses of obtaining
quotations on portfolio securities and pricing of the Fund's shares; a portion
of the expenses of maintaining the Fund's legal existence and of shareholders'
meetings; and expenses of preparation and distribution to existing shareholders
of reports, proxies and prospectuses. See "Management" in the SAI. Trust
expenses directly attributed to the Fund are charged to the Fund; other expenses
are allocated proportionately among all the portfolios of the Trust in relation
to the net assets of each portfolio. See "Management - Fees and Expenses" in
the SAI.

SCMI and Schroder Advisors have voluntarily undertaken to assume certain
expenses of the Fund (or waive their respective fees), which applies to fees and
expenses paid by the Fund as well as fees and expenses paid by the Portfolio of
which the Fund bears its pro rata portion. This undertaking is designed to
place a maximum limit on Fund expenses (including all fees to be paid to SCMI
and Schroder Advisors but excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses and extraordinary expenses) of 1.60% of the
average daily net assets the Fund. This expense limitation cannot be withdrawn
except by a majority vote of the Independent Trustees. If expense
reimbursements are required, they will be made on a monthly basis. SCMI will
reimburse the Fund for four-fifths of the amount required and Schroder Advisors,
the remaining one-fifth; provided, however, that neither SCMI nor Schroder
Advisors will be required to make any reimbursements or waive any fees in excess
of the fees payable to them by the Fund on a monthly basis for their respective
advisory and administrative services. This undertaking to reimburse or waive
expenses supplements any applicable state expense limitation.

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<PAGE>

PORTFOLIO TRANSACTIONS

The Investment Advisory Contract authorizes and directs SCMI to place orders for
the purchase and sale of the Portfolio's investments with brokers and dealers
selected by SCMI in its discretion and to seek "best execution" of such
portfolio transactions. The Portfolio may pay higher than the lowest available
commission rates when SCMI believes it is reasonable to do so in light of the
value of the brokerage and research services provided by the broker effecting
the transaction. It should be noted that costs associated with transactions in
foreign securities are generally higher than with transactions in United States
securities. However, the Portfolio will seek to achieve the best net results in
effecting such transactions.

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

INVESTMENT IN THE FUND

PURCHASE OF SHARES

The Fund offers its shares at their next determined net asset value, subject to
the purchase charge described below, after receipt of a Purchase Order at the
address set forth below without any sales charge as an investment vehicle for
individuals, institutions, corporations and fiduciaries. The net asset value
per share of the Fund is calculated at 4:00 p.m. New York City time. See "Net
Asset Value." Prospectuses, sales material and applications can be obtained
from the Trust or Forum Financial Corp., the Fund's Transfer Agent. See "Other
Information - Shareholder Inquiries."

The minimum initial investment is $250,000. The Fund and the Administrator each
reserves the right to waive the minimum investment requirement. All purchase
payments are invested in full and fractional shares. The Fund is authorized to
reject any purchase order.

Initial and subsequent purchases may be made by mailing a check (in U.S.
dollars), payable to Schroder Emerging Markets Fund Institutional Portfolio, to:

Schroder Emerging Markets Fund Institutional Portfolio
P.O. Box 446

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<PAGE>

Portland, Maine 04112

In the case of an initial purchase, the check must be accompanied by a completed
Purchase Application.

Investors wishing to purchase shares through their accounts at a Service
Organization should contact that organization directly for appropriate
instructions.

Service Organizations (on behalf of customers) may transmit purchase payments by
Federal Reserve Bank wire directly to the Fund at the following address:

Chase Manhattan Bank
New York, NY
ABA. No.: 021000021

For Credit To: Forum Financial Corp.
Acct. No.: 910-2-718187
Ref: Schroder Emerging Markets Fund Institutional Portfolio
Account of: (shareholder name)
Account Number: (shareholder account number)

The wire order must specify the name of the Fund, the account name and number,
address, confirmation number, social security and tax identification number
(where applicable), 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.
Where the initial purchase is by wire, an account number will be assigned and a
Purchase Application must be completed and mailed to the Fund. Purchase
requests by wire that are received prior to 4:00 p.m. (New York City Time) will
be processed at the net asset value determined as of that day. Purchase requests
by wire that are received after 4:00 p.m. (New York City Time) will be processed
at the net asset value determined as of the next day that the New York Stock
Exchange is open for trading.

For each shareholder of record, the Fund's Transfer Agent, as the shareholder's
agent, will establish an open account to which all shares purchased are
credited, together with any dividends and capital gain distributions which are
paid in additional shares. Although most shareholders elect not to receive
share certificates, certificates for full shares may be obtained by specific
written request to the Transfer Agent. No certificates are issued for
fractional shares.

PURCHASE CHARGE. Purchases of Fund shares are subject to a purchase charge of
0.50% of the amount invested. This charge is designed to help compensate the
Fund for transaction costs it incurs in accepting investment in the Fund,
including brokerage commissions in acquiring

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<PAGE>

portfolio securities, currency transaction costs and transfer
agent costs, and to protect the interests of shareholders.
This charge, which is not a sales charge, is paid to the Fund,
not to Schroder Advisors or any other entity. The purchase
charge is not assessed on the reinvestment of dividends or
distributions or shares purchased through a subscription in
kind.

RETIREMENT PLANS

Shares of the Fund are offered in connection with tax-deferred
retirement plans. Application forms and further information
about these plans, including applicable fees, are available
upon request. Before investing in the Fund through one of
these plans, an investor should consult his or her tax adviser.

REDEMPTION OF SHARES

Shares of the Fund will be redeemed at their next determined
net asset value, subject to the redemption charge described
below, following receipt by the Fund (at the address set forth
below) of a redemption request in proper form. See "Net Asset
Value." Redemption requests by telephone or wire may be made
between the hours of 9:00 a.m. and 6:00 p.m. (New York City
time) on each day that the New York Stock Exchange is open for
trading. Redemption requests by telephone or wire that are
received prior to 4:00 p.m. (New York City Time) will be
processed at the net asset value determined as of that day.
Redemption requests by telephone or wire that are received
after 4:00 p.m. (New York City Time) will be processed at the
net asset value determined as of the next day that the New
York Stock Exchange is open for trading.

BY TELEPHONE. Redemption requests may be made by telephoning
the Transfer Agent at 800-344-8332. Shareholders must provide
the Transfer Agent with the shareholder's account number, the
exact name in which the shares are registered and some
additional form of identification such as a password. A
redemption by telephone may be made only if the telephone
redemption privilege option has been elected on the Account
Registration Form. In an effort to prevent unauthorized or
fraudulent redemption requests by telephone, reasonable
procedures will be followed by Forum to confirm that such
instructions are genuine. If such procedures are followed,
neither Forum nor the Trust will be liable for any losses due
to unauthorized or fraudulent redemption requests. Shares for
which certificates have been issued may not be redeemed by
telephone. In times of drastic economic or market changes, it
may be difficult to make redemptions by telephone. If a
shareholder cannot reach the Transfer Agent by telephone,
redemption requests may be mailed or hand-delivered to the
Transfer Agent.

WRITTEN REQUESTS. Redemptions may be made by letter to the
Fund, specifying the dollar amount or number of shares to be
redeemed and account number, and sent to:

Schroder Emerging Markets Fund Institutional Portfolio
P.O. Box 446
Portland, Maine 04112

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<PAGE>

The letter must be signed in exactly the same way the account
is registered. If there is more than one owner of the shares,
all must sign. In certain cases, signatures must be
guaranteed by an institution acceptable to the Transfer Agent.
Such institutions may include certain banks, broker-dealers
(including municipal and government securities brokers and
dealers), credit unions, securities exchanges and
associations, clearing agencies and savings associations.
Signature guarantees by notaries public are not acceptable.
Further documentation, such as copies of corporate resolutions
and instruments of authority, may be requested from
corporations, administrators, executors, personal
representatives, directors or custodians to evidence the
authority of the person or entity making the redemption
request. Questions concerning the need for signature
guarantees or documentation of authority should be directed to
the Transfer Agent, at the address set forth for the Fund
under "Purchase of Shares" or by calling the Account
Information telephone number appearing on the cover of this
Prospectus.

If shares to be redeemed are held in certificate form, the
certificates must be enclosed with the letter and the
assignment form on the back of the certificates, or an
assignment separate from the certificates (but accompanied by
the certificates), must be signed by all owners in exactly the
same way the name or names are written on the face of the
certificates. Requirements for signature guarantees and/or
documentation of authority as described above could also
apply. For your protection, the Fund suggests that
certificates be sent by registered mail.

Checks for redemption proceeds will normally be mailed within
seven days but will not be mailed until all checks in payment
for the purchase of the shares to be redeemed have been
cleared, which may take up to 15 calendar days from purchase
date. Unless other instructions are given in proper form, a
check for the proceeds of a redemption will be sent to the
shareholder's address of record.

The Fund may suspend the right of redemption during any period
when (i) trading on the New York Stock Exchange is restricted
or that Exchange is closed, other than customary weekend and
holiday closings, (ii) the SEC has by order permitted such
suspension, or (iii) an emergency, as defined by rules of the
SEC, exists making disposal of portfolio investments or
determination of the value of the net assets of the Fund not
reasonably practicable.

Proceeds of redemptions normally are paid in cash. If the
Board should determine that it would be detrimental to the
best interests of the remaining shareholders of the Fund to
make payment wholly or partly in cash, the Fund may pay the
redemption price in whole or in part by an in-kind
distribution of securities from the portfolio of the Fund.
The Fund has filed a formal election with the SEC pursuant to
which the Fund will redeem shares solely in cash up to the
lesser of $250,000 or 1% of net assets during any 90-day
period for any one shareholder of record. It is the Fund's
policy, however, to redeem shares solely in cash up to the
greater of $5,000,000 or 5% of net assets during any 90-day
period. This policy may involve the sale of certain portfolio
securities before the time the investment adviser might
otherwise deem appropriate and therefore may reduce the
diversification and liquidity of the Fund's portfolio. For
further information about redemption in kind, see "Redemption
in Kind" in the SAI.

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<PAGE>

The proceeds of a redemption may be more or less than the
amount invested and, therefore, a redemption may result in a
gain or loss for Federal income tax purposes.

Due to the relatively high cost of maintaining smaller
accounts, the Fund reserves the right to redeem, upon not less
than 30 days' notice, shares in any account if at any time the
total investment does not have a value of at least $2,000,
unless the value of the account shall have fallen below such
amount solely as a result of market activity. However, an
affected shareholder would be allowed to make an additional
investment prior to the date fixed for redemption to avoid
liquidation of the account.

REDEMPTION CHARGE. Redemptions of Fund shares are subject to
a redemption charge of 0.50% of the net asset value of the
shares redeemed. This charge is designed to help compensate
the Fund for the transaction costs it incurs in redeeming Fund
shares, including brokerage commissions in selling portfolio
securities, currency transaction costs and transfer agent
costs, and to protect the interests of shareholders. This
charge, which is not a sales charge, is paid to the Fund, not
to Schroder Advisors or any other entity. The redemption
charge is not assessed on shares acquired through the
reinvestment of dividends or distributions or on redemptions
in kind. For purposes of computing the redemption charge,
redemptions by a shareholder are deemed to be made in the
following order: (i) shares purchased through the reinvestment
of dividends and distributions and (ii) shares for which the
redemption charge is applicable, on a first purchased, first
redeemed basis.

NET ASSET VALUE

The net asset value per share of the Fund is calculated at
4:00 p.m. New York City time, Monday through Friday, on each
day that the New York Stock Exchange is open for trading
(which excludes the following national business holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas
Day). Net asset value per share is calculated by subtracting
the Fund's liabilities from the aggregate value of its assets
and dividing the remainder by the number of shares of the Fund
outstanding.

The Board has established procedures for the valuation of the
Fund's securities. In general, those valuations are based on
market value, with special provisions being made for
securities which do not have readily available market
quotations, short-term debt securities and Hedging
Instruments. Trading in securities on some non-U.S. exchanges
and over-the-counter markets may not occur every day that the
Fund calculates its net asset value. Furthermore, trading in
some non-U.S. markets may take place on days on which the Fund
does not calculate its net asset value. If events materially
affecting the value of foreign securities occur between the
time when their price is determined and the time when net
asset value is calculated, such securities will be valued at
far value as determined in good faith by the Board. Portfolio
securities listed on recognized stock exchanges are valued at
the last reported trade price, prior to the time when the
assets are valued, on the exchange on which the securities are
principally listed. Listed securities traded on recognized
stock exchanges where last trade prices are not available are
valued at mid-market prices. Securities traded in
over-the-counter markets, or listed securities

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<PAGE>

for which no trade is reported on the valuation date, are
valued at the most recent reported mid-market price. For
further information, see "Determination of Net Asset Value Per
Share" in the SAI.

All assets or liabilities denominated in non-U.S. 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.

DIVIDENDS, DISTRIBUTIONS AND TAXES

THE FUND. The Fund intends to comply with the provisions of
Subchapter M of the Code, applicable to regulated investment
companies. As a regulated investment company, the Fund will
distribute substantially all of its "investment company
taxable income" and its "net capital gains" at least annually,
as defined in the Code, and, therefore, the Fund will not be
subject to Federal income tax to the extent it distributes
such income and capital gains in the manner required under the
Code.

The Fund intends to declare and pay as a dividend
substantially all of its net investment income annually and to
distribute any net realized long-term capital gains at least
annually. Dividend and capital gains distributions will be
reinvested automatically in additional shares of the Fund at
net asset value unless the shareholder has notified the Fund
in his Purchase Application or otherwise in writing of his
election to receive distributions in cash.

Dividend and capital gain distributions are made on a
per-share basis. After every distribution the value of a
share declines by the amount of the distribution. Purchases
made shortly before a distribution include in the purchase
price the amount of the distribution which will be returned to
the investor in the form of a taxable dividend or capital gain
distribution.

Earnings of the Fund not distributed on a timely basis in
accordance with a calendar year distribution requirement will
subject the Fund to a nondeductible 4% excise tax. To prevent
imposition of this tax, the Fund intends to comply with this
distribution requirement. A distribution will be treated as
paid during the calendar year if it is declared by the Fund in
October, November or December of that year with a record date
in such month and paid by the Fund during January of the
following year. Such distributions will be taxable to
shareholders in the calendar year in which declared rather
than the calendar year in which received.

For Federal income tax purposes, distribution of the Fund's
investment company taxable income (including net short-term
capital gains) will be taxable to shareholders at ordinary
income rates whether they are invested in additional shares or
received in cash. Distributions of any net capital gains
designated by the Fund as capital gain dividends will be
taxable as long-term capital gain, regardless of how long a
shareholder has held the shares and whether they are invested
in additional shares or received in cash. Each year the Trust
will notify Fund shareholders of the tax status of dividends
and distributions.

Ordinary income dividends paid by the Fund to shareholders who
are non-resident aliens will be subject to a 30% United States
withholding tax under existing provisions of the Code

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<PAGE>

applicable to foreign individuals and entities unless a
reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Non-resident
shareholders are urged to consult their own tax advisers
concerning the applicability of the United States withholding
tax.

Dividends and interest received, and, in certain
circumstances, capital gains realized, by the Fund may give
rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. If more
than 50% in value of the Fund's total assets at the close of
its taxable year consists of securities of foreign
corporations, the Fund will be eligible, and intends, to file
an election with the Internal Revenue Service ("IRS") pursuant
to which shareholders of the Fund will be required to include
their proportionate share of such withholding taxes in their
United States income tax returns as gross income, treat such
proportionate share as taxes paid by them, and, subject to
certain limitations, deduct such proportionate share in
computing their taxable incomes or, alternatively, use them as
foreign tax credits against their United States income taxes.
No deductions for foreign taxes, however, may be claimed by
noncorporate shareholders who do not itemize deductions. A
shareholder that is a nonresident alien individual or a
foreign corporation may be subject to United States
withholding tax on the income resulting from the Fund's
election described in this paragraph but may not be able to
claim a credit or deduction against such United States tax for
the foreign taxes treated as having been paid by such
shareholder. The Fund will report annually to its
shareholders the amount per share of such withholding taxes.

Due to investment laws in certain emerging market countries,
it is anticipated that the Fund's investments in equity
securities in such countries will consist primarily of shares
of investment companies (or similar investment entities)
organized under foreign law or of ownership interests in
special accounts, trusts or partnerships. If the Fund
purchases shares of an investment company (or similar
investment entity) organized under foreign law, the Fund will
be treated as owning shares in a passive foreign investment
company ("PFIC") for United States Federal income tax
purposes. The Fund may be subject to United States Federal
income tax, and an additional tax in the nature of interest,
on a portion of distributions from such company and on gain
from the disposition of such shares (collectively referred to
as "excess distributions"), even if such excess distributions
are paid by the Fund as a dividend to its shareholders. The
Fund may be eligible to make an election with respect to
certain PFICs in which it owns shares that will allow it to
avoid the taxes on excess distributions. However, such
election may cause the Fund to recognize income in a
particular year in excess of the distribution received from
such PFICs.

Under Code Section 988, foreign currency gains or losses from
forward contracts, from futures contracts that are not
"regulated futures contracts," and from unlisted options will
generally be treated as ordinary income or loss. In certain
circumstances the Fund may elect capital gain or loss
treatment for such transactions. In general, however, Code
Section 988 gains or losses will increase or decrease the
amount of the Fund's investment company taxable income
available to be distributed to shareholders as ordinary
income. Additionally, if Code Section 988 losses exceed other
investment company taxable income during a taxable year, the
Fund would not be

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<PAGE>

able to make any ordinary dividend distributions, and any
distributions made before the losses were realized but in the
same taxable year would be recharacterized as a return of the
capital to shareholders, thereby reducing each shareholder's
basis in his Fund shares.

The Trust will be required to withhold Federal income tax at a
rate of 31% ("backup withholding") from dividends paid to
non-corporate shareholders if (a) the payee fails to furnish
the payee's correct taxpayer identification number or social
security number, (b) the IRS notifies the Trust that the payee
has failed to report properly certain interest and dividend
income to the IRS and to respond to notices to that effect or
(c) when required to do so, the payee fails to certify that he
is not subject to backup withholding.

Depending on the residence of the shareholder for tax
purposes, distributions also may be subject to state and local
taxes. Shareholders should consult their own tax advisers as
to the Federal, foreign, state and local tax consequences of
ownership of shares of the Fund in their particular
circumstances.

THE PORTFOLIO. The Portfolio is not required to pay Federal
income taxes on its net investment income and capital gain, as
it is treated as a partnership for Federal income tax
purposes. All interest, dividends and gains and losses of the
Portfolio are deemed to have been "passed through" to the Fund
in proportion to its holdings of the Portfolio, regardless of
whether such interest, dividends or gains have been
distributed by the Portfolio or losses have been realized by
the Portfolio. Investment income received by the Fund from
sources within foreign countries may be subject to foreign
income or other taxes. The Fund intends to elect, if eligible
to do so, to permit its shareholders to take a credit (or a
deduction) for foreign income and other taxes paid by the
Portfolio. Shareholders of the Fund will be notified of their
share of those taxes and will be required to include that
amount as income. In that event, the shareholder may be
entitled to claim a credit or deduction for those taxes.

OTHER INFORMATION

CAPITALIZATION AND VOTING

The Trust was originally organized as a Maryland corporation
on July 30, 1969 and on January 9, 1996 was reorganized as a
Delaware business trust. The Trust was formerly known as
"Schroder Capital Funds, Inc." The Trust is registered as an
open-end management investment company under the Act and has
an unlimited number of authorized shares of beneficial
interest. The Board may, without shareholder approval, divide
the authorized shares into an unlimited number of separate
portfolios or series (such as the Fund) and may divide
portfolios or series into classes of shares, and the costs of
doing so will be borne by the Trust. The Trust currently
consists of five separate portfolios, each of which has
separate investment objectives and policies, and five classes,
one of which pertains to the Fund.

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<PAGE>

50% of the shares voting for the election of Trustees can
elect 100% of the Trustees if they choose to do so. A
shareholder is entitled to one vote for each full share held
(and a fractional vote for each fractional share held), then
standing in his name on the books of the Trust. On matters
requiring shareholder approval, shareholders are entitled to
vote only with respect to matters which affect the interest of
the class they hold, except as otherwise required by
applicable law.

There will normally be no meetings of shareholders to elect
Trustees unless and until such time as less than a majority of
the Trustees holding office have been elected by shareholders.
However, the holders of not less than a majority of the
outstanding shares of the Trust may remove any person serving
as a Director and the Board will call a special meeting of
shareholders to consider removal of one or more Trustees if
requested in writing to do so by the holders of not less than
10% of the outstanding shares of the Trust.

As of December 22, 1995, the Robert Wood Johnson Foundation may
be deemed to control the Fund for purposes of the Act.

From time to time, certain shareholders may own a large
percentage of the shares of a Fund. Accordingly, those
shareholders may be able to greatly affect (if not determine)
the outcome of a shareholder vote.

REPORTS

The Trust sends to each shareholder of the Fund a semi-annual
report and an audited annual report, each of which includes a
list of the investment securities held by the Fund.

PERFORMANCE INFORMATION

The Fund from time to time may include quotations of its
average annual total return in advertisements or reports to
shareholders or prospective investors. Quotations of average
annual total return for the Fund will be expressed in terms of
the average annual compounded rate of return of a hypothetical
investment in the Fund over a period of 1, 5 and 10 years (up
to the life of the Fund). Average annual total return
quotations reflect the deduction of a proportional share of
Fund expenses (on an annual basis), and assume that all
dividends and distributions are reinvested when paid.

Performance information for the Fund may be compared to
various unmanaged securities indices, groups of mutual funds
tracked by mutual fund ratings services, or other general
economic indicators. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect
deductions for administrative and management costs and
expenses.

Performance information for the Fund represents only the
performance of a hypothetical investment in the Fund during
the particular time period on which the calculations are
based. Performance information should be considered in light
of the Fund's investment objectives and policies,
characteristics and quality of the Fund's portfolio, and the
market conditions during the given time period, and should not
be considered as a representation of what may be achieved in
the future. For a description of the methods used to
determine total return for the Fund, see the SAI.

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<PAGE>

CUSTODIAN AND TRANSFER AGENT

Securities of the Fund will be held by The Chase Manhattan
Bank, N.A. as Custodian for the Fund. Forum Financial Corp.
serves as the Fund's Transfer and Dividend Disbursing Agent.
The Transfer Agent maintains an account for each shareholder
of the Trust (unless such accounts are maintained by
sub-transfer agents), performs other transfer agency functions
and acts as dividend disbursing agent for the Trust. In
addition, under a separate agreement, Forum Financial Corp.
performs portfolio accounting services for the Fund, including
determination of the Fund's net asset value.

SHAREHOLDER INQUIRIES

Inquiries about the Fund's investment policies and past
performance should be directed to:

Schroder Emerging Markets Fund Institutional Portfolio
P.O. Box 446
Portland, Maine 04112

Information about specific stockholder accounts may be
obtained from the Transfer Agent by calling (800) 344-8332.

FUND STRUCTURE

The Fund invests all of its assets in the Portfolio, a
separate series of Core Trust, a business trust organized
under the laws of the State of Delaware in September 1995.
Core Trust is registered under the Act as an open-end
management investment company and currently has two separate
portfolios. The assets of the Portfolio, a diversified
portfolio, belong only to, and the liabilities of the
Portfolio are borne solely by, the Portfolio and no other
portfolio of Core Trust.

THE PORTFOLIO. The Fund seeks to achieve its investment
objective by investing all of its investable assets in the
Portfolio, which has the same investment objective and
policies as the Fund. Accordingly, the Portfolio directly
acquires its own securities and the Fund acquires an indirect
interest in those securities. The investment objective and
fundamental investment policies of the Fund and the Portfolio
can be changed only with shareholder approval. See
"Prospectus Summary," "The Fund," and "Management of the Fund"
for a complete description of the Portfolio's investment
objective, policies, restrictions, management, and expenses.

The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this
Prospectus, the Fund is the only institutional investor that
has invested all of its assets in the Portfolio. The
Portfolio may permit other investment companies or
institutional investors to invest in it. All investors in the
Portfolio will invest on the same terms and conditions as the
Fund and will pay a proportionate share of the Portfolio's
expenses.

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<PAGE>

The Portfolio normally will not hold meetings of investors
except as required by the Act. Each investor in the Portfolio
will be entitled to vote in proportion to its relative
beneficial interest in the Portfolio. On most issues subject
to a vote of investors, as required by the Act and other
applicable law, the Fund will solicit proxies from
shareholders of the Fund and will vote its interest in the
Portfolio in proportion to the votes cast by its shareholders.
If there are other investors in the Portfolio, there can be
no assurance that any issue that receives a majority of the
votes cast by Fund shareholders will receive a majority of
votes cast by all investors in the Portfolio; indeed, if other
investors hold a majority interest in the Portfolio, they
could hold have voting control of the Portfolio.

The Portfolio will not sell its shares directly to members of
the general public. Another investor in the Portfolio, such
as an investment company, that might sell its shares to
members of the general public would not be required to sell
its shares at the same public offering price as the Fund,
could have different advisory and other fees and expenses than
the Fund. Therefore, Fund shareholders may have different
returns than shareholders in another investment company that
invests exclusively in the Portfolio. There is currently no
such other investment company that offers its shares to
members of the general public. Information regarding any such
funds in the future will be available from Core Trust by
calling (207) 879-8903.

CERTAIN RISKS OF INVESTING IN THE PORTFOLIO. The Fund's
investment in the Portfolio may be affected by the actions of
other large investors in the Portfolio, if any. For example,
if the Portfolio had a large investor other than the Fund that
redeemed its interest in the Portfolio, the Portfolio's
remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby
producing lower returns.

The Fund may withdraw its entire investment from the Portfolio
at any time, if the Board determines that it is in the best
interests of the Fund and its shareholders to do so. The Fund
might withdraw, for example, if there were other investors in
the Portfolio with power to, and who did by a vote of the
shareholders of all investors (including the Fund), change the
investment objective or policies of the Portfolio in a manner
not acceptable to the Board. A withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a
cash distribution) by the Portfolio. That distribution could
result in a less diversified portfolio of investments for the
Fund and could affect adversely the liquidity of the Fund's
portfolio. If the Fund decided to convert those securities to
cash, it usually would incur brokerage fees or other
transaction costs. If the Fund withdrew its investment from
the Portfolio, the Board would consider what action might be
taken, including the management of the Fund's assets in
accordance with its investment objective and policies by the
Adviser and Schroder, the Fund's investment adviser and
subadviser, respectively, or the investment of all of the
Fund's investable assets in another pooled investment entity
having substantially the same investment objective as the
Fund. The inability of the Fund to find a suitable
replacement investment, in the event the Board decided not to
permit the Adviser and Schroder to manage the Fund's assets,
could have a significant impact on shareholders of the Fund.

Each investor in the Portfolio, including the Fund, will be
liable for all obligations of the Portfolio, but not any other
portfolio of Core Trust. The risk to an investor in the
Portfolio of

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<PAGE>

incurring financial loss on account of such liability,
however, would be limited to circumstances in which the
Portfolio was unable to meet its obligations. Upon
liquidation of the Portfolio, investors would be entitled to
share pro rata in the net assets of the Portfolio available
for distribution to investors.

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<PAGE>

SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO

INVESTMENT ADVISER
Schroder Capital Management International Inc.
787 Seventh Avenue
New York, New York 10019

ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue
New York, New York 10019

SUB-ADMINISTRATOR
Forum Financial Services, Inc.
61 Broadway
New York, New York 10006

CUSTODIAN
The Chase Manhattan Bank, N.A.
Global Custody Division
Woolgate House, Coleman Street
London, EC2P 2HD
United Kingdom

TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Financial Corp.
P.O. Box 446
Portland, Maine 04112

COUNSEL
Jacobs Persinger & Parker
77 Water Street
New York, New York 10005

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109

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<PAGE>

_____________

TABLE OF CONTENTS
_____________

PROSPECTUS SUMMARY

FINANCIAL HIGHLIGHTS

INVESTMENT OBJECTIVE AND POLICIES

Investment Objective
Investment Policies
Investment Restrictions
Special Risk Considerations
Additional Investment Policies

MANAGEMENT OF THE FUND
Board of Trustees
Investment Adviser and Portfolio Manager
Administrative Services
Code of Ethics
Distribution
Service Organizations
Other Expenses
Portfolio Transactions

INVESTMENT IN THE FUND
Purchase of Shares
Retirement Plans
Redemption of Shares
Net Asset Value

DIVIDENDS, DISTRIBUTIONS AND TAXES

OTHER INFORMATION
Capitalization and Voting
Reports
Performance Information
Custodian and Transfer Agent
Shareholder Inquiries

PROSPECTUS
January 9, 1996

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<PAGE>

INTERNATIONAL EQUITY FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101

______________________________________________________________________________

GENERAL INFORMATION: (207) 879 8903
ACCOUNT INFORMATION: (800) 344 8332
FAX: (207) 879 6206
______________________________________________________________________________

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. - INVESTMENT ADVISER
SCHRODER FUND ADVISORS INC. - ADMINISTRATOR AND DISTRIBUTOR

STATEMENT OF ADDITIONAL INFORMATION

International Equity Fund (the "Fund") is a diversified, separately-managed
portfolio of Schroder Capital Funds (Delaware) (the "Trust"), an open-end
management investment company currently consisting of five separate portfolios,
each of which has different investment objectives and policies.

The Fund's investment objective is capital appreciation through investment in
securities markets outside the United States. All international investments
involve special risks in addition to those risks associated with investments in
general, and there can be no assurance that the Fund's objective will be
achieved. The Fund currently seeks to achieve its investment objective by
holding, as its only investment securities, the securities of International
Equity Fund (the "Portfolio"), a separate portfolio of a registered open-end
management investment company ("Core Trust").

Shares of the Fund are offered for sale at net asset value with no sales charge
as an investment vehicle for individuals, institutions, corporations and
fiduciaries.

This Statement of Additional Information ("SAI") is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Prospectus for
the Fund dated January 9, 1996 (the "Prospectus"). This SAI contains additional
and more detailed information than that set forth in the Prospectus and should
be read in conjunction with the Prospectus. The Prospectus and SAI for the Fund
may be obtained without charge by writing or calling the Fund at the address and
information numbers printed above.

January 9, 1996

<PAGE>

TABLE OF CONTENTS

INTRODUCTION

INVESTMENT POLICIES
Introduction
Foreign Securities
Depository Receipts
Use of Forward Contracts in Foreign
Exchange Transactions
U.S. Government Securities
Bank Obligations
Short-Term Debt Securities
Repurchase Agreements

INVESTMENT RESTRICTIONS

MANAGEMENT
Officers and Trustees
Investment Adviser
Administrative Services
Distribution of Fund Shares
Service Organizations
Portfolio Accounting
Fees and Expenses

PORTFOLIO TRANSACTIONS
Investment Decisions
Brokerage and Research Services

ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION
Redemption in Kind

TAXATION

OTHER INFORMATION
Organization
Capitalization and Voting
Principal Shareholders
Custody of Fund Assets
Transfer Agent and Dividend Disbursing Agent
Performance Information
Independent Accountants
Counsel
Registration Statement

FINANCIAL STATEMENTS

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<PAGE>

INTRODUCTION

The Fund was originally organized in 1985 as a separate portfolio of Fund Source
("Fund Source"), a Massachusetts business trust. Pursuant to a reorganization
(the "Reorganization") which became effective August 1, 1989, all the assets and
liabilities of such portfolio were transferred to the Trust in exchange for
shares of common stock of the Trust classified as the "International Equity
Fund." Such shares were distributed to the former shareholders of such
portfolio of Fund Source and it thereby became a portfolio of the Trust.
References in this SAI to the Fund with respect to periods prior to the
effective date of the Reorganization mean as it was constituted as a portfolio
of Fund Source.

INVESTMENT POLICIES

INTRODUCTION

The following information supplements the discussion found under "Investment
Objectives" and "Investment Policies" in the Prospectus. The Fund currently
seeks to achieve its investment objective by investing all of its investment
assets in the Portfolio, which has the same investment objective and policies.
As the Fund has the same investment policies as the Portfolio and currently
invests all of its assets in the Portfolio, investment policies are discussed
with respect to the Portfolio only.

The Portfolio will normally invest at least 65% of its total assets in equity
securities of companies domiciled outside the United States, including common
and preferred stock, convertible securities, depository receipts, and warrants
or rights to purchase such equity securities. Investments also may be made in
debt obligations of foreign governments, corporations and international or
supranational organizations (and their agencies or instrumentalities).

For temporary defensive purposes, to accumulate cash for investments, or to meet
anticipated redemptions, the Portfolio may invest in (or enter into repurchase
agreements with banks and broker dealers with respect to) short-term debt
securities, including Treasury bills and other U.S. Government securities, and
certificates of deposit and bankers' acceptances of U.S. banks. The Portfolio
may also hold cash and time deposits in foreign banks, denominated in any major
foreign currency.

In anticipation of foreign exchange requirements and to avoid losses due to
adverse movements in foreign currency exchange rates, the Portfolio also may
enter into forward contracts to purchase and sell foreign currencies.

FOREIGN SECURITIES

Investment in the securities of foreign issuers may involve risks in addition to
those normally associated with investments in the securities of U.S. issuers.
There may be less publicly available information about foreign issuers than is
available for U.S. issuers, and foreign auditing, accounting and financial
reporting practices may differ from U.S. practices. Foreign securities markets
may be less active than U.S. markets, trading may be thin and consequently
securities prices may be more volatile. The Portfolio's investment adviser,
Schroder Capital Management International, Inc. ("SCMI" or "Adviser") will, in
general, invest only in securities of companies and governments of countries
which, in its judgment, are both politically and economically stable.
Nevertheless, all foreign investments are subject to risks of foreign political
and economic instability, adverse movements in foreign exchange rates, the
imposition or tightening of exchange controls or other limitations on the
repatriation of foreign capital and changes in foreign governmental attitudes
toward private investment, possibly leading to nationalization, increased
taxation, or confiscation of Portfolio assets.

DEPOSITORY RECEIPTS

Investments in securities of foreign issuers may on occasion be in the form of
sponsored or unsponsored American Depository Receipts ("ADRs") or European
Depository Receipts ("EDRs"), or other similar securities convertible into
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued in the United States by a bank or

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<PAGE>

trust company, evidencing ownership of the underlying securities. EDRs are
typically issued in Europe under a similar arrangement. Generally, ADRs, in
registered form, are designed for use in the U.S. securities markets and EDRs,
in bearer form, are designed for use in European securities markets.
Unsponsored ADRs may be created without the participation of the foreign issuer.
Holders of these ADRs generally bear all the costs of the ADR facility, whereas
foreign issuers typically bear certain costs in a sponsored ADR. The bank or
trust company depository of an unsponsored ADR may be under no obligation to
distribute shareholder communications received from the foreign issuer or to
pass through voting rights.

USE OF FORWARD CONTRACTS IN FOREIGN EXCHANGE TRANSACTIONS

To protect or "hedge" against adverse movements in foreign currency exchange
rates, the Portfolio may invest in forward contracts to purchase or sell an
agreed-upon amount of a specified 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. Such 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.
Although such contracts tend to minimize the risk of loss due to a decline in
the value of the currency which is sold, they expose the Portfolio to the risk
that the counterparty is unable to perform and they tend to limit commensurately
any potential gain which might result should the value of such currency increase
during the contract period.

U.S. GOVERNMENT SECURITIES

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

BANK OBLIGATIONS

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

The Portfolio also may invest in certificates of deposit issued by foreign
banks, denominated in any major foreign currency. The Portfolio will invest in
instruments issued by foreign banks which, in the view of SCMI and the Trustees
of Core Trust, are of credit-worthiness and financial stature in their
respective countries comparable to U.S. banks used by the Portfolio.

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

SHORT-TERM DEBT SECURITIES

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<PAGE>

("S&P"), or securities which, if not rated, are issued by companies having an
outstanding debt issue currently rated Aa by Moody's or AAA or AA by S&P. The
rating "P-1" is the highest commercial paper rating assigned by Moody's and the
rating "A-1" is the highest commercial paper ratings assigned by S&P.

REPURCHASE AGREEMENTS

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

INVESTMENT RESTRICTIONS

The following investment restrictions restate or are in addition to those
described under "Investment Restrictions" and "Investment Policies" in the
Prospectus. Under the following restrictions, which, unless otherwise indicated
(see in particular the discussion below regarding restriction c(i)), may not be
changed without the approval of the holders of a majority of the Portfolio's
outstanding shares, the Portfolio will not:

(a) Invest more than 5% of its assets in the securities of any single issuer.
This restriction does not apply to securities issued by the U.S.
Government, its agencies or instrumentalities.

(b) Purchase more than 10% of the voting securities of any one issuer.
Moreover, the Portfolio will not purchase more than 3% of the outstanding
securities of any closed-end investment company. (Any such purchase of
securities issued by a closed-end investment company will otherwise be made
in full compliance with Sections 12(d)(1)(a)(i), (ii) and (iii) of the
Investment Company Act of the 1940 Act.)

(c) Invest in (i) securities which cannot be readily resold to the public
because of legal or contractual restrictions or for which no readily
available market exists, or in (ii) securities of issuers having a record,
together with predecessors, of less than three years of continuous
operations if, regarding all such securities, more than 10% of its total
assets would be invested in such securities.

(d) Invest 25% or more of the value of its total assets in any one industry.

(e) Borrow money, except from banks, for temporary emergency purposes and then
only in an amount not exceeding 5% of the value of the total assets of the
Portfolio.

(f) Pledge, mortgage or hypothecate its assets to an extent greater than 10% of
the value of the total assets of the Portfolio.

(g) Purchase securities on margin or sell short.

(h) Make investments for the purpose of exercising control or management.

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

-5-
<PAGE>

(j) Make loans to other persons, provided that for purposes of this
restriction, entering into repurchase agreements, acquiring corporate debt
securities and investing in U.S. Government obligations, short-term
commercial paper, certificates of deposit and bankers' acceptances shall
not be deemed to be the making of a loan.

(k) Invest in commodities; commodity contracts other than foreign currency
forward contracts; or oil, gas and other mineral resource, lease, or
arbitrage transactions.

(l) Write, purchase or sell options or puts, calls, straddles, spreads, or
combinations thereof.

(m) 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.

(n) Invest in warrants, valued at the lower of cost or market, more than 5% of
the value of the Portfolio's net assets (included within that amount, but
not to exceed 2% of the value of the Portfolio's net assets, may be
warrants which are not listed on the New York or American Stock Exchange.
Warrants acquired by the Portfolio in units or attached to securities may
be deemed to be without value.).

The Portfolio's restrictions on investing in the securities described in (c)(i)
above is an operating (non-fundamental) policy, which may be changed by Core
Trust's Board of Trustees without prior shareholder approval. This policy does
not include restricted securities eligible for resale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933 that are
determined to be liquid by Core Trust's Board of Trustees or SCMI under Board-
approved guidelines. Such guidelines take into account trading activity for
such securities and the availability of reliable pricing information, among
other factors. If there is a lack of trading interest in particular Rule 144A
securities, the Portfolio's holdings of those securities may be illiquid.

MANAGEMENT

OFFICERS AND TRUSTEES

The following information relates to the principal occupations of each Trustee
and executive officer of the Trust during the past five years and shows the
nature of any affiliation with SCMI. Each of these individuals currently serves
in the same capacity for Core Trust.

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

RALPH E. HANSMANN, 40 Wall Street, New York, New York - a Trustee of the Trust -
Private investor; Director, First Eagle Fund of America, Inc.; Director, Verde
Exploration, Ltd.; Trustee Emeritus, Institute for Advanced Study; Trustee and
Treasurer, New York Public Library; Life Trustee, Hamilton College.

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

LAURA E. LUCKYN-MALONE(a), 787 Seventh Avenue, New York, New York - President
and a Trustee of the Trust - Director and Senior Vice President of SCMI since
February 1990; Director and President, Schroder Advisors(b).

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

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

-6-
<PAGE>

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

ROBERT G. DAVY, 787 Seventh Avenue, New York, New York - a Vice-President of the
Trust - First Vice President of SCMI since July, 1992; prior thereto, employed
by various affiliates of Schroders plc(b) in various positions in the investment
research and portfolio management areas since 1986.

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

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

CATHERINE A. MAZZA, 787 Seventh Avenue, New York, New York - a Vice President of
the Trust - Vice President of SCMI since September 1994; prior thereto, held
various marketing positions at Alliance Capital, an investment adviser, since
July 1985.

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

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

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

ROBERT JACKOWITZ, 787 Seventh Avenue, New York, New York - Treasurer of the
Trust - Vice President of SCMI since September 1995 and Assistant Treasurer
since January 1990.

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

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

THOMAS G. SHEEHAN, 2 Portland Square, Portland, Maine - Assistant Treasurer and
Assistant Secretary of the Trust - Counsel, Forum Financial Services, Inc. since
1993; prior thereto, Special Counsel, U.S. Securities and Exchange Commission,
Division of Investment Management, Washington, D.C.

BARBARA GOTTLIEB, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust - [business history].

GERARDO MACHADO, 787 Seventh Avenue, New York, New York - Assistant Secretary of
the Trust - Assistant Portfolio Manager, SCMI.

(a) Interested Trustee of the Trust within the meaning of the 1940 Act.

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<PAGE>

(b) Schroder Advisors is a wholly-owned subsidiary of SCMI, which is a wholly-
owned subsidiary of Schroders Incorporated, which in turn is an indirect,
wholly-owned subsidiary of Schroders plc.

Officers and Trustees who are interested persons of the Trust receive no salary,
fees or compensation from the Fund. Independent Trustees of the Trust receive
an annual fee of $1,000 and a fee of $250 for each meeting of the Board attended
by them except in the case of Mr. Schwab, who receives an annual fee of $1,500
and a fee of $500 for each meeting attended. The Fund has no bonus, profit
sharing, pension or retirement plans.

The following table provides the fees paid to each Trustee of the Trust for the
fiscal year ended October 31, 1995.

Name of Trustee Aggregate Pension or Estimated Total
Compensation Retirement Annual Compensation
From Trust Benefits Benefits Upon From Trust
Accrued As Retirement And Fund
Part of Trust Complex Paid
Expenses To Trustees
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mr. Guernsey $4,000 $0 $0 $4000
Mr. Hansmann 3,500 0 0 3,500
Mr. Howell 4,000 0 0 4,000

Ms. Luckyn-Malone 0 0 0 0
Mr. Michalis 3,000 0 0 3,000
Mr. Schwab 7,000 0 0 7,000

Mr. Smith 0 0 0 0

</TABLE>

As of December 22, 1995, the officers and Trustees of the Trust owned, in the
aggregate, less than 1% of the Fund's outstanding shares.

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

INVESTMENT ADVISER

SCMI, 787 Seventh Avenue, New York, New York, 10019, serves as Adviser to the
Portfolio pursuant to an Investment Advisory Contract dated August 1, 1989.
SCMI is a wholly-owned U.S. subsidiary of Schroders Incorporated, the wholly-
owned U.S. holding company subsidiary of Schroders plc. Schroders plc is the
holding company parent of a large worldwide group of banks and financial service
companies (referred to as the "Schroder Group"), with associated companies and
branch and representative offices located in seventeen countries worldwide. The
Schroder Group specializes in providing investment management services, with
Group funds under management currently in excess of $90 billion.

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

-8-
<PAGE>

discretion. SCMI also furnishes to the Board of Trustees, which has overall
responsibility for the business and affairs of the Trust, periodic reports on
the investment performance of the Fund.

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

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

For its services, the Fund pays SCMI a fee of 0.45% of its average daily net
assets for the first $100 million of the Fund's net assets, 0.40% of the next
$150 million of average daily assets, and 0.35% of the Fund's average daily net
assets in excess of $250 million. For the fiscal years ended October 31, 1993,
1994 and 1995, SCMI received advisory fees of $990,419, $1,665,176 and $893,082,
respectively.

The Fund currently invests all of its assets in the Portfolio. SCMI will not
receive an investment advisory fee with respect to the Fund so long as the Fund
remains completely invested in the Portfolio or any other investment company.
The Fund may withdraw its investment from the Portfolio at any time if the Board
determines that it is in the best interests of the Fund and its shareholders to
do so. Accordingly, the Fund retains SCMI as its investment adviser to manage
the Fund's assets in the event the Fund so withdraws its investment.

The investment advisory contract between Core Trust and SCMI with respect to the
Portfolio is the same in all material respects as the Fund's Investment Advisory
Contract except as to the parties, the circumstances under which fees will be
paid, the jurisdiction whose laws govern the agreement and fees payable
thereunder. For its investment advisory services under the Investment Advisory
Contract with respect to the Portfolio, SCMI receives an advisory fee of 0.45%
of the Portfolio's average daily net assets.

ADMINISTRATIVE SERVICES

On behalf of the Fund, the Trust has entered into an Administrative Services
Contract with Schroder Fund Advisors Inc. ("Schroder Advisors"), 787 Seventh
Avenue, New York, New York 10019. The Trust and Schroder Advisors have entered
into a Sub-Administration Agreement with Forum Financial Services, Inc.
("Forum"). Pursuant to their agreements, Schroder Advisors and Forum provide
certain management and administrative services necessary for the Fund's
operations, other than the investment management and administrative services
provided to the Fund by SCMI pursuant to the Investment Advisory Contract,
including among other things, (i) preparation of shareholder reports and
communications, (ii) regulatory compliance, such as reports to and filings with
the Securities and Exchange Commission and state securities commissions, and
(iii) general supervision of the operation of the Fund, including coordination
of the services performed by the Fund's investment adviser, transfer agent,
custodian, independent accountants, legal counsel and others. Schroder Advisors
is a wholly-owned subsidiary of SCMI, and is a registered broker-dealer
organized to act as administrator and distributor of mutual funds. Effective
July 5, 1995, Schroder Advisors changed its name from Schroder Capital
Distributors Inc.

For these services, Schroder Advisors receives from the Fund a fee, payable
monthly, at the annual rate of 0.20% of the Fund's average daily net assets.
For the fiscal years ended October 31, 1993, 1994 and 1995, Schroder Advisors
received administrative fees of $495,210, $832,588 and $446,541, respectively.
Payment for Forum's services is made by Schroder Advisors and is not a separate
expense of the Fund.

-9-
<PAGE>

The Administrative Services Contract and Sub-Administration Agreement are
terminable with respect to the Fund without penalty, at any time, by vote of a
majority of the Trustees who are not "interested persons" of the Trust and who
have no direct or indirect financial interest in the operation of the Fund's
Distribution Plan or in the Administrative Services Contract or Sub-
Administration Agreement, upon not more than 60 days' written notice to Schroder
Advisors or Forum, as appropriate, or by vote of the holders of a majority of
the shares of the Fund, or, upon 60 days' notice, by Schroder Advisors or Forum.
The Administrative Services Contract will terminate automatically in the event
of its assignment.

The Sub-Administration Agreement is terminable with respect to the Fund without
penalty, at any time, by the Board, Schroder Advisors and the Adviser upon 60
days' written notice to Forum or by Forum upon 60 days' written notice to the
Fund and Schroder Advisors, and the Adviser, as appropriate.

Schroder Advisors and Forum provide similar services to the Portfolio pursuant
to administrative services agreements between Core Trust and each of these
entities, for which Schroder Advisors is separately compensated at an annual
rate of 0.15% of the average daily net assets of the Portfolio, a portion of
which Forum receives for its services with respect to the Portfolio. The fees
paid by the Fund to SCMI and Schroder Advisors therefore may equal up to 0.80%
of the Fund's average daily net assets. The administrative services agreements
are the same in all material respects as the Fund's respective agreements except
as to the parties, the circumstances under which fees will be paid, the fees
payable thereunder and the jurisdiction whose laws govern the agreement.

DISTRIBUTION OF FUND SHARES

Under a Distribution Plan (the "Plan") adopted by the Fund, the Trust will pay
directly or will reimburse the Adviser or a broker-dealer registered under the
Securities Exchange Act of 1934 (the Adviser or such registered broker-dealer,
if so designated, to be a "Distributor" of the Fund shares) monthly (subject to
a limit of 0.50% per annum of the Fund's average daily net assets) for the sum
of (a) advertising expenses including advertising by radio, television,
newspapers, magazines, brochures, sales literature or direct mail, (b) costs of
printing prospectuses and other materials to be given or sent to prospective
investors, (c) expenses of sales employees or agents of the Distributor,
including salary, commissions, travel and related expenses in connection with
the distribution of Fund shares, and (d) payments to broker-dealers (other than
the Distributor) or other organizations (other than banks) for services rendered
in the distribution of the Fund's shares, including payments in amounts based on
the average daily value of Fund shares owned by shareholders in respect of which
the broker-dealer or organization has a distributing relationship. The Fund
will make no payments or reimbursements under the Distribution Plan until the
Board specifically further so authorizes. The Fund will not be liable for
distribution expenditures made by the Distributor in any given year in excess of
the maximum amount (0.50% per annum of the Fund's average daily net assets)
payable under the Plan in that year. Salary expense of salesmen who are
responsible for marketing shares of the Fund may be allocated to various
portfolios of the Trust that have adopted a Plan similar to that of the Fund on
the basis of average net assets; travel expense is allocated to, or divided
among, the particular portfolios of the Trust for which it is incurred. The
Board of Trustees has concluded that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.

The Plan provides that it may not be amended to increase materially the costs
which the Fund may bear pursuant to the Plan without shareholder approval and
that other material amendments of the Plan must be approved by the Board, and by
the Trustees who are neither "interested persons" (as defined in the 1940 Act)
of the Trust nor have any direct or indirect financial interest in the operation
of the Plan or in any related agreement, by vote cast in person at a meeting
called for the purpose of considering such amendments. The selection and
nomination of the Trustees of the Trust has been committed to the discretion of
the Trustees who are not "interested persons" of the Trust. The Plan has been
approved, and is subject to annual approval, by the Board and by the Trustees
who are neither "interested persons" nor have any direct or indirect financial
interest in the operation of the Plan, by vote cast in person at a meeting
called for the purpose of voting on the Plan. The Fund has no intention of
implementing the Distribution Plan with respect to institutional investors, and
in any event will make no payments under the Distribution Plan until the Board
specifically further so authorizes. The Plan is terminable with respect to the
Fund at any time by a vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no

-10-
<PAGE>

direct or indirect financial interest in the operation of the Plan or by vote of
the holders of a majority of the shares of the Fund.

Schroder Advisors acts as Distributor of the Fund's shares.

During the fiscal year ended October 31, 1995, the Fund spent, respectively,
pursuant to the Plan, the following amounts on:

Year Ended
10/31/95
--------

advertising $-0-

printing and mailing of
prospectuses to other
than current shareholders $-0-

compensation to underwriters $-0-

compensation to dealers $-0-

compensation to sales personnel $-0-

interest, carrying or other
financing charge $-0-

SERVICE ORGANIZATIONS

The Fund may also contracts with banks, trust companies, broker-dealers or other
financial organizations ("Service Organizations") to provide certain
administrative services for the Fund. The Fund may pay fees to Service
Organizations (which vary depending upon the services provided) in amounts up to
an annual rate of 0.25% of the daily net asset value of the Fund's shares owned
by shareholders with whom the Service Organization has a servicing relationship.
Services provided by Service Organization may include, among other things:
providing necessary personnel and facilities to establish and maintain certain
shareholder accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds; transmitting and
receiving funds in connection with client orders to purchase or redeem shares;
verifying and guaranteeing client signatures in connection with redemption
orders, transfers among and changes in client-designated accounts; providing
periodic statements showing a client's account balances and, to the extent
practicable, integrating such information with other client transactions;
furnishing periodic and annual statements and confirmations of all purchases and
redemption's of shares in a client's account; transmitting proxy statements,
annual reports, and updating prospectuses and other communications from the Fund
to clients; and such other services as the Fund or a client reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
Neither SCMI nor Schroder Advisors will be a Service Organization or receive
fees for servicing. The Fund will make no such payments to service
organizations until the Board specifically further so authorizes.

-11-
<PAGE>

decisions or interpretations of such laws, as well as changes in either federal
or state statutes or regulations relating to the permissible activities of banks
and their subsidiaries or affiliates, could prevent a bank service organization
from continuing to perform all or a part of its servicing activities. If a bank
were prohibited from so acting, its shareholder clients would be permitted to
remain shareholders of the Fund and alternative means for continuing the
servicing of such shareholders would be sought. In that event, changes in the
operation of the Fund might occur and a shareholder serviced by such a bank
might no longer be able to avail itself of any services then being provided by
the bank. It is not expected that shareholders would suffer any adverse
financial consequences as a result of any of these occurrences.

PORTFOLIO ACCOUNTING

Forum Financial Corp. ("FFC"), an affiliate of Forum, performs portfolio
accounting services for the Fund pursuant to a Fund Accounting Agreement with
the Trust. The Fund Accounting Agreement will continue in effect only if such
continuance is specifically approved at least annually by the Board of Trustees
or by a vote of the shareholders of the Trust and in either case by a majority
of the Trustees who are not parties to the Fund Accounting Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on the Fund Accounting Agreement.

Under its agreement, FFC prepares and maintains books and records of the Fund on
behalf of the Trust that are required to be maintained under the 1940 Act,
calculates the net asset value per share of the Fund and dividends and capital
gain distributions and prepares periodic reports to shareholders and the
Securities and Exchange Commission. For its services, FFC receives from the
Trust with respect to the Fund a fee of $36,000 per year plus, for each class of
the Fund above one, $12,000 per year. FFC is paid an additional $24,000 per
year with respect to global and international funds. In addition, FFC is paid
an additional $12,000 per year with respect to tax-free money market funds and
funds with more than 25% of their total assets invested in asset backed
securities, that have more than 100 security positions or that have a monthly
portfolio turnover rate of 10% or greater.

FFC is required to use its best judgment and efforts in rendering fund
accounting services and is not be liable to the Trust for any action or inaction
in the absence of bad faith, willful misconduct or gross negligence. FFC is not
responsible or liable for any failure or delay in performance of its fund
accounting obligations arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control and the Trust has agreed to
indemnify and hold harmless FFC, its employees, agents, officers and directors
against and from any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising out of or in any way related to FFC's actions
taken or failures to act with respect to a Fund or based, if applicable, upon
information, instructions or requests with respect to a Fund given or made to
FFC by an officer of the Trust duly authorized. This indemnification does not
apply to FFC's actions taken or failures to act in cases of FFC's own bad faith,
willful misconduct or gross negligence.

FFC assumed responsibility for fund accounting on August 15, 1994. Previously,
these services were performed by SCMI. For the fiscal years ended October 31,
1994 and October 31, 1995, the Fund paid fund accounting fees of $114,325 and
$72,000, respectively.

FEES AND EXPENSES

As compensation for the advisory, administrative and management services
rendered to the Fund, SCMI and Schroder Advisors each earn (before waivers)
monthly fees at the following annual rates:

Fee Rate
Portion of average daily value Advisory Administrative
of the Fund's net assets Fee Fee
------------------------ --- ---

100% 0.45% 0.35%

-12-
<PAGE>

SCMI and Schroder Advisors have voluntarily undertaken to assume certain
expenses of the Fund. This undertaking is designed to place a maximum limit on
Fund expenses (including all fees to be paid to SCMI and Schroder Advisors but
excluding taxes, interest, brokerage commissions and other portfolio transaction
expenses and extraordinary expenses) of 0.99% of the Fund's daily net assets.
This expense limitation will apply for the Fund's first year of operations, and
may be withdrawn by a majority vote of the disinterested Trustees. If expense
reimbursements are required, they will be made on a monthly basis. SCMI will
reimburse the Fund for four-fifths of the amount required and Schroder Advisors,
the remaining one-fifth; provided, however, that neither SCMI nor Schroder
Advisors nor will be required to make any reimbursements in excess of the fees
paid to them by the Fund on a monthly basis for their respective administrative
and advisory services. This undertaking to reimburse expenses supplements any
applicable state expense limitation.

Certain of the states in which the shares of the Fund are qualified for sale
impose limitations on the expenses of the Fund. If, in any fiscal year, the
total expenses of the Fund (excluding taxes, interest, expenses under the Plan,
brokerage commissions and other portfolio transaction expenses, other
expenditures which are capitalized in accordance with generally accepted
accounting principles and extraordinary expenses, but including the advisory and
administrative fees) exceed the expense limitations applicable to the Fund
imposed by the securities regulations of any state, SCMI will reimburse the Fund
for four-fifths of the excess, and Schroder Advisors, the remaining one-fifth of
the excess. For the years ended October 31, 1993, 1994, and 1995, no payments
pursuant to these limitations were required.

Except for the expenses paid by SCMI or Schroder Advisors, the Fund bears all
costs of its operations.

PORTFOLIO TRANSACTIONS

INVESTMENT DECISIONS

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

BROKERAGE AND RESEARCH SERVICES

Transactions on U.S. stock exchanges and other agency transactions involve the
payment by the Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the
transaction. Transactions in foreign securities generally involve the payment
of fixed brokerage commissions, which are generally higher than those in the
United States. Since most brokerage transactions for the Fund will be placed
with foreign broker-dealers, certain portfolio transaction costs for the Fund
may be higher than fees for similar transactions executed on U.S. securities
exchanges. There is generally no stated commission in the case of securities
traded in the over-the-counter markets, but the price paid by the Fund usually
includes an undisclosed dealer commission or mark-up. In underwritten
offerings, the price paid by the Fund includes a disclosed, fixed commission or
discount retained by the underwriter or dealer. For the years ended October 31,
1993, 1994, and 1995, the Fund paid a total of $506,672, $653,234 and $584,429,
respectively, in brokerage commissions.

-13-
<PAGE>

portfolio transactions. SCMI places all such orders for the purchase and sale
of portfolio securities and buys and sells securities for the Fund through a
substantial number of brokers and dealers. In so doing, SCMI uses its best
efforts to obtain for the Fund the most favorable price and execution available.
The Fund may, however, pay higher than the lowest available commission rates
when SCMI believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the
transaction. In seeking the most favorable price and execution, SCMI, having in
mind the Fund's best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the transaction, the
nature of the market for the security, the amount of the commission, the timing
of the transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealers involved and the
quality of service rendered by the broker-dealers in other transactions.

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

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

Subject to the general policies regarding allocation of portfolio brokerage as
set forth above, the Board of Trustees of the Trust has authorized SCMI to
employ Schroder Securities Limited and its affiliates (collectively, "Schroder
Securities"), which are affiliated with SCMI, to effect securities transactions
of the Fund on various foreign securities exchanges on which Schroder Securities
has trading privileges, provided certain other conditions are satisfied as
described below.

Payment of brokerage commissions to Schroder Securities for effecting such
transactions is subject to Section 17(e) of the 1940 Act, which requires, among
other things, that commissions for transactions on securities exchanges paid by
a registered investment company to a broker which is an affiliated person of
such investment company or an affiliated person of another person so affiliated
not exceed the usual and customary broker's commissions for such transactions.
It is the Fund's policy that commissions paid to Schroder Securities will in the
judgment of the officers of SCMI responsible for making portfolio decisions and
selecting brokers, be (i) at least as favorable as commissions contemporaneously
charged by Schroder Securities on comparable transactions for its most favored
unaffiliated customers and (ii) at least as favorable as those which would be
charged on comparable transactions by other qualified brokers having comparable
execution capability. The Board of Trustees of the Trust, including a majority
of the non-interested Trustees, has adopted procedures pursuant to Rule 17e-1
promulgated by the Securities and Exchange Commission under Section 17(e) to
ensure that commissions paid to Schroder Securities by the Fund satisfy the
foregoing standards. The Board will review all transactions at least quarterly
for compliance with these procedures.

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

-14-
<PAGE>

commissions to Schroder Securities in any of the Fund's fiscal years ended
October 31, 1993, or 1994. For the fiscal year ended October 31, 1995, the Fund
paid $1,829 in brokerage commissions to Schroder, Munchmeyer, Hengst & Co., an
affiliate of Schroder Securities Limited, representing 0.003% of the Fund's
aggregate brokerage commissions and 0.005% of the Fund's aggregate dollar amount
of transactions involving the payment of commissions.

The annual portfolio turnover rate of the Fund may exceed 50% but will not
ordinarily exceed 100%.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Detailed information pertaining to the purchase of shares of the Fund,
redemption of shares and the determination of the net asset value of Fund shares
is set forth in the Prospectus under "Investment in the Fund".

REDEMPTION IN KIND

In the event that payment for redeemed shares is made wholly or partly in
portfolio securities, brokerage costs may be incurred by the shareholder in
converting the securities to cash. An in kind distribution of portfolio
securities will be less liquid than cash. The shareholder may have difficulty
in finding a buyer for portfolio securities received in payment for redeemed
shares. Portfolio securities may decline in value between the time of receipt
by the shareholder and conversion to cash. A redemption in kind of the Fund's
portfolio securities could result in a less diversified portfolio of investments
for the Fund and could affect adversely the liquidity of the Fund's portfolio.

TAXATION

The Fund intends to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). To
qualify as a regulated investment company the Fund intends to distribute to
shareholders at least 90% of its net investment income (which includes, among
other items, dividends, interest and the excess of any net short-term capital
gains over net long-term capital losses), and to meet certain diversification of
assets, source of income, and other requirements of the Code. By so doing, the
Fund will not be subject to Federal income tax on its net investment income and
net realized capital gains (the excess of net long-term capital gains over net
short-term capital losses) distributed to shareholders. If the Fund does not
meet all of these Code requirements, it will be taxed as an ordinary
corporation, and its distributions will be taxable to shareholders as ordinary
income.

Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Fund must distribute for each calendar
year an amount equal to the sum of (1) at least 98% its ordinary income
(excluding any capital gains or losses) for the calendar year, (2) at least 98%
of the excess of its capital gains over capital losses realized during the one-
year period ending October 31, of such year, and (3) all such ordinary income
and capital gains for previous years that were not distributed during such
years. A distribution will be treated as paid during the calendar year if it is
declared by the Fund in October, November or December of the year with a record
date in such month and paid by the Fund during January of the following year.
Such distributions will be taxable to shareholders in the calendar year in which
the distributions are declared, rather than the calendar year in which the
distributions are received.

Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time the Fund accrues interest or other receivable or
accrues expenses or other liabilities denominated in a foreign currency and the
time the Fund actually collects such receivable or pays such liabilities
generally are treated as ordinary income or ordinary loss. Similarly, gains or
losses on disposition of debt securities denominated in a foreign currency
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of the security and the date of disposition as well as gains
or losses from certain foreign currency transactions and options on certain
foreign currency transactions, generally are treated as ordinary gain or loss.
These gains or losses, referred to under the Code as "Section 988" gains or
losses, may increase or decrease the amount of the Fund's net investment income
to be distributed to its shareholders as ordinary income.

-15-
<PAGE>

Generally, the hedging transactions undertaken by the Fund may be deemed
"straddles" for Federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by the Fund. In addition, losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Fund of hedging transactions are not
entirely clear. The hedging transactions may increase the amount of short-term
capital gain realized by the Fund which is taxed as ordinary income when
distributed to shareholders.

The Fund may make one or more of the elections available under the Code which
are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.

Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
shareholders and which will be taxed to shareholders as ordinary income or long-
term capital gain, may be increased or decreased as compared to a fund that did
not engage in such hedging transactions.

The requirements applicable to regulated investment companies such as the Fund
may limit the extent to which the Fund will be able to engage in transactions in
options and forward contracts.

Distributions of net investment income (including realized net short-term
capital gain) are taxable to shareholders as ordinary income. It is not
expected that such distributions will be eligible for the dividends received
deduction available to corporations.

Distributions of net long-term capital gain are taxable to shareholders as long-
term capital gain, regardless of the length of time the Fund shares have been
held by a shareholder, and are not eligible for the dividends received
deduction. A loss realized by a shareholder on the sale of shares of the Fund
with respect to which capital gain dividends have been paid will, to the extent
of such capital gain dividends, be treated as long-term capital loss although
such shares may have been held by the shareholder for one year or less.
Further, a loss realized on a disposition will be disallowed to the extent the
shares disposed of are replaced (whether by reinvestment or distributions or
otherwise) within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss.

All distributions are taxable to the shareholder whether reinvested in
additional shares or received in cash. Shareholders receiving distributions in
the form of additional shares will have a cost basis for Federal income tax
purposes in each share received equal to the net asset value of a share of the
Fund on the reinvestment date. Shareholders will be notified annually as to the
Federal tax status of distributions.

Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value below a shareholder's cost
basis, such distribution nevertheless would be taxable to the shareholder as
ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a distribution which will nevertheless
be taxable to them.

Upon redemption or sale of his shares, a shareholder will realize a taxable gain
or loss depending upon his basis in his shares. Such gain or loss generally
will be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. Such gain or loss generally will be long-term or short-
term depending upon the shareholder's holding period for the shares.

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<PAGE>

The Fund intends to minimize foreign income and withholding taxes by investing
in obligations the payments with respect to which will be subject to minimal or
no such taxes insofar as this objective is consistent with the Fund's income
objective. However, since the Fund may incur foreign taxes, it intends, if it
is eligible to do so, to elect under Section 853 of the Code to treat each
shareholder as having received an additional distribution from the Fund, in the
amount indicated in a notice furnished to him, as his pro rata portion of income
taxes paid to or withheld by foreign governments with respect to interest,
dividends and gain on the Fund's foreign portfolio investments. The shareholder
then may take the amount of such foreign taxes paid or withheld as a credit
against his Federal income tax, subject to certain limitations. If the
shareholder finds it more to his advantage to do so, he may, in the alternative,
deduct the foreign tax withheld as an itemized deduction, in computing his
taxable income. Each shareholder is referred to his tax adviser with respect to
the availability of the foreign tax credit.

The Fund will be required to report to the Internal Revenue Service (the "IRS")
all distributions as well as gross proceeds from the redemption of the Fund
shares, except in the case of certain exempt shareholders. All such
distributions and proceeds generally will be subject to withholding of Federal
income tax at a rate of 31% ("backup withholding") in the case of nonexempt
shareholders if (1) the shareholder fails to furnish the Fund with and to
certify the shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Fund that the shareholder 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
shareholder fails to certify that he is not subject to backup withholding. If
the withholding provisions are applicable, any such distributions or proceeds,
whether reinvested in additional shares or taken in cash, will be reduced by the
amount required to be withheld. Any amounts withheld may be credited against
the shareholder's Federal income tax liability. Investors may wish to consult
their tax advisers about the applicability of the backup withholding provisions.

The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be
subject to state and local taxes, and their treatment under state and local
income tax laws may differ from the Federal income tax treatment. Shareholders
should consult their tax advisors with respect to particular questions of
Federal, state and local taxation. Shareholders who are not U.S. persons should
consult their tax advisors regarding U.S. and foreign tax consequences of
ownership of shares of the Fund including the likelihood that distributions to
them would be subject to withholding of U.S. tax at a rate of 30% (or a lower
rate under a tax treaty).

OTHER INFORMATION

ORGANIZATION

The Trust was originally organized as a Maryland corporation on July 30, 1969.
On February 29, 1988, the Trust was recapitalized to enable the Board to
establish a series of separately managed investment portfolios, each having
different investment objectives and policies. At the time of the
recapitalization, the Trust's name was changed from "The Cheapside Dollar Fund
Limited" to "Schroder Capital Funds, Inc." On January 9, 1996, the Trust was
reorganized as a Delaware business trust. At that time, the Trust's name was
changed from "Schroder Capital Funds, Inc." to its present name. The Trust is
registered as an open-end management investment company under the Act.

Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. The securities regulators of some states, however,
have indicated that they and the courts in their state may decline to apply
Delaware law on this point. To guard against this risk, the Trust Instrument
contains an express disclaimer of shareholder liability for the debts,
liabilities, obligations, and expenses of the Trust. The Trust Instrument
provides for indemnification out of each series' property of any shareholder or
former shareholder held personally liable for the obligations of the series.
The Trust Instrument also provides that each series shall, upon request, assume
the defense of any claim made against any shareholder for any act or obligation
of the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply (or no

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<PAGE>

contractual limitation of liability was in effect) and the portfolio is unable
to meet its obligations. Forum believes that, in view of the above, there is no
risk of personal liability to shareholders.

CAPITALIZATION AND VOTING

The Trust has an unlimited number of authorized shares of beneficial interest.
The Board may, without shareholder approval, divide the authorized shares into
an unlimited number of separate portfolios or series (such as the Fund) and may
divide portfolios or series into classes of shares, and the costs of doing so
will be borne by the Trust. The Trust currently consists of five separate
portfolios, each of which has separate investment objectives and policies, and
five classes, one of which pertains to the Fund.

The shares of the Trust are fully paid and nonassessable, and have no
preferences as to conversion, exchange, dividends, retirement or other features.
The shares have no preemptive rights. They have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting for the
election of Trustees can elect 100% of the Trustees if they choose to do so. A
shareholder is entitled to one vote for each full share held (and a fractional
vote for each fractional share held), then standing in his name on the books of
the Trust. Shares of each class would vote separately to approve investment
advisory agreements or changes in investment objectives and other fundamental
policies affecting the portfolio to which they pertain, but all classes would
vote together in the election of Trustees and ratification of the selection of
independent accountants. Shareholders of any particular class would not be
entitled to vote on any matters as to which such class were not affected.

The Trust will not hold annual meetings of shareholders. The matters considered
at an annual meeting typically include the reelection of Trustees, approval of
an investment advisory agreement, and the ratification of the selection of
independent accountants. These matters will not be submitted to shareholders
unless a meeting of shareholders is held for some other reason, such as those
indicated below. Each of the Trustees will serve until death, resignation or
removal. Vacancies will be filled by the remaining Trustees, subject to the
provisions of the 1940 Act requiring a meeting of shareholders for election of
Trustees to fill vacancies when less than a majority of Trustees then in office
have been elected by shareholders. Similarly, the selection of accountants and
renewal of investment advisory agreements for future years will be performed
annually by the Board. Future shareholder meetings will be held to elect
Trustees if required by the 1940 Act, to obtain shareholder approval of changes
in fundamental investment policies, to obtain shareholder approval of material
changes in investment advisory agreements, to select new accountants if the
employment of the Trust's accountants has been terminated, and to seek any other
shareholder approval required under the 1940 Act. The Board has the power to
call a meeting of shareholders at any time when it believes it is necessary or
appropriate. In addition, Trust Instrument provides that a special meeting of
shareholders may be called at any time for any purpose by the holders of at
least 10% of the outstanding shares entitled to be voted at such meeting.

In addition to the foregoing rights, the Trust Instrument provides that holders
of at least two-thirds of the outstanding shares of the Trust may remove any
person serving as a Trustee either by declaration in writing or at a meeting
called for such purpose. Further, the Board is required to call a shareholders
meeting for the purpose of considering the removal of one or more Trustees if
requested in writing to do so by the holders of not less than 10% of the
outstanding shares of the Trust. In addition, the Board is required to provide
certain assistance if requested in writing to do so by ten or more shareholders
of record (who have been such for at least six months), holding in the aggregate
the lesser of shares of the Trust having a total net asset value of at least
$25,000 or 1% of the outstanding shares of the Trust, for the purpose of
enabling such holders to communicate with other shareholders of the Trust with a
view to obtaining the requisite signatures to request a special meeting to
consider such removal.

PRINCIPAL SHAREHOLDERS

As of December 22, 1995, the following persons owned of record or beneficially
5% or more of the Fund's shares:

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<PAGE>

SHAREHOLDER SHARE BALANCE PERCENT OF FUND
- ----------- ------------- ---------------

Norwest Bank Denver, N.A. 1,036,784.781 9.31%
Stout & Co.
1740 Broadway
Denver, CO 80274

Union College Pooled Investments 655,695.792 5.88%
Fiduciary Trust Company International
P.O. Box 3199, Church Street Station
New York, NY 10008

MAC & CO 648,519.293 5.82%
Mellon Bank, N.A.
P.O. Box 320
Pittsburgh, PA 15230

CUSTODY OF FUND ASSETS

The Chase Manhattan Bank, N.A., through its Global Custody Division located in
London, England, acts as custodian of the Fund's assets, but plays no role in
making decisions as to the purchase or sale of portfolio securities for the
Fund. Pursuant to rules adopted under the 1940 Act, the Fund may maintain its
foreign securities and cash in the custody of certain eligible foreign banks and
securities depositories. Selection of these foreign custodial institutions is
made by the Board of Trustees following a consideration of a number of factors,
including (but not limited to) the reliability and financial stability of the
institution; the ability of the institution to perform capably custodial
services for the Fund; the reputation of the institution in its national market;
the political and economic stability of the country in which the institution is
located; and further risks of potential nationalization or expropriation of Fund
assets.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Forum Financial Corp., Portland, Maine, serves as the Fund's Transfer and
Dividend Disbursing Agent.

PERFORMANCE INFORMATION

The Fund may, from time to time, include quotations of its average annual total
return in advertisement or reports to shareholders or prospective investors.

Quotations of average annual total return will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund over periods of 1, 5 and 10 years (up to the life of the Fund), calculated
pursuant to the following formula:

P(1+T)(n)=ERV

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n= the number of years, and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses (net of certain
reimbursed expenses) on an annual basis, and will assume that all dividends and
distributions are reinvested when paid.

For the one year, five year and nine year, ten month periods ended October 31,
1995, respectively, the average annual total return of the Fund was 2.08%, 8.56%
and 12.51%.

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<PAGE>

Quotations of total return will reflect only the performance of a hypothetical
investment in the Fund during the particular time period shown. Total return
for the Fund will vary based on changes in market conditions and the level of
the Fund's expenses, and no reported performance which may be expected in the
future.

In connection with communicating total return to current or prospective
investors, the Fund also may compare these figures to the performance of other
mutual funds tracked by mutual fund rating services or to other unmanaged
indexes which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs.

Investors who purchase and redeem shares of the Fund through a customer account
maintained at a Service Organization may be charged one or more of the following
types of fees as agreed upon by the Services Organization and the investor, with
respect to the customer services provided by the Service Organization: account
fees (a fixed amount per month or per year); transaction fees (a fixed amount
per transaction processed); compensating balance requirements (a minimum dollar
amount a customer must maintain in order to obtain the services offered); or
account maintenance fees (a periodic charge based upon a percentage of the
assets in the account or of the dividends paid on these assets). Such fees will
have the effect of reducing the average annual total return of the Fund for
those investors.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P. ("Coopers & Lybrand") serves as independent accountants
for the Fund. Coopers & Lybrand provides audit services and consultation in
connection with review of U.S. Securities and Exchange Commission filings.
Coopers & Lybrand's address is One Post Office Square, Boston, Massachusetts
02109.

COUNSEL

Jacobs Persinger & Parker, 77 Water Street, New York, New York 10005, counsel
to the Fund, passes upon certain legal matters in connection with the shares
offered by the Fund.

REGISTRATION STATEMENT

This SAI and the Prospectus do not contain all the information included in the
Fund's registration statement filed with the Securities and Exchange Commission
under the Securities Act of 1933 with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The registration
statement, including the exhibits filed therewith, may be examined at the office
of the Securities and Exchange Commission in Washington, D.C.

Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.

FINANCIAL STATEMENTS

The audited Statement of Assets and Liabilities, Statement of Operations,
Statements of Changes in Net Assets, Statement of Investments, notes thereto,
and Financial Highlights of the Fund for the fiscal year ended October 31, 1995
and the Report of Independent Accountants thereon (included in the Annual Report
to shareholders), which are delivered along with this SAI, are incorporated
herein by reference.

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<PAGE>

SCHRODER U. S. EQUITY FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101

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

GENERAL INFORMATION: (207) 879 8903
ACCOUNT INFORMATION: (800) 344 8332
FAX: (207) 879 6206

- -------------------------------------------------------------------------------
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. - INVESTMENT ADVISER
SCHRODER FUND ADVISORS INC. - DISTRIBUTOR

STATEMENT OF ADDITIONAL INFORMATION

Schroder U.S. Equity Fund (the "Fund") is a separately-managed, diversified, no-
load portfolio of Schroder Capital Funds (Delaware) (the "Trust"), an open-end
management investment company currently consisting of four separate portfolios,
each of which has different investment objectives and policies. Schroder U.S.
Equity Fund is described herein.

The Fund's primary investment objective is to seek growth of capital. Income,
while a factor in portfolio selection, is secondary to the principal objective.
There is no assurance that these objectives will be achieved. The Fund invests
substantially all its assets in common stocks and securities convertible into
common stock and may also invest in warrants or other rights to purchase common
stock, and to a lesser extent in non-convertible preferred and debt securities.

Shares of the Fund are offered for sale at net asset value per share, with no
sales charge. The minimum initial investment is $500 and the minimum subsequent
investment is $100.

This Statement of Additional Information ("SAI") is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Prospectus for
the Fund dated January 9, 1996 (the "Prospectus"). This SAI contains additional
and more detailed information than that set forth in the Prospectus and should
be read in conjunction with the Prospectus. The Prospectus for the Fund may be
obtained without charge by writing or calling the Fund at the address and
telephone numbers printed above.

January 9, 1996

<PAGE>

TABLE OF CONTENTS

INVESTMENT POLICIES
Introduction
Primary Investments
Temporary Defensive and Operating Investments
Restricted Securities
Leverage

INVESTMENT RESTRICTIONS

MANAGEMENT
Trustees and Officers
Investment Adviser
Sub-Administrator
Distribution of Fund Shares
Portfolio Accounting

PORTFOLIO TRANSACTIONS
Investment Decisions
Portfolio Brokerage
Portfolio Turnover

SHARE OWNERSHIP

ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION
Determination of Net Asset Value
Redemption in Kind

TAXATION

OTHER INFORMATION
Organization
Capitalization and Voting
Performance Information
Custodian
Transfer Agent and Dividend Disbursing Agent
Legal Counsel
Independent Accountants

FINANCIAL STATEMENTS

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<PAGE>

INVESTMENT POLICIES

INTRODUCTION

The following information supplements the discussion found under "The Fund -
Investment Objectives and Investment Policies" in the Prospectus.

The Fund is a "diversified" portfolio and, as such, at least 75% of the Fund's
total assets must be represented by cash and cash items, Government securities
and securities limited in respect of any one issuer to not more than 5% of the
Fund's total assets and to not more than 10% of the voting securities of such
issuer. The classification of the Fund as diversified under the Investment
Company Act of 1940 (the "1940 Act") cannot be changed without the majority
approval of the Fund's shareholders. As used in this SAI, "majority approval of
the Fund's shareholders" means approval of the lesser of (i) 67% or more of the
Fund's shares present at a meeting if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, and (ii)
more than 50% of the outstanding shares of the Fund.

The investment objectives of the Fund set forth in the Prospectus are
fundamental policies of the Fund, meaning that they cannot be changed without
majority approval of the Fund's shareholders. A non-fundamental policy could be
changed by the Trust's Board of Trustees without such prior shareholder
approval. Unless otherwise indicated, all of the investment policies of the
Fund described below are also fundamental policies.

PRIMARY INVESTMENTS

The Fund will generally purchase securities which are believed to have potential
for capital appreciation. Securities, however, will be disposed of in
situations where the Fund believes that such potential is no longer feasible or
the risk of decline in market price is too great. Pursuant to this policy, the
Fund has invested and normally will invest substantially all its assets in
common stock and securities convertible into common stock. The Fund may also
invest in other securities with common stock purchase warrants attached, or in
such warrants or other rights to purchase common stock. The Fund may also
invest to a limited degree in non-convertible preferred and debt securities.
Such investments might be made at such times as in the opinion of management
substantially greater yields could be earned on such securities of investment
grade than on U.S. Government securities and bank certificates of deposit. As a
non-fundamental policy, the Fund will not invest more than 15% of its total
assets in such non-convertible preferred and debt securities.

TEMPORARY DEFENSIVE AND OPERATING INVESTMENTS

For temporary defensive purposes, the Fund may invest all or any portion of its
assets in investment grade corporate bonds or debentures (meaning for these
purposes bonds or debentures rated "A" or better by Standard & Poor's
Corporation ("S&P") or the equivalent thereof), preferred stock, U.S. Government
securities or bank certificates of deposit. (According to S&P, bonds rated "A"
have a strong capacity to pay principal and interest although they are somewhat
more susceptible to the adverse effect of changes in circumstances and economic
conditions.) The conditions under which the Fund may so invest all or any
portion of its assets for temporary defensive purposes will be at such times as
in the opinion of management the market appears relatively fully priced or at
such times as in the opinion of management uncertain economic conditions
indicate the advisability of assuming such a temporary defensive position.

As an operating, non-fundamental policy, the Fund may also invest temporarily in
certain short-term fixed income securities. Such securities may be used to
invest uncommitted cash balances, or to maintain liquidity to meet shareholder
redemptions or other Fund obligations. Such securities might include U.S.
Government securities, commercial paper, bank certificates of deposit and
bankers acceptances, and repurchase agreements collateralized by such
securities. The Fund will limit its total investment at any time in these
securities for this operating purpose to not more than 25% of its total assets.

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<PAGE>

Certain of the securities in which the Fund may invest for either of the
foregoing temporary purposes are more fully described as follows:

1. U.S. GOVERNMENT SECURITIES - These securities consist of obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities. Agencies and instrumentalities which issue or guarantee debt
securities and which have been established or sponsored by the United States
Government include the Bank for Cooperatives, the Export-Import Bank, the
Federal Farm Credit System, the Federal Home Loan Banks, the Federal Home Loan
Mortgage Corporation, the Federal Intermediate Credit Banks, the Federal Land
Banks, the Federal National Mortgage Association, the Government National
Mortgage Association, and the Student Loan Marketing Association.

2. BANK OBLIGATIONS - These securities consist of certificates of deposit
and bankers' acceptances issued by U.S. banks having total assets at the time of
purchase in excess of $1 billion. Such banks must be members of the Federal
Deposit Insurance Corporation. A certificate of deposit is an interest-bearing
negotiable certificate issued by a bank against funds deposited in the bank. A
bankers' acceptance is a short-term draft drawn on a commercial bank by a
borrower, usually in connection with an international commercial transaction.
Although the borrower is liable for payment of the draft, the bank
unconditionally guarantees to pay the draft at its face value on the maturity
date. The foregoing limitation as to banks in whose obligations the Fund may
invest is a non-fundamental policy of the Fund.

3. COMMERCIAL PAPER - These securities are short-term unsecured
promissory notes issued in bearer form by bank holding companies, corporations
and finance companies. The commercial paper which may be purchased by the Fund
for temporary purposes would consist of direct obligations of domestic issuers
which, at the time of investment, are rated "P-1" by Moody's Investors Services,
Inc. ("Moody's") or "A-1" by S&P, or securities which, if not rated, are issued
by companies having an outstanding debt issue currently rated Aa by Moody's or
AAA or AA by S&P. The rating "P-1" is the highest commercial paper rating
assigned by Moody's and the rating "A-1" is the highest commercial paper ratings
assigned by S&P. Such limitations with respect to commercial paper constitute a
non-fundamental policy of the Fund.

4. REPURCHASE AGREEMENTS - The Fund may invest in securities subject to
repurchase agreements maturing in seven days or less (normally one day) with
member banks of the Federal Reserve System or certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. In a typical
repurchase agreement the seller of a security commits itself at the time of the
sale to repurchase such security from the buyer at a mutually agreed-upon time
and price. The repurchase price exceeds the sale price, reflecting an agreed-
upon interest rate effective for the period the buyer owns the security subject
to repurchase. The agreed-upon rate is unrelated to the interest rate on the
underlying security. The value of the underlying security is monitored by the
Fund's investment adviser at the time the transaction is entered into and at all
times during the term of the repurchase agreement to insure that the value of
the security always equals or exceeds the repurchase price. In the event of
default by the seller under the repurchase agreement, the Fund may have
difficulties in exercising its rights to the underlying securities and may incur
costs and experience time delays in connection with the disposition of such
securities. To evaluate potential risks, the investment adviser reviews the
creditworthiness of those banks and dealers with which the Fund enters into
repurchase agreements. The foregoing policy with respect to repurchase
agreements is a non-fundamental policy of the Fund.

RESTRICTED SECURITIES

The Fund may from time to time acquire securities which are subject to legal or
contractual restrictions on resale. The Fund may invest up to 10% of the value
of its total assets in such restricted securities and should changes in market
values result in more than 10% being so invested, management will take such
action as it deems appropriate to reduce such assets to the 10% limit. A
considerable period might elapse between the time a decision is made to sell
such securities and the time the Fund might be permitted to sell all or part of
such securities publicly under an effective registration statement or an
exemption from registration, or the time the Fund might find a suitable
purchaser willing to accept such securities subject to restrictions. Such delay
might adversely affect the price

-4-
<PAGE>

obtainable by the Fund for such securities. The Fund may be required to pay the
registration expenses of restricted securities held by it.

LEVERAGE

The Fund is authorized to borrow money from a bank on its promissory note or
other evidence of indebtedness. Monies borrowed would be invested and any
appreciation thereon, to the extent it exceeded interest paid on the loan, would
cause the net assets value of Fund shares to rise faster than it would
otherwise. If, however, the investment performance of additional monies failed
to cover the Fund's interest charges, the net asset value would decrease faster
than would otherwise be the case. This is the speculative feature known as
"leverage". Any such borrowing (i) would not exceed one-third of the value of
the Fund's total assets after borrowing, (ii) if at any time it exceeded such
one-third limitation, the Fund would within three days thereafter (not including
Sundays or holidays) or such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations, reduce its borrowings to the
limitation and (iii) might or might not be secured and, if secured, all or any
part of the Fund's assets could be pledged. To comply with such limitations,
the Fund might be required to dispose of certain of its assets when it might be
disadvantageous to do so. Any such borrowings would be subject to Federal
Reserve Board regulations. The Fund has not borrowed money for investment or
any other purpose during the last ten years and, as a non-fundamental policy,
will not borrow for investment in the future.

INVESTMENT RESTRICTIONS

The following investment restrictions restate or are in addition to those
described under "The Fund - Investment Restrictions" in the Prospectus. These
restrictions, which are fundamental policies (except as set forth), provide that
the Fund:

1. Will not issue senior securities except that it may borrow money from
a bank on its promissory note or other evidence of indebtedness. Any such
borrowing (i) would not exceed one-third of the value of the Fund's total assets
after the borrowing, (ii) if at any time it exceeded such one-third limitation,
the Fund would within three days thereafter (not including Sundays or holidays)
or such longer period as the Securities and Exchange Commission may prescribe by
rules and regulations, reduce its borrowings to the limitation and (iii) might
or might not be secured and, if secured, all or any part of the Fund's assets
could be pledged. To comply with such limitations, the Fund might be required
to dispose of certain of its assets when it might be disadvantageous to do so.
Any such borrowings would be subject to Federal Reserve Board regulations. (As
a non-fundamental policy, the Fund will not borrow for investment purposes).

2. Will not effect short sales, purchase any security on margin or write
or purchase put and call options.

3. Will not acquire more than 10% of the voting securities of any one
issuer.

4. Will not invest 25% or more of the value of its total assets in any
one industry.

5. Will not engage in the purchase and sale of illiquid interests in real
estate, including illiquid interests in real estate investment trusts.

6. Will not engage in the purchase and sale of commodities or commodity
contracts.

7. Will not invest in companies for the purpose of exercising control or
management.

8. Will not underwrite securities of other issuers, except that the Fund
may acquire portfolio securities, not in excess of 10% of the value of its total
assets, under circumstances where if sold it might be deemed to be an
underwriter for the purposes of the Securities Act of 1933.

-5-
<PAGE>

9. Will not make loans to other persons except that it may purchase
evidences of indebtedness of a type distributed privately to financial
institutions but not in excess of 10% of the value of its total assets.

10. Will not acquire securities described in 8 and 9 above which in the
aggregate exceed 10% of the value of the Fund's total assets.

11. Will not invest in other investment companies.

As non-fundamental policies, the Fund (a) will not invest more than 10% of its
total assets in illiquid securities, including securities described in items 8
and 9 above and repurchase agreements maturing more than seven days after they
are entered into and (b) will not engage in writing, buying or selling of stock
index futures, options on stock index futures, financial futures contracts or
options thereon.

MANAGEMENT

TRUSTEES AND OFFICERS

The following information relates to the principal occupations of each Trustee
and executive officer of the Trust during the past five years and shows the
nature of any affiliation with SCMI.

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

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

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

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

-6-
<PAGE>

ROBERT JACKOWITZ, 787 Seventh Avenue, New York, New York - Treasurer of the
Trust - Vice President of SCMI since September 1995 and Assistant Treasurer
since January 1990.

BARBARA GOTTLIEB, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust - [business history].

GERARDO MACHADO, 787 Seventh Avenue, New York, New York - Assistant Secretary of
the Trust - Assistant Portfolio Manager, SCMI.

(a) Interested Trustee of the Trust within the meaning of the 1940 Act.

(b) Schroder Advisors is a wholly-owned subsidiary of SCMI, which is a wholly-
owned subsidiary of Schroders Incorporated, which in turn is an indirect,
wholly-owned subsidiary of Schroders plc.

The following table provides the fees paid to each Trustee of the Trust for the
fiscal year ended October 31, 1995.

-7-
<PAGE>

As of December 22, 1995, the officers and Trustees of the Trust owned, in the
aggregate, less than 1% of the Fund's outstanding shares.

INVESTMENT ADVISER

Schroder Capital Management International Inc. ("SCMI"), 787 Seventh Avenue, New
York, New York 10019, serves as Investment Adviser to the Fund pursuant to an
Investment Advisory Contract dated March 1, 1988. SCMI is a wholly-owned United
States subsidiary of Schroders Incorporated, the wholly-owned United States
holding company subsidiary of Schroders plc. Schroders plc is the holding
company parent of a large world-wide group of banks and financial service
companies (referred to as the "Schroder Group"), with associated companies and
branch and representative offices located in seventeen countries worldwide. The
Schroder Group specializes in providing investment management services, with
Group funds under management currently in excess of $90 billion.

Under the Investment Advisory Contract, SCMI regularly provides the Fund with
investment research, advice and supervision and furnishes continuously an
investment program for the Fund's investments consistent with the Fund's
investment objectives. SCMI recommends what securities shall be bought or sold
by the Fund, and what portion of the Fund's assets shall be held uninvested.
SCMI advises and assists the officers of the Trust in taking such steps as are
necessary or appropriate to carry out the decisions of its Board of Trustees
regarding the foregoing matters and general conduct of the investment business
of the Fund. SCMI pays directly any office rent of the Fund and furnishes or
causes to be furnished without expense to the Fund, the services of such of its
officers and employees and employees of its corporate affiliates as may be duly
elected officers or Trustees of the Trust. In addition, SCMI provides
investment advisory, research and statistical facilities and all clerical
services relating to research, statistical and investment work. The Fund pays
all of its other costs and expenses, including without limitation: brokers'
commissions; legal, auditing or accounting expenses, taxes or governmental fees;
cost of preparing share certificates or any other expenses (including clerical
expenses) of issue (not including sales or promotion expenses unless the Fund
shall in the future duly adopt a plan pursuant to Rule 12b-1 under the 1940
Act), distribution, redemption or repurchase of shares of the Fund; registration
expenses; the cost of preparing and

-8-
<PAGE>

distributing reports and notices to shareholders; fees or disbursements of the
custodian of the Fund's assets, of the Fund's dividend disbursing agent and of
the Fund's transfer agent. To the extent employees of SCMI or its affiliates
devote their time to the affairs of the Fund, other than as officers or
Trustees, the Fund will reimburse SCMI or such affiliates the pro rate share of
such individuals' salaries or wages and expenses.

Under the Investment Advisory Contract, SCMI receives a fee for its services,
computed daily and payable monthly, at the annual rate of 0.75% of the Fund's
average daily net assets of the first $100 million and 0.50% of the Fund's
average daily net assets in excess of $100 million. It is the Trust's
understanding that although other mutual funds pay investment advisory fees at
annual rates of 0.75% or more of their average net assets (or a portion
thereof), the majority of other mutual funds, regardless of size, pay advisory
fees at rates lower than 0.75% of any portion of their average net assets. For
the fiscal years ended October 31, 1993, 1994 and 1995, SCMI earned an aggregate
of $153,453, $144,539 and $140,988, respectively, in advisory fees from the
Fund.

Certain of the states in which shares of the Fund are qualified for sale impose
limitations on the expenses of the Fund. If, in any fiscal year, commencing
with the fiscal year which began on November 1, 1992, the total expenses of the
Fund (excluding taxes, interest, brokerage commissions and other portfolio
transaction expenses, other expenditures which are capitalized in accordance
with generally accepted accounting principles and extraordinary expenses, but
including the advisory and bookkeeping fees) exceed the expense limitations
applicable to the Fund imposed by the securities regulations of any state, SCMI
will reimburse the Fund for the excess.

SUB-ADMINISTRATOR

On behalf of the Fund, the Trust and SCMI have entered into a Sub-Administration
Agreement with Forum Financial Services, Inc. ("Forum"). Pursuant to its
agreement, Forum provides certain management and administrative services
necessary for the Fund's operations, other than the investment management and
administrative services provided to the Fund by SCMI pursuant to the Investment
Advisory Contract, including among other things, (i) preparation of shareholder
reports and communications, (ii) regulatory compliance, such as reports to and
filings with the Securities and Exchange Commission and state securities
commissions, and (iii) general supervision of the operation of the Fund,
including coordination of the services performed by the Fund's investment
adviser, transfer agent, custodian, independent accountants, legal counsel and
others.

The Sub-Administration Agreement is terminable with respect to the Fund without
penalty, at any time, by the Board of Trustees and SCMI upon 60 days' written
notice to Forum or by Forum upon 60 days' written notice to the Fund and the
Adviser.

DISTRIBUTION OF FUND SHARES

Schroder Fund Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York,
New York 10019, was appointed Distributor of the Fund shares pursuant to an
agreement approved by the Board of Trustees of the Trust at a meeting held on
November 2, 1992. The renewal of the distribution agreement for the one year
period ending February 1, 1996 was approved by the Board of Trustees at a
meeting held on November 21, 1994 (which approval included the approval of a
majority of the Trustees who are not interested persons). Schroder Advisors is
a wholly-owned subsidiary of Schroders Incorporated, the parent company of SCMI,
and is a registered broker-dealer

-9-
<PAGE>

organized to act as administrator and/or distributor of mutual funds. Effective
July 5, 1995, Schroder Advisors changed its name from Schroder Capital
Distributors Inc.

Under the distribution agreement, Schroder Advisors has agreed to use its best
efforts to secure purchases of Fund shares in jurisdictions in which such shares
may be legally offered for sale. Schroder Advisors is not obligated to sell any
specific amount of Fund shares. Further, Schroder Advisors has agreed in the
distribution agreement to serve without compensation and to pay from its own
resources all costs and expenses incident to the sale and distribution of Fund
shares including expenses of printing and distribution to prospective investors
of prospectuses and other sales materials and advertising expenses, and the
salaries and expenses of its employees or agents in connection with the
distribution of Fund shares.

PORTFOLIO ACCOUNTING

FFC assumed responsibility for fund accounting on August 15, 1994. Previously,
these services were performed by Schroders Incorporated, the parent company of
SCMI. For the fiscal years ended October 31, 1994 and October 31, 1995, the
Fund paid fund accounting fees of $31,596 and $38,000, respectively.

PORTFOLIO TRANSACTIONS

INVESTMENT DECISIONS

-10-
<PAGE>

day's transactions in such security are, insofar as is possible, averaged as to
price and allocated between such clients in a manner which in SCMI's opinion is
equitable to each and in accordance with the amount being purchased or sold by
each. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.

PORTFOLIO BROKERAGE

Decisions with respect to allocation of portfolio brokerage are made by the
Trust's President, a Vice President or Treasurer.

It is the Fund's policy, consistent with the best execution, to secure the
highest possible price on sales and the lowest possible price on purchases of
securities. Over- the-counter purchases and sales are transacted directly with
principal market makers except in those circumstances where in the opinion of
the Trust's officers better prices and executions are available elsewhere.
Portfolio transactions are frequently placed with broker-dealers who provide
SCMI with research and statistical assistance. The assistance may include
advice as to the advisability of investing in securities, security analysis and
reports, economic studies, industry studies, receipt of quotations for portfolio
valuations and similar services.

Give equal price and comparable execution of the transaction, it is the policy
of the Fund to select a broker or dealer primarily on the basis of the
furnishing of such services to SCMI by the broker or dealer. Although no fixed
formula is used in placing such transactions, an attempt is made to allocate
such brokerage in proportion to the services rendered to SCMI. SCMI may thus be
able to supplement its own information, and to consider the views and
information of other research organizations in arriving at its investment
recommendations. If such information is received, and if it is in fact useful
to SCMI, it may tend to reduce SCMI's cost; however, the dollar value of any
information received is indeterminable and may in fact be negligible and does
not tend to reduce SCMI's normal and customary research activities. The
research services furnished by brokers or dealers through whom the Fund effects
securities transactions may be used by SCMI in servicing all of its accounts,
and not all such services may be used by SCMI in connection with the Fund.
Portfolio transactions are also frequently placed with broker-dealers acting as
principals in the "third market".

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

Payment of brokerage commissions to Schroder Wertheim for effecting such
transactions is subject to Section 17(e) of the 1940 Act, which requires, among
other things, that commissions for transactions on a national securities
exchange paid by a registered investment company to a broker which is an
affiliated person of such investment company or an affiliated person of another
person so affiliated not exceed the usual and customary broker's commissions for
such transactions. It is the Fund's policy that commissions paid to Schroder
Wertheim will in the judgment of the officers of the Trust responsible for
making portfolio decisions and selecting brokers, be (i) at least as favorable
as commissions contemporaneously charged by Schroder Wertheim on comparable
transactions for its most favored unaffiliated customers and (ii) at least as
favorable as those which would be charged on comparable transactions by other
qualified brokers having comparable execution capability. The Board of Trustees
of the Trust, including a majority of the non-interested Trustees, has adopted
procedures pursuant to Rule 17e-1 promulgated by the Securities and Exchange
Commission under Section 17(e) to ensure that commissions paid to Schroder
Wertheim by the Fund satisfy the foregoing standards. The Board will review all
transactions at least quarterly for compliance with these procedures.

During the fiscal years ended October 31, 1993, 1994 and 1995 the total
brokerage commissions paid by the Fund on portfolio transactions were $39,356
and $23,579 and $31,381 respectively. These amounts do not include any

-11-
<PAGE>

spreads or concessions on principal transactions on a net trade basis.
Substantially all of such commissions were paid to firms which provided SCMI
with research and statistical assistance. No commissions were paid to Schroder
Wertheim during any of the fiscal years ended October 31, 1993, 1994 and 1995.

SHARE OWNERSHIP

As of December 22, 1995, the following persons owned of record or beneficially
5% or more of the Fund's shares:w

SHAREHOLDER SHARE BALANCE PERCENT OF FUND
- ----------- ------------- ---------------
<S> <C> <C>
Schroder Nominees Limited 493,923.368 22.18%
120 Cheapside
London EC2V 6DS England

Gracechurch Co. 351,069.439 15.76%
75 Wall Street
New York, NY 10265

Fox & Co. 151,228.600 6.79%
P.O. Box 976
New York, NY 10268

</TABLE>

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

DETERMINATION OF NET ASSET VALUE

The net asset value per share of the Fund is calculated at 4:00 p.m. (New York
City time), Monday through Friday, on each day that the New York Stock Exchange
is open for trading (which excludes the following national business holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day). Net asset value per share is
calculated by dividing the aggregate value of the Fund's assets less all
liabilities by the number of shares of the Fund outstanding.

Portfolio securities listed on the New York Stock Exchange are valued on the
basis of the last sale on that date on the basis of information obtained from
authoritative sources at the end of the business day. Lacking any sales, they
are valued at the average of the closing bid and asked prices. Securities not
listed on such exchange are valued by the use of quotations on any other
national stock exchange on which the securities are listed, or if unlisted,
published quotations in common use and/or quotations from a market maker or
makers in the security, in each case on the basis of information obtained from
authoritative sources, or if securities for which no quotations are available,
including restricted securities, by such other method as the Board of Trustees,
in good faith, shall deem to reflect their fair value. If securities are listed
on more than one national stock exchange (other than the New York Stock
Exchange), they are valued on the basis of quotations on the national stock
exchange in which the primary market for the securities exists.

REDEMPTION IN KIND

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<PAGE>

TAXATION

Under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund and
each other portfolio established from time to time by the Board of Trustees of
the Trust will be treated as a separate taxpayer for Federal income tax purposes
with the result that: (a) each such portfolio must meet separately the income
and distribution requirements for qualification as a regulated investment
company, and (b) the amounts of investment income and capital gains earned will
be determined on a portfolio-by-portfolio (rather than on a Trust-wide) basis.

The Fund intends to continue to qualify as a regulated investment company under
Subchapter M of the Code. To qualify as a regulated investment company the Fund
intends to distribute to shareholders at least 90% of its "investment company
taxable income" as defined in the Code (which includes, among other items,
dividends, interest and the excess of any net short-term capital gains over net
long-term capital losses), and to meet certain diversification of assets, source
of income, and other requirements of the Code. By so doing, the Fund will not be
subject to Federal income tax on its investment company taxable income and "net
capital gains" (the excess of net long-term capital gains over net short-term
capital losses) distributed to shareholders. If the Fund does not meet all of
these Code requirements, it will be taxed as an ordinary corporation, and its
distributions will be taxable to shareholders as ordinary income.

Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Fund must distribute for each calendar
year an amount equal to the sum of (1) at least 98% of its ordinary income
(excluding any capital gains or losses) for the calendar year, (2) at least 98%
of the excess of its capital gains over capital losses realized during the one-
year period ending October 31 of such year, and (3) all such ordinary income and
capital gains for previous years that were not distributed during such years. A
distribution will be treated as paid during the calendar year if it is declared
by the Fund in October, November or December of the year with a record date in
such month and paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.

Distributions of investment company taxable income (including realized net
short-term capital gain) are taxable to shareholders as ordinary income.
Generally, dividends of investment income (but not capital gain) from the Fund
will qualify for the Federal 70% dividends-received deduction for corporate
shareholders to the extent such dividends do not exceed the aggregate amount of
dividends received by the Fund from domestic corporations, provided the Fund
shares are held by said shareholders for more than 45 days. If securities held
by the Fund are considered to be "debt-financed" (generally, acquired with
borrowed funds), are held by the Fund for less than 46 days (91 days in the case
of certain preferred stock), or are subject to certain forms of hedges or short
sales, the portion of the dividends paid by the Fund which corresponds to the
dividends paid with respect to such securities will not be eligible for the
corporate dividends-received deduction.

Distributions of net long-term capital gain are taxable to shareholders as long-
term capital gain, regardless of the length of time the Fund shares have been
held by a shareholder, and are not eligible for the dividends received
deduction. A loss realized by a shareholder on the sale of shares of the Fund
with respect to which capital gain dividends have been paid will, to the extent
of such capital gain dividends, be treated as long-term capital loss although
such shares may have been held by the shareholder for one year or less.
Further, a loss realized on a disposition will be disallowed to the extent the
shares disposed of are replaced (whether by reinvestment of distributions or
otherwise) within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss.

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<PAGE>

ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a distribution which will nevertheless
be taxable to them.

The Trust will be required to report to the Internal Revenue Service (the "IRS")
all distributions as well as gross proceeds from the redemption of the Fund
shares, except in the case of certain exempt shareholders. All such
distributions and proceeds generally will be subject to withholding of Federal
income tax at a rate of 31% ("backup withholding") in the case of non-exempt
shareholders if (1) the shareholder fails to furnish the Trust with and to
certify the shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Trust that the shareholder 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
shareholder fails to certify that he is not subject to backup withholding. If
the withholding provisions are applicable, any such distributions or proceeds,
whether reinvested in additional shares or taken in cash, will be reduced by the
amount required to be withheld. Any amounts withheld may be credited against
the shareholder's Federal income tax liability. Investors may wish to consult
their tax advisers about the applicability of the backup withholding provisions.

The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (I.E., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be
subject to state and local taxes, and their treatment under state and local
income tax laws may differ from the Federal income tax treatment. Shareholders
should consult their tax advisers with respect to particular questions of
Federal, state and local taxation. Shareholders who are not U.S. persons should
consult their tax advisers regarding U.S. and foreign tax consequences of
ownership of shares of the Fund including the likelihood that distributions to
them would be subject to withholding of U.S. tax at a rate of 30% (or a lower
rate under a tax treaty).

OTHER INFORMATION

ORGANIZATION

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<PAGE>

CAPITALIZATION AND VOTING

PERFORMANCE INFORMATION

The Fund may, from time to time, include quotations of total return data in
advertisements, sales literature or reports to shareholders or prospective
investors.

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<PAGE>

P (1+T)(n) = ERV

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses on an annual basis,
and will assume that all dividends and distributions are reinvested when paid.

For the one year, five year and ten year periods ended October 31, 1995, the
average annual total returns of the Fund were 17.68%, 17.50% and 13.09%,
respectively.

CUSTODIAN

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

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Forum Financial Corp., Portland, Maine, acts as the Fund's transfer agent and
dividend disbursing agent.

LEGAL COUNSEL

Jacobs Persinger & Parker, 77 Water Street, New York, New York 10005, counsel
to the Fund, passes upon certain legal matters in connection with the shares
offered by the Fund.

INDEPENDENT ACCOUNTANTS

FINANCIAL STATEMENTS

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<PAGE>

SCHRODER U.S. SMALLER COMPANIES FUND
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101

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

GENERAL INFORMATION: (207) 879 8903
ACCOUNT INFORMATION: (800) 344 8332
FAX: (207) 879 6206

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

SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC.
- INVESTMENT ADVISER ("SCMI" OR THE "ADVISER")

SCHRODER FUND ADVISORS INC.
- ADMINISTRATOR AND DISTRIBUTOR ("SCHRODER ADVISORS")

STATEMENT OF ADDITIONAL INFORMATION

Schroder U.S. Smaller Companies Fund (the "Fund") is a diversified, separately-
managed portfolio of Schroder Capital Funds (Delaware) (the "Trust"), an open-
end management investment company currently consisting of five separate
portfolios, each of which has different investment objectives and policies.
Schroder U.S. Smaller Companies Fund is described in this Statement of
Additional Information ("SAI").

This SAI is not a prospectus and is only authorized for distribution when
preceded or accompanied by the Prospectus for the Fund dated January 9, 1996
(the "Prospectus"). This SAI contains additional and more detailed information
than that set forth in the Prospectus and should be read in conjunction with the
Prospectus. The Prospectus and SAI for the Fund may be obtained without charge
by writing or calling the Fund at the address and information numbers printed
above.

January 9, 1996

<PAGE>

TABLE OF CONTENTS

INVESTMENT POLICIES
Introduction
U.S. Government Securities
Bank Obligations
Short-Term Debt Securities
Repurchase Agreements
High Yield/Junk Bonds
Illiquid and Restricted Securities
Loans of Portfolio Securities
Covered Calls and Hedging
Short Sales Against-the-Box

INVESTMENT RESTRICTIONS

MANAGEMENT
Trustees and Officers
Investment Adviser
Administrative Services
Distribution of Fund Shares
Service Organizations
Fees and Expenses
Portfolio Accounting

PORTFOLIO TRANSACTIONS
Investment Decisions
Brokerage and Research Services

ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION
Determination of Net Asset Value Per Share
Redemption in Kind

TAXATION

OTHER INFORMATION
Organization
Capitalization and Voting
Principal Shareholders
Performance Information
Custodian
Transfer Agent and Dividend Disbursing Agent
Legal Counsel
Independent Accountants

FINANCIAL STATEMENTS

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<PAGE>

INVESTMENT POLICIES

INTRODUCTION

The Fund's investment objective and policies authorize it to invest in certain
types of securities and to engage in certain investment techniques as identified
in "The Fund-Investment Objective and Policies; and Special Investment Methods"
in the Prospectus. The following supplements the discussion found in those
sections by providing additional information or elaborating upon the discussion
with respect to certain of those securities and techniques.

U.S. GOVERNMENT SECURITIES

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

BANK OBLIGATIONS

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

SHORT-TERM DEBT SECURITIES

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

REPURCHASE AGREEMENTS

The Fund may invest in securities subject to repurchase agreements with U.S.
banks or broker-dealers maturing in seven days or less. In a typical repurchase
agreement the seller of a security commits itself at the time of the sale to
repurchase that security from the buyer at a mutually agreed-upon time and
price. The repurchase price exceeds the sale price, reflecting an agreed-upon
interest rate effective for the period the buyer owns the security subject to
repurchase. The agreed-upon rate is unrelated to the interest rate on that
security. SCMI will monitor the value of the underlying security at the time
the transaction is entered into and at all times during the term of the
repurchase agreement to insure that the value of the security always equals or
exceeds the repurchase price. In the event of default by the seller under the
repurchase agreement, the Fund may have difficulties in exercising its rights to
the underlying securities and may incur costs and experience time delays in
connection with the disposition of such

-3-
<PAGE>

securities. To evaluate potential risks, SCMI reviews the credit-worthiness of
those banks and dealers with which the Fund enters into repurchase agreements.

HIGH YIELD/JUNK BONDS

The Fund may invest up to 5% of its assets in bonds rated below Baa by Moody's
or BBB by S&P (commonly known as "high yield/high risk securities" or "junk
bonds"). Securities rated less than Baa by Moody's or BBB by S&P are classified
as non-investment grade securities and are considered speculative by those
rating agencies. Junk bonds may be issued as a consequence of corporate
restructurings, such as leveraged buyouts, mergers, acquisitions, debt
recapitalizations, or similar events or by smaller or highly leveraged
companies. Although the growth of the high yield securities market in the
1980's had paralleled a long economic expansion, recently many issuers have been
affected by adverse economic and market conditions. It should be recognized
that an economic downturn or increase in interest rates is likely to have a
negative effect on (i) the high yield bond market, (ii) the value of high yield
securities and (iii) the ability of the securities' issuers to service their
principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. In addition, the market for high yield
securities, which is concentrated in relatively few market makers, may not be as
liquid as the market for investment grade securities. Under adverse market or
economic conditions, the market for high yield securities could contract
further, independent of any specific adverse changes in the condition of a
particular issuer. As a result, the Fund could find it more difficult to sell
these securities or may be able to sell the securities only at prices lower than
if such securities were widely traded. Prices realized upon the sale of such
lower rated or unrated securities, under these circumstances, may be less than
the prices used in calculating the Fund's net asset value.

In periods of reduced market liquidity, junk bond prices may become more
volatile and may experience sudden and substantial price declines. Also, there
may be significant disparities in the prices quoted for junk bonds by various
dealers. Under such conditions, a Fund may have to use subjective rather than
objective criteria to value its junk bond investments accurately and rely more
heavily on the judgment of the Fund's investment adviser.

Prices for junk bonds also may be affected by legislative and regulatory
developments. For example, new federal laws require the divestiture by
federally insured savings and loans associations of their investments in high
yield bonds. Also, from time to time, Congress has considered legislation to
restrict or eliminate the corporate tax deduction for interest payments or to
regulate corporate restructurings such as takeovers, mergers or leveraged
buyouts. These laws could adversely affect the Fund's net asset value and
investment practices, the market for high yield securities, the financial
condition of issuers of these securities and the value of outstanding high yield
securities.

Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Fund experiences unexpected net
redemptions, it may be forced to sell its higher rated securities, resulting in
a decline in the overall credit quality of the Fund's portfolio and increasing
the exposure of the Fund to the risks of high yield securities.

ILLIQUID AND RESTRICTED SECURITIES

"Illiquid and Restricted Securities" under "Investment Objectives and Policies -
Additional Investment Policies" in the Prospectus sets forth the circumstances
in which the Fund may invest in "restricted securities". In connection with the
Fund's original purchase of restricted securities it may negotiate rights with
the issuer to have such securities registered for sale at a later time.
Further, the expenses of registration of restricted securities that are illiquid
may also be negotiated by the Fund with the issuer at the time such securities
are purchased by the Fund. When registration is required, however, a
considerable period may elapse between a decision to sell the securities and the
time the Fund would be permitted to sell such securities. A similar delay might
be experienced in attempting to sell such securities pursuant to an exemption
from registration. Thus, the Fund may not be able to obtain as favorable a
price as that prevailing at the time of the decision to sell.

-4-
<PAGE>

LOANS OF PORTFOLIO SECURITIES

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

COVERED CALLS AND HEDGING

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

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

When the Fund writes a call on a security, it receives a premium and agrees to
sell the underlying securities to a purchaser of a corresponding call on the
same security during the call period (usually not more than 9 months) at a fixed
exercise price (which may differ from the market price of the underlying
security), regardless of market price changes during the call period. The risk
of loss will have been retained by the Fund if the price of the underlying
security should decline during the call period, which may be offset to some
extent by the premium.

To terminate its obligation on a call it has written, the Fund may be purchase a
corresponding call in a "closing purchase transaction". A profit or loss will
be realized, depending upon whether the net of the amount of option transaction
costs and the premium previously received on the call written was more or less
than the price of the call subsequently purchased. A profit may also be
realized if the call lapses unexercised, because the Fund retains the underlying
security and the premium received. Any such profits are considered short-term
capital gains for Federal income tax purposes, and when distributed by the Fund
are taxable as ordinary income. If the Fund could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the callable
securities until the call lapsed or was exercised.

The Fund may also write calls on Stock Index Futures without owning a futures
contract or a deliverable bond, provided that at the time the call is written,
the Fund covers the call by segregating in escrow an equivalent dollar

-5-
<PAGE>

amount of liquid assets. The fund will segregate additional liquid assets if
the value of the escrowed assets drops below 100% of the current value of the
Stock Index Future. In no circumstances would an exercise notice require the
Fund to deliver a futures contract; it would simply put the Fund in a short
futures position, which is permitted by the Fund's hedging policies.

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

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

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

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

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

No price is paid or received upon the purchase or sale of a Stock Index Future.
Upon entering into a Futures transaction, the Fund will be required to deposit
an initial margin payment in cash or U.S. Treasury bills with a futures
commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's Custodian in an account registered in the futures
broker's name; however the futures broker can gain access to that account only
under specified conditions. As the Future is marked to market to reflect
changes in its market value, subsequent margin payments, called variation
margin, will be paid to or by the futures broker on a daily basis. Prior to
expiration of the Future, if the Fund elects to close out its position by taking
an opposite position, a final

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<PAGE>

determination of variation margin is made, additional cash is required to be
paid by or released to the Fund, and any loss or gain is realized for tax
purposes. Although Stock Index Futures by their terms call for settlement by
the delivery of cash, in most cases the obligation is fulfilled without such
delivery, by entering into an offsetting transaction. All futures transactions
are effected through a clearinghouse associated with the exchange on which the
contracts are traded.

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

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

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

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

Transactions in options by the Fund are subject to limitations established by
each of the exchanges governing the maximum number of options which may be
written or held by a single investor or group of investors acting in concert,
regardless of whether the options were written or purchased on the same or
different exchanges or are held

-7-
<PAGE>

in one or more accounts or through one or more exchanges or brokers. Thus, the
number of options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment companies having
the same or an affiliated investment adviser. Position limits also apply to
Stock Index Futures. An exchange may order the liquidation of positions found
to be in violation of those limits and may impose certain other sanctions. Due
to requirements under the Investment Company Act, when the Fund purchases a
Stock Index Future, the Fund will maintain, in a segregated account or accounts
with its custodian bank, cash or readily-marketable, short-term (maturing in one
year or less) debt instruments in an amount equal to the market value of the
securities underlying such Stock Index Future, less the margin deposit
applicable to it.

TAX ASPECTS OF HEDGING INSTRUMENTS. The Fund intends to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986 (the "Code"). One
of the tests for such qualification is that less than 30% of its gross income
must be derived from gains realized on the sale of securities held for less than
three months. Due to this limitation, the Fund will limit the extent to which
it engages in the following activities, but will not be precluded from them: (i)
selling investments, including Stock Index Futures, held for less than three
months, whether or not they were purchased on the exercise of a call held by the
Fund; (ii) purchasing calls or puts which expire in less than three months;
(iii) effecting closing transactions with respect to calls or puts purchased
less than three months previously; (iv) exercising puts held by the Fund for
less than three months; and (v) writing calls on investments held for less than
three months.

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

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

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

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<PAGE>

SHORT SALES AGAINST-THE-BOX

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

INVESTMENT RESTRICTIONS

The Fund's significant investment restrictions are described in the Prospectus.
The following investment restrictions, except where stated to be non-fundamental
policies, are also fundamental policies of the Fund and, together with the
fundamental policies and investment objective described in the Prospectus,
cannot be changed without the vote of a "majority" of the Fund's outstanding
shares. Under the Investment Company Act of 1940 (the "1940 Act"), such a
"majority" vote is defined as the vote of the holders of the lesser of: (i) 67%
or more of the shares present or represented by proxy at a meeting of
shareholders, if the holders of more than 50% of the outstanding shares are
present, or (ii) more than 50% of the outstanding shares. Under these
additional restrictions, the Fund cannot:

(a) Underwrite securities of other companies except insofar as the Fund
might be deemed to be an underwriter in the resale of any securities
held in its portfolio;

(b) Invest in commodities or commodity contracts other than Hedging
Instruments which it may use as permitted by any of its other
fundamental policies, whether or not any such Hedging Instrument is
considered to be a commodity or a commodity contract;

(c) Purchase securities on margin; however, the Fund may make margin
deposits in connection with any Hedging Instruments which it may use
as permitted by any of its other fundamental policies;

(d) Purchase or write puts or calls except as permitted by any of its
other fundamental policies;

(e) Lend money except in connection with the acquisition of that portion
of publicly-distributed debt securities which the Fund's investment
policies and restrictions permit it to purchase (see "Investment
Objective and Policies" and "Special Investment Methods" in the
Prospectus); the Fund may also make loans of portfolio securities (see
"Loans of Portfolio Securities") and enter into repurchase agreements
(see "Repurchase Agreements");

(f) Pledge, mortgage or hypothecate its assets to an extent greater than
10% of the value of the total assets of the Fund; however, this does
not prohibit the escrow arrangements contemplated by the put and call
activities of the Fund or other collateral or margin arrangements in
connection with any of the Hedging Instruments which it may use as
permitted by any of its other fundamental policies;

(g) As a non-fundamental policy, invest in or hold securities of any
issuer if officers or Trustees of the Company or SCMI individually
owning more than 0.5% of the securities of such issuer together own
more than 5% of the securities of such issuer;

(h) Invest in companies for the purpose of acquiring control or management
thereof;

(i) Invest in interests in oil, gas or other mineral exploration or
development programs but may purchase readily marketable securities of
companies which operate, invest in, or sponsor such programs; or

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<PAGE>

(j) Invest in real estate or in interests in real estate, but may purchase
readily marketable securities of companies holding real estate or
interests therein.

MANAGEMENT

TRUSTEES AND OFFICERS

The following information relates to the principal occupations of each Trustee
and executive officer of the Company during the past five years and shows the
nature of any affiliation with SCMI.

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

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

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

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

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<PAGE>

ROBERT JACKOWITZ, 787 Seventh Avenue, New York, New York - Treasurer of the
Trust - Vice President of SCMI since September 1995 and Assistant Treasurer
since January 1990.

BARBARA GOTTLIEB, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust - [business history].

GERARDO MACHADO, 787 Seventh Avenue, New York, New York - Assistant Secretary of
the Trust - Assistant Portfolio Manager, SCMI.

(a) Interested Trustee of the Trust within the meaning of the 1940 Act.

(b) Schroder Advisors is a wholly-owned subsidiary of SCMI, which is a wholly-
owned subsidiary of Schroders Incorporated, which in turn is an indirect,
wholly-owned subsidiary of Schroders plc.

The following table provides the fees paid to each Trustee of the Trust for the
fiscal year ended October 31, 1995.

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<PAGE>

<S> <C> <C> <C> <C>
Mr. Guernsey $4,000 $0 $0 $4000
Mr. Hansmann 3,500 0 0 3,500
Mr. Howell 4,000 0 0 4,000

Ms. Luckyn-Malone 0 0 0 0
Mr. Michalis 3,000 0 0 3,000
Mr. Schwab 7,000 0 0 7,000

Mr. Smith 0 0 0 0
</TABLE>

As of December 22, 1995, the officers and Trustees of the Trust owned, in the
aggregate, less than 1% of the Fund's outstanding shares.

INVESTMENT ADVISER

Schroder Capital Management International Inc. ("SCMI"), 787 Seventh Avenue, New
York, New York 10019, serves as Investment Adviser to the Fund pursuant to an
Investment Advisory Contract dated July 27, 1993. SCMI is a wholly-owned United
States subsidiary of Schroders Incorporated, the wholly-owned United States
holding company subsidiary of Schroders plc. Schroders plc is the holding
company parent of a large worldwide group of banks and financial service
companies (referred to as the "Schroder Group"), with associated companies and
branch and representative offices located in seventeen countries worldwide. The
Schroder Group specializes in providing investment management services, with
Group funds under management currently in excess of $90 billion.

SCMI manages the investment and reinvestment of the assets included in the
Fund's portfolio and continuously reviews, supervises and administers the Fund's
investments. In this regard, it is the responsibility of SCMI to make decisions
relating to the Fund's investments and to place purchase and sale orders
regarding such investments with brokers or dealers selected by it in its
discretion. SCMI also furnishes to the Board of Trustees, which has overall
responsibility for the business and affairs of the Trust, periodic reports on
the investment performance of the Fund.

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

-12-
<PAGE>

the Fund on 60 days' written notice to the Adviser, or by the Adviser on 60
days' written notice to the Trust and it will terminate automatically if
assigned. The Investment Advisory Contract also provides that, with respect to
the Fund, neither SCMI nor its personnel shall be liable for any error of
judgment or mistake of law or for any act or omission in the performance of its
or their duties to the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of the SCMI's or their duties or by reason of
reckless disregard of its or their obligations and duties under the Investment
Advisory Contract.

For its services, the Fund pays SCMI a monthly fee equal on an annual basis to
0.50% of its average daily net assets for the first $100 million of the Fund's
net assets, 0.40% of the next $150 million of average daily assets, and 0.35% of
the Fund's average daily net assets in excess of $250 million. For the period
from commencement of operations through October 31, 1993, SCMI received fees of
$11,958. For the fiscal years ended October 31, 1994 and 1995, SCMI received
fees of $63,210 and $71,188, respectively.

ADMINISTRATIVE SERVICES

For these services, Schroder Advisors will receive from the Fund a fee, payable
monthly, at the annual rate of 0.25% of the Fund's average daily net assets for
the first $100 million of the Fund's average daily net assets, 0.20% of the next
$150 million of average daily net assets and 0.175% of the Fund's average daily
net assets in excess of $250 million. The fees paid by the Fund to SCMI and
Schroder Advisors therefore may equal up to 0.75% of the Fund's average daily
net assets. For the period from commencement of operations through October 31,
1993, Schroder Advisors received fees of $5,979. For the fiscal years ended
October 31, 1994 and 1995, Schroder Advisors received fees of $31,690 and
$35,594, respectively. Payment for Forum's services is made by Schroder
Advisors and is not a separate expense of the Fund.

DISTRIBUTION OF FUND SHARES

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<PAGE>

connection with the distribution of Fund shares, and (d) payments to broker-
dealers (other than the Distributor) or other organizations (other than banks)
for services rendered in the distribution of the Fund's shares, including
payments in amounts based on the average daily value of Fund shares owned by
shareholders in respect of which the broker-dealer or organization has a
distributing relationship. Any payment or reimbursement made pursuant to the
Plan is contingent upon the Board of Trustees' approval. The Fund will not be
liable for distribution expenditures made by the Distributor in any given year
in excess of the maximum amount (0.50% per annum of the Fund's average daily net
assets) payable under the Plan in that year. Salary expense of salesmen who are
responsible for marketing shares of the Fund may be allocated to various
portfolios of the Trust that have adopted a Plan similar to that of the Fund on
the basis of average net assets; travel expense is allocated to, or divided
among, the particular portfolios of the Trust for which it is incurred. The
Board of Trustees has concluded that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.

Schroder Advisors was appointed Distributor of the Fund's shares under the Plan
pursuant to an agreement approved by the Board of Trustees of the Trust at a
meeting held on November 2, 1992. Under such agreement, Schroder Advisors is
not obligated to sell any specific amount of Fund shares.

The Plan provides that it may not be amended to increase materially the costs
which the Fund may bear pursuant to the Plan without shareholder approval and
that other material amendments of the Plan must be approved by the Board of
Trustees, and by the Trustees who are neither "interested persons" (as defined
in the 1940 Act) of the Trust nor have any direct or indirect financial interest
in the operation of the Plan or in any related agreement, by vote cast in person
at a meeting called for the purpose of considering such amendments. The
selection and nomination of the Trustees of the Trust has been committed to the
discretion of the Trustees who are not "interested persons" of the Trust. The
Plan has been approved, and is subject to annual approval, by the Board of
Trustees and by the Trustees who are neither "interested persons" nor have any
direct or indirect financial interest in the operation of the Plan, by vote cast
in person at a meeting called for the purpose of voting on the Plan. The Board
of Trustees and the Trustees who are not "interested persons" and who have no
direct or indirect financial interest in the operation of the Plan voted to
approve the Plan at a meeting held on November 2, 1992. The Plan was approved
by the initial shareholders of the Fund at a meeting held on July 27, 1993. At
a meeting held on November 21, 1994, the Board of Trustees and the Trustees who
are not "interested persons" and who have no direct or indirect financial
interest in the operation of the Plan voted to continue the Plan for the one-
year period ending February 1, 1996. The Plan is terminable with respect to the
Fund at any time by a vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial interest in
the operation of the Plan or by vote of the holders of a majority of the shares
of the Fund.

During the period from commencement of operations through October 31, 1995, the
Fund spent, respectively, pursuant to the Plan, the following amounts on:

Period Ended
10/31/95
----------

advertising $ -0-

printing and mailing ofprospectuses to other than $ -0-
current shareholders

compensation to underwriters $ -0-

compensation to dealers $ -0-

compensation to sales personnel $ -0-

interest, carrying, or other financing charges $ -0-

-14
<PAGE>

SERVICE ORGANIZATIONS

The Fund may also contract with banks, trust companies, broker-dealers or other
financial organizations ("Service Organizations") to provide certain
administrative services for the Fund. The Fund could pay fees to Service
Organizations (which vary depending upon the services provided) in amounts up to
an annual rate of 0.25% of the daily net asset value of the Fund's shares owned
by shareholders with whom the Service Organization had a servicing relationship.
Services provided by Service Organizations may include, among other things:
providing necessary personnel and facilities to establish and maintain certain
shareholder accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds; transmitting and
receiving funds in connection with client orders to purchase or redeem shares;
verifying and guaranteeing client signatures in connection with redemption
orders, transfers among and changes in client-designated accounts; providing
periodic statements showing a client's account balances and, to the extent
practicable, integrating such information with other client transactions;
furnishing periodic and annual statements and confirmations of all purchases and
redemptions of shares in a client's account; transmitting proxy statements,
annual reports, and updating prospectuses and other communications from the Fund
to clients; and such other services as the Fund or a client reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
Neither SCMI nor Schroder Advisors will be a Service Organization or receive
fees for servicing.

Some Service Organizations could impose additional or different conditions on
their clients, such as requiring their clients to invest more than the minimum
initial or subsequent investments specified by the Fund or charging a direct fee
for servicing. If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Fund. Each Service
Organization would agree to transmit to its clients a schedule of any such fees.
Shareholders using Service Organizations would be urged to consult them
regarding any such fees or conditions.

The Glass-Steagall Act and other applicable laws provide that banks may not
engage in the business of underwriting, selling or distributing securities.
There currently is no precedent prohibiting banks from performing administrative
and shareholder servicing functions as Service Organizations. However, judicial
or administrative decisions or interpretations of such laws, as well as changes
in either federal or state statutes or regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, could prevent a bank
service organization from continuing to perform all or a part of its servicing
activities. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders of the Fund and alternative means for
continuing the servicing of such shareholders would be sought. In that event,
changes in the operation of the Fund might occur and a shareholder serviced by
such a bank might no longer be able to avail itself of any services then being
provided by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.

PORTFOLIO ACCOUNTING

-15-
<PAGE>

FEES AND EXPENSES

As compensation for the advisory, administrative and management services
rendered to the Fund, SCMI and Schroder Advisors will each earn monthly fees at
the following annual rates:

Portion of average daily value Fee Rate
of the Fund's net assets SCMI Schroder Advisors
- ------------------------ ---- -----------------

up to $100 million 0.50% 0.25%
$100 million to $250 million 0.40% 0.20%
over $250 million 0.35% 0.175%

However, certain of the states in which the shares of the Fund may be qualified
for sale impose limitations on the expenses of the Fund. If, in any fiscal
year, the total expenses of the Fund (excluding taxes, interest, expenses under
the Plan, brokerage commissions and other portfolio transaction expenses, other
expenditures which are capitalized in accordance with generally accepted
accounting principles and extraordinary expenses, but including the advisory and
administrative fees) exceed the expense limitations applicable to the Fund
imposed by the securities regulations of any such state, SCMI will reimburse the
Fund for 2/3 of the excess, and Schroder Advisors, the remaining 1/3 of the
excess. As of the date of this SAI, the Fund believes that the most restrictive
state expense limitation which might be applicable to the Fund requires
reimbursement of expenses in any year that applicable Fund expenses exceed 2
1/2% of the first $30 million of the average daily value of Fund net assets, 2%
of the next $70 million of the average daily value of Fund net assets and 1 1/2%
of the remaining average daily value of Fund net assets. For the period from
commencement of operations through October 31, 1995, no payments pursuant to
these limitations were required.

Except for the expenses paid by SCMI or Schroder Advisors, the Fund bears all
costs of its operations.

PORTFOLIO TRANSACTIONS

INVESTMENT DECISIONS

-16-
<PAGE>

insofar as is possible, averaged as to price and allocated between such clients
in a manner which in SCMI's opinion is equitable to each and in accordance with
the amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients.

BROKERAGE AND RESEARCH SERVICES

The Investment Advisory Contract authorizes and directs SCMI to place orders for
the purchase and sale of the Fund's investments with brokers or dealers selected
by SCMI in its discretion and to seek "best execution" of such portfolio
transactions. SCMI places all such orders for the purchase and sale of
portfolio securities and buys and sells securities for the Fund through a
substantial number of brokers and dealers. In so doing, SCMI uses its best
efforts to obtain for the Fund the most favorable price and execution available.
The Fund may, however, pay higher than the lowest available commission rates
when SCMI believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the
transaction. In seeking the most favorable price and execution, SCMI, having in
mind the Fund's best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the transaction, the
nature of the market for the security, the amount of the commission, the timing
of the transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealers involved and the
quality of service rendered by the broker-dealers in other transactions.

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

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

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

-17-
<PAGE>

The Fund has no understanding or arrangement to direct any specific portion of
its brokerage to Schroder Wertheim and will not direct brokerage to Schroder
Wertheim in recognition of research services. The Fund paid no commissions to
Schroder Wertheim during the fiscal years ended October 31, 1993, 1994 and 1995.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

DETERMINATION OF NET ASSET VALUE PER SHARE

The net asset value per share of the Fund is determined each day the New York
Stock Exchange (the "Exchange") is open as of 4:00 P.M. New York time that day,
by dividing the value of the Fund's net assets by the total number of Fund
shares outstanding. The Exchange's most recent holiday schedule (which is
subject to change) states that it will close on New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days.

The Trust's Board of Trustees has established procedures for the valuation of
the Fund's securities: (i) equity securities traded on a securities exchange or
on the NASDAQ National Market System for which last sale information is
regularly reported are valued at the last reported sales prices on their primary
exchange or the NASDAQ National Market System that day (or, in the absence of
sales that day, at values based on the last sale prices on the preceding trading
day or closing mid-market prices); (ii) NASDAQ and other unlisted equity
securities for which last sale prices are not regularly reported but for which
over-the-counter market quotations are readily available are valued at the most
recently reported mid-market prices; (iii) securities (including restricted
securities) not having readily-available market quotations are valued at fair
value under the Board's procedures; (iv) debt securities having a maturity in
excess of 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; and (v) 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 discount.

Puts, calls and Stock Index Futures are valued at the last sales price on the
principal exchange on which they are traded, or, if there are no transactions,
in accordance with (i) above. When the Fund writes an option, an amount equal
to the premium received by the Fund is recorded in the Fund's books as an asset,
and an equivalent deferred credit is recorded as a liability. The deferred
credit is adjusted ("marked-to-market") to reflect the current market value of
the option.

REDEMPTION IN KIND

-18-
<PAGE>

shareholder and conversion to cash. A redemption in kind of the Fund's
portfolio securities could result in a less diversified portfolio of investments
for the Fund and could affect adversely the liquidity of the Fund's portfolio.

TAXATION

The Fund intends to qualify as a regulated investment company under Subchapter M
of the Code. To qualify as a regulated investment company the Fund intends to
distribute to shareholders at least 90% of its "investment company taxable
income" as defined in the Code (which includes, among other items, dividends,
interest and the excess of any net short-term capital gains over net long-term
capital losses), and to meet certain diversification of assets, source of
income, and other requirements of the Code. By so doing, the Fund will not be
subject to Federal income tax on its investment company taxable income and "net
capital gains" (the excess of net long-term capital gains over net short-term
capital losses) distributed to shareholders. If the Fund does not meet all of
these Code requirements, it will be taxed as an ordinary corporation, and its
distributions will be taxable to shareholders as ordinary income.

Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Fund must distribute for each calendar
year an amount equal to the sum of (1) at least 98% of its ordinary income
(excluding any capital gains or losses) for the calendar year, (2) at least 98%
of the excess of its capital gains over capital losses realized during the one-
year period ending October 31 of such year, and (3) all such ordinary income and
capital gains for previous years that were not distributed during such years. A
distribution will be treated as paid during the calendar year if it is declared
by the Fund in October, November or December of the year with a record date in
such month and paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.

Distributions of investment company taxable income (including realized net
short-term capital gain) are taxable to shareholders as ordinary income.
Generally, dividends of investment income (but not capital gain) from the Fund
will qualify for the Federal dividends-received deduction for corporate
shareholders to the extent such dividends do not exceed the aggregate amount of
dividends received by the Fund from domestic corporations, provided the Fund
shares are held by said shareholders for more than 45 days. If securities held
by the Fund are considered to be "debt-financed" (generally, acquired with
borrowed funds), are held by the Fund for less than 46 days (91 days in the case
of certain preferred stock), or are subject to certain forms of hedges or short
sales, the portion of the dividends paid by the Fund which corresponds to the
dividends paid with respect to such securities will not be eligible for the
corporate dividends-received deduction.

Distributions of net long-term capital gain are taxable to shareholders as long-
term capital gain, regardless of the length of time the Fund shares have been
held by a shareholder, and are not eligible for the dividends received
deduction. A loss realized by a shareholder on the sale of shares of the Fund
with respect to which capital gain dividends have been paid will, to the extent
of such capital gain dividends, be treated as long-term capital loss although
such shares may have been held by the shareholder for one year or less.
Further, a loss realized on a disposition will be disallowed to the extent the
shares disposed of are replaced (whether by reinvestment of distributions or
otherwise) within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of. In such a case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss.

-19-
<PAGE>

The Trust will be required to report to the Internal Revenue Service (the "IRS")
all distributions as well as gross proceeds from the redemption of Fund shares,
except in the case of certain exempt shareholders. 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 shareholders if (1)
the shareholder fails to furnish the Trust with and to certify the shareholder's
correct taxpayer identification number or social security number, (2) the IRS
notifies the Trust that the shareholder 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 shareholder fails to certify that he
is not subject to backup withholding. If the withholding provisions are
applicable, any such distributions or proceeds, whether reinvested in additional
shares or taken in cash, will be reduced by the amount required to be withheld.
Any amounts withheld may be credited against the shareholder's Federal income
tax liability. Investors may wish to consult their tax advisers about the
applicability of the backup withholding provisions.

The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be
subject to state and local taxes, and their treatment under state and local
income tax laws may differ from the Federal income tax treatment. Shareholders
should consult their tax advisers with respect to particular questions of
Federal, state and local taxation. Shareholders who are not U.S. persons should
consult their tax advisers regarding U.S. and foreign tax consequences of
ownership of shares of the Fund including the likelihood that distributions to
them would be subject to withholding of U.S. tax at a rate of 30% (or a lower
rate under a tax treaty).

OTHER INFORMATION

ORGANIZATION

-20-
<PAGE>

loss on account of shareholder liability is limited to circumstances in which
Delaware law does not apply (or no contractual limitation of liability was in
effect) and the portfolio is unable to meet its obligations. Forum believes
that, in view of the above, there is no risk of personal liability to
shareholders.

CAPITALIZATION AND VOTING

-21-
<PAGE>

PRINCIPAL SHAREHOLDERS

As of December 22, 1995, the following persons owned of record or beneficially
5% or more of the Fund's shares:

SHAREHOLDER SHARE BALANCE PERCENT OF FUND
- ----------- ------------- ---------------

Schroder Nominees Limited 967,861.834 86.66%
120 Cheapside
London EC2V 6DS England

Gracechurch Co. 145,548.345 13.04%
75 Wall Street
New York, NY 10265

PERFORMANCE INFORMATION

The Fund may, from time to time, include quotations of its average annual total
return in advertisements or reports to shareholders or prospective investors.

P (1+T)(n) = ERV

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses (net of certain
reimbursed expenses) on an annual basis, and will assume that all dividends and
distributions are reinvested when paid.

For the period from commencement of operations on August 6, 1993 through October
31, 1995, the average annual total return of the Fund was 22.57%. For the
fiscal year ended October 31, 1995, the average annual total return of the Fund
was 32.84%.

Investors who purchase and redeem shares of the Fund through a customer account
maintained at a Service Organization may be charged one or more of the following
types of fees as agreed upon by the Service Organization and the investor, with
respect to the customer services provided by the Service Organization: account
fees (a fixed amount per month or per year); transaction fees (a fixed amount
per transaction processed); compensating balance requirements (a minimum dollar
amount a customer must maintain in order to obtain the services offered); or
account maintenance fees (a periodic charge based upon a percentage of the
assets in the account or of the dividends paid on these assets). Such fees will
have the effect of reducing the average annual total return of the Fund for
those investors.

-22-
<PAGE>

CUSTODIAN

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

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Forum Financial Corp., Portland, Maine, acts as the Fund's transfer agent and
dividend disbursing agent.

LEGAL COUNSEL

Jacobs Persinger & Parker, 77 Water Street, New York, New York 10005, counsel
to the Fund, passes upon certain legal matters in connection with the shares
offered by the Fund.

INDEPENDENT ACCOUNTANT

FINANCIAL STATEMENTS

-23-
<PAGE>

SCHRODER EMERGING MARKETS FUND
INSTITUTIONAL PORTFOLIO
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101

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

GENERAL INFORMATION: (207) 879 8903
ACCOUNT INFORMATION: (800) 344 8332
FAX: (207) 879 6206

- -------------------------------------------------------------------------------
SCHRODER CAPITAL MANAGEMENT INTERNATIONAL INC. - INVESTMENT ADVISER
SCHRODER FUND ADVISORS INC. - ADMINISTRATOR AND DISTRIBUTOR

STATEMENT OF ADDITIONAL INFORMATION

Schroder Emerging Markets Fund Institutional Portfolio (the "Fund") is a non-
diversified, separately-managed portfolio of Schroder Capital Funds (Delaware)
(the "Trust"), an open-end management investment company currently consisting of
five separate portfolios, each of which has different investment objectives and
policies. The Fund's investment objective is to achieve long-term capital
appreciation through direct or indirect investment in equity and debt securities
of issuers domiciled or doing business in emerging market countries in regions
such as Southeast Asia, Latin America, and Eastern and Southern Europe. There
is no assurance that the Fund will achieve this objective. Furthermore,
investing in securities of emerging market issuers involves special risks in
addition to those associated with investments in securities of U.S. issuers.
See "The Fund - Special Risk Considerations." The Fund currently seeks to
achieve its investment objective by holding, as its only investment securities,
the securities of Schroder Emerging Markets Fund Institutional Portfolio (the
"Portfolio"), a separate portfolio of a registered open-end management
investment company ("Core Trust").

January 9, 1996

<PAGE>

TABLE OF CONTENTS

INVESTMENT POLICIES
Introduction
Convertible Securities
Debt-to-Equity Conversions
U.S. Government Securities
Bank Obligations
Short-Term Debt Securities
Repurchase Agreements
Illiquid and Restricted Securities
Loans of Portfolio Securities
Forward Foreign Currency
Exchange Contracts
Options and Hedging

INVESTMENT RESTRICTIONS

MANAGEMENT
Officers and Trustees
Investment Adviser
Administrative Services
Distribution of Fund Shares
Service Organizations
Fees and Expenses

PORTFOLIO TRANSACTIONS
Investment Decisions
Brokerage and Research Services

ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION
Determination of Net Asset Value
Per Share
Redemption in Kind

TAXATION

OTHER INFORMATION
Organization
Capitalization and Voting
Custodian
Transfer Agent and Dividend Disbursing Agent
Performance Information
Legal Counsel
Independent Accountant

APPENDIX - Ratings of
Corporate Debt Instruments
and Countries Excluded from
Emerging Markets Category A-1

-2-
<PAGE>

INVESTMENT POLICIES

INTRODUCTION

The Fund's investment objective and policies authorize it to invest in certain
types of securities and to engage in certain investment techniques as identified
in "Investment Objective," "Investment Policies" and "Additional Investment
Policies" in the Prospectus. The following supplements the discussion found in
those sections by providing additional information or elaborating upon the
discussion with respect to certain of those securities and techniques. The Fund
currently seeks to achieve its investment objective by investing all of its
investment assets in the Portfolio, which has the same investment objective and
policies. As the Fund has the same investment policies as the Portfolio and
currently invests all of its assets in the Portfolio, investment policies are
discussed with respect to the Portfolio only.

CONVERTIBLE SECURITIES

The Portfolio may invest in convertible preferred stocks and convertible debt
securities. A convertible security is a bond, debenture, note, preferred stock
or other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. Convertible securities rank
senior to common stocks in a corporation's capital structure and, therefore,
entail less risk than the corporation's common stock. The value of a
convertible security is a function of its "investment value" (its value as if it
did not have a conversion privilege), and its "conversion value" (the security's
worth if it were to be exchanged for the underlying security, at market value,
pursuant to its conversion privilege).

DEBT-TO-EQUITY CONVERSIONS

The Portfolio may participate in up to 5% of its net assets in debt-to-equity
conversions. Debt-to-equity conversion programs are sponsored in varying
degrees by certain emerging market countries, particularly in Latin America, and
permit investors to use external debt of a country to make equity investments in
local companies. Many conversion programs relate primarily to investments in
transportation, communication, utilities and similar infrastructure related
areas. The terms of the programs vary from country to country, but include
significant restrictions on the application of the proceeds received in the
conversion and on the repatriation of investment profits and capital. In
inviting conversion applications by holders of eligible debt, a government will
usually specify a minimum discount from par value that it will accept for
conversion. The Adviser believes that debt-to-equity conversion programs may
offer investors opportunities to invest in otherwise restricted equity
securities with a potential for significant capital appreciation and, to a
limited extent, intends to invest assets of the Portfolio in such programs in
appropriate circumstances. There can be no assurance that debt-to-equity
conversion programs will continue or be successful or that the Portfolio will be
able to convert all or any of its emerging market debt portfolio into equity
investments.

U.S. GOVERNMENT SECURITIES

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

-3-
<PAGE>

BANK OBLIGATIONS

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

SHORT-TERM DEBT SECURITIES

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

REPURCHASE AGREEMENTS

ILLIQUID AND RESTRICTED SECURITIES

"Illiquid and Restricted Securities" under "Additional Investment Policies" in
the Prospectus sets forth the circumstances in which the Portfolio may invest in
"restricted securities." In connection with the Portfolio's original purchase
of restricted securities it may negotiate rights with the issuer to have such
securities registered for sale at a later time. Further, the expenses of
registration of restricted securities that are illiquid may also be negotiated
by the Portfolio with the issuer at the time such securities are purchased by
the Portfolio. When registration is required, however, a considerable period
may lapse between a decision to sell the securities and the time the Portfolio
would be permitted to sell such securities. A similar delay might be
experienced in attempting to sell such securities pursuant to an exemption from
registration. Thus, the Portfolio may not be able to obtain as favorable a
price as that prevailing at the time of the decision to sell.

LOANS OF PORTFOLIO SECURITIES

The Portfolio may lend its portfolio securities subject to the restrictions
stated in the Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral must, on each business day, at least
equal the market value of the loaned securities and must consist of cash, bank
letters of credit, U.S. Government securities, or other cash equivalents in
which the Portfolio is permitted to invest. To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the Portfolio
if the demand meets the terms of

-4-
<PAGE>

the letter. Such terms and the issuing bank must be satisfactory to the
Portfolio. In a portfolio securities lending transaction, the Portfolio
receives from the borrower an amount equal to the interest paid or the dividends
declared on the loaned securities during the term of the loan as well as the
interest on the collateral securities, less any finders' or administrative fees
the Portfolio pays in arranging the loan. The Portfolio may share the interest
it receives on the collateral securities with the borrower as long as it
realizes at least a minimum amount of interest required by the lending
guidelines established by the Trust's Board of Trustees (the "Board"). The
Portfolio will not lend its portfolio securities to any officer, director,
employee or affiliate of the Portfolio or SCMI. The terms of the Portfolio's
loans must meet certain tests under the Internal Revenue Code and permit the
Portfolio to reacquire loaned securities on five business days' notice or in
time to vote on any important matter.

Portfolio securities purchased with cash collateral are subject to possible
depreciation. Loans of securities by the Portfolio will be subject to
termination at the Portfolio's or the borrower's option. The Portfolio may pay
reasonable negotiated fees in connection with loaned securities, so long as such
fees are set forth in a written contract and approved by Core Trust's Board of
Trustees.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

To hedge against adverse price movements in the securities held in its portfolio
and the currencies in which they are denominated (as well as in the securities
it might wish to purchase and their denominated currencies) the Portfolio may
engage in transactions in forward foreign currency contracts.

A forward foreign currency exchange contract ("forward contract") involves an
obligation to purchase or sell a 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. The Portfolio may enter into
forward contracts as a hedge against fluctuations in future foreign exchange
rates.

Currently, only a limited market, if any, exists for hedging transactions
relating to currencies in many emerging market countries or to securities of
issuers domiciled or principally engaged in business in emerging market
countries. This may limit the Portfolio's ability to effectively hedge its
investments in those emerging markets. Hedging against a decline in the value
of a currency does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of such securities decline. Such
transactions also limit the opportunity for gain if the value of the hedged
currencies should rise. In addition, it may not be possible for the Portfolio
to hedge against a devaluation that is so generally anticipated that the
Portfolio is not able to contract to sell the currency at a price above the
devaluation level it anticipates.

The Portfolio will enter into forward contracts under certain instances. When
the Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may, for example, wish to secure the price
of the security in U.S. dollars or some other foreign currency which the
Portfolio is temporarily holding in its portfolio. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars or other
currency, of the amount of foreign currency involved in the underlying security
transactions, the Portfolio will be able to protect itself against a possible
loss resulting from an adverse change in the relationship between the U.S.
dollar or other currency which is being used for the security purchase and the
foreign currency in which the security is denominated during the period between
the date on which the security is purchased or sold and the date on which
payment is made or received.

In addition, when the Portfolio anticipates purchasing securities at some future
date, and wishes to secure the current exchange rate of the currency in which
those securities are denominated against the U.S. dollar or some other foreign
currency, it may enter into a forward contract to purchase an amount of currency
equal to part or all of the value of the anticipated purchase, for a fixed
amount of U.S. dollars or other currency.

In all of the above instances, if the currency in which the Portfolio's
portfolio securities (or anticipated portfolio securities) are denominated rises
in value with respect to the currency which is being purchased, then the
Portfolio will have realized fewer gains than if the Portfolio had not entered
into the forward contracts. Furthermore, the precise matching of the forward
contract amounts and the value of the securities involved will not generally be

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possible, since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the date the forward contract is entered into and the date it matures.

To the extent that the Portfolio enters into forward foreign currency contracts
to hedge against a decline in the value of portfolio holdings denominated in a
particular foreign currency resulting from currency fluctuations, there is a
risk that the Portfolio may nevertheless realize a gain or loss as a result of
currency fluctuations after such portfolio holdings are sold should the
Portfolio be unable to enter into an "offsetting" forward foreign currency
contract with the same party or another party. The Portfolio may be limited in
its ability to enter into hedging transactions involving forward contracts by
the Internal Revenue Code requirements relating to qualifications as a regulated
investment company (see "Taxation").

The Portfolio is not required to enter into such transactions with regard to its
foreign currency-denominated securities and will not do so unless deemed
appropriate by the Adviser. Generally, the Portfolio will not enter into a
forward contract with a term of greater than one year.

OPTIONS AND HEDGING

As discussed in the Prospectus, the Portfolio may write covered call options
against securities held in its portfolio and covered put options on eligible
portfolio securities and purchase options of the same series to effect closing
transactions, and may hedge against potential changes in the market value of its
investments (or anticipated investments) by purchasing put and call options on
portfolio (or eligible portfolio) securities (and the currencies in which they
are denominated) and engaging in transactions involving futures contracts and
options on such contracts.

Call and put options on U.S. Treasury notes, bonds and bills and on various
foreign currencies are listed on several U.S. and foreign securities exchanges
and are written in over-the-counter transactions ("OTC Options"). Listed
options are issued or guaranteed by the exchange on which they trade or by a
clearing corporation such as the Options Clearing Corporation ("OCC").
Ownership of a listed call option gives the Portfolio the right to buy from the
OCC (in the U.S.) or other clearing corporation or exchange, the underlying
security or currency covered by the option at the stated exercise price (the
price per unit of the underlying security or currency) by filing an exercise
notice prior to the expiration date of the option. The writer (seller) of the
option would then have the obligation to sell, to the OCC (in the U.S.) or other
clearing corporation or exchange, the underlying security or currency at that
exercise price prior to the expiration date of the option, regardless of its
then current market price. Ownership of a listed put option would give the
Portfolio the right to sell the underlying security or currency to the OCC (in
the U.S.) or other clearing corporation or exchange at the stated exercise
price. Upon notice of exercise of the put option, the writer of the option
would have the obligation to purchase the underlying security or currency from
the OCC (in the U.S.) or other clearing corporation or exchange at the exercise
price.

The OCC or other clearing corporation or exchange which issues listed options
assures that all transactions in such options are properly executed. OTC
options are purchased from or sold (written) to dealers or financial
institutions which have entered into direct agreements with the Portfolio. With
OTC options, such variables as expiration date, exercise price and premium will
be agreed between the Portfolio and the transacting dealer. If the transacting
dealer fails to make or take delivery of the securities or amount of foreign
currency underlying an option it has written, the Portfolio would lose the
premium paid for the option as well as any anticipated benefit of the
transaction. The Portfolio will engage in OTC option transactions only with
member banks of the Federal Reserve System or primary dealers in U.S. Government
securities or with affiliates of such banks or dealers which have capital of at
least $50 million or whose obligations are guaranteed by an entity having
capital of at least $50 million.

OPTIONS ON FOREIGN CURRENCIES. The Portfolio may purchase and write options on
foreign currencies for purposes similar to those involved with investing in
forward foreign currency exchange contracts. For example, in order to protect
against declines in the dollar value of portfolio securities which are
denominated in a foreign currency, the Portfolio may purchase put options on an
amount of such foreign currency equivalent to the current value of the portfolio
securities involved. As a result, the Portfolio would be able to sell the
foreign currency for a fixed amount of U.S. dollars, thereby securing the dollar
value of the portfolio securities (less the amount of the premiums paid

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<PAGE>

for the options). Conversely, the Portfolio may purchase call options on
foreign currencies in which securities it anticipates purchasing are denominated
to secure a set U.S. dollar price for such securities and protect against a
decline in the value of the U.S. dollar against such foreign currency. The
Portfolio may also purchase call and put options to close out written option
positions.

The Portfolio may also write covered call options on foreign currency to protect
against potential declines in its portfolio securities which are denominated in
foreign currencies. If the U.S. dollar value of the portfolio securities falls
as a result of a decline in the exchange rate between the foreign currency in
which it is denominated and the U.S. dollar, then a loss to the Portfolio
occasioned by such value decline would be ameliorated by receipt of the premium
on the option sold. At the same time, however, the Portfolio gives up the
benefit of any rise in value of the relevant portfolio securities above the
exercise price of the option and, in fact, only receives a benefit from the
writing of the option to the extent that the value of the portfolio securities
falls below the price of the premium received. The Portfolio may also write
options to close out long call option positions. A covered put option on a
foreign currency would be written by the Portfolio for the same reason it would
purchase a call option, namely, to hedge against an increase in the U.S. dollar
value of a foreign security which the Portfolio anticipates purchasing. Here,
the receipt of the premium would offset, to the extent of the size of the
premium, any increased cost to the Portfolio resulting from an increase in the
U.S. dollar value of the foreign security. However, the Portfolio could not
benefit from any decline in the cost of the foreign security which is greater
than the price of the premium received. The Portfolio may also write options to
close out long put option positions.

The markets in foreign currency options are relatively new and the Portfolio's
ability to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although the Portfolio will not
purchase or write such options unless and until, in the opinion of the Adviser,
the market for them has developed sufficiently to ensure that the risks in
connection with such options are not greater than the risks in connection with
the underlying currency, there can be no assurance that a liquid secondary
market will exist for a particular option at any specific time. In addition,
options on foreign currencies are affected by all of those factors which
influence foreign exchange rates and investments generally.

The value of a foreign currency option depends upon the value of the underlying
currency relative to the U.S. dollar. As a result, the price of the option
position may vary with changes in the value of either or both currencies and
have no relationship to the investment merits of a foreign security, including
foreign securities held in a "hedged" investment portfolio. 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
or any regulatory requirement that quotations available through dealers or other
market sources be firm or revised on a timely basis. Quotation information
available is generally representative of very large transactions in the
interbank market and thus may not reflect relatively smaller transactions (i.e.,
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 are not reflected in the options market.

COVERED CALL WRITING. The Portfolio is permitted to write covered call options
on portfolio securities and on the U.S. dollar and foreign currencies in which
they are denominated, without limit. Generally, a call option is "covered" if
the Portfolio owns, or has the right to acquire, without additional cash
consideration (or for additional cash consideration held for the Portfolio by
its Custodian in a segregated account) the underlying security (currency)
subject to the option except that in the case of call options on U.S. Treasury
Bills, the Portfolio might own U.S. Treasury Bills of a different series from
those underlying the call option, but with a principal amount and value
corresponding to the exercise price and a maturity date no later than that of
the security (currency) deliverable under the call option. A call option is
also covered if the Portfolio holds a call on the same security as the
underlying security (currency) of the written option, where the exercise price
of the call used for coverage is equal to or less than the exercise price of the
call or greater than the exercise price of the call written if the mark to
market

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<PAGE>

difference is maintained by the Portfolio in cash, U.S. Government securities or
other high grade debt obligations which the Portfolio holds in a segregated
account maintained with its custodian.

The Portfolio will receive from the purchaser, in return for a call it has
written, a premium. Receipt of such premiums may enable the Portfolio to earn a
higher level of current income than it would earn from holding the underlying
securities (currencies) alone. Moreover, the premium received will offset a
portion of the potential loss incurred by the Portfolio if the securities
(currencies) underlying the option are ultimately sold (exchanged) by the
Portfolio at a loss. Furthermore, a premium received on a call written on a
foreign currency will ameliorate any potential loss of value on the portfolio
security due to a decline in the value of the currency. However, during the
option period, the covered call writer has, in return for the premium, given up
the opportunity for capital appreciation above the exercise price should the
market price of the underlying security (or the exchange rate of the currency in
which it is denominated) increase, but has retained the risk of loss should the
price of the underlying security (or the exchange rate of the currency in which
it is denominated) decline. The premium received will fluctuate with varying
economic market conditions. If the market value of the portfolio securities (or
the currencies in which they are denominated) upon which call options have been
written increases, the Portfolio may receive a lower total return from the
portion of its portfolio upon which calls have been written than it would have
had such calls not been written.

With respect to listed options and certain OTC options, during the option
period, the Portfolio may be required, at any time, to deliver the underlying
security (currency) against payment of the exercise price on any calls it has
written (exercise of certain listed and OTC options may be limited to specific
expiration dates). This obligation is terminated upon the expiration of the
option period or at such earlier time when the writer effects a closing purchase
transaction. A closing purchase transaction is accomplished by purchasing an
option of the same series as the option previously written. However, once the
Portfolio has been assigned an exercise notice, the Portfolio will be unable to
effect a closing purchase transaction.

Closing purchase transactions are ordinarily effected to realize a profit on an
outstanding call option, to prevent an underlying security (currency) from being
called, to permit the sale of an underlying security (or the exchange of the
underlying currency) or to enable the Portfolio to write another call option on
the underlying security (currency) with either a different exercise price or
expiration date or both. The Portfolio may realize a net gain or loss from a
closing purchase transaction depending upon whether the amount of the premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. Any loss incurred in a closing purchase
transaction may be wholly or partially offset by unrealized appreciation in the
market value of the underlying security (currency). Conversely, a gain
resulting from a closing purchase transaction could be offset in whole or in
part or exceeded by a decline in the market value of the underlying security
(currency).

If a call option expires unexercised, the Portfolio realizes a gain in the
amount of the premium on the option less the commission paid. Such a gain,
however, may be offset by depreciation in the market value of the underlying
security (currency) during the option period. If a call option is exercised,
the Portfolio realizes a gain or loss from the sale of the underlying security
(currency) equal to the difference between the purchase price of the underlying
security (currency) and the proceeds of the sale of the security (currency) plus
the premium received on the option less the commission paid.

Options written by the Portfolio will normally have expiration dates of up to
eighteen months from the date written. The exercised price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.

COVERED PUT WRITING. As a writer of a covered put option, the Portfolio would
incur an obligation to buy the security underlying the option from the purchaser
of the put, at the option's exercise price at any time during the option period,
at the purchaser's election (certain listed and OTC put options written by the
Portfolio will be exercisable by the purchaser only on a specific date). A put
is "covered" if, at all times, the Portfolio maintains with its custodian, in a
segregated account, cash, U.S. Government securities or other high grade
obligations in an amount equal to at least the exercise price of the option, at
all times during the option period. Similarly, a short put position could be
covered by the Portfolio by its purchase of a put option on the same security
(currency) as the

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<PAGE>

underlying security of the written option, where the exercise price of the
purchased option is equal to or more than the exercise price of the put written
or less than the exercise price of the put written if the marked to market
difference is maintained by the Portfolio in cash, U.S. Government securities or
other high grade debt obligations which the Portfolio holds in a segregated
account maintained at its custodian. In writing puts, the Portfolio assumes the
risk of loss should the market value of the underlying security (currency)
decline below the exercise price of the option (any loss being decreased by the
receipt of the premium on the option written). In the case of listed options,
during the option period, the Portfolio may be required, at any time, to make
payment of the exercise price against delivery of the underlying security
(currency). The operation of and limitations on covered put options in other
respects are substantially identical to those of call options.

The Portfolio will write put options for three purposes: (1) to receive the
income derived from the premiums paid by purchasers; (2) when the Adviser wishes
to purchase the security (or a security denominated in the currency underlying
the option) underlying the option at a price lower than its current market
price, in which case it will write the covered put at an exercise price
reflecting the lower purchase price sought; and (3) to close out a long put
option position. The potential gain on a covered put option is limited to the
premium received on the option (less the commissions paid on the transaction)
while the potential loss equals the differences between the exercise price of
the option and the current market price of the underlying securities
(currencies) when the put is exercised, offset by the premium received (less the
commissions paid on the transaction).

PURCHASING CALL AND PUT OPTIONS. The Portfolio may purchase listed and OTC call
and put options in amounts equaling up to 5% of its total assets. The Portfolio
may purchase a call option in order to close out a covered call position (see
"Covered Call Writing" above), to protect against an increase in price of a
security it anticipates purchasing or, in the case of a call option on foreign
currency, to hedge against an adverse exchange rate move of the currency in
which the security it anticipates purchasing is denominated vis-a-vis the
currency in which the exercise price is denominated. The purchase of the call
option to effect a closing transaction on a call written over-the-counter may be
a listed or an OTC option. In either case, the call purchased is likely to be
on the same securities (currencies) and have the same terms as the written
option. If purchased over-the-counter, the option would generally be acquired
from the dealer or financial institution which purchased the call written by the
Portfolio.

The Portfolio may purchase put options on securities (currencies) which it holds
in its portfolio to protect itself against a decline in the value of the
security and to close out written put option positions. If the value of the
underlying security (currency) were to fall below the exercise price of the put
purchased in an amount greater then the premium paid for the option, the
Portfolio would incur no additional loss. In addition, the Portfolio may sell a
put option which it has previously purchased prior to the sale of the securities
(currencies) underlying such option. Such a sale would result in a net gain or
loss depending on whether the amount received on the sale is more or less than
the premium and other transaction costs paid on the put option which is sold.
Any such gain or loss could be offset in whole or in part by a change in the
market value of the underlying security (currency). If a put option purchased
by the Portfolio expired without being sold or exercised, the premium would be
lost.

RISKS OF OPTIONS TRANSACTIONS. During the option period, the covered call
writer has, in return for the premium on the option, given up the opportunity
for capital appreciation above the exercise price should the market price of the
underlying security (or the value of its denominated currency) increase, but has
retained the risk of loss should the price of the underlying security (or the
value of its denominated currency) decline. The writer has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver or receive the underlying securities at the exercise
price.

Prior to exercise or expiration, an option position can only be terminated by
entering into a closing purchase or sale transaction. If a covered call option
writer is unable to effect a closing purchase transaction or to purchase an
offsetting OTC option, it cannot sell the underlying security until the option
expires or the option is exercised. Accordingly, a covered call option writer
may not be able to sell an underlying security at a time when it might otherwise
be advantageous to do so. A covered put option writer who is unable to effect a
closing purchase transaction or to purchase an offsetting OTC option would
continue to bear the risk of decline in the market price of the underlying
security until the option expires or is exercised. In addition, a covered put
writer would be unable to

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<PAGE>

utilize the amount held in cash or U.S. Government or other high grade short-
term obligations as security for the put option for other investment purposes
until the exercise or expiration of the option.

The Portfolio's ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market on option exchanges.
There is no assurance that such a market will exist, particularly in the case of
OTC options, as such options will generally only be closed out by entering into
a closing purchase transaction with the purchasing dealer. However, the
Portfolio may be able to purchase an offsetting option which does not close out
its position as a writer but constitutes an asset of equal value to the
obligation under the option written. If the Portfolio is not able to either
enter into a closing purchase transaction or purchase an offsetting position, it
will be required to maintain the securities subject to the call, or the
collateral underlying the put, even though it might not be advantageous to do
so, until a closing transaction can be entered into (or the option is exercised
or expires).

Among the possible reasons for the absence of a liquid secondary market on an
exchange are: (i) insufficient trading interest in certain options;
(ii) restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities; (iv) interruption of the normal
operations on an exchange; (v) inadequacy of the facilities of an exchange or
the OCC to handle current trading volume; or (vi) a decision by one or more
exchanges to discontinue the trading of options (or a particular class or series
of options), in which event the secondary market on that exchange (or in that
class or series of options) would cease to exist.

In the event of the bankruptcy of a broker through which the Portfolio engages
in transactions in options, the Portfolio could experience delays and/or losses
in liquidating open positions purchased or sold through the broker and/or incur
a loss of all or part of its margin deposits with the broker. Similarly, in the
event of the bankruptcy of the writer of an OTC option purchased by the
Portfolio, the Portfolio could experience a loss of all or part of the value of
the option. Transactions will be entered into by the Portfolio only with
brokers or financial institutions deemed creditworthy by the Adviser.

Exchanges have established limitations governing the maximum number of options
on the same underlying security or futures contract (whether or not covered)
which may be written by a single investor, whether acting alone or in concert
with others (regardless of whether such options are written on the same or
different exchanges or are held or written on one or more accounts or through
one or more brokers). An exchange may order the liquidation of positions found
to be in violation of these limits and it may impose other sanctions or
restrictions. These position limits may restrict the number of listed options
which the Portfolio may write.

The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the option markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying markets that cannot be reflected in
the option markets.

The extent to which the Portfolio may enter into transactions involving options
may be limited by the Internal Revenue Code's requirements for qualification as
a regulated investment company and the Portfolio's intention to qualify as such
(see "Taxation").

FUTURES CONTRACTS. The Portfolio may purchase and sell interest rate, currency,
and index futures contracts ("futures contracts") that are traded on U.S. and
foreign commodity exchanges, on such underlying securities as U.S. Treasury
bonds, notes and bills, and/or any foreign government fixed-income security
("interest rate" futures), on various currencies ("currency futures") and on
such indices of U.S. and foreign securities as may exist or come into being
("index futures").

The Portfolio will purchase or sell interest rate futures contracts for the
purpose of hedging some or all of the value of its portfolio securities (or
anticipated portfolio securities) against changes in prevailing interest rates.
If the Adviser anticipates that interest rates may rise and, concomitantly, the
price of certain of its portfolio securities fall, the Portfolio may sell an
interest rate futures contract. If declining interest rates are anticipated,
the Portfolio may purchase an interest rate futures contract to protect against
a potential increase in the price of securities the Portfolio

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<PAGE>

intends to purchase. Subsequently, appropriate securities may be purchased by
the Portfolio in an orderly fashion; as securities are purchased, corresponding
futures positions would be terminated by offsetting sales of contracts.

The Portfolio will purchase or sell index futures contracts for the purpose of
hedging some or all of its portfolio (or anticipated portfolio) securities
against changes in their prices. If the Adviser anticipates that the prices of
securities held by the Portfolio may fall, the Portfolio may sell an index
futures contract. Conversely, if the Portfolio wishes to hedge against
anticipated price rises in those securities which the Portfolio intends to
purchase, the Portfolio may purchase an index futures contract.

The Portfolio will purchase or sell currency futures on currencies in which its
portfolio securities (or anticipated portfolio securities) are denominated for
the purposes of hedging against anticipated changes in currency exchange rates.
The Portfolio will enter into currency futures contracts for the same reasons as
set forth above for entering into forward foreign currency exchange contracts;
namely, to secure the value of a security purchased or sold in a given currency
vis-a-vis a different currency or to hedge against an adverse currency exchange
rate movement of a portfolio security's (or anticipated portfolio security's)
denominated currency vis-a-vis a different currency.

In addition to the above, interest rate, index and currency futures will be
bought or sold in order to close out short or long positions maintained by the
Portfolio in corresponding futures contracts.

Although most interest rate futures contracts call for actual delivery or
acceptance of securities, the contracts usually are closed out before the
settlement date without making or taking delivery. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of the specific type of security (currency) and the same delivery date.
If the sale price exceeds the offsetting purchase price, the seller would be
paid the difference and would realize a gain. If the offsetting purchase price
exceeds the sale price, the seller would pay the difference and would realize a
loss. Similarly, a futures contract purchase is closed out by effecting a
futures contract sale for the same aggregate amount of the specific type of
security (currency) and the same delivery date. If the offsetting sale price
exceeds the purchase price, the purchaser would realize a gain, whereas if the
purchase price exceeds the offsetting sale price, the purchaser would realize a
loss. There is no assurance that the Portfolio will be able to enter into a
closing transaction.

INTEREST RATE FUTURES CONTRACTS. When the Portfolio enters into an interest
rate futures contract, it is initially required to deposit with the Portfolio's
custodian, in a segregated account in the name of the broker performing the
transaction, an "initial margin" of cash or U.S. Government securities or other
high grade short-term obligations equal to approximately 2% of the contract
amount. Initial margin requirements are established by the exchanges on which
futures contracts trade and may, from time to time, change. In addition,
brokers may establish margin deposit requirements in excess of those required by
the exchanges.

Initial margin in futures transactions is different from margin in securities
transactions in that initial margin does not involve the borrowing of Portfolios
by a brokers' client but is, rather, a good faith deposit on the futures
contract which will be returned to the Portfolio upon the proper termination of
the futures contract. The margin deposits made are marked to market daily and
the Portfolio may be required to make subsequent deposits of cash or U.S.
Government securities called "variation margin," with the Portfolio's futures
contract clearing broker, which are reflective of price fluctuations in the
futures contract.

CURRENCY FUTURES. Generally, foreign currency futures provide for the delivery
of a specified amount of a given currency, on the exercise date, for a set
exercise price denominated in U.S. dollars or other currency. Foreign currency
futures contracts would be entered into for the same reason and under the same
circumstances as forward foreign currency exchange contracts. The Adviser will
assess such factors as cost spreads, liquidity and transaction costs in
determining whether to utilize futures contracts or forward contracts in its
foreign currency transactions and hedging strategy.

Purchasers and sellers of foreign currency futures contracts are subject to the
same risks that apply to the buying and selling of futures generally. In
addition, there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
foreign currencies described above. Further,

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<PAGE>

settlement of a foreign currency futures contract must occur within the country
issuing the underlying currency. Thus, the Portfolio must accept or make
delivery of the underlying foreign currency in accordance with any U.S. or
foreign restrictions or regulations regarding the maintenance of foreign banking
arrangements by U.S. residents and may be required to pay any fees, taxes or
charges associated with such delivery which are assessed in the issuing country.

INDEX FUTURES CONTRACTS. The Portfolio may invest in index futures contracts.
An index futures contract sale creates an obligation by the Portfolio, as
seller, to deliver cash at a specified future time. An index futures contract
purchase would create an obligation by the Portfolio, as purchaser, to take
delivery of cash at a specified future time. Futures contracts on indices do
not require the physical delivery of securities, but provide for a final cash
settlement on the expiration date which reflects accumulated profits and losses
credited or debited to each party's account.

The Portfolio is required to maintain margin deposits with brokerage firms
through which it effects index futures contracts in a manner similar to that
described above for interest rate futures contracts. In addition, due to
current industry practice, daily variations in gains and losses on open
contracts are required to be reflected in cash in the form of variation margin
payments. The Portfolio may be required to make additional margin payments
during the term of the contract.

At any time prior to expiration of the futures contract, the Portfolio may elect
to close the position by taking an opposite position which will operate to
terminate the Portfolio's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Portfolio and the Portfolio realizes a loss or
gain.

OPTIONS ON FUTURES CONTRACTS. The Portfolio may purchase and write call and put
options on futures contracts which are traded on an exchange and enter into
closing transactions with respect to such options to terminate an existing
position. An option on a futures contract gives 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 term of the option. Upon
exercise of the option, the delivery of the futures position by the writer of
the option to the holder of the option is accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract at the time of exercise
exceeds, in case of a call, or is less than, in the case of a put, the exercise
price of the option on the futures contract.

The Portfolio will purchase and write options on futures contracts for identical
purposes to those set forth above for the purchase of a futures contract
(purchase of a call option or sale of a put option) and the sale of a futures
contract (purchase of a put option or sale of a call option), or to close out a
long or short position in futures contracts. If, for example, the Adviser
wished to protect against an increase in interest rates and the resulting
negative impact on the value of a portion of its fixed-income portfolio, it
might write a call option on an interest rate futures contract, the underlying
security of which correlates with the portion of the portfolio the Adviser seeks
to hedge. Any premiums received in the writing of options on futures contracts
may provide a further hedge against losses resulting from price declines in
portions of the Portfolio's investment portfolio.

Options on foreign currency futures contracts may involve certain additional
risks. Trading options on foreign currency futures contracts is relatively new.
The ability to establish and close out positions on such options is subject to
the maintenance of a liquid secondary market. To reduce this risk, the
Portfolio will not purchase or write options on foreign currency futures
contracts unless and until, in the Adviser's option, the market for such option
has developed sufficiently that the risks in connection with such options are
not greater than the risks in connection with transactions in the underlying
foreign currency futures contracts.

LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Portfolio may not
enter into futures contracts or purchase related options thereon if, immediately
thereafter, the amount committed to margin plus the amount paid for premiums for
unexpired options on futures contracts exceeds 5% of the value of the
Portfolio's total assets, after taking into account unrealized gains and
unrealized losses on such contracts it has entered into, provided, however,

-12-
<PAGE>

that in the case of an option that is in-the-money (the exercise price of the
call (put) option is less (more) than the market price of the underlying
security) at the time of purchase, the in-the-money amount may be excluded in
calculating the 5%. However, there is no overall limitation on the percentage
of the Portfolio's assets which may be subject to a hedge position. In
addition, in accordance with the regulations of the Commodity Futures Trading
Commission ("CFTC") under which the Portfolio is exempted from registration as a
commodity pool operator, the Portfolio may only enter into futures contracts and
options on futures contracts transactions for purposes of hedging a part or all
of its portfolio. Except as described above, there are no other limitations on
the use of futures and options thereon by the Portfolio.

The writer of an option on a futures contract is required to deposit initial and
variation margin pursuant to requirements similar to those applicable to futures
contracts. Premiums received from the writing of an option on a futures
contract are included in initial margin deposits.

RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. The Portfolio
may sell a futures contract to protect against the decline in the value of
securities (or the currency in which they are denominated) held by the
Portfolio. However, it is possible that the futures market may advance and the
value of securities (or the currency in which they are denominated) held in the
portfolio of the Portfolio may decline. If this occurred, the Portfolio would
lose money on the futures contract and also experience a decline in value of its
portfolio securities. While this might occur for only a very brief period or to
a very small degree, over time the value of a diversified portfolio will tend to
move in the same direction as the futures contracts.

If the Portfolio purchases a futures contract to hedge against the increase in
value of securities it intends to buy (or the currency in which they are
denominated), and the value of such securities (currencies) decreases, then the
Portfolio may determine not to invest in the securities as planned and will
realize a loss on the futures contract that is not offset by a reduction in the
price of the securities.

If the Portfolio has sold a call option on a futures contract, it will cover
this position by holding in a segregated account maintained at its Custodian,
cash, U.S. Government Securities or other high grade debt obligations equal in
value (when added to any initial or variation margin on deposit) to the market
value of the securities (currencies) underlying the futures contract or the
exercise price of the option. Such a position may also be covered by owning the
securities (currencies) underlying the futures contract, or by holding a call
option permitting the Portfolio to purchase the same contract at a price no
higher than the price at which the short position was established.

In addition, if the Portfolio holds a long position in a futures contract it
will hold cash, U.S. Government Securities or other high grade debt obligations
equal to the purchase price of the contract (less the amount of initial or
variation margin on deposit) in a segregated account maintained for the
Portfolio by its Custodian. Alternatively, the Portfolio could cover its long
position by purchasing a put option on the same futures contract with an
exercise price as high or higher than the price of the contract held by the
Portfolio.

Exchanges limit the amount by which the price of a futures contract may move on
any day. If the price moves equal the daily limit on successive days, then it
may prove impossible to liquidate a futures position until the daily limit moves
have creased. In the event of adverse price movements, the Portfolio would
continue to be required to make daily cash payments of variation margin on open
futures positions. In such situations, if the Portfolio has insufficient cash,
it may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition,
the Portfolio may be required to take or make delivery of the instruments
underlying interest rate futures contracts it holds at a time when it is
disadvantageous to do so. The inability to close out options and futures
positions could also have an adverse impact on the Portfolio's ability to
effectively hedge its portfolio.

Futures contracts and options thereon which are purchased or sold on foreign
commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges. Brokerage
commissions, clearing costs and other transaction costs may be higher on foreign
exchanges. Greater margin requirements may limit the Portfolio's ability to
enter into certain commodity transactions on foreign exchanges. Moreover,
differences in clearance and

-13-
<PAGE>

delivery requirements on foreign exchanges may occasion delays in the settlement
of the Portfolio's transactions effected on foreign exchanges.

In the event of the bankruptcy of a broker through which the Portfolio engages
in transactions in futures or options thereon, the Portfolio could experience
delays and/or losses in liquidating open positions purchased or sold through the
broker and/or incur a loss of all or part of its margin deposits with the
broker. Similarly in the event of the bankruptcy of the writer of an OTC option
purchased by the Portfolio, the Portfolio could experience a loss of all or part
of the value of the option. Transactions are entered into by the Portfolio only
with brokers or financial institutions deemed creditworthy by the Adviser.

While the futures contracts and options transactions to be engaged in by the
Portfolio for the purpose of hedging the Portfolio's portfolio securities are
not speculative in nature, there are risks inherent in the use of such
instruments. One such risk which may arise in employing futures contracts to
protect against the price volatility of portfolio securities (and the currencies
in which they are denominated) is that the prices of securities and indices
subject to futures contracts (and thereby the futures contract prices) may
correlate imperfectly with the behavior of the cash prices of the Portfolio's
portfolio securities (and the currencies in which they are denominated).
Another such risk is that prices of interest rate futures contracts may not move
in tandem with the changes in prevailing interest rates against which the
Portfolio seeks a hedge. A correlation may also be distorted by the fact that
the futures market is dominated by short-term traders seeking to profit from the
difference between a contract or security price objective and their cost of
borrowed funds. Such distortions are generally minor and would diminish as the
contract approached maturity.

There may exist an imperfect correlation between the price movements of futures
contracts purchased by the Portfolio and the movements in the prices of the
securities (currencies) which are the subject of the hedge. If participants in
the futures market elect to close out their contracts through offsetting
transactions rather than meet margin deposit requirements, distortions in the
normal relationship between the debt securities or currency markets and futures
markets could result. Price distortions could also result if investors in
futures contracts choose to make or take delivery of underlying securities
rather than engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, because the deposit requirements
in the futures markets are less onerous than margin requirements in the cash
market, increased participation by speculators in the futures market can be
anticipated with the resulting speculation causing temporary price distortions.
Due to the possibility of price distortions in the futures market and because of
the imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of interest
rate trends may still not result in a successful hedging transaction.

There is no assurance that a liquid secondary market will exist for futures
contracts and related options in which the Portfolio may invest. In the event a
liquid market does not exist, it may not be possible to close out a futures
position, and in the event of adverse price movements, the Portfolio would
continue to be required to make daily cash payments of variation margin. In
addition, limitations imposed by an exchange or board of trade on which futures
contracts are traded may compel or prevent the Portfolio from closing out a
contract which may result in reduced gain or increased loss to the Portfolio.
The absence of a liquid market in futures contracts might cause the Portfolio to
make or take delivery of the underlying securities (currencies) at a time when
it may be disadvantageous to do so.

The extent to which the Portfolio may enter into transactions involving futures
contracts and options thereon may be limited by the Internal Revenue Code's
requirements for qualification as a regulated investment company and the
Portfolio's intention to qualify as such (see "Taxation").

INVESTMENT RESTRICTIONS

The Portfolio's significant investment restrictions are described in the
Prospectus. The following investment restrictions, except where stated to be
non-fundamental policies, are also fundamental policies of the Portfolio and,
together with the fundamental policies and investment objective described in the
Prospectus, cannot be changed without the vote of a "majority" of the
Portfolio's outstanding shares. Under the Investment Company Act of 1940

-14-
<PAGE>

(the "1940 Act"), such a "majority" vote is defined as the vote of the holders
of the lesser of : (i) 67% of more of the shares present or represented by proxy
at a meeting of shareholders, if the holders of more than 50% of the outstanding
shares are present, or (ii) more than 50% of the outstanding shares. Under
these additional restrictions, the Portfolio cannot:

(a) Underwrite securities of other companies except insofar as the
Portfolio might be deemed to be an underwriter in the resale of any securities
held in its portfolio.

(b) Invest in commodities or commodity contracts other than Hedging
Instruments which it may use as permitted by any of its other fundamental
policies, whether or not any such Hedging Instrument is considered to be a
commodity or a commodity contract.

(c) Purchase securities on margin; however, the Portfolio may make margin
deposits in connection with any Hedging Instruments which it may use as
permitted by any of its other fundamental policies.

(d) Purchase or write puts or calls except as permitted by any of its
other fundamental policies.

(e) Lend money except in connection with the acquisition of debt
securities which the Portfolio's investment policies and restrictions permit it
to purchase (see "Investment Objective and Policies" in the Prospectus); the
Portfolio may also make loans of portfolio securities (see "Loans of Portfolio
Securities") and enter into repurchase agreements (see "Repurchase Agreements").

(f) As a non-fundamental policy, invest in or hold securities of any
issuer if officers or Trustees of the Trust or SCMI individually owning more
than 0.5% of the securities of such issuer together own more than 5% of the
securities of such issuer.

(g) As a non-fundamental policy, invest more than 5% of the value of its
total assets in securities of issuers having a record, together with
predecessors, of less than three years of continuous operation.

(h) Make short sales of securities.

(i) Invest in interests in oil, gas or other mineral exploration or
development programs but may purchase readily marketable securities of companies
which operate, invest in, or sponsor such programs.

(j) Invest in real estate or in interests in real estate, but may purchase
readily marketable securities of companies holding real estate or interests
therein.

MANAGEMENT

OFFICERS AND TRUSTEES

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

-15-
<PAGE>

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

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

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

ROBERT JACKOWITZ, 787 Seventh Avenue, New York, New York - Treasurer of the
Trust - Vice President of SCMI since September 1995 and Assistant Treasurer
since January 1990.

-16-
<PAGE>

BARBARA GOTTLIEB, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust - [business history].

GERARDO MACHADO, 787 Seventh Avenue, New York, New York - Assistant Secretary of
the Trust - Assistant Portfolio Manager, SCMI.

(a) Interested Trustee of the Trust within the meaning of the 1940 Act.

(b) Schroder Advisors is a wholly-owned subsidiary of SCMI, which is a wholly-
owned subsidiary of Schroders Incorporated, which in turn is an indirect,
wholly-owned subsidiary of Schroders plc.

The following table provides the fees paid to each Trustee of the Trust for the
fiscal year ended October 31, 1995.

Ms. Luckyn-Malone 0 0 0 0
Mr. Michalis 3,000 0 0 3,000
Mr. Schwab 7,000 0 0 7,000

Mr. Smith 0 0 0 0
</TABLE>

As of December 22, 1995, the officers and Trustees of the Trust owned, in the
aggregate, less than 1% of the Fund's outstanding shares.

-17-
<PAGE>

INVESTMENT ADVISER

Schroder Capital Management International Inc. ("SCMI"), 787 Seventh Avenue, New
York, New York 10019, serves as Investment Adviser to the Fund pursuant to an
Investment Advisory Contract between the Trust and SCMI. SCMI is a wholly-owned
U.S. subsidiary of Schroders Incorporated, the wholly-owned U.S. holding company
subsidiary of Schroders plc. Schroders plc is the holding company parent of a
large worldwide group of banks and financial service companies (referred to as
the "Schroder Group"), with associated companies and branch and representative
offices located in seventeen countries worldwide. The Schroder Group
specializes in providing investment management services, with Group funds under
management currently in excess of $90 billion.

Pursuant to the Investment Advisory Contract, SCMI is responsible for managing
the investment and reinvestment of the assets included in the Fund's portfolio
and continuously reviews, supervises and administers the Fund's investments. In
this regard, it is the responsibility of SCMI to make decisions relating to the
Fund's investments and to place purchase and sale orders regarding such
investments with brokers or dealers selected by it in its discretion. SCMI also
furnishes to the Board of Trustees periodic reports on the investment
performance of the Fund. Under the terms of the Investment Advisory Contract,
SCMI is required to manage the Portfolio's investment portfolio in accordance
with applicable laws and regulations. In making its investment decisions, SCMI
does not use material inside information that may be in its possession or in the
possession of its affiliates.

Under the terms of the Investment Advisory Contract, SCMI receives a monthly fee
equal on an annual basis to 1.00% of its average daily net assets. From
commencement of operations through October 31, 1995, SCMI received an advisory
fee of $19,326.

ADMINISTRATIVE SERVICES

The Trust has entered into an Administrative Services Contract with Schroder
Fund Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York, New York
10019, pursuant to which Schroder Advisors provides management and
administrative services necessary for the operation of the Fund, other than any
management services provided to the Fund by SCMI pursuant to the Investment
Advisory Contract, including among other things, (i) preparation of shareholder
reports and communications, (ii) regulatory compliance, such as reports to and
filings with the Securities and Exchange Commission and state securities
commissions, and (iii) general supervision of the operation of the Fund,
including coordination of the services performed by the Fund's investment
adviser,

-18-

<PAGE>

transfer agent, custodian, independent accountants, legal counsel and others.
Schroder Advisors is a wholly-owned subsidiary of SCMI, and is a registered
broker-dealer organized to act as administrator and distributor of mutual funds.
Effective July 5, 1995, Schroder Advisors changed its name from Schroder Capital
Distributors Inc.

For these services, Schroder Advisors will receive from the Fund a fee, payable
monthly, at the annual rate of 0.10% of the Fund's average daily net assets.
From commencement of operations through October 31, 1995, Schroder Advisors
received an administrative fee of $19,591.

The Administrative Services Contract is terminable with respect to the Fund
without penalty, at any time, by vote of a majority of the Trustees who are not
"interested persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or in the
Administrative Services Contract, upon not more than 60 days' written notice to
Schroder Advisors or by vote of the holders of a majority of the shares of the
Fund, or, upon 60 days' notice, by Schroder Advisors. The Administrative
Services Contract will terminate automatically in the event of its assignment.

The Trust and Schroder Advisors have entered into a Sub-Administration Agreement
with Forum Financial Services, Inc. ("Forum"). Pursuant to the Sub-
Administration Agreement, Forum assists Schroder Advisors with certain of its
responsibilities under the Administrative Services Agreement, including
shareholder reporting and regulatory compliance. Payment for Forum's services
is made by Schroder Advisors and is not a separate expense of the Fund.

Schroder Advisors and Forum provide similar services to the Portfolio pursuant
to administrative services agreements between Core Trust and each of these
entities, for which Schroder Advisors is separately compensated at an annual
rate of 0.15% of the average daily net assets of the Portfolio, a portion of
which Forum receives for its services with respect to the Portfolio. The
administrative services agreements are the same in all material respects as the
Fund's respective agreeements except as to the parties, the circumstances under
which fees will be paid, the fees payable thereunder and the jurisdiction whose
laws govern the agreements.

The fees paid by the Fund to SCMI and Schroder Advisors may equal up to 1.25% of
the Fund's average daily net assets. Such fees as a whole are higher than
advisory and management fees charged to mutual funds which invest primarily in
U.S. securities but not necessarily higher than those charged to funds with
investment objectives similar to that of the Fund.

DISTRIBUTION OF FUND SHARES

Under a Distribution Plan (the "Plan") adopted by the Fund, the Trust may pay
directly or may reimburse the Investment Adviser or a broker-dealer registered
under the Securities Exchange Act of 1934 (the "1934 Act") (the Investment
Adviser or such registered broker-dealer, if so designated, to be a
"Distributor" of the Fund's shares) monthly (subject to a limit of 0.50% per
annum of the Fund's average daily net assets) for the sum of (a) advertising
expenses including advertising by radio, television, newspapers, magazines,
brochures, sales literature or direct mail, (b) costs of printing prospectuses
and other materials to be given or sent to prospective investors, (c) expenses
of sales employees or agents of the Distributor, including salary, commissions,
travel and related expenses in connection with the distribution of Fund shares,
and (d) payments to broker-dealers (other than the Distributor) or other
organizations (other than banks) for services rendered in the distribution of
the Fund's shares, including payments in amounts based on the average daily
value of Fund shares owned by shareholders in respect of which the broker-dealer
or organization has a distributing relationship. Any payment or reimbursement
made pursuant to the Plan is contingent upon the Board's approval. The Fund
will not be liable for distribution expenditures made by the Distributor in any
given year in excess of the maximum amount (0.50% per annum of the Fund's
average daily net assets) payable under the Plan in that year. Salary expense
of salesmen who are responsible for marketing

-19-
<PAGE>

shares of the Fund may be allocated to various portfolios of the Trust that have
adopted a Plan similar to that of the Fund on the basis of average net assets;
travel expense is allocated to, or divided among, the particular portfolios of
the Trust for which it is incurred. The Board has concluded that there is a
reasonable likelihood that the Plan will benefit the Fund and its shareholders.

Schroder Advisors acts as Distributor of the Fund's shares.

SERVICE ORGANIZATIONS

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<PAGE>

from continuing to perform all or a part of its servicing activities. If a bank
were prohibited from so acting, its shareholder clients would be permitted to
remain shareholders of the Fund and alternative means for continuing the
servicing of such shareholders would be sought. In that event, changes in the
operation of the Fund might occur and a shareholder serviced by such a bank
might no longer be able to avail itself of any services then being provided by
the bank. It is not expected that shareholders would suffer any adverse
financial consequences as a result of any of these occurrences.

PORTFOLIO ACCOUNTING

For the fiscal year ended October 31, 1995, the Fund paid fund accounting fees
of $35,667.

FEES AND EXPENSES

As compensation for the advisory, administrative and management services
rendered to the Fund, SCMI and Schroder Advisors will each earn monthly fees at
the following annual rates:

Fee Rate
Portion of average daily value Advisory Administrative
of the Fund's net assets Fee Fee
------------------------ --- ---

100% 1.00% 0.25%

-21-
<PAGE>

Fund's first year of operations, and may be withdrawn by a majority vote of the
disinterested Trustees. If expense reimbursements are required, they will be
made on a monthly basis. SCMI will reimburse the Fund for four-fifths of the
amount required and Schroder Advisors, the remaining one-fifth; provided,
however, that neither SCMI nor Schroder Advisors nor will be required to make
any reimbursements in excess of the fees paid to them by the Fund on a monthly
basis for their respective administrative and advisory services. This
undertaking to reimburse expenses supplements any applicable state expense
limitation.

Certain of the states in which the shares of the Fund may be qualified for sale
impose limitations on the expenses of the Fund. If, in any fiscal year, the
total expenses of the Fund (excluding taxes, interest, expenses under the Plan,
brokerage commissions and other portfolio transaction expenses, other
expenditures which are capitalized in accordance with generally accepted
accounting principles and extraordinary expenses, but including the advisory and
administrative fees) exceed the expense limitations applicable to the Fund
imposed by the securities regulations of any such state, SCMI will reimburse the
Fund for four-fifths of the excess, and Schroder Advisors, the remaining one-
fifth of the excess. As of the date of this SAI, the Fund believes that the
most restrictive state expense limitation which might be applicable to the Fund
requires reimbursement of expenses in any year that applicable Fund expenses
exceed 2 1/2% of the first $30 million of the average daily value of Fund net
assets, 2% of the next $70 million of the average daily value of Fund net assets
and 1 1/2% of the remaining average daily value of Fund net assets.

Except for the expenses paid by SCMI or Schroder Advisors, the Fund bears all
costs of its operations.

PORTFOLIO TRANSACTIONS

INVESTMENT DECISIONS

BROKERAGE AND RESEARCH SERVICES

Transactions on U.S. stock exchanges and other agency transactions involve the
payment by the Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the
transaction. Transactions in foreign securities generally involve the payment
of fixed brokerage commissions, which are generally higher than those in the
U.S. Since most brokerage transactions for the fund will be placed with foreign
broker-dealers, certain portfolio transaction costs for the Fund may be higher
than fees for similar transactions executed on U.S. securities exchanges.
However, the Fund will seek to achieve the best net results in effecting its
portfolio transactions. There is generally less governmental supervision and
regulation of foreign stock exchanges and brokers than in the United States.

There is generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Fund usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings, the price
paid by the Fund includes a disclosed, fixed commission or discount retained by
the underwriter or dealer.

-22-
<PAGE>

The Investment Advisory Contract authorizes and directs SCMI to place orders for
the purchase and sale of the Fund's investments with brokers or dealers selected
by SCMI in its discretion and to seek "best execution" of such portfolio
transactions. SCMI places all such orders for the purchase and sale of
portfolio securities and buys and sells securities for the Fund through a
substantial number of brokers and dealers. In so doing, SCMI uses its best
efforts to obtain for the Fund the most favorable price and execution available.
The Fund may, however, pay higher than the lowest available commission rates
when SCMI believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the
transaction. In seeking the most favorable price and execution, SCMI, having in
mind the Fund's best interests, considers all factors it may deem relevant,
including, by way of illustration, price, the size of the transaction, the
nature of the market for the security, the amount of the commission, the timing
of the transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealers involved and the
quality of service rendered by the broker-dealers in other transactions. For
period from commencement of operations through October 31, 1995, the Fund paid a
total of $101,087 in brokerage commissions.

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

As permitted by Section 28(e) of the 1934 Act, SCMI may cause the Fund to pay a
broker-dealer which provides "brokerage and research services" (as defined in
the Act) to SCMI an amount of disclosed commission for effecting a securities
transaction for the Fund in excess of the commission which another broker-dealer
would have charged for effecting that transaction. In addition, SCMI may
allocate brokerage transactions to broker/dealers who have entered into
arrangements under which the broker/dealer allocates a portion of the
commissions paid by the Fund toward payment of Fund expenses, such as custodian
fees.

Subject to the general policies of the Fund regarding allocation of portfolio
brokerage as set forth above, the Board has authorized the Fund to employ (a)
Schroder Wertheim & Company, Incorporated ("Schroder Wertheim") an affiliate of
SCMI, to effect securities transactions of the Fund, on the New York Stock
Exchange only, and (b) Schroder Securities Limited and its affiliates
(collectively, "Schroder Securities"), which are affiliated with SCMI, to effect
securities transactions of the Fund on various foreign securities exchanges on
which Schroder Securities has trading privileges, provided certain other
conditions are satisfied as described below.

Payment of brokerage commissions to Schroder Wertheim or Schroder Securities for
effecting such transactions is subject to Section 17(e) of the 1940 Act, which
requires, among other things, that commissions for transactions on a securities
exchange paid by a registered investment company to a broker which is an
affiliated person of such investment company or an affiliated person of another
person so affiliated not exceed the usual and customary broker's commissions for
such transactions. It is the Fund's policy that commissions paid to Schroder
Wertheim or Schroder Securities will in the judgment of the officers of SCMI
responsible for making portfolio decisions and selecting brokers, be (i) at
least as favorable as commissions contemporaneously charged by Schroder Wertheim
or Schroder Securities, as the case may be, on comparable transactions for their
most favored unaffiliated customers and (ii) at least as favorable as those
which would be charged on comparable transactions by other qualified brokers
having comparable execution capability. The Board, including a majority of the
non-interested Trustees, has

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<PAGE>

adopted procedures pursuant to Rule 17e-1 promulgated by the Securities and
Exchange Commission under Section 17(e) to ensure that commissions paid to
Schroder Wertheim or Schroder Securities by the Fund satisfy the foregoing
standards. Such procedures will be reviewed at least annually by the Board,
including a majority of the non-interested Trustees. The Board will also review
all transactions at least quarterly for compliance with such procedures.

It is further a policy of the Fund that all such transactions effected for the
Fund by Schroder Wertheim on the New York Stock Exchange be in accordance with
Rule 11a2-2(T) promulgated under the 1934 Act, which requires in substance that
a member of such exchange not associated with Schroder Wertheim actually execute
the transaction on the exchange floor or through the exchange facilities. Thus,
while Schroder Wertheim will bear responsibility for determining important
elements of execution such as timing and order size, another firm will actually
execute the transaction.

Schroder Wertheim will pay a portion of the brokerage commissions it receives
from the Fund to the brokers executing the Fund's transactions on the Exchange.
In accordance with Rule 11a2-2(T), the Trust has entered into an agreement with
Schroder Wertheim permitting it to retain a portion of the brokerage commissions
paid to it by the Fund. This agreement has been approved by the Board,
including a majority of the non-interested Trustees.

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

From time to time, the Fund may purchase securities of a broker or dealer
through which its regularly engages in securities transactions. During the
fiscal year ended October 31, 1995, the Fund purchased securities of Global
Securities, one of its regular broker-dealers. Such securities had a value of
$110,979 as of the end of the Fund's fiscal year.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

DETERMINATION OF NET ASSET VALUE PER SHARE

The net asset value per share of the Fund is determined each day the New York
Stock Exchange (the "Exchange") is open as of 4:00 p.m. Eastern Time that day,
by dividing the value of the Fund's net assets by the total number of Fund
shares outstanding. Any assets or liabilities initially expressed in terms of
non-U.S. dollar 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 Exchange's most recent holiday schedule (which is subject to
change) states that it will close on New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days.

The Board has established procedures for the valuation of the Fund's securities:
(i) equity securities listed or traded on the New York or American Stock
Exchange or other domestic or foreign stock exchange are valued at their latest
sale prices on such exchange that day prior to the time when assets are valued;
in the absence of sales that day, such securities are valued at the mid-market
prices (in cases where securities are traded on more than one exchange, the
securities are valued on the exchange designated as the primary market by the
Fund's investment adviser); (ii) unlisted equity 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; (iii) securities
(including restricted securities) not having readily-available market quotations
are valued at fair value under the Board's procedures; (iv) debt securities
having a maturity in excess of 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; and (v) 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 discount.

When the Fund writes an option, an amount equal to the premium received by the
Fund is recorded in the Fund's books as an asset, and an equivalent deferred
credit is recorded as a liability. The deferred credit is adjusted

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<PAGE>

("marked-to-market") to reflect the current market value of the option. Options
purchased by the Fund are valued at their mid-market prices in the case of
exchange-traded options or, in the case of options traded in the over-the-
counter market, the average of the last bid price as obtained from two or more
dealers unless there is only one dealer, in which case that dealer's price is
used. Futures contracts and related options are stated at market value.

REDEMPTION IN KIND

TAXATION

Under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund and
each other portfolio established from time to time by the Board will be treated
as a separate taxpayer for Federal income tax purposes with the result that: (a)
each such portfolio must meet separately the income and distribution
requirements for qualification as a regulated investment company, and (b) the
amounts of investment income and capital gains earned will be determined on a
portfolio-by-portfolio (rather than on a Trust-wide) basis.

Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% nondeductible excise tax. To
prevent imposition of the excise tax, the Fund must distribute for each calendar
year an amount equal to the sum of (1) at least 98% of its ordinary income
(excluding any capital gains or losses) for the calendar year, (2) at least 98%
of the excess of its capital gains over capital losses realized during the one-
year period ending October 31 of such year, and (3) all such ordinary income and
capital gains for previous years that were not distributed during such years. A
distribution will be treated as paid during the calendar year if it is declared
by the Fund in October, November or December of the year with a record date in
such month and paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.

Distributions of investment company taxable income (including realized net
short-term capital gain) are taxable to shareholders as ordinary income.
Generally, it is not expected that such distributions will be eligible for the
dividends received deduction available to corporations. However, if the Fund
acquires at least 10% of the stock of a foreign corporation which has U.S.
source income, a portion of the Fund's ordinary income dividends attributable to
such income may be eligible for such deduction, if certain requirements are met.

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<PAGE>

distributions or otherwise) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss.

Ordinary income dividends paid by the Fund to shareholders who are nonresident
aliens will be 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 shareholders are urged to consult their own tax advisers
concerning the applicability of the U.S. withholding tax.

Dividends and interest received, and, in certain circumstances, capital gains
realized, by the Fund may give rise to withholding and other taxes imposed by
foreign countries. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% in value of the Fund's total
assets at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible, and intends, to file an election with
the Internal Revenue Service ("IRS") pursuant to which shareholders of the Fund
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, 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 shareholders who do not
itemize deductions. A shareholder that is a nonresident alien individual or a
foreign corporation may be subject to U.S. withholding tax on the income
resulting from the Fund's election described in this paragraph but may 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 shareholder. The Fund will report annually
to its shareholders the amount per share of such withholding taxes.

Due to investment laws in certain emerging market countries, it is anticipated
that the Fund's investments in equity securities in such countries will consist
primarily of shares of investment companies (or similar investment entities)
organized under foreign law or of ownership interests in special accounts,
trusts or partnerships. If the Fund purchases shares of an investment company
(or similar investment entity) organized under foreign law, the Fund will be
treated as owning shares in a passive foreign investment company ("PFIC") for
U.S. Federal income tax purposes. The Fund may be subject to U.S. Federal
income tax, and an additional tax in the nature of interest, on a portion of
distributions from such company and on gain from the disposition of such shares
(collectively referred to as "excess distributions"), even if such excess
distributions are paid by the Fund as a dividend to its shareholders. The Fund
may be eligible to make an election with respect to certain PFICs in which it
owns shares that will allow it to avoid the taxes on excess distributions.
However, such election may cause the Fund to recognize income in a particular
year in excess of the distributions received from such PFICs.

The Fund may write, purchase or sell options or futures contracts. Unless the
Fund is eligible to make and makes a special election, such options and futures
contracts that are "Section 1256 contracts" will be "marked to market" for

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<PAGE>

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 the special election referred
to in the previous sentence 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 the Fund's transactions in options and futures contracts. Under Section
1092, the Fund may be required to postpone recognition for tax purposes of
losses incurred in certain closing transactions in options and futures.

One of the requirements for qualification as a regulated investment company is
that less than 30% of the Fund's gross income may be derived from gains from the
sale or other disposition of securities held for less than three months.
Accordingly, the Fund may be restricted in effecting closing transactions within
three months after entering into an option or futures contract.

In general, gains from "foreign currencies" and from foreign currency options,
foreign currency futures and forward foreign exchange contracts relating to
investments in stock, securities or foreign currencies will be qualifying income
for purposes of determining whether the Fund qualifies as a regulated investment
company. It is currently unclear, however, who will be treated as the issuer of
a foreign currency instrument or how foreign currency options, futures or
forward foreign currency contracts will be valued for purposes of the regulated
investment company diversification requirements applicable to the Fund.

Under Code Section 988 special rules are provided for certain transactions in a
foreign currency other than the taxpayer's functional currency (i.e., unless
certain special rules apply, currencies other than the U.S. dollar). In
general, foreign currency gains or losses from certain forward contracts not
traded in the interbank market, from futures contracts that are not "regulated
futures contracts," and from unlisted options will be treated as ordinary income
or loss under Code Section 988. In certain circumstances, the Fund may elect
capital gain or loss treatment for such transactions. In general, however, Code
Section 988 gains or losses will increase or decrease the amount of the Fund's
investment company taxable income available to be distributed to shareholders as
ordinary income. Additionally, if Code Section 988 losses exceed other
investment company taxable income during a taxable year, the Fund would not be
able to make any ordinary dividend distributions, and any distributions made
before the losses were realized but in the same taxable year would be
recharacterized as a return of capital to shareholders, thereby reducing each
shareholder's basis in his Fund shares.

The Trust will be required to report to the Internal Revenue Service (the "IRS")
all distributions as well as gross proceeds from the redemption of the Fund
shares, except in the case of certain exempt shareholders. 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 shareholders if (1) the shareholder fails to furnish the Trust with and
to certify the shareholder's correct taxpayer identification number or social
security number, (2) the IRS notifies the Trust that the shareholder 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
shareholder fails to certify that he is not subject to backup withholding. If
the withholding provisions are applicable, any such distributions or proceeds,
whether reinvested in additional shares or taken in cash, will be reduced by the
amount required to be withheld. Any amounts withheld may be credited against
the shareholder's Federal income tax liability. Investors may wish to consult
their tax advisers about the applicability of the backup withholding provisions.

Distributions by the Fund also may be subject to state and local taxes, and
their treatment under state and local income tax laws may differ from the
Federal income tax treatment. Shareholders should consult their tax advisers
with respect to particular questions of Federal, foreign, state and local
taxation.

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<PAGE>

OTHER INFORMATION

ORGANIZATION

The Trust was originally organized as a Maryland corporation on July 30, 1969.
On February 29, 1988, the Trust was recapitalized to enable the Board to
establish a series of separately managed investment portfolios, each having
different investment objectives and policies. At the time of the
recapitalization, the Trust's name was changed from "The Cheapside Dollar Fund
Limited" to "Schroder Capital Funds, Inc." On November ___, 1995, the Trust was
reorganized as a Delaware business trust. At that time, the Trust's name was
changed from "Schroder Capital Funds, Inc." to its present name. The Trust is
registered as an open-end management investment company under the Act.

CAPITALIZATION AND VOTING

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<PAGE>

shareholders at any time when it believes it is necessary or appropriate. In
addition, Trust Instrument provides that a special meeting of shareholders may
be called at any time for any purpose by the holders of at least 10% of the
outstanding shares entitled to be voted at such meeting.

PRINCIPAL SHAREHOLDERS

As of December 22, 1995, the following persons owned of record or beneficially
5% or more of the Fund's shares:

SHAREHOLDER SHARE BALANCE PERCENT OF FUND
- ----------- ------------- ---------------

The Robert Wood Johnson Foundation 2,835,538.752 51.26%
P.O. Box 2316
College Road at Route One
Princeton, NJ 08543

University of Chicago 869,956.899 15.73%
450 North Cityfront Plaza Drive
Chicago, IL 60611

Schroder Nominees Limited 642,064.664 11.61%
JHSW Retirement Benefits Scheme
120 Cheapside
London EC2V 6DS England

The Board of Trustees of the Leland 593,376.420 10.73%
Stanford Junior University
c/o Stanford Management Co.
2770 Sand Bill Road
Menlo Park, CA 94025

General Reinsurance Corp. 421,803.152 7.62%
695 E Main Street
Financial Center
Stamford, CT 06904-2350

CUSTODIAN

The Chase Manhattan Bank, N.A., through its Global Custody Division located in
London, England, acts as custodian of the Fund's assets, but plays no role in
making decisions as to the purchase or sale of portfolio securities for the
Fund. Pursuant to rules adopted under the 1940 Act, the Fund may maintain its
foreign securities and cash in the custody of certain eligible foreign banks and
securities depositories. Selection of these foreign custodial institutions is
made by the Board following a consideration of a number of factors, including
(but not limited to) the reliability and financial stability of the institution;
the ability of the institution to perform capably custodial services for the
Fund; the reputation of the institution in its national market; the political
and economic stability of the

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<PAGE>

country in which the institution is located; and further risks of potential
nationalization or expropriation of Fund assets.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Forum Financial Corp., Portland, Maine, acts as the Fund's transfer agent and
dividend disbursing agent.

PERFORMANCE INFORMATION

The Fund may, from time to time, include quotations of its average annual total
return in advertisements or reports to shareholders or prospective investors.

P (1+T)(n) = ERV

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of Fund expenses (net of certain
reimbursed expenses) on an annual basis, and will assume that all dividends and
distributions are reinvested when paid.

For the period from commencement of operations on March 31, 1995 through October
31, 1995, the average annual total return of the Fund was 10.98%.

Investors who purchase and redeem shares of the Fund through a customer account
maintained at a Service Organization may be charged one or more of the following
types of fees as agreed upon by the Service Organization and the investor, with
respect to the customer services provided by the Service Organization: account
fees (a fixed amount per month or per year); transaction fees (a fixed amount
per transaction processed); compensating balance requirements (a minimum dollar
amount a customer must maintain in order to obtain the services offered); or
account maintenance fees (a periodic charge based upon a percentage of the
assets in the account or of the dividends paid on these assets). Such fees will
have the effect of reducing the average annual total return of the Fund for
those investors.

LEGAL COUNSEL

Jacobs Persinger & Parker, 77 Water Street, New York, New York 10005, counsel
to the Fund, passes upon certain legal matters in connection with the shares
offered by the Fund.

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<PAGE>

INDEPENDENT ACCOUNTANT

FINANCIAL STATEMENTS

The audited Statement of Assets and Liabilities, Statement of Operations,
Statements of Changes in Net Assets, Statement of Investments, notes thereto,
and Financial Highlights of the Fund for the period from commencement of
operations through October 31, 1995 and the Report of Independent Accountants
thereon (included in the Annual Report to shareholders), which are delivered
along with this SAI, are incorporated herein by reference.

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<PAGE>

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements

Included in the Prospectus:

Financial Highlights.

Incorporated by reference in the Statement of Additional Information for each
Fund:

For the fiscal year ended October 31, 1995 - Statement of Assets and
Liabilities, Statement of Operations, Statements of Changes in Net Assets; for
fiscal years ended 1993 and 1994, Statement of Investments, Notes to Financial
Statements, Report of Independent Accountants (for each Fund, filed with the
Securities and Exchange Commission on January 9, 1995 as part of Registrant's
Annual Report for such Fund pursuant to Rule 30b-1 under the Investment Company
Act of 1940, as amended, and incorporated herein by reference)

(b) Exhibits:

(1) Trust Instrument of Schroder Capital Funds (Delaware) (the "Trust") (filed
herewith).

(3) None.

(4) (a) Sections 2.04 and 2.06 of Registrant's Trust Instrument provide as
follows:

"SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by
the Trustees, Shares shall be transferable on the records of the Trust only
by the record holder thereof or by his agent thereunto duly authorized in
writing, upon delivery to the Trustees or the Trust's transfer agent of a
duly executed instrument of transfer and such evidence of the genuineness
of such execution and authorization and of such other matters as may be
required by the Trustees. Upon such delivery the transfer shall be
recorded on the register of the Trust. Until such record is made, the
Shareholder of record shall be deemed to be the holder of such Shares for
all purposes hereunder and neither the Trustees nor the Trust, nor any
transfer agent or registrar nor any officer, employee or agent of the Trust
shall be affected by any notice of the proposed transfer.

"SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby
shall consist of one or more Series and separate and distinct records shall

<PAGE>

be maintained by the Trust for each Series and the assets associated with
any such Series shall be held and accounted for separately from the assets
of the Trust or any other Series. The Trustees shall have full power and
authority, in their sole discretion, and without obtaining any prior
authorization or vote of the Shareholders of any Series of the Trust, to
establish and designate and to change in any manner any such Series of
Shares or any classes of initial or additional Series and to fix such
preferences, voting powers, rights and privileges of such Series or classes
thereof as the Trustees may from time to time determine, to divide or
combine the Shares or any Series or classes thereof into a greater or
lesser number, to classify or reclassify any issued Shares or any Series or
classes thereof into one or more Series or classes of Shares, and to take
such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be
effective upon the adoption of a resolution by a majority of the Trustees
setting forth such establishment and designation and the relative rights
and preferences of the Shares of such Series. A Series may issue any
number of Shares and need not issue shares. At any time that there are no
Shares outstanding of any particular Series previously established and
designated, the Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.

"All references to Shares in this Trust Instrument shall be deemed to
be Shares of any or all Series, or classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally
to each Series of the Trust, and each class thereof, except as the context
otherwise requires.

"Each Share of a Series of the Trust shall represent an equal
beneficial interest in the net assets of such Series. Each holder of
Shares of a Series shall be entitled to receive his pro rata share of all
distributions made with respect to such Series. Upon redemption of his
Shares, such Shareholder shall be paid solely out of the funds and property
of such Series of the Trust."

(5) Form of Investment Advisory Contract between the Trust and Schroder
Capital Management International Inc. with respect to each Fund (filed
herewith).

(6) Form of Master Distribution Contract and Supplement to be between the
Trust and Schroder Fund Advisors Inc. (filed herewith).

(7) (a) Form of Distribution Agrement between the Trust and Schroder Fund
Advisors Inc. with respect to Schroder Emerging Markets Fund -
Institutional Pprtofolio, Schroder U.S. Smaller Companies Fund, Schroder
Latin American Fund and International Equity Fund (filed herewith).

(b) Form of Distribution Agrement between the Trust and Schroder Capital
Management International Inc. with respect to Schroder U.S. Equity Fund
(filed herewith).

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<PAGE>

(8) Form of Global Custody Agreement between the Trust and The Chase Manhattan
Bank, N.A. (filed herewith).

(9) (a) Form of Administrative Services Agreement with Schroder Fund Advisors
Inc. with respect to each Fund except Schroder U.S. Equity Fund (filed
herewith).

(b) Form of Sub-Administration Agreement with Forum Financial Services,
Inc. (filed herewith).

(d) Form of Fund Accounting Agreement with Forum Financial Corp. (filed
herewith).

(10) Opinion of Jacobs Persinger & Parker as to legality of shares issued by
the Trust (filed herewith).

(11) Consent of Coopers & Lybrand L.L.P. (filed herewith).

(15) (a) Form of Master Distribution Plan adopted by Registrant (filed
herewith).

(b) Form of Distribution Plan Supplement with respect to each Fund (filed
herewith).

Other Exhibits:

Copies of Powers of Attorney pursuant to which Trustees have signed this
Post-Effective Amendment (filed as Other Exhibits to Post-Effective
Amendment No. 45 and incorporated herein by reference).

Copy of Power of Attorney pursuant to which Mr. Jackowitz has signed this
Post-Effective Amendment (filed as an Other Exhibit to Post-Effective
Amendment No. 45 and incorporated herein by reference).

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<PAGE>

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

(1) (2)

Number of Record
Holders as of
Title of Class December 22, 1995
-------------- ------------------

Schroder U.S. Equity Fund 637

International Equity Fund 1,810

Schroder U.S. Smaller
Companies Fund 5

Schroder Emerging Markets Fund
Institutional Portfolio 6

Schroder Latin American Fund N/A

ITEM 27. INDEMNIFICATION.

In accordance with Section 3803 of the Delaware Business Trust Act,
SECTION 5.2 of the Registrant's Trust Instrument provides as follows:

"5.2. INDEMNIFICATION.

"(a) Subject to the exceptions and limitations contained in Section
(b) below:

"(i) Every Person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified
by the Trust to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes involved as a
party or otherwise by virtue of being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof;

"(ii) The words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words

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<PAGE>

"liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and
other liabilities.

"(b) No indemnification shall be provided hereunder to a Covered
Person:

"(i) Who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to the
Trust or its Holders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of the Covered Person's office or (B) not to have
acted in good faith in the reasonable belief that Covered Person's
action was in the best interest of the Trust; or

"(ii) In the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Trustee's or officer's office,

"(A) By the court or other body approving the settlement;

"(B) By at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to
a full trial-type inquiry); or

"(C) By written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full
trial-type inquiry);

provided, however, that any Holder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.

"(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.

"(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 5.2 may be paid by the Trust or Series from time
to time prior to final disposition thereof upon receipt of an undertaking by or
on behalf of such Covered Person that such amount will be paid over by him to
the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 5.2; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance payments
or (c)

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<PAGE>

either a majority of the Trustees who are neither Interested Persons of the
Trust nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled
to indemnification under this Section 5.2.

"(e) Conditional advancing of indemnification monies under this
Section 5.2 for actions based upon the 1940 Act may be made only on the
following conditions: (i) the advances must be limited to amounts used, or
to be used, for the preparation or presentation of a defense to the action,
including costs connected with the preparation of a settlement; (ii)
advances may be made only upon receipt of a written promise by, or on
behalf of, the recipient to repay that amount of the advance which exceeds
that amount which it is ultimately determined that he is entitled to
receive from the Trust by reason of indemnification; and (iii) (a) such
promise must be secured by a surety bond, other suitable insurance or an
equivalent form of security which assures that any repayments may be
obtained by the Trust without delay or litigation, which bond, insurance or
other form of security must be provided by the recipient of the advance, or
(b) a majority of a quorum of the Trust's disinterested, non-party
Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the
recipient of the advance ultimately will be found entitled to
indemnification.

"(f) In case any Holder or former Holder of any Series shall be
held to be personally liable solely by reason of the Holder or former
Holder being or having been a Holder of that Series and not because of the
Holder or former Holder acts or omissions or for some other reason, the
Holder or former Holder (or the Holder or former Holder's heirs, executors,
administrators or other legal representatives, or, in the case of a
corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets belonging to the applicable Series to
be held harmless from and indemnified against all loss and expense arising
from such liability. The Trust, on behalf of the affected Series, shall,
upon request by the Holder, assume the defense of any claim made against
the Holder for any act or obligation of the Series and satisfy any judgment
thereon from the assets of the Series."

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

(a) Schroder Capital Management International Inc. ("SCMI") provides
advisory services to individuals, businesses and other entities (including
registered investment companies). SCMI is a wholly-owned United States
subsidiary of Schroders Incorporated, the wholly-owned United States holding
company subsidiary of Schroders plc. Schroders plc is the holding company
parent of a large worldwide group of banks and financial service companies
(referred to as the "Schroder Group"), with associated companies and branch and
representative offices located in seventeen countries worldwide.

(b) Several of SCMI's officers and/or directors also serve as officers
and/or directors of, or are employed by, various other entities within the
Schroder Group.

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<PAGE>

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

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

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

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

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

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

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

-7-
<PAGE>

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

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

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

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

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

Jane Lucas, Director. Ms. Lucas is also a director Schroder Wertheim
Investment Services, an affiliate of SCMI.

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

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

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

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

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

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

-8-
<PAGE>

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

Abdallah Nauphal, First Vice President.

Joshua Shapiro, First Vice President.

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

Ellen B. Sullivan, First Vice President.

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

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

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

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

Mark J. Astley, Vice President.

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

Susan M. Belson, Vice President.

Alan Gilston, Vice President.

Robert A. Jackowitz, Vice President.

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

-9-
<PAGE>

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

Robert J. Martorana, Vice President.

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

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

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

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) Schroder Fund Advisors, Inc., the Registrant's principal
underwriter, also serves as underwriter to WSIS Series Trust.

(b) Following is information with respect to each officer and director of
Schroder Fund Advisors Inc., the Distributor of the shares of International
Equity Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies Fund,
Schroder Emerging Markets Fund and Schroder Latin American Fund (each a series
of the Registrant):

Position and
Name and Principal Position and Offices Offices with
Business Address* with Distributor Registrant
------------------ ---------------- ------------
Laura E. Luckyn-Malone Chairman and Director and
President President

Sharon L. Haugh Director None

Mark J. Smith Director and Vice Director and Vice
President President

John A. Troiano Director Vice President

Margaret H. Douglas-
Hamilton Secretary Secretary

Kathleen Adams Vice President None

Catherine A. Mazza Vice President Vice President

-10-
<PAGE>

Robert Jackowitz Treasurer Treasurer

* Address for each is 787 Seventh Avenue, New York, New York 10019 except
for John A. Troiano and Mark J. Smith each of whose address is 33 Gutter Lane,
London, England.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

The accounts, books and other documents required to be maintained by
Registrant with respect to Schroder Emerging Markets Fund pursuant to Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder will be
maintained at the offices of Schroder Capital Management International Inc. and
Schroder Fund Advisors Inc., 787 Seventh Avenue, New York, New York 10019 and/or
33 Gutter Lane, London EC2V 8AS, England, except that certain items will be
maintained at the following locations:

(a) Forum Financial Corp., Two Portland Square, Portland, Maine 04101
(shareholder records).

(b) Forum Financial Services, Inc., Two Portland Square, Portland,
Maine, 04101 (corporate minute book).

ITEM 31. MANAGEMENT SERVICES.

Inapplicable.

ITEM 32. UNDERTAKINGS.

Inapplicable.

-11-

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York and the State of New York on
the 9th day of January, 1996.

SCHRODER CAPITAL FUNDS (DELAWARE)

By: /s/ Laura E. Luckyn-Malone
--------------------------
Laura E. Luckyn-Malone
President

Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registrant's Registration Statement has been signed below by the following
persons in the capacities indicated on the 9th day of January, 1996.

Signatures Title
---------- -----

(a) Principal Executive Officer

/s/ Laura E. Luckyn-Malone President
-------------------------- and Trustee
Laura E. Luckyn-Malone

(b) Principal Financial and
Accounting Officer
Treasurer

--------------------------
Robert Jackowitz*

/s/ Laura E. Luckyn-Malone Trustee
--------------------------
Laura E. Luckyn-Malone

PETER E. GUERNSEY* Trustee
RALPH E. HANSMANN* Trustee
JOHN I. HOWELL* Trustee
HERMANN C. SCHWAB* Trustee
MARK J. SMITH* Trustee

*By: /s/ Thomas G. Sheehan
----------------------
Thomas G. Sheehan, Attorney-in-Fact

<PAGE>

SIGNATURES

On behalf of Schroder Capital Funds, being duly authorized, I have duly caused
this amendment to the Registration Statement of Schroder Capital Funds, Inc. to
be signed in the City of New York, State of New York on the 9th day of January,
1996.

SCHRODER CAPITAL FUNDS

By: /s/ Laura E. Luckyn-Malone
--------------------------
Laura E. Luckyn-Malone
President

This amendment to the Registration Statement of Schroder Capital Funds, Inc. has
been signed below by the following persons in the capacities indicated on the
9th day of December, 1996.

Signatures Title
---------- -----

(a) Principal Executive Officer

/s/ Laura E. Luckyn-Malone President
-------------------------- and Trustee
Laura E. Luckyn-Malone

(b) Principal Financial and
Accounting Officer

Treasurer
--------------------------
Robert Jackowitz*

/s/ Laura E. Luckyn-Malone Trustee
--------------------------
Laura E. Luckyn-Malone

PETER E. GUERNSEY* Trustee
RALPH E. HANSMANN* Trustee
JOHN I. HOWELL* Trustee
HERMANN C. SCHWAB* Trustee
MARK J. SMITH* Trustee

*By: /s/ Thomas G. Sheehan
---------------------
Thomas G. Sheehan, Attorney-in-Fact

<PAGE>

INDEX TO EXHIBITS
Item Description
- ---- -----------

(1) Trust Instrument of Schroder Capital Funds (Delaware) (the "Trust")

(5)(a) Form of Investment Advisory Contract between the Trust and Schroder
Capital Management International Inc. with respect to Schroder
Emerging Markets Fund - Institutional Pprtofolio, Schroder U.S.
Smaller Companies Fund, Schroder Latin American Fund and International
Equity Fund

(5)(b) Form of Investment Advisory Contract between the Trust and Schroder
Capital Management International Inc. with respect to Schroder U.S.
Equity Fund

(6)(a) Form of Distribution Agreement between the Trust and Schroder Fund
Advisors Inc. with respect to Schroder Emerging Markets Fund -
Institutional Portfolio, Schroder U.S. Smaller Companies Fund,
Schroder Latin American Fund and International Equity Fund

(6)(b) Form of Distribution Agrement between the Trust and Schroder Capital
Management International Inc. with respect to Schroder U.S. Equity
Fund

(8) Form of Global Custody Agreement to be between the Trust and The Chase
Manhattan Bank, N.A.

(9)(a) Form of Administrative Services Agreement with Schroder Fund Advisors
Inc. with respect to each Fund except Schroder U.S. Equity Fund

(9)(b) Form of Sub-Administration Agreement with Forum Financial Services,
Inc.

(9)(c) Form of Transfer Agency Agreement with Forum Financial Corp.

(9)(d) Form of Fund Accounting Agreement with Forum Financial Corp.

(10) Opinion of Jacobs Persinger & Parker as to legality of shares to be
issued by the Trust

(11) Consent of Coopers & Lybrand L.L.P.

(15) Form of Distribution Plan adopted by Registrant

<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)

TRUST INSTRUMENT
DATED SEPTEMBER 6, 1995
<PAGE>

TABLE OF CONTENTS

PAGE
ARTICLE I NAME AND DEFINITIONS

Section 1.01 Name 1
Section 1.02 Definitions 1

ARTICLE II BENEFICIAL INTEREST

Section 2.01 Shares of Beneficial Interest 2
Section 2.02 Issuance of Shares 2
Section 2.03 Register of Shares and Share Certificates 2
Section 2.04 Transfer of Shares 3
Section 2.05 Treasury Shares 3
Section 2.06 Establishment of Series 3
Section 2.07 Investment in the Trust 3
Section 2.08 Assets and Liabilities of Series 4
Section 2.09 No Preemptive Rights 4
Section 2.10 No Personal Liability of Shareholders 4
Section 2.11 Assent to Trust Instrument 5

ARTICLE III THE TRUSTEES

Section 3.01 Management of the Trust 5
Section 3.02 Initial Trustees 5
Section 3.03 Term of Office 5
Section 3.04 Vacancies and Appointments 6
Section 3.05 Temporary Absence 6
Section 3.06 Number of Trustees 6
Section 3.07 Effect of Ending of a Trustee's Service 6
Section 3.08 Ownership of Assets of the Trust 6

ARTICLE IV POWERS OF THE TRUSTEES

Section 4.01 Powers 7
Section 4.02 Issuance and Repurchase of Shares 9
Section 4.03 Trustees and Officers as Shareholders 9
Section 4.04 Action by the Trustees 9
Section 4.05 Chairman of the Trustees 10
Section 4.06 Principal Transactions 10

ARTICLE V EXPENSES OF THE TRUST 10
<PAGE>

ARTICLE VI INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT

Section 6.01 Investment Adviser 11
Section 6.02 Principal Underwriter 11
Section 6.03 Administrator 11
Section 6.04 Transfer Agent 11
Section 6.05 Parties to Contract 12
Section 6.06 Provisions and Amendments 12

ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS

Section 7.01 Voting Powers 12
Section 7.02 Meetings 13
Section 7.03 Quorum and Required Vote 13

ARTICLE VIII CUSTODIAN

Section 8.01 Appointment and Duties 13
Section 8.02 Central Certificate System 14

ARTICLE IX DISTRIBUTIONS AND REDEMPTIONS

Section 9.01 Distributions 14
Section 9.02 Redemptions 14
Section 9.03 Determination of Net Asset Value
and Valuation of Portfolio Assets 15
Section 9.04 Suspension of the Right of Redemption 15
Section 9.05 Redemption of Shares in Order to
Qualify as Regulated Investment Company 16

ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 10.01 Limitation of Liability 16
Section 10.02 Indemnification 16
Section 10.03 Shareholders 17

ARTICLE XI MISCELLANEOUS

Section 11.01 Trust Not a Partnership 18
Section 11.02 Trustee's Good Faith Action,
Expert Advice, No Bond or Surety 18
Section 11.03 Establishment of Record Dates 18
Section 11.04 Termination of Trust 18
Section 11.05 Reorganization 19

ii
<PAGE>

Section 11.06 Filing of Copies, References, Headings 19
Section 11.07 Applicable Law 20
Section 11.08 Amendments 20
Section 11.09 Fiscal Year 20
Section 11.10 Provisions in Conflict with Law 21

iii
<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)

September 6, 1995

TRUST INSTRUMENT, made by John Y. Keffer, Thomas G. Sheehan and David I.
Goldstein (the "Trustees").

WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;

NOW THEREFORE, the Trustees declare that all money and property contributed
to the trust hereunder shall be held and managed in trust under this Trust
Instrument as herein set forth below.

ARTICLE I
NAME AND DEFINITIONS

SECTION 1.01 NAME. The name of the trust created hereby is "Schroder
Capital Funds (Delaware)."

SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:

(a) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.

(b) "Bylaws" means the Bylaws of the trust as adopted by the Trustees, as
amended from time to time;

(c) "Commission" has the meaning given it in the 1940 Act. "Affiliated
Person", "Assignment," "Interested Person" and "Principal Underwriter" shall
have the respective meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any rules or
regulations adopted by or interpretive releases of the Commission thereunder.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" is given in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted by or interpretive releases of the
Commission thereunder.

(d) "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time.

(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
<PAGE>

(f) "Outstanding Shares" means those Shares shown from time to time in the
books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;

(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06 hereof.

(h) "Shareholder" means a record owner of Outstanding Shares of the Trust;

(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;

(j) The "Trust" means Learning Assets-TM- and reference to the Trust, when
applicable to one or more Series of the Trust, shall refer to any such Series;

(k) The "Trustees" means the person or persons who has or have signed this
Trust Instrument, so long as he or they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
III hereof and reference herein to a Trustee or to the Trustees shall refer to
the individual Trustees in their capacity as Trustees hereunder;

(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.

ARTICLE II
BENEFICIAL INTEREST

SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more separate
and distinct Series or classes of a Series as the Trustees shall from time to
time create and establish. The number of Shares of each Series, and class
thereof, authorized hereunder is unlimited. Each Share shall have no par value.
All Shares issued hereunder, including without limitation, Shares issued in
connection with a dividend in Shares or a split or reverse split of Shares,
shall be fully paid and nonassessable.

SECTION 2.02 ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the

-5-
<PAGE>

Trustees may issue fractional Shares and Shares held in the treasury. The
Trustees may from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial interests in
the Trust. Contributions to the Trust may be accepted for, and Shares shall be
redeemed as, whole Shares and/or 1/1,000th of a Share or integral multiples
thereof.

SECTION 2.03 REGISTER OF SHARES AND SHARE CERTIFICATES. A register shall
be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders
of each Series, the number of Shares of that Series (or any class or classes
thereof) held by them respectively and a record of all transfers thereof. As to
Shares for which no certificate has been issued, such register shall be entitled
to receive dividends or other distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or other distribution, nor to have notice given to him as herein
or in the Bylaws provided, until he has given his address to the transfer agent
or such officer or other agent of the Trustees as shall keep the said register
for entry thereon. No share certificates shall be issued by the Trust.

SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.

SECTION 2.05 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.

SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby shall
consist of one or more Series and separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees shall have full power and authority, in their
sole discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or classes of Shares, and
to take such other action with respect to the Shares as the Trustees may deem
desirable. The establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the Trustees setting forth
such establishment and designation and the relative rights and preferences of
the Shares of such Series. A Series

-6-
<PAGE>

may issue any number of Shares and need not issue shares. At any time that
there are no Shares outstanding of any particular Series previously established
and designated, the Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.

All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require.
All provisions herein relating to the Trust shall apply equally to each Series
of the Trust, and each class thereof, except as the context otherwise requires.

Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of all distributions made with
respect to such Series. Upon redemption of his Shares, such Shareholder shall
be paid solely out of the funds and property of such Series of the Trust.

SECTION 2.07 INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series of the Trust from such persons and on such terms as
they may from time to time authorize. At the Trustees' discretion, such
investments, subject to applicable law, may be in the form of cash or securities
in which the affected Series is authorized to invest, valued as provided in
Article IX, Section 9.03 hereof. Investments in a Series shall be credited to
each Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received or accepted as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge upon investments in the Trust in such
manner and at such time determined by the Trustees or (c) issue fractional
Shares.

SECTION 2.08 ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation of such assets,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held and accounted for separately
from the other assets of the Trust and of every other Series and may be
referred to herein as "assets belonging to" that Series. The assets
belonging to a particular Series shall belong to that Series for all
purposes, and to no other Series, subject only to the rights of creditors of
that Series. In addition, any assets, income, earnings, profits or funds, or
payments and proceeds with respect theret,o which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes, and such assets, income, earnings, profits or funds,
or payments and proceeds with respect thereto shall be assets belonging to
that Series. The assets belonging to a particular Series shall be so
recorded upon the books of the Trust, and shall be held by the Trustees in
trust for the benefit of the holders of Shares of that Series. The assets
belonging to each particular Series shall be charged with the liabilities of
that Series and all expenses, costs, charges and reserves attributable to
that Series. Any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any
particular Series

-7-
<PAGE>

shall be allocated and charged by the Trustees between or among any one or more
of the Series in such manner as the Trustees in their sole discretion deem fair
and equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes. Without limitation of the
foregoing provisions of this Section 2.08, but subject to the right of the
Trustees in their discretion to allocate general liabilities, expenses, costs,
changes or reserves as herein provided, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such Series only,
and not against the assets of the Trust generally. Notice of this contractual
limitation on inter-Series liabilities may, in the Trustee's sole discretion, be
set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on inter-Series liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against any
Series may look only to the assets of that Series to satisfy or enforce any
debt, with respect to that Series. No Shareholder or former Shareholder of any
Series shall have a claim on or any right to any assets allocated or belonging
to any other Series.

SECTION 2.09 NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust or the Trustees, whether of the same or other Series.

SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDER. Each Shareholder of
the Trust and of each Series shall not be personally liable for the debts,
liabilities, obligation and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).

SECTION 2.11 ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue of
having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.

ARTICLE III
THE TRUSTEES

SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with

-8-
<PAGE>

such powers of delegation as may be permitted by this Trust Instrument. The
Trustees shall have power to conduct the business of the Trust and carry on its
operations in any and all of its branches and maintain offices both within and
without the State of Delaware, in any and all states of the United States of
America, in the District of Columbia, in any and all commonwealths, territories,
dependencies, colonies, or possessions of the United States of America, and in
any foreign jurisdiction and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made
by the Trustees in good faith shall be conclusive. In construing the provisions
of this Trust Instrument, the presumption shall be in favor of a grant of power
to the Trustees.

The enumeration of any specific power in this Trust Instrument shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court.

Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.

SECTION 3.02 INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein. On a date fixed by the Trustees, the Shareholders shall elect at
least three (3) but not more than twelve (12) Trustees, as specified by the
Trustees pursuant to Section 3.06 of this Article III.

SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by reason
of disease or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least two-
thirds of the Outstanding Shares.

SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of the declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy
in the Board of Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder and the certificate of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining

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Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit consistent with the limitations under the 1940
Act. Such appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by resolution of the Trustees, duly
adopted, which shall be recorded in the minutes of a meeting of the Trustees,
whereupon the appointment shall take effect.

An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder.

SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.

SECTION 3.06 NUMBER OF TRUSTEES. The number of Trustees shall be at least
three (3), and thereafter shall be such number as shall be fixed from time to
time by a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than twelve (12).

SECTION 3.07 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination to
serve, death, resignation, retirement, removal, incapacity, or inability of the
Trustees, or any one of them, shall not operate to terminate the trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.

SECTION 3.08 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and
the right to conduct any business shall at all times be considered as vested in
the Trustees on behalf of the Trust, except that the Trustees may cause legal
title to any Trust Property to be held by, or in the name of the Trust, or in
the name of any person as nominee. No Shareholder shall be deemed to have a
severable ownership in any individual asset of the Trust or of any Series or any
right of partition or possession thereof, but each Shareholder shall have,
except as otherwise provided for herein, a proportionate undivided beneficial
interest in the Trust or Series. The Shares shall be personal property giving
only the rights specifically set forth in this Trust Instrument.

ARTICLE IV
POWERS OF THE TRUSTEES

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SECTION 4.01 POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority and power
to make any and all investments which they, in their sole discretion, shall deem
proper to accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust Instrument
or the Bylaws of the Trust, the Trustees shall have the power and authority:

(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the assets of the Trust:

(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;

(c) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other Person and to lend
Trust Property;

(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;

(e) To adopt Bylaws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such Bylaws
shall be deemed incorporated and included in this Trust Instrument;

(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;

(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;

(h) To retain one or more transfer agents and shareholder servicing
agents, or both;

(i) To set record dates in the manner provided herein or in the Bylaws;

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(j) To delegate such authority as they consider desirable to any officers
of the Trust and to any investment adviser, manager, custodian, underwriter or
other agent or independent contractor;

(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, subsection 11.04(b) hereof;

(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;

(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;

(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business trusts or investment companies;

(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;

(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
to apportion the same between or among two or more Series, provided that any
liabilities or expenses incurred by a particular Series shall be payable solely
out of the assets belonging to that Series as provided for in Article II hereof;

(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;

(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;

(s) To make distributions of income and of capital gains to Shareholders
in the manner provided herein;

(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Series or class, and to require the redemption of
the Shares of any

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Shareholders whose investment is less than such minimum upon giving notice to
such Shareholder;

(u) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees and to adopt a committee charter providing for
such responsibilities, membership (including Trustees, officers or other agents
of the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article IV,
and in addition to such provisions or any other provision of this Trust
Instrument or of the Bylaws, the Trustees may by resolution appoint a committee
consisting of less than the whole number of Trustees then in office, which
committee may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any action, suit or proceeding which shall be pending or
threatened to be brought before any court, administrative agency or other
adjudicatory body;

(v) To interpret the investment policies, practices or limitations of any
Series;

(w) To establish a registered office and have a registered agent in the
state of Delaware; and

(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.

The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.

The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.

No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see the application of
any payments made or property transferred to the Trustees or upon their order.

SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any

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funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.

SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee, officer
or other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he were not a Trustee, officer or agent; and the Trustees may issue
and sell or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
Bylaws.

SECTION 4.04 ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote at a meeting duly called or by unanimous written consent without a meeting
or by telephone meeting provided a quorum of Trustees participate in any such
telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date
and place of all meetings of the Trustees shall be given by the party calling
the meeting to each Trustee by telephone, facsimile or other electronic
mechanism sent to his home or business address at least twenty-four hours in
advance of the meeting or by written notice mailed to his home or business
address at least seventy-two hours in advance of the meeting. Notice need not
be given to any Trustee who attends the meeting without objecting to the lack of
notice or who executes a written waiver of notice with respect to the meeting.
Any meeting conducted by telephone shall be deemed to take place at the
principal office of the Trust, as determined by the Bylaws or by the Trustees.
Subject to the requirements of the 1940 Act, the Trustees by majority vote may
delegate to any one or more of their number their authority to approve
particular matters or take particular actions on behalf of the Trust. Written
consents or waivers of the Trustees may be executed in one or more counterparts.
Execution of a written consent or waiver and delivery thereof to the Trust may
be accomplished by facsimile or other similar electronic mechanism.

SECTION 4.05 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the execution
of policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.

SECTION 4.06 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person; and the Trust may employ any such person, or
firm or company in which such person is an Interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.

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ARTICLE V
EXPENSES OF THE TRUST

Subject to the provisions of Article II, Section 2.08 hereof, the Trustees
shall be reimbursed from the Trust estate or the assets belonging to the
appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; certain insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodian,
transfer agent and fund accountant; fees of pricing, interest, dividend, credit
and other reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal and
compliance expenses; costs of forming the Trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information and shareholder reports and delivering them to
existing shareholders; expenses of meetings of shareholders and proxy
solicitations therefore; costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; fees and expenses of the Trust's
trustees; compensation of the Trust's officers and employees and costs of other
personnel performing services for the Trust; costs of Trustee meetings;
Securities and Exchange Commission registration fees and related expenses; state
or foreign securities laws registration fees and related expenses and for such
non-recurring items as may arise, including litigation to which the Trust (or a
Trustee acting as such) is a party, and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series, prior to
any rights or interests of the Shareholders thereto. This section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses.

ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT

SECTION 6.01 INVESTMENT ADVISER. The Trustees may in their discretion,
from time to time, enter into an investment advisory contract or contracts with
respect to the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory, statistical and research facilities and services and such
other facilities and services, if any, all upon such terms and conditions as may
be prescribed in the Bylaws or as the Trustees may in their discretion determine
(such terms and conditions not to be inconsistent with the provisions of this
Trust Instrument or of the Bylaws). Notwithstanding any other provision of this
Trust Instrument, the Trustees may authorize any investment adviser (subject to
such general or specific instructions as the Trustees may from time to time
adopt) to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf of the
Trustees, or may authorize any

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officer, agent, or Trustee to effect such purchases, sales or exchanges pursuant
to recommendations of the investment adviser (and all without further action by
the Trustees). Any such purchases, sales and exchanges shall be deemed to have
been authorized by all of the Trustees.

The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be agreed upon
between the investment adviser and sub-adviser (such terms and conditions not to
be inconsistent with the provisions of this Trust Instrument or of the Bylaws).
Any reference in this Trust Instrument to the investment adviser shall be deemed
to include such sub-advisers, unless the context otherwise requires.

SECTION 6.02 PRINCIPAL UNDERWRITER. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws); and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.

SECTION 6.03 ADMINISTRATION. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).

SECTION 6.04 TRANSFER AGENT. The Trustees may in their discretion from
time to time enter into one or more transfer agency and Shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and Shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).

SECTION 6.05 PARTIES TO CONTRACT. Any contract of the character described
in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that

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the contract when entered into was not inconsistent with the provisions of this
Article VI or Article VIII hereof or of the Bylaws. The same person (including
a firm, corporation, partnership, trust, or association) may be the other party
to contracts entered into pursuant to Sections 6.01, 6.02, 6.03 and 6.04 of this
Article VI or pursuant to Article VIII hereof, and any individual may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this Section 6.05.

SECTION 6.06 PROVISIONS AND AMENDMENTS. Any contract entered into
pursuant to Sections 6.01 or 6.02 of this Article VI shall be consistent with
and subject to the requirements of Section 15 of the 1940 Act, if applicable, or
other applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any contract
entered into pursuant to Section 6.01 of this Article VI shall be effective
unless assented to in a manner consistent with the requirements of said Section
15, as modified by any applicable rule, regulation or order of the Commission.

ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 7.01 VOTING POWERS. The Shareholders shall have power to vote
only (a) for the election of Trustees as provided in Article III, Sections 3.01
and 3.02 hereof, (b) for the removal of Trustees as provided in Article III,
Section 3.03(d) hereof, (c) with respect to any investment advisory contract as
provided in Article VI, Sections 6.01 and 6.06 hereof, and (d) with respect to
such additional matters relating to the Trust as may be required by law, by this
Trust Instrument, or the Bylaws or any registration of the Trust with the
Commission or any State, or as the Trustees may consider desirable.

On any matter submitted to a vote of the Shareholders, all Shares shall be
voted separately by individual Series, except (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and (ii)
when the Trustees have determined that the matter affects the interests of more
than one Series, then the Shareholders of all such Series shall be entitled to
vote thereon. The Trustees may also determine that a matter affects only the
interests of one or more classes of a Series, in which case any such matter
shall be voted on by such class or classes. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. A proxy may
be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of the Shareholders of one or more Series or of the Trust, or in the
event of any proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees of the Trust, Shares may be voted only
in person or by written proxy. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required

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or permitted by law, this Trust Instrument or any of the Bylaws of the Trust to
be taken by Shareholders.

SECTION 7.02 MEETINGS. The first Shareholders' meeting shall be held in
order to elect Trustees as specified in Section 3.02 of Article III hereof at
the principal office of the Trust or such other place as the Trustees may
designate. Meetings may be held within or without the State of Delaware.
Special meetings of the Shareholders of any Series may be called by the Trustees
and shall be called by the Trustees upon the written request of Shareholders
owning at least one-tenth of the Outstanding Shares entitled to vote. Whenever
ten or more Shareholders meeting the qualifications set forth in Section 16(c)
of the 1940 Act, as the same may be amended from time to time, seek the
opportunity of furnishing materials to the other Shareholders with a view to
obtaining signatures on such a request for a meeting, the Trustees shall comply
with the provisions of said Section 16(c) with respect to providing such
Shareholders access to the list of the Shareholders of record of the Trust or
the mailing of such materials to such Shareholders of record, subject to any
rights provided to the Trust or any Trustees provided by said Section 16(c).
Notice shall be sent, by First Class Mail or such other means determined by the
Trustees, at least 15 days prior to any such meeting.

SECTION 7.03 QUORUM AND REQUIRED VOTE. One-third of Shares entitled to
vote in person or by proxy shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requires that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series (or class), voted on the matter in person or by proxy
shall decide that matter insofar as that Series (or class) is concerned.
Shareholders may act by unanimous written consent. Actions taken by Series (or
class) may be consented to unanimously in writing by Shareholders of that Series
(or class).

ARTICLE VIII
CUSTODIAN

SECTION 8.01 APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a bank, a company that is a member of a national securities exchange, or
a trust company, each having capital, surplus and undivided profits of at least
twenty million dollars ($20,000,000) and is a member of the Depository Trust
Company as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the Bylaws

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of the Trust: (a) to hold the securities owned by the Trust and deliver the same
upon written order or oral order confirmed in writing; (b) to receive and
receipt for any moneys due to the Trust and deposit the same in its own banking
department or elsewhere as the Trustees may direct; and (c) to disburse such
funds upon orders or vouchers.

The Trustees may also authorize the custodian to employ one or more sub-
custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and is a
member of the Depository Trust Company or such other person as may be permitted
by the Commission or otherwise in accordance with the 1940 Act.

SECTION 8.02 CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, as amended, or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.

ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS

SECTION 9.01 DISTRIBUTIONS.

(a) The Trustees may from time to time declare and pay dividends or other
distributions with respect to any Series. The amount of such dividends or
distributions and the payment of them and whether they are in cash or any other
Trust Property shall be wholly in the discretion of the Trustees.

(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.

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(c) Anything in this Trust Instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute a stock dividend pro rata among
the Shareholders of a particular Series, or class thereof, as of the record date
of that Series fixed as provided in Subsection 9.01(b) hereof.

SECTION 9.02 REDEMPTIONS. In case any holder of record of Shares of a
particular Series desires to dispose of his Shares or any portion thereof, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 9.02; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or the principal
underwriter of the Series shall purchase his said Shares, but only at the Net
Asset Value thereof (as described in Section 9.03 of this Article IX). The
Series shall make payment for any such Shares to be redeemed, as aforesaid, in
cash or property from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective. Upon redemption, shares shall become Treasury shares and
may be re-issued from time to time.

SECTION 9.03 DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO
ASSETS. The term "Net Asset Value" of any Series shall mean that amount by
which the assets of that Series exceed its liabilities, all as determined by or
under the direction of the Trustees. Such value shall be determined separately
for each Series and shall be determined on such days and at such times as the
Trustees may determine. Such determination shall be made with respect to
securities for which market quotations are readily available, at the market
value of such securities; and with respect to other securities and assets, at
the fair value as determined in good faith by the Trustees; provided, however,
that the Trustees, without Shareholder approval, may alter the method of valuing
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations and interpretations thereof promulgated or issued by the Commission
or insofar as permitted by any Order of the Commission applicable to the Series.
The Trustees may delegate any of their powers and duties under this Section 9.03
with respect to valuation of assets and liabilities. The resulting amount,
which shall represent the total Net Asset Value of the particular Series, shall
be divided by the total number of shares of that Series outstanding at the time
and the quotient so obtained shall be the Net Asset Value per Share of that
Series. At any time the Trustees may cause the Net Asset Value per Share last
determined to be determined again in similar manner and may fix the time when
such redetermined value shall become effective. If, for any reason, the net
income of any Series, determined at any time, is a negative amount, the Trustees
shall have the power with respect to that Series (a) to offset each
Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, (b) to reduce the number of Outstanding Shares of
such Series by reducing the number of Shares in the account of each Shareholder
by a pro rata portion of that number of full and fractional Shares which
represents the amount of such excess negative net income, (c) to cause to be
recorded on the books of such Series an asset account in the amount of such
negative net income (provided that the same shall thereupon become the property
of such Series with respect to such Series and shall not be paid to any
Shareholder), which account may be reduced by the amount, of dividends declared
thereafter upon the Outstanding Shares of such Series on

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<PAGE>

the day such negative net income is experienced, until such asset account is
reduced to zero; (d) to combine the methods described in clauses (a) and (b) and
(c) of this sentence; or (e) to take any other action they deem appropriate, in
order to cause (or in order to assist in causing) the Net Asset Value per Share
of such Series to remain at a constant amount per Outstanding Share immediately
after each such determination and declaration. The Trustees shall also have the
power not to declare a dividend out of net income for the purpose of causing the
Net Asset Value per Share to be increased. The Trustees shall not be required
to adopt, but may at any time adopt, discontinue or amend the practice of
maintaining the Net Asset Value per Share of the Series at a constant Amount.

SECTION 9.04 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
as permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.03, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.

SECTION 9.05 REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of any Series has or may
become concentrated in any Person to an extent which would disqualify any Series
as a regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other means
deemed equitable by them (a) to call for redemption by any such person of a
number, or principal amount, of Shares sufficient to maintain or bring the
direct or indirect ownership of Shares into conformity with the requirements for
such qualification and (b) to refuse to transfer or issue Shares to any person
whose acquisition of Shares in question would result in such disqualification.
The redemption shall be effected at the redemption price and in the manner
provided in this Article IX.

The holders of Shares shall upon demand disclose to the Trustees in writing
such information with respect to direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the requirements of any taxing authority.

ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION

SECTION 10.01 LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or

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<PAGE>

omission or any conduct whatsoever in his capacity as Trustee, provided that
nothing contained herein or in the Delaware Act shall protect any Trustee
against any liability to the Trust or to Shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.

SECTION 10.02 INDEMNIFICATION.

(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):

(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;

(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

(b) No indemnification shall be provided hereunder to a Covered Person:

(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust 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 or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or

(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry);

provided, however, that any Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.

(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and

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<PAGE>

administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.

(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under Section 10.02.

SECTION 10.03 SHAREHOLDERS. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of his being or having been a
Shareholder of such Series and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled out
of the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust, on behalf of the affected Series, shall, upon request by the Shareholder,
assume the defense of any claim made against the Shareholder for any act or
obligation of the Series and satisfy any judgment thereon from the assets of the
Series.

ARTICLE XI
MISCELLANEOUS

SECTION 11.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder
shall have any power to bind personally either the Trust officers or any
Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Series or (if the Trustees shall have yet to have established
Series) of the Trust for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their agents, whether
past, present or future, shall be personally liable therefor. Nothing in this
Trust Instrument shall protect a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee hereunder.

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<PAGE>

SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
X hereof and to Section 11.01 of this Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Trust Instrument, and subject to the provisions of Article X hereof and
Section 11.01 of this Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.

SECTION 11.03 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.

SECTION 11.04 TERMINATION OF TRUST.

(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).

(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder Vote
of the Trust, and subject to a vote of a majority of the Trustees,

(i) sell and convey all or substantially all of the assets of the Trust or
any affected Series to another trust, partnership, association or corporation,
or to a separate series of shares thereof, organized under the laws of any state
which trust, partnership, association or corporation is an open-end management
investment company as defined in the 1940 Act, or is a series thereof, for
adequate consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of the Trust or
any affected Series, and which may

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<PAGE>

include shares of beneficial interest, stock or other ownership interests of
such trust, partnership, association or corporation or of a series thereof; or

(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.

Upon making reasonable provision, in the determination of the Trustees, for the
payment of all such liabilities in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) of each Series (or class) ratably among the holders of Shares
of that Series then outstanding.

(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.05(b), the Trust or any affected
Series shall terminate and the Trustees and the Trust shall be discharged of any
and all further liabilities and duties hereunder and the right, title and
interest of all parties with respect to the Trust or Series shall be cancelled
and discharged.

Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.

SECTION 11.05 REORGANIZATION. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (a) cause the Trust to merge or consolidate with or
into one or more trusts, partnerships, associations or corporations so long as
the surviving or resulting entity is an open-end management investment company
under the 1940 Act, or is a series thereof, that will succeed to or assume the
Trust's registration under that Act and which is formed, organized or existing
under the laws of a state, commonwealth, possession or colony of the United
States or (b) cause the Trust to incorporate under the laws of Delaware. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.

Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.

SECTION 11.06 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been make and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy

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<PAGE>

certified by an officer or Trustee of the Trust to be a copy of this Trust
Instrument or of any such amendment or supplemental Trust Instrument. In this
Trust Instrument or in any such amendment or supplemental Trust Instrument,
references to this Trust Instrument, and all expressions like "herein," "hereof"
and "hereunder," shall be deemed to refer to this Trust Instrument as amended or
affected by any such supplemental Trust Instrument. All expressions like "his",
"he" and "him", shall be deemed to include the feminine and neuter, as well as
masculine, genders. Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this Trust Instrument, rather than
the headings, shall control. This Trust Instrument may be executed in any
number of counterparts each of which shall be deemed an original.

SECTION 11.07 APPLICABLE LAW. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust", and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.

SECTION 11.08 AMENDMENTS. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to
vote (a) on any amendment which would affect their right to vote granted in
Section 7.01 of Article VII hereof, (b) on any amendment to this Section 11.08,
(c) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission and (d) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the

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<PAGE>

Shareholders of each Series affected and no vote of shareholders of a Series not
affected shall be required. Notwithstanding anything else herein, any amendment
to Article X hereof shall not limit the rights to indemnification or insurance
provided therein with respect to action or omission of Covered Persons prior to
such amendment.

SECTION 11.09 FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may, without Shareholder approval, change the fiscal year of the Trust.

SECTION 11.10 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provisions in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees of
the Trust, have executed this instrument as of date first written above.

-----------------------------------
John Y. Keffer, as Trustee
and not individually

-----------------------------------
Thomas G. Sheehan, as Trustee
and not individually

-----------------------------------
David I. Goldstein, as Trustee
and not individually

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<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)
INVESTMENT ADVISORY AGREEMENT

AGREEMENT, dated and effective as of January 9, 1996, between Schroder
Capital Funds (Delaware), a Delaware business trust (herein referred to as the
"Trust") and Schroder Capital Management International Inc., a New York
corporation (herein referred to as the "Investment Adviser").

W I T N E S S E T H:

WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act") which
currently has five separate investment portfolios, one of which is subject to
this agreement: Schroder Emerging Markets Fund Institutional Portfolio (the
"Fund");

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

WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory services to or on behalf of the Fund in the manner and on
the terms hereinafter set forth; and

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

NOW, THEREFORE, in consideration of the promises and covenants hereinafter
contained, the Trust and the Investment Adviser hereby agree as follows:

1. ENGAGEMENT OF THE INVESTMENT ADVISER. The Trust hereby employs the
Investment Adviser to act as the investment adviser to the Fund and to provide
the investment advisory services described below, subject to the supervision of
the Board of Trustees of the Trust, for the period and on the terms and
conditions set forth in this Agreement. The Investment Adviser hereby accepts
such employment and agrees during such period to render such services and to
assume the obligations herein set forth for the compensation provided for
herein. The Investment Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority hereunder to act for or represent the Fund in any
way or otherwise be deemed an agent of the Fund.
<PAGE>

2. INVESTMENT ADVISORY SERVICES.

Subject always to the Trust's Trust Instrument and its registration
statement filed on Form N-2 with the SEC, the Investment Adviser shall:

(a) Furnish the Trust with advice and recommendations consistent with
the investment objective, policies, and restrictions of the Fund, with respect
to the purchase, holding and disposition of portfolio assets, including advice
on the allocation of investments among the countries in which the Fund may
invest and among equity and debt securities;

(b) Furnish the Trust with advice and recommendations with respect to
foreign currency matters, having regard to foreign exchange controls, if any,
and forward foreign exchange contracts;

(c) Advise the Trust in connection with policy decisions to be made
by its Board of Trustees or any committee thereof with respect to its
investments and, as requested, furnish the Fund with research, economic and
statistical data in connection with its investments and investment policies;

(d) Submit such reports relating to the valuation of the Fund's
securities as the Trust's Board of Trustees or the Trust's administrator may
reasonably request;

(e) Place orders for the purchase, sale or exchange of portfolio
assets for the Fund's accounts with brokers or dealers selected by the
Investment Adviser; provided, however, that in connection with the placing of
such orders and the selection of such brokers or dealers the Investment Adviser
shall seek to obtain execution and pricing within the policy guidelines
established by the Trust's Board of Trustees;

(f) Provide information in the possession of the Investment Adviser
to the Trust's administrator as the Trust's administrator may request to
maintain and preserve the records required by the Investment Company Act;

(g) Obtain and evaluate such information relating to economics,
industries, businesses, securities markets and securities as the Investment
Adviser may deem necessary or useful in the discharge of its duties hereunder;
and

(h) From time to time, or at any time requested by the Trust's Board
of Trustees, make reports to the Trust concerning its performance of the
foregoing services and furnish advice and recommendations with respect to other
aspects of the business and affairs of the Fund.

3. ALLOCATION OF CHARGES AND EXPENSES.

(a) The Investment Adviser shall pay for maintaining its staff and
personnel necessary to perform its obligations under this Agreement and shall,
at its own expense, maintain

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<PAGE>

the office space, facilities, equipment and personnel that are reasonably
necessary to carry out its obligations hereunder. In addition, the Investment
Adviser shall pay the reasonable salaries, fees and expenses of such of the
Trust's officers and employees (including the Trust's share of payroll taxes)
and any fees and expenses of such of the Trust's trustees as are trustees,
officers or employees of the Investment Adviser, provided, however, that the
Trust, and not the Investment Adviser, shall bear OUT-OF-POCKET travel expenses
of trustee and officers of the Trust who are trustees, officers or employees of
the Investment Adviser to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust or any committees thereof.

(b) The Fund assumes and shall pay or cause to be paid fees to the
Investment Adviser and the Trust's administrator and all other expenses of the
Fund including, without limitation: (i) charges and expenses of any custodian,
subcustodian or depository appointed by the Trust for the safekeeping of its
cash, securities or property and fees and expenses of any transfer agent,
dividend paying agent and registrar for the Trust; (ii) charges and expenses of
accounting and auditing; (iii) expenses and fees associated with registering and
qualifying securities issued by the Fund for sale with the SEC and in various
states and foreign jurisdictions and expenses of preparing share certificates
and other expenses in connection with the issuance, offering or underwriting of
securities issued by the Fund, including stock exchange listing fees and freight
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; (iv) expenses of stationary, preparing, printing and
distributing reports, notices and dividends and other documents to the Fund's
shareholders, including, without limitation, expenses of tender offers for and
repurchases of securities issued by the Fund, to the extent not borne by the
Trust's administrator; (v) interest on any indebtedness of the Fund; (vi)
governmental fees and taxes of the Fund, including any stock transfer tax
payable on a portfolio security of the Fund; (vii) brokerage commissions and
other expenses incurred in acquiring or disposing of the Fund's portfolio
securities; (viii) costs of trustees' and officers' insurance and fidelity
bonds; (ix) compensation and expenses of the trustees who are not interested
persons of the Investment Adviser, including out-of-pocket travel expenses; (x)
costs and expenses incidental to holding meetings of the Board of Trustees, or
any committees thereof, including out-of-pocket travel expenses of trustees and
officers of the Trust who are trustees, officers or employees of the Investment
Adviser to the extent that such expenses relate to attendance at such meetings
of the Board of Trustees, or any committee thereof; (xi) fees for legal,
auditing and consulting services and litigation expenses, including settlement
or arbitration costs; (xii) dues and expenses incurred in connection with
membership in investment company organizations and expenses relating to investor
and public relations; and (xiii) costs, expenses and fees incurred in connection
with obtaining, maintaining, refinancing or repaying indebtedness. It is
understood that the organizational, offering and marketing expenses, including
accounting, legal and printing expenses and registration fees incurred by the
Investment Adviser on behalf of the Fund in connection with the initial public
offering of the Fund's securities will be reimbursed to the Investment Adviser
by the Fund within the limitations set forth in the Prospectus.

4. COMPENSATION OF THE INVESTMENT ADVISER.

(a) For the services rendered, the equipment and facilities furnished
and expenses assumed by the Investment Adviser, the Fund shall pay in arrears to
the Investment

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<PAGE>

Adviser at the end of each calendar month a fee calculated by applying the
annual percentage rate of 1.00% to the Fund's month-end average of net assets
("net assets" being the value of the total assets of the Fund, minus the sum of
liabilities of the Fund), determined at the end of each month by dividing the
sum of the average net assets of the Fund at the end of each week during the
month by the number of weeks ended during the calendar month. The assets for
each weekly period are determined by averaging the net assets of the Fund at the
close of each business day for each business day in the week that this Agreement
is in effect. If this Agreement becomes effective subsequent to the first day
of a month or shall terminate before the last day of a month, compensation for
that part of the month this Agreement is in effect shall be subject to a pro
rata adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month. During any period when
the determination of net asset value is suspended by the Board of Trustees of
the Trust, the average net asset value of a share for the last week prior to
such suspension shall for this purpose be deemed to be the average net asset
value at the close of each succeeding week until it is again determined. No fee
shall be payable hereunder with respect to a Fund during any period in which the
Fund invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Investment Company Act of 1940.

(b) EXPENSE LIMITATIONS. In the event the operating expenses of the
Fund, including amounts payable to the Investment Adviser pursuant to subsection
(a) hereof, for any fiscal year ending on a date on which this Agreement is in
effect, exceed the expense limitations applicable to the Fund imposed by
applicable state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Investment Adviser shall reduce
its management fee by the extent of such excess and, if required pursuant to any
such laws or regulations, will reimburse the Fund in the amount of such excess;
provided, however, to the extent permitted by law, there shall be excluded from
such expenses the amount of any interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs, including settlement or arbitration costs, and
any indemnification related thereto) paid or payable by the Fund. Whenever the
expenses of the Fund exceed a pro rata portion of the applicable annual expense
limitations, the estimated amount of reimbursement under such limitations shall
be applicable as an offset against the monthly payment of the management fee due
to the Investment Adviser. Should two or more such expense limitations be
applicable as at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Investment Adviser's
fee shall be applicable.

5. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER.

(a) The Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss arising out of any investment or for
any act or omission in the execution and management of the Fund, except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard or its obligations and duties
hereunder. As used in this Article 5, the term "Investment Adviser" shall
include any

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<PAGE>

affiliates of the Investment Adviser performing services for the Fund
contemplated hereby and trustees, officers and employees of the Investment
Adviser as well as that corporation itself.

(b) The Investment Adviser shall not be liable for any losses caused
by disturbances of its operations by virtue of force majeure, riot, or damage
caused by nature or due to other events for which it is not responsible (E.G.,
strike, lock-out or losses caused by the imposition of foreign exchange
controls, expropriation of assets or other acts of domestic or foreign
authorities).

(c) The presence of exculpatory language in this Agreement shall not
be deemed by the Trust, the Investment Adviser or any other party appointed
pursuant to this Agreement, including without limitation any custodian, as in
any way limiting causes of action and remedies which may, notwithstanding such
language, be available to the Trust either under common law or statutory law
principles applicable to fiduciary relationships or under the federal securities
laws.

6. OTHER ACTIVITIES OF THE INVESTMENT ADVISER AND ITS AFFILIATES.

(a) Nothing herein contained shall prevent the Investment Adviser or
any of its affiliates from engaging in any other business or from acting as
investment adviser or investment manager for any other person or entity, whether
or not having investment policies or portfolios similar to that of the Fund; and
it is specifically understood that officers, trustees and employees of the
Investment Adviser and its affiliates may continue to engage in providing
portfolio management services and advice to other investment companies, whether
or not registered, and to other investment advisory clients. When other clients
of the Investment Adviser desire to purchase or sell a security at the same time
such security is purchased or sold for the Fund, such purchases and sales will,
to the extent feasible, be allocated among the Fund and such clients in a manner
believed by the Investment Adviser to be equitable to the Fund and such clients.

(b) The Investment Adviser reserves the right to grant the use of the
name "SCHRODER", or any derivative thereof, to any other investment company or
business enterprise. The Investment Adviser reserves the right to withdraw from
the Fund the use of the name "SCHRODER", the Investment Adviser agrees that the
question of continuing this Agreement may be submitted to a vote of the Fund's
shareholders. In the event of such withdrawal or the termination of this
Agreement, for any reason, the Trust will, on the written request of the
Investment Adviser, take such action as may be necessary to change its name and
eliminate all reference to the words "SCHRODER" in any form, and will no longer
use such registered service mark.

7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until the second anniversary of the effective date of this
Agreement first set forth above and from year to year thereafter, but only so
long as such continuance is approved at least annually by (a) the vote of a
majority of the trustees of the Trust who are not parties to the Agreement or
interested persons of the Investment Adviser or interested persons of any such
party (other than

-33-
<PAGE>

as trustees of the Trust), cast in person at a meeting called for the purpose of
voting on such approval, and (b) the vote of either (i) the Board of Trustees of
the Trust or (ii) a majority of the outstanding voting securities of the Fund.
This Agreement may be terminated at any time, without payment of any penalty, by
the Trust either by the vote of Board of Trustees of the Trust or by the vote of
a majority of the outstanding voting securities of the Fund on sixty (60) days'
written notice to the Investment Adviser, and by the Investment Adviser on sixty
(60) days' written notice to the Trust. This Agreement shall automatically
terminate (i) in the event of its assignment by either party, or (ii) upon
termination of the Investment Advisory Agreement. In interpreting the
provisions of this Section 7, the definitions contained in Section 2(e) of the
Investment Company Act (particularly the definitions of "assignment,"
"interested person" and "voting security") shall be applied.

8. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment, sale
hypothecation or pledge of this Agreement shall be effective until approved by
the vote of: (a) the Board of Trustees, including a majority of the trustees
who are not parties to the Agreement or interested persons of the Investment
Adviser or interested persons of any such party (other than as trustees of the
Trust), cast in person at a meeting called for the purpose of voting on such
approval and (b) a majority of the outstanding voting securities of the Fund.

9. NOTICE. Any notice or other communication required to be given
pursuant to this Agreement shall be in writing or by telex and shall be
effective upon receipt. Notices and communications shall be given: (a) to the
Trust at Schroder Capital Funds (Delaware), Two Portland Square, Portland, Maine
04101 and (b) to the Investment Adviser at 787 Seventh Avenue, 29th Floor, New
York, New York 10019, Attention: Mark J. Smith.

10. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the
Investment Company Act. To the extent the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable provisions
of the Investment Company Act, the latter shall control.

11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

The Investment Adviser confirms that the Trust is a "business customer" as
defined by IMRO.

The Trust confirms that it has been provided with independent legal advice
on this Agreement.

-34-
<PAGE>

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

SCHRODER CAPITAL FUNDS, (DELAWARE)

By:___________________________
Name:
Title

SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.

By:___________________________
Name:
Title

-35-

<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)

INVESTMENT ADVISORY AGREEMENT

AGREEMENT, made as of the 9th day of January, 1996 between Schroder Capital
Funds (Delaware), a Delaware Business Trust (the "Trust") and Schroder Capital
Management International Inc., a New York Corporation (the "Adviser").

W I T N E S S E T H:

1. Prior to the effective date hereof, the Trust will furnish the Adviser
with copies properly certified or authenticated of each of the following:

(a) Trust Instrument of the Trust.

(b) Resolutions of the Board of Trustees of the Trust selecting
Schroder Capital Management International Inc. as investment adviser and
approving the form of this Agreement. The Trust will furnish the Adviser
from time to time with copies, properly certified or authenticated, of all
amendments of or supplements to the foregoing, if any.

2. The Adviser will regularly provide the Trust with respect to its class
of Common Stock and related investment portfolio entitled Schroder U.S. Equity
Fund (the "Portfolio") with investment research, advice and supervision and will
furnish continuously an investment program for the Portfolio's investments
consistent with the Trust's investment objectives for the Portfolio as set forth
in its Registration Statement, Form N-1A, as it may from time to time be in
effect under the Securities Act of 1993, as amended (hereinafter referred to as
the "1933 Act"). the Adviser will recommend what securities shall be bought or
sold by the Portfolio, and what portion of the Portfolio's assets shall be held
uninvested, subject always to the provisions of the Trust's Trust Instrument,
Registration Statement on Form N-1A under the 1933 Act and of the Investment
Company Act of 1940, as amended (hereinafter referred to as the "1940 Act"), as
each of the same shall be from time to time amended. The Adviser shall advise
and assist the officers of the Trust in taking such steps as are necessary or
appropriate to carry out the decisions of its Board of Trustees and the
appropriate committees of such Board regarding the foregoing matters and general
conduct of the investment business of the Portfolio.

3. (a) The Adviser will pay directly all office rent of the Trust to the
extent there is any.

(b) The Adviser will furnish or cause to be furnished without expense
to the Trust or the Portfolio, the services of such of the Adviser's officers
and employees and officers and employees of corporate affiliates of the Adviser,
as may be duly elected officers or trustees of the Trust, subject to their
individual consent to serve and to any limitations imposed by law.
<PAGE>

(c) The Adviser will provide for the Portfolio investment advisory,
research and statistical facilities and all clerical services relating to
research, statistical and investment work.

(d) Except to the extent provided in subsections (a), (b) and (c)
above, the Adviser shall have no responsibility or obligation to pay any costs
or expenses of the Trust or the Portfolio, including without limiting the
generality of the foregoing, brokers' commissions; legal, auditing or accounting
expenses, taxes or governmental fees; cost of preparing share certificates or
any other expenses (including clerical expenses) of issue (except that nothing
herein shall require the Trust or the Portfolio to bear any sales or promotional
expenses unless incurred pursuant to a plan or plans from time to time in effect
in the future duly adopted in accordance with Rule 12b-1 under the 1940 Act or a
successor provision), distribution, redemption or repurchase of shares of the
Trust; registration expenses under the 1933 Act or 1940 Act subsequent to the
initial registration thereunder (except that nothing herein shall require the
Trust to pay any registration expenses occasioned by the initial issuance of
classes or series of its capital stock not related or attributable to the
Portfolio); the cost of preparing and distributing reports and notices to
stockholders; fees or disbursements of the custodian of the Trust's assets, of
the Trust's dividend disbursing agent and of the Trust's transfer agent,
including expenses incurred in the performance of any obligations enumerated in
the Trust Instrument of the Trust insofar as they govern agreements with such
custodian, dividend disbursing agent or transfer agent. To the extent employees
of the Adviser or its affiliates devote their time to the affairs of the Trust,
other than as officers or trustees, the Trust will reimburse the Adviser the pro
rata share of said individual's salary or wages and expenses and the Adviser
will keep specific time and other records of the same.

4. (a) For all services to be rendered and payments made as provided in
paragraphs 2 and 3 hereof, the Trust will pay the Adviser a fee based on the
average daily net asset value of the Portfolio, as determined in accordance with
the Trust Instrument of the Trust, which shall be computed at the following
rates:

(i) 3/4 of 1% of the portion of such average daily net assets
that shall not exceed $100 million.

(ii) 1/2 of 1% of the portion of such average daily net assets
that shall exceed $100 million.

(b) The amounts due the Adviser in payment of such fee shall be
accrued daily by the Trust on the basis of the number of days in each calendar
month, the net asset value of the Portfolio applicable to the close of each
business day in such month and, in the case of any day in such month which is
not a business day, the net asset value applicable to the close of the last
preceding business day; and the amount accrued with respect to each calendar
month shall become due and payable to the Adviser on the first business day of
the next succeeding calendar month. The Adviser hereby acknowledges that the
Trust's obligation to pay such fee is binding only on the assets and property
belonging to the Portfolio.

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<PAGE>

5. If any occasion should arise in which the Adviser gives any advice to
its clients concerning the shares of the Trust, the Adviser will act solely for
such clients and not in any way on behalf of the Trust.

6. The Adviser shall not be liable for any error of judgment or for any
loss suffered by the Trust or the Portfolio in connection with the matters to
which this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the Adviser's part in the performance of its
duties or from reckless disregard by the Adviser of its obligations and duties
under this Agreement. Any person, even though also employed by the Adviser, who
may be or become an employee of and paid by the Trust shall not be deemed, when
acting within the scope of his employment by the Trust, to be the Adviser's
employee or agent. Any of the Adviser's officers or employees rendering
services (other than pursuant to paragraph 2 hereof) to the Trust as an officer
or employee of the Trust acting in any business of the Trust pursuant to the
undertakings contained in this Agreement, shall be deemed to render such service
solely to the Trust and in no respect to act under the Trust's control or
direction although paid by the Adviser.

7. This Agreement shall become effective on January 9, 1996, and
indefinitely thereafter, but only so long as the continuance after the second
anniversary of the effective date of this Agreement first set forth above shall
be specifically approved at least annually by the vote of a majority of Trustees
of the Trust or by a vote of a majority of the outstanding voting securities of
the Portfolio and, in either case, by vote of a majority of Trustees who are not
parties to this Agreement or "interested persons" of the Trust or the Adviser
within the meaning of the 1940 Act, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may, on 60 days' written
notice, be terminated at any time without the payment of any penalty, by the
Board of Trustees of the Trust, by vote of a majority of the outstanding voting
securities of the Portfolio or by the Adviser. This Agreement shall
automatically terminate in the event of its assignment. In interpreting the
provisions of this paragraph 7, the definitions contained in the 1940 Act
(particularly the definitions of "interested persons," "assignment" and "voting
security"), and in any regulation of the Securities and Exchange Commission
thereunder, shall be applied.

8. The Adviser consents to the use by the Trust in its corporate name and
to designate the Portfolio of the name "Schroder," or any variant thereof, but
only on condition that (a) any change in such corporate name or designation
which continues to use the "Schroder" name or variant is approved in writing by
the Adviser and (b) so long as this Agreement shall remain in force, the Trust
shall fully perform, fulfill and comply with all the provisions expressed herein
to be performed, fulfilled or complied with by it. No such name shall be used
by the Trust at any time or in any place for any purposes or under any
conditions except as provided in this paragraph 8. Upon any termination of this
Agreement by either party or upon the violation of any of its provisions by the
Trust, the Trust will, at the request of the Adviser made within 60 days after
the Adviser has knowledge of such termination or violation, change its corporate
name and the designation of the Portfolio so as to eliminate all reference to
"Schroder" or any variant thereof and will not thereafter transact any business
in a corporate name or on behalf of the

-39-
<PAGE>

Portfolio having a designation containing such name or variant, or otherwise use
such name or variant. Such covenants on the part of the Trust set forth in this
paragraph 8 shall be binding upon it, its Trustees, officers, stockholders,
creditors, affiliates and all other persons claiming under or through it.

9. Upon the effective date of this Agreement, the Agreement dated as of
March 1, 1988, as amended, between the Adviser and the Trust shall be terminated
and shall be of no further force or effect, except as to the obligations to pay
fees accrued to the close of business on the date of termination.

10. There is to be no duplication of any fees payable to the Adviser under
this Agreement or the Agreement relating to the same subject matter between the
Trust and the Adviser which terminated on the effective date of this Agreement,
by reason of the termination of said prior Agreement and the commencement of
this Agreement.

11. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of (a) holders of a majority of the outstanding voting securities of the
Portfolio and (b) by vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" of the Trust or the Adviser,
cast in person at a meeting called for the purpose of voting on such approval.

12. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

IN WITNESS WHEREOF, the parties to this Agreement have hereinafter executed
this Agreement as of the day and year first above written.

SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.

By:
-------------------------------------
Title:

SCHRODER CAPITAL FUNDS (DELAWARE)

By:
-------------------------------------
Title:

-40-

<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)

DISTRIBUTION AGREEMENT

AGREEMENT made as of the 9th day of January, 1996, by and between Schroder
Capital Funds (Delaware), a Delaware business trust, with respect to its series
called "Schroder U.S. Equity Fund" (the "Fund") and Schroder Fund Advisors Inc.
(the "Distributor").

1. The Fund hereby appoints the Distributor its agent to sell and arrange
for the sale of shares of the Fund in jurisdictions wherein shares of the Fund
may legally be offered for sale. The Distributor shall discharge its
responsibilities in compliance with the objectives, policies and limitations set
forth in the Fund's current prospectus and applicable laws and regulations. The
Distributor accepts such appointment and agrees to use its "best efforts" to
secure purchases of shares of the Fund.

2. The Distributor will, upon receipt of unconditional orders (and not
before), transmit such orders to the Fund (or its authorized agent) for
acceptance and confirmation. The price at which shares are offered shall be the
net asset value per share as determined in accordance with the Fund's charter
and by-laws, subject to the provisions of the Investment Company Act of 1940
(the "1940 Act") and any regulations of the Securities and Exchange Commission,
as described in the then current prospectus (which for the purposes hereof is
deemed to include the Fund's current statement of additional information) of the
Fund.

3. Upon receipt of such orders from the Distributor, the Fund or its
agent shall open a new account in such names as shall be specified by the
Distributor, provided, however, that no shares shall be registered on the Fund's
books until (i) receipt by the Fund's Transfer Agent of the Distributor's
written request therefor; and (ii) receipt of payment of that amount by the
Fund, its Transfer Agent or its Custodian.

4. The Fund reserves the right to reject any order for the purchase of
shares, provided, however, that the Fund agrees that it will not arbitrarily or
without reasonable cause refuse acceptance or confirmation of such orders.

5. The Fund covenants and agrees that it will, at its own expense:

(a) use its best efforts to keep authorized, but unissued, sufficient
shares to meet the reasonable requirements of the Distributor;

(b) supply the Distributor with the net asset value per shares computed as
at the times prescribed by and in compliance with all pertinent
requirements of the charter of the Fund and the Securities and
Exchange Commission;

(c) prepare, file and keep effective registration statements, prospectuses
and licenses covering as many shares as may be necessary for
distribution and sale of shares in such

<PAGE>

jurisdictions where shares may lawfully be sold and as reasonably
requested by the Distributor;

(d) maintain qualified personnel and adequate facilities for the
acceptance and confirmation of orders for the sale of Shares.

6. The Distributor will pay all expenses incident to the sale and
distribution of the shares issued or sold hereunder, including (i) expenses of
printing and distributing or disseminating any sales literature (including
prospectuses and annual reports), advertising and selling aids in connection
with such offering of the shares for sale (except that such expenses shall not
include expenses incurred by the Fund in connection with the preparation,
printing and distribution of any report or other communication to holders of
shares in their capacity as such) and (ii) expenses of advertising in connection
with such offering. The Fund authorizes the Distributor in connection with the
sale or arranging for the sale of shares to give only such information and to
make only such statements or representations as are contained in the prospectus
or in sales literature or advertisements approved by the Fund.

7. The Distributor covenants and agrees that it will comply, at its own
expense, with the applicable Federal and state laws and regulations regulating
the affairs of broker-dealers, and will conduct its affairs with the Fund and
with dealers, brokers and investors in accordance with the Rules of Fair
Practice of The National Association of Securities Dealers. The Distributor
agrees that all sales literature and advertisements used by the Distributor
shall be subject to the approval of the Fund.

8. In the absence of (i) any breach of its obligations under this
Agreement (ii) willful misfeasance, bad faith or gross negligence on the part of
the Distributor, or (iii) reckless disregard by the Distributor of its
obligations and duties hereunder, the Distributor shall not be subject to any
liability whatsoever to the Fund, or to any shareholder of the Fund, for any
error of judgment, mistake of law or any other act or omission in the course of,
or connected with, rendering services hereunder. The Fund agrees to indemnify
and hold harmless the Distributor and each person who controls the Distributor
within the meaning of the Securities Act of 1933 (the "1933 Act") against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the 1933 and 1940 Acts, the Securities
Exchange Act of 1934 or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Fund's
registration statement for the registration of the Shares as originally filed or
in any amendment thereof, or in the Fund's current prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party for any legal loss, claim,
damage, liability or action; provided, however, that the Fund will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in

-43-
<PAGE>

reliance upon and in conformity with written information furnished to the
Fund by or on behalf of the Distributor specifically for use in connection
with the preparation thereof.

9. This Agreement shall terminate automatically in the event of its
assignment. This Agreement may be terminated at any time, (i) by the Board of
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Fund by thirty days' written notice addressed to the
Distributor at its principal place of business; and (ii) by the Distributor by
thirty days' written notice addressed to the Fund at its principal place of
business.

10. This Agreement shall continue in effect for one year, and thereafter
only so long as its continuance is specifically approved at least annually by a
majority of the Board of Trustees of the Fund who are not parties to the
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval, or by vote of a majority of
the outstanding voting securities of the Fund.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 9th day of January, 1996.

SCHRODER CAPITAL FUNDS (DELAWARE)

By:
--------------------------------
Title:

SCHRODER FUND ADVISORS INC.

By:
--------------------------------
Title:

-44-

<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)

DISTRIBUTION AGREEMENT

5. The Fund covenants and agrees that it will, at its own expense:

(a) use its best efforts to keep authorized, but unissued, sufficient
shares to meet the reasonable requirements of the Distributor;

(c) prepare, file and keep effective registration statements, prospectuses
and licenses covering as many shares as may be necessary for
distribution and sale of shares in such
<PAGE>

jurisdictions where shares may lawfully be sold and as reasonably
requested by the Distributor;

(d) maintain qualified personnel and adequate facilities for the
acceptance and confirmation of orders for the sale of Shares.

-47-
<PAGE>

reliance upon and in conformity with written information furnished to the Fund
by or on behalf of the Distributor specifically for use in connection with the
preparation thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 9th day of January, 1996.

SCHRODER CAPITAL FUNDS (DELAWARE)

By:
-------------------------------------
Title:

SCHRODER FUND ADVISORS INC.

By:
-------------------------------------
Title:

-48-

<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)
GLOBAL CUSTODY AGREEMENT

AGREEMENT, dated as of January 9, 1996 between The Chase Manhattan Bank,
N.A. (the "Bank") and Schroder Capital Funds (Delaware). (the "Customer") on
behalf of each series of the Customer listed in Schedule A hereto (each series,
a "Fund").

SECTION 1. CUSTOMER ACCOUNTS

The Bank agrees to establish and maintain the following accounts
("Accounts"):

(a) A custody account in the name of the Customer ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or
other obligations for the payment of money, bullion, coin and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other similar
property whether certificated or uncertificated as may be received by
the Bank or its Subcustodian (as defined in Section 3) for the account
of the Customer ("Securities"); and

(b) A deposit account in the name of the Customer ("Deposit Account") for
any and all cash in any currency received by the Bank or its
Subcustodian for the account of the Customer, which cash shall not be
subject to withdrawal by draft or check.

The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.

Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.

SECTION 2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN
LOCATIONS

Unless Instructions specifically require another location acceptable to the
Bank:

(a) Securities will be held in the country or other jurisdiction in which
the principal trading market for such Securities is located, where
such Securities are to be presented for payment or where such
Securities are acquired; and
<PAGE>

(b) Cash will be credited to an account in a country or other jurisdiction
in which such cash may be legally deposited or is the legal currency
for the payment of public or private debts.

Cash may be held pursuant to Instructions in either interest or non-
interest bearing accounts as may be available for the particular currency. To
the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.

If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.

SECTION 3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES

The Bank may act under this Agreement through the Subcustodians listed in
Schedule B of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians. The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.

The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule B. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.

The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:

(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in
Rule 17f-5 under the Act;

(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that
country's government or an agency thereof and that has shareholders'
equity in excess of $200 million in U.S. currency (or a foreign
currency equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign

-2-
<PAGE>

currency equivalent thereof) (iii) a banking institution or trust
company incorporated or organized under the laws of a country other
than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States which has such other qualifications as shall be
specified in Instructions and approved by the Bank; or (iv) any other
entity that shall have been so qualified by exemptive order, rule or
other appropriate action of the SEC; and

(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling
of securities or equivalent book-entries.

The Customer represents that its Board of Trustees has approved each of the
Subcustodians listed in Schedule B to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through ___ of Schedule B, and further represents that its Board
has determined that the use of each Subcustodian and the terms of each
subcustody agreement are consistent with the best interests of the Fund(s) and
its (their) shareholders. The Bank will supply the Customer with any amendment
to Schedule B for approval. The Customer has supplied or will supply the Bank
with certified copies of its Board of Trustees resolutions(s) with respect to
the foregoing prior to placing Assets with any Subcustodian so approved.

SECTION 4. USE OF SUBCUSTODIAN

(a) The Bank will identify such Assets on its books as belonging to the
Customer.

(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive
benefit of customers of the Bank.

(c) Any Assets in the Accounts held by a Subcustodian will be subject only
to the instructions of the Bank or its agent. Any Securities held in
a securities depository for the account of a Subcustodian will be
subject only to the instructions of such Subcustodian.

(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject
to any right, charge, security interest, lien or claim of any kind in
favor of such Subcustodian except for safe custody or administration,
and that the beneficial ownership of such assets will be freely
transferable without the payment of money or value other than for safe
custody or administration. The foregoing shall not apply to the

-3-
<PAGE>

extent of any special agreement or arrangement made by the Customer
with any particular Subcustodian.

SECTION 5. DEPOSIT ACCOUNT TRANSACTIONS

(a) The Bank or its Subcustodians will make payments from a Deposit
Account upon receipt of Instructions which include all information
required by the Bank.

(b) In the event that any payment to be made under this Section 5 exceeds
the funds available in a Deposit Account, the Bank, in its discretion,
may advance the Customer such excess amount which shall be deemed a
loan payable on demand, bearing interest at the rate customarily
charged by the Bank on similar loans.

(c) If the Bank credits a Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to that Deposit
Account, with interest, dividends, redemptions or any other amount
due, the Customer will promptly return any such amount upon oral or
written notification: (i) that such amount has not been received in
the ordinary course of business or (ii) that such amount was
incorrectly credited. If the Customer does not promptly return any
amount upon such notification, the Bank shall be entitled, upon oral
or written notification to the Customer, to reverse such credit by
debiting the Deposit Account for the amount previously credited. The
Bank or its Subcustodian shall have no duty or obligation to institute
legal proceedings, file a claim or a proof of claim in any insolvency
proceeding or take any other action with respect to the collection of
such amount, but may act for the Customer upon Instructions after
consultation with the Customer.

SECTION 6. CUSTODY ACCOUNT TRANSACTIONS

(a) Securities will be transferred, exchanged or delivered by the Bank or
its Subcustodian upon receipt by the Bank of Instructions which
include all information required by the Bank. Settlement and payment
for Securities received for, and delivery of Securities out of, a
Custody Account may be made in accordance with the customary or
established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of a Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.

(b) The Bank, in its discretion, may credit or debit an Account on a
contractual settlement date with cash or Securities with respect to
any sale, exchange or purchase of Securities. Otherwise, such
transactions will be credited or debited to

-4-
<PAGE>

the Account on the date cash or Securities are actually received by
the Bank and reconciled to the Account.

(i) The Bank may reverse credits or debits made to an Account in its
discretion if the related transaction fails to settle within a
reasonable period, determined by the Bank in its discretion,
after the contractual settlement date for the related
transaction.

(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the
credits and debits of the particular transaction at any time.

SECTION 7. ACTIONS OF THE BANK

The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:

(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation, to the extent that the
Bank or Subcustodian is actually aware of such opportunities.

(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of
Securities.

(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or
any Subcustodian.

(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.

The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.

-5-
<PAGE>

All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.

SECTION 8. CORPORATE ACTIONS; PROXIES

Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase plans
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.

When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from the
Customer or its Authorized Person as defined in Section 10, but if Instructions
are not received in time for the Bank to take timely actions, or actual notice
of such Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in good
faith, to be appropriate in which case it shall be held harmless for any such
action.

The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing. Such
proxies shall be executed in the appropriate nominee name relating to Securities
in the Custody Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted; and where bearer
Securities are involved, proxies will be delivered in accordance with
Instructions.

SECTION 9. NOMINEES

Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising from their status as a mere record
holder of Securities in the Custody Account.

-6-
<PAGE>

SECTION 10. AUTHORIZED PERSONS.

As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer under
this Agreement. Such persons shall continue to be Authorized Persons until such
time as the Bank receives Instructions from the Customer or its designated agent
that any such employee or agent is no longer an Authorized Person.

SECTION 11. INSTRUCTIONS.

The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.

Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.

Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions are in
accord with any limitations or restrictions applicable to the Customer by law or
as may be set forth in its prospectus.

(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;

(b) When Securities are called, redeemed or retired, or otherwise become
payable;

(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;

(d) Upon conversion of Securities pursuant to their terms into other
securities;

-7-
<PAGE>

(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;

(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;

(g) In connection with any borrowings by the Customer requiring a pledge
of Securities, but only against receipt of amounts borrowed;

(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer;

(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the
Bank, its Subcustodian or the Customer's transfer agent, such shares
to be purchased or redeemed;

(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer
agent of such shares to be so redeemed;

(k) For delivery in accordance with the provisions of any agreement among
the Customer, the Bank and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Customer;

(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released
only upon payment to the Bank of monies for the premium due and a
receipt for the Securities which are to be held in escrow. Upon
exercise of the option, or at expiration, the Bank will receive from
brokers the Securities previously deposited. The Bank will act
strictly in accordance with Instructions in the delivery of Securities
to be held in escrow and will have no responsibility or liability for
any such Securities which are not returned promptly when due other
than to make proper request for such return;

(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;

(n) For other proper purposes as may be specified in Instructions issued
by an officer of the Customer which shall include a statement of the
purpose for which the

-8-
<PAGE>

delivery or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person or persons
to whom delivery or payment is to be made, and a certification that
the purpose is a proper purpose under the instruments governing the
Customer; and

(o) Upon the termination of this Agreement as set forth in Section 14(i).

SECTION 12. STANDARD OF CARE; LIABILITIES

(a) The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this
Agreement as follows:

(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
Assets. The Bank shall be liable to the Customer for
any loss which shall occur as the result of the failure
of a Subcustodian to exercise reasonable care with
respect to the safekeeping of such Assets to the same
extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the
event of any loss to the Customer by reason of the
failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the
customer only to the extent of the Customer's direct
damages, to be determined based on the market value of
the property which is the subject of the loss at the
date of discovery of such loss and without reference to
any special conditions or circumstances.

(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent
which it or a Subcustodian appoints unless such
appointment was made negligently or in bad faith.

(iii) The Bank shall be indemnified by, and without liability
to the Customer for any actions taken or omitted by the
Bank whether pursuant to Instructions or otherwise
within the scope of this Agreement if such act or
omission was in good faith, without negligence. In
performing its obligations under this Agreement, the
Bank may rely on the genuineness of any document which
it believes in good faith to have been validly
executed.

(iv) The Customer agrees to pay for and hold the Bank
harmless from any liability or loss resulting from the
imposition or

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<PAGE>

assessment of any taxes or other governmental charges, and
any related expenses with respect to income from or Assets
in the Accounts.

(v) The Bank shall be entitled to rely, and may act, upon
the advice of counsel (who may be counsel for the
Customer) on all matters and shall be without liability
for any action reasonably taken or omitted pursuant to
such advice.

(vi) The Bank need not maintain any insurance for the
benefit of the Customer.

(vii) Without limiting the foregoing, the Bank shall not be
liable for any loss which results from: 1) the general
risk of investing, or 2) investing or holding Assets in
a particular country including, but not limited to,
losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking
or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities
transactions or affect the value of Assets.

(viii) Neither party shall be liable to the other for any loss
due to forces beyond their control including, but not
limited to strikes or work stoppages, acts of war or
terrorism, revolution, nuclear fusion, fission or
radiation, or acts of God.

(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have
no duty or responsibility to:

(i) question Instructions or make any suggestions to the
Customer or an Authorized Person regarding such
Instructions;

(ii) supervise or make recommendations with respect to
investments or the retention of Securities;

(iii) advise the Customer or an Authorized Person regarding
any default in the payment of principal or income of
any security other than as provided in Section 5(c) of
this Agreement;

(iv) evaluate or report to the Customer or an Authorized
Person regarding the financial condition of any broker,
agent or

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<PAGE>

other party (except for brokers, agents other than
subcustodians or depositories or other parties selected by
the Bank, except in markets where there is only one
registered or otherwise qualified broker, agent or other
party) to which Securities are delivered or payments are
made pursuant to this Agreement; or

(v) review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as
defined in Section 10) issuing Instructions shall bear
any responsibility to review such confirmations against
Instructions issued to and statements issued by the
Bank.

(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates
may have a material interest in a transaction, or circumstances are
such that the Bank may have a potential conflict of duty or interest
including the fact that the Bank or any of its affiliates may provide
brokerage services to other customers, act as financial advisor to the
issuer of Securities, act as a lender to the issuer of Securities, act
in the same transaction as agent for more than one customer, have a
material interest in the issue of Securities, or earn profits from any
of the activities listed herein.

(d) The Bank hereby warrants to the Customer that in its opinion, after
due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding the
Customer's Securities pursuant to this Agreement afford protection for
such Securities at least equal to that afforded by the Bank's
established procedures with respect to similar securities held by the
Bank and its securities depositories in New York.

SECTION 13. FEES AND EXPENSES

The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement, so long as such lien does not contravene the provisions of
S.E.C. Release #40-12053, as amended from time to time. No fee shall be payable
hereunder with respect to any Fund during any period in which such Fund invests
all (or substantially all) of its investment assets in a registered, open-end
management investment company, or separate series thereof, in accordance with
section 12(d)(1)(E) under the Investment Company Act of 1940.

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<PAGE>

SECTION 14. MISCELLANEOUS

(a) FOREIGN EXCHANGE TRANSACTIONS. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized
to enter into spot or forward foreign exchange contracts with the
Customer or an Authorized Person for the Customer and may also provide
foreign exchange through its subsidiaries, affiliates or
Subcustodians. Instructions, including standing instructions, may be
issued with respect to such contracts, but the Bank may establish
rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates
or Subcustodians enter into a foreign exchange contract related to an
Account, the terms and conditions of the then current foreign exchange
contract of the Bank, its subsidiary, affiliate or Subcustodian and,
to the extent not inconsistent, this Agreement shall apply to such
transaction.

(b) CERTIFICATION OF RESIDENCY, ETC. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any
changes in residency. The Bank may rely upon this certification or
the certification of such other facts as may be required to administer
the Bank's obligations under this Agreement. The Customer will
indemnify the Bank against all losses, liability, claims or demands
arising directly or indirectly from any such certifications.

(c) ACCESS TO RECORDS. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their
examination of books and records pertaining to the customer's affairs.
Subject to restrictions under applicable law, the Bank shall also
obtain an undertaking to permit the Customer's independent public
accountants reasonable access to the records of any Subcustodian which
has physical possession of any Assets as may be required in connection
with the examination of the Customer's books and records. Upon
reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under
this Agreement. The Bank shall endeavor to obtain and furnish the
Customer with such similar reports as it may reasonably request with
respect to each Subcustodian and securities depository holding the
Customer's assets.

(d) GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by the laws of the State of New York and shall not be
assignable by either party, but shall bind the successors in interest
of the Customer and the Bank.

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<PAGE>

(e) ENTIRE AGREEMENT; APPLICABLE RIDERS. Customer represents that the
Assets deposited in the Accounts are (Check one):

Employee Benefit Plan or other assets subject to the Employee
--- Retirement Income Security Act of 1974, as amended ("ERISA");

X Mutual Fund assets subject to certain Securities and Exchange
--- Commission ("SEC") rules and regulations;

Neither of the above.
---

This Agreement consists exclusively of this document together with Schedule A,
Schedule B, Exhibits I-___ and the following Rider(s) [Check applicable
rider(s)]:

ERISA
---

X MUTUAL FUND
---

X SPECIAL TERMS AND CONDITIONS
---

There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.

(f) SEVERABILITY. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on
the basis of any particular circumstances or in any jurisdiction, the
validity, legality and enforceability of such provision or provisions
under other circumstances or in other jurisdictions and of the
remaining provisions will not in any way be affected or impaired.

(g) WAIVER. Except as otherwise provided in this Agreement, no failure or
delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or
partial exercise of any power or right preclude any other or further
exercise, or the exercise of any other power or right. No waiver by a
party or any provision of this Agreement, or waiver of any breach or
default, is effective unless in writing and signed by the party
against whom the waiver is to be enforced.

(h) NOTICES. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be
required under this Agreement are to be sent to the parties at the
following addresses or such other addresses as may subsequently be
given to the other party in writing:

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<PAGE>

Bank: The Chase Manhattan Bank, N.A.
Attention: Global Custody Division
Woolgate House, Coleman Street
London, EC2P 2HD, United Kingdom
or telex:

Customer: Schroder Capital Funds (Delaware)
c/o Forum Financial Services, Inc., Legal Dept.
Two Portland Square
Portland, Maine 04101
or telex: (207) 879-6050

(i) TERMINATION. This Agreement may be terminated by the Customer or the
Bank by giving sixty (60) days written notice to the other, provided
that such notice to the Bank shall specify the names of the persons to
whom the Bank shall deliver the assets in the Accounts. If notice of
termination is given by the Bank, the Customer shall, within sixty
(60) days following receipt of the notice, deliver to the Bank
Instructions specifying the names of the persons to whom the Bank
shall deliver the Assets. In either case, the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which
the Bank determines in good faith to be owed to it under Section 13.
If within sixty (60) days following receipt of a notice of termination
by the Bank, the Bank does not receive Instructions from the Customer
specifying the names of the persons to whom the Bank shall deliver the
Assets, the Bank, at its election, may deliver the Assets to a bank or
trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until
Instructions are provided to the Bank.

(j) A copy of the Trust Instrument of the Schroder Capital Funds
(Delaware) is on file with the Secretary of the State of Delaware and
notice is hereby given that the Agreement is not binding upon any of
the trustees, officers, or shareholders of the Customer individually,
but are binding only upon the assets and property of the applicable
Fund. The Bank agrees that no shareholder, trustee, or officer of the
Customer or any Fund may be held personally liable or responsible for
any obligations of any fund arising out of the Agreement. With
respect to the obligations of a Fund arising out of the Agreement, the
Bank shall look for payment or satisfaction of any claim solely to the
assets and property of that Fund, and not to the assets of any other
series of the Trust.

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<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)
On behalf of each fund listed in Schedule A.

By:
--------------------------------
Name:
Title:

THE CHASE MANHATTAN BANK, N.A.

By:
--------------------------------
Name: Alan Naughton
Title: Director

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<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)
GLOBAL CUSTODY AGREEMENT

SCHEDULE A
(as of January 9, 1996)

International Equity Fund
Schroder Emerging Markets Fund Institutional Portfolio
Schroder U.S. Equity Fund
Schroder U.S. Smaller Companies Fund
Schroder Latin American Fund

<PAGE>

SCHRODER CAPITAL FUNDS (DELAWARE)
GLOBAL CUSTODY AGREEMENT

SCHEDULE B

(List of authorized Subcustodians)

<PAGE>

SPECIAL TERMS AND CONDITIONS

These Special Terms and Conditions supplement the Agreement by and between
The Chase Manhattan Bank, N.A. (the "Bank") and Schroder Capital Funds
(Delaware) (the "Customer") effective January 9, 1996. To the extent that any
term or provision of the Agreement is inconsistent with these Special Terms and
Conditions, the Special Terms and Conditions shall control.

In order to properly allocate the responsibilities of the parties, the term
"Customer" shall have the meanings designated below.

a) In the following sections of the Agreement, the term "Customer" shall
mean "each Fund":

-- Section 1(a) & (b)
-- Section 2
-- Section 4
-- Section 13, and
-- Section 14(c)

b) In the following sections of the Agreement the term "Customer" shall
refer to the Customer on behalf of a Fund.

-- Section 1; the last paragraphs
-- Section 3
-- Section 4
-- Section 5(c)
-- Section 7(b) & (e)
-- Section 7; the last paragraph
-- Section 8
-- Section 10
-- Section 11, and
-- Section 14(a) & (i)

c) In sections 9 and 12 of the Agreement, the term "Customer" shall mean
the Customer or the Fund.

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)

ADMINISTRATIVE SERVICES AGREEMENT

AGREEMENT, made as of this 9th day of January, 1996, between Schroder
Capital Funds (Delaware) (the "Trust") and Schroder Fund Advisors Inc. (the
"Administrator") as follows:

1. The Trust is an open-end management investment company organized as a
Delaware business trust and consists of one or more separate investment
portfolios as may be established and designated by the Trustees from time to
time (the "Funds"). This Agreement shall pertain to such Funds as shall be
designated in Appendix A to this Agreement, as further agreed by the Trust and
the Administrator. A separate class of shares of common stock in the Trust is
offered to investors with respect to each Fund. The Trust engages in the
business of investing and reinvesting the assets of each Fund in the manner and
in accordance with the investment objective and restrictions specified in the
currently effective Prospectus (the "Prospectus") relating to the Trust and the
Fund included in the Trust's Registration Statement, as amended from time to
time (the "Registration Statement"), filed by the Trust under the Investment
Company Act of 1940 (the "1940 Act") and the Securities Act of 1933 (the "1933
Act"). Copies of the documents referred to in the preceding sentence have been
furnished to the Administrator. Any amendments to those documents shall be
furnished to the Administrator promptly. The Trust has entered into an
investment advisory agreement or agreements (the "Advisory Agreement") with
respect to the Funds with such advisers as may be designated therein (each such
adviser is hereinafter referred to as an "Adviser"), and may enter into a
Distribution Agreement or Agreements relating to the distribution of its shares
(together, the "Distribution Agreement"). The Trust also has adopted a
Distribution Plan or Plans (the "Plan") pursuant to Rule 12b-1 under the 1940
Act with respect to certain of the Funds.

2. (a) The Administrator shall provide all management and administrative
services reasonably necessary for the operation of the Trust and each Fund,
other than those investment management and administrative services which are to
be provided with respect to a Fund by an Adviser pursuant to an Advisory
Agreement. The Administrator may retain Service Organizations (as defined in
the Prospectus) to provide these services to the Trust. The Administrator shall
make periodic reports to the Trust's Board of Trustees on the performance of its
obligations under this agreement, other than services provided to the Trust by
Service Organizations retained in accordance with the previous sentence. The
Administrator shall, at its expense, employ or associate with itself such
persons as it believes appropriate to assist it in performing its obligations
under this Agreement and it shall provide the Trust with persons satisfactory to
the Trust's Board of Trustees to serve as officers and employees of the Trust at
no expense to any funds.

(b) Except as provided in subparagraph (a) and, with respect to a
Fund, in an Advisory Agreement, the Trust shall be responsible for all of its
expenses and liabilities, including compensation of its Trustees who are not
affiliated with the Administrator or the
<PAGE>

Adviser or any of their affiliates; taxes and governmental fees; interest
charges; fees and expenses of the Trust's independent accountants and legal
counsel; trade association membership dues; fees and expenses of any custodian
(including maintenance of books and accounts and calculation of the net asset
value of shares of the Fund), transfer agent, registrar and dividend disbursing
agent of the Trust; expenses of issuing, redeeming, registering and qualifying
for sale shares of common stock in the Trust; expenses of preparing and printing
share certificates, prospectuses and reports to shareholders, notices, proxy
statements and reports to regulatory agencies; the cost of office supplies,
including stationery; travel expenses of all officers, trustees and employees;
insurance premiums; brokerage and other expenses of executing portfolio
transactions; expenses of shareholders' meetings; organizational expenses;
extraordinary expenses; and reimbursements to any distributor of Fund shares
pursuant to the Distribution Agreement.

3. The Administrator shall give the Trust the benefit of the
Administrator's best judgment and efforts in rendering services under this
Agreement. As an inducement to the Administrator's undertaking to render these
services, the Trust agrees that the Administrator shall not be liable under this
Agreement for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this Agreement shall be deemed
to protect or purport to protect the Administrator against any liability to the
Trust or its shareholders to which the Administrator would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Administrator's duties under this Agreement or by reason of
the Administrator's reckless disregard of its obligations and duties hereunder.

4. In consideration of the services to be rendered by the Administrator
under this Agreement, the Trust shall pay the Administrator a monthly fee with
respect to each Fund on the first business day of each month, based upon the
average daily value of the net assets of that Fund during the preceding month at
annual rates set forth in Appendix A to this Agreement with respect to that
Fund. If the fees payable to the Administrator pursuant to this paragraph 4
begin to accrue before the end of any month or if this Agreement terminates
before the end of any month, the fees for the period from that date to the end
of that month or from the beginning of that month to the date of termination, as
the case may be, shall be prorated according to the proportion that the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Fund shall be computed in the manner specified in its Prospectus for the
computation of net asset value. For purposes of this Agreement, a "business
day" is any day the New York Stock Exchange is open for trading.

5. If the aggregate expenses of every character incurred by, or allocated
to, a Fund in any fiscal year, other than interest, taxes, brokerage commissions
and other portfolio transaction expenses, other expenditures which are
capitalized in accordance with generally accepted accounting principles and any
extraordinary expense (including, without limitation, litigation and
indemnification expense), but including the fees provided for in paragraph 4 and
under an Advisory Agreement with respect to a Fund ("includable expenses"),
shall exceed the expense limitations applicable to that Fund imposed by state
securities law or regulations thereunder, as

-5-
<PAGE>

these limitations may be raised or lowered from time to time, the Administrator
shall pay that Fund an amount equal to a percentage of that excess (the
"Administrator's reimbursement"), such Administrator's reimbursement to be in an
amount set forth with respect to the Fund in Appendix A to this Agreement. With
respect to portions of a fiscal year in which this Agreement shall be in effect,
the foregoing limitations shall be prorated according to the proportion which
that portion of the fiscal year bear to the full fiscal year. At the end of
each month of the Trust's fiscal year, the Administrator will review the
includable expenses accrued during that fiscal year to the end of the period and
shall estimate the contemplated includable expenses for the balance of that
fiscal year. If, as a result of that review and estimation, it appears likely
that the includable expenses will exceed the limitations referred to in this
paragraph 5 for a fiscal year, the monthly fees payable to the Administrator
under this contract for such month shall be reduced, subject to a later
reimbursement to reflect actual expenses, by an amount equal to a percentage
(which shall be equal to the Administrator's reimbursement) of a pro rata
portion (prorated on the basis of the remaining months of the fiscal year,
including the month just ended) of the amount by which the includable expenses
for the fiscal year (less an amount equal to the aggregate of actual reductions
made pursuant to this provision with respect to prior months of the fiscal year)
are expected to exceed the limitations provided in this paragraph 5. For
purposes of the foregoing, the value of the net assets of each Fund shall be
computed in the manner specified in paragraph 4, and any payments required to be
made by the Administrator shall be made once a year promptly after the end of
the Trust's fiscal year.

6. This Agreement shall become effective with respect to a Fund only when
approved by vote of a majority of (i) the Board of Trustees of the Trust, and
(ii) the Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust and who have no direct or indirect financial interest in the Plan
and this Agreement, cast in person at a meeting called for the purpose of voting
on such approval. This Agreement shall continue in effect with respect to a
Fund for a period of one year, and thereafter shall continue automatically for
successive annual periods provided such continuance is specifically approved at
least annually by a vote of a majority of (i) the Trust's Board of Trustees and
(ii) the Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust and who have no direct or indirect financial interest in the Plan
and this Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval. This agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the outstanding
voting securities of each Fund (as defined in the 1940 Act) or by a vote of a
majority of the Trustees of the Trust who are not "interested persons" (as
defined in the 1940 Act) and who have no direct or indirect financial interest
in the Plan and this Agreement on 60 days' written notice to the Administrator
or by the Administrator on 60 days' written notice to the Trust. This Agreement
shall terminate automatically in the event of its assignment (as defined in the
1940 Act).

7. Except to the extent necessary to perform the Administrator's
obligations under this Agreement, nothing herein shall be deemed to limit or
restrict the right of the Administrator, or any affiliate of the Administrator,
or any employee of the Administrator, to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.

-6-
<PAGE>

8. This Agreement shall be construed and its provisions interpreted in
accordance with the laws of the State of New York.

If the foregoing correctly sets forth the agreement between the Trust and
the Administrator, please so indicate by signing and returning to the Trust the
enclosed copy hereof.

SCHRODER CAPITAL FUNDS (DELAWARE)

By:
--------------------------------
Title:

SCHRODER FUND ADVISORS INC.

By:
--------------------------------
Title:

-7-
<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
ADMINISTRATIVE SERVICES AGREEMENT
APPENDIX A

SERIES FEE AS % OF THE AVERAGE ANNUAL
DAILY NET ASSETS OF THE FUND

International Equity Fund 0.25% for the first $100 million;
0.20% of the next $150 million; and
0.175% of assets in excess of $250
million

Schroder U.S. Smaller Companies Fund 0.25% for the first $100 million;
0.20% of the next $150 million; and
0.175% of assets in excess of $250
million

Schroder Latin American Fund 0.25%

Schroder Emerging Markets Fund 0.25%

During any period in which International Equity Fund invests all (or
substantially all) of its investment assets in a registered, open-end management
investment company, or separate series thereof, in accordance with Section
12(d)(1)(E) under the Investment Company Act of 1940, the Trust shall pay the
Administrator a monthly fee on the first business day of each month based upon
the average daily value of the net assets of the Fund during the preceding month
at an annual rate of 0.20% of the average daily value of net assets of the Fund.

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
SUB-ADMINISTRATION AGREEMENT

AGREEMENT made this 9th day of January, 1996, between Schroder Capital
Funds (Delaware) ("Fund"), Schroder Capital Management International Inc.
("Adviser"), Schroder Fund Advisers Inc. ("Administrator"), all corporations
organized under the laws of the State of Maryland, and Forum Financial Services,
Inc. ("FFSI" or "Sub-Administrator"), a corporation organized under the laws of
the State of Delaware with its principal place of business at 61 Broadway, New
York, New York 10006.

WHEREAS, the Fund is registered under the Investment Company Act of 1940
("1940 Act") as an open-end management investment company and is authorized to
issue shares of common stock ("Shares") in separate series and classes;

WHEREAS, the Fund currently consists of five series: International Equity
Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies Fund, Schroder
Emerging Markets Fund Institutional Portfolio and Schroder Latin American Fund;

WHEREAS, the Fund has entered into Investment Advisory Agreements
("Advisory Agreements") with Adviser pursuant to which the Adviser provides
certain management and administrative services, other than investment management
services, to the Fund and each of its series;

WHEREAS, the International Equity Fund, Schroder U.S. Smaller Companies
Fund, Schroder Emerging Markets Fund Institutional Portfolio and Schroder Latin
American Fund have entered into an Administrative Services Agreement
("Administrative Agreement") with Administrator, pursuant to which Administrator
provides certain management and administrative services for the Fund, and for
any series of the Fund that adopts the Administrative Agreement, other than
investment management and administrative services provided to the Fund by
Adviser pursuant to the aforesaid Advisory Agreements.

WHEREAS, the Fund, Adviser and Administrator desire that FFSI perform
certain administrative services for the Fund, and each of its series and classes
that now exist or may in the future be created, and FFSI is willing to provide
those services on the terms and conditions set forth in this Agreement;

WHEREAS, Administrator desires that FFSI provide such administrative
services to International Equity Fund, Schroder U.S. Smaller Companies Fund,
Schroder Emerging Markets Fund Institutional Portofolio, Schroder Latin American
Fund and other future series of the Fund, pursuant to a sub-contract to the
Administrative Agreement; and

WHEREAS, Adviser desires that FFSI provide such administrative services to
Schroder U.S. Equity Fund pursuant to a sub-contract to an Advisory Contract
between the Fund and Adviser with respect to that Series, wherein the Adviser
provides administrative services ;
<PAGE>

NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund, Administrator, Adviser, and FFSI agree as
follows:

SECTION 1. APPOINTMENT. The Fund hereby appoints FFSI as Sub-
Administrator of the Fund and FFSI hereby accepts such appointment, all in
accordance with the terms and conditions of this Agreement. In connection
therewith, the Fund has delivered to the Sub-Administrator copies of its Trust
Instrument, the Fund's Registration Statement and all amendments thereto filed
pursuant to the Securities Act of 1933, as amended (the "Securities Act") or the
Act (the "Registration Statement") and the current Prospectus and Statement of
Additional Information of each Series of the Fund (collectively, as currently in
effect and as amended or supplemented, the "Prospectus") and, shall promptly
furnish the Sub-Administrator with all amendments of or supplements to the
foregoing.

SECTION 2. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings specified, insofar as the context will allow:

a) ACT: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.

b) ADMINISTRATOR. The term Administrator shall mean Schroder Fund
Advisers Inc., or any successor thereto who acts as the administrator
of the Fund or any series thereof.

c) ADVISER. The term Adviser shall mean Schroder Capital Management
International Inc., or any successor thereto who acts as the
investment adviser of the Fund or any series thereof;

d) BOARD: The term Board shall mean the Board of Trustees of the Fund.

e) CLASS: The term Class shall mean any future classes of each Series
listed in Schedule A or any class of any Series that the Fund shall
subsequently establish;

f) CUSTODIAN; The term Custodian shall mean Chase Manhattan Bank, NA; or
any successor or other custodian acting as such for any current or
future Series of the Fund.

g) FUND: The term Fund shall mean Schroder Capital Funds (Delaware).

h) FUND ACCOUNTANT. The term Fund Accountant shall mean Forum Financial
Corp., or any successor thereto that is responsible for calculating
the Fund's net asset value and maintaining its accounting books and
records.

i) FUND BUSINESS DAY: The term Fund Business Day shall mean each day
that the New York Stock Exchange is open for trading (which excludes
the following national business holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day).
<PAGE>

j) PROSPECTUS: The term Prospectus shall mean the then-current
prospectus forming a part of an effective Registration Statement of
the Fund under the Securities Act of 1933, as amended, and the Act
covering the Shares of a Series or Class as the case may be, as the
same may be amended or supplemented from time to time.

k) SERIES: The term Series shall mean each series listed in Schedule A
or any series that the Fund shall subsequently establish;

l) SHAREHOLDERS: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the share registry
records of the Fund.

m) SHARES: The term Shares shall mean the issued and outstanding shares
of common stock of the Fun.d, or any series or class of the Fund,
including any fractions thereof.

n) SUB-ADMINISTRATOR: The term Sub-Administrator shall mean Forum
Financial Services, Inc. or any successor thereto who provides
administrative services to the Fund.

o) TRANSFER AGENT. The term Transfer Agent shall mean Forum Financial
Corp., or any successor thereto who provides transfer agent services
to the Fund.

SECTION 3. FURNISHING OF EXISTING ACCOUNTS AND RECORDS. The Fund shall
promptly turn over to FFSI such of the Accounts and Records previously
maintained by or for it as are necessary for FFSI to perform its functions under
this Agreement. The Fund authorizes FFSI to rely on such Accounts and Records
turned over to it and hereby indemnifies and will hold FFSI, its successors and
assigns, harmless of and from any and all expenses, damages, claims, suits,
liabilities, actions, demands and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency of such
Accounts and Records or in the failure of the Fund to provide any portion of
such or to provide any information needed by FFSI to knowledgeably perform its
functions.

SECTION 4. ADMINISTRATIVE DUTIES

(a) Subject to the direction and control of the Board and the
Administrator, the Sub-Administrator shall manage certain aspects of operations
of the Fund, and any existing or future class thereof, except those functions
which are the responsibility of the Adviser, the Administrator, Custodian, or
Transfer Agent, all in such manner and to such extent as may be authorized by
the Board, the Administrator (in the case of the International Equity Fund,
Schroder U.S. Smaller Companies Fund, Schroder Emerging Markets Fund
Institutional Portfolio and Schroder Latin American Fund), or the Adviser (in
the case of the Schroder U.S. Equity Fund).

(b) With respect to the Fund and each series or class thereof, as
applicable, the Sub-Administrator shall:
<PAGE>

(i) oversee (A) the preparation and maintenance by the Adviser and the
Fund's Custodian, Transfer Agent, dividend disbursing agent and Fund
Accountant (or if appropriate, prepare and maintain) in such form, for
such periods and in such locations as may be required by applicable
law, of all documents and records relating to the operation of the
Fund required to be prepared or maintained by the Fund or its agents
pursuant to applicable law; (B) the reconciliation of account
information and balances among the Adviser and the Fund's Custodian,
Transfer Agent, dividend disbursing agent and Fund Accountant; (C) the
transmission of purchase and redemption orders for Shares; (D) the
notification to the Adviser of available funds for investment; and (E)
the performance of fund accounting, including the calculation of the
net asset value of the Shares;

(ii) oversee the performance of administrative and professional services
rendered to the Fund by others, including its Custodian, Transfer
Agent and dividend disbursing agent as well as legal, auditing and
shareholder servicing and other services performed for each existing
or future Series of the Fund, or class thereof;

(iii) be responsible for the preparation and the printing of the periodic
updating of the Registration Statement and Prospectus, tax returns,
and reports to shareholders, the Securities and Exchange Commission
and state securities commissions;

(iv) be responsible for the preparation of proxy and information statements
and any other communications to shareholders;

(v) at the request of the Board, provide the Fund with adequate general
office space and facilities and provide persons suitable to the Board
to serve as officers of the Fund;

(vi) provide the Fund, at the Fund's request, with the services of persons
who are competent to perform such supervisory or administrative
functions as are necessary for effective operation of the Fund;

(vii) prepare, file and maintain the Fund's governing documents, including
the Trust Instrument and minutes of meetings of Trustees and
shareholders;

(viii) with the cooperation of the Fund's counsel, the Administrator, the
Adviser, and other relevant parties, prepare and disseminate materials
for meetings of the Board of Trustees;

(ix) monitor sales of Shares and ensure that such Shares are properly and
duly registered with the Securities and Exchange Commission and
applicable state securities commissions;
<PAGE>

(x) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for
sales literature of the Fund and other appropriate purposes;

(xi) oversee the determination of the amount of, and supervise the
declaration of, dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Series as a regulated investment company under the Internal Revenue
Code of 1986, as amended, and prepare and distribute to appropriate
parties notices announcing the declaration of dividends and other
distributions to shareholders; and

(xii) advise the Fund and its Board of Trustees on matters concerning the
Fund and its affairs.

(c) FFSI shall prepare and maintain or cause to be prepared and maintained
records in such form for such periods and in such locations as may be required
by applicable regulations, all documents and records relating to the services
provided to the Fund pursuant to this Agreement required to be maintained
pursuant to the Act, rules and regulations of the Securities and Exchange
Commission, the Internal Revenue Service and any other national, state or local
government entity with jurisdiction over the Fund. The accounts and records
pertaining to the Fund which are in possession of the Sub-Administrator shall be
the property of the Fund. The Fund, or the Fund's authorized representatives,
shall have access to such accounts and records at all times during the Sub-
Administrator's normal business hours. Upon the reasonable request of the Fund,
copies of any such accounts and records shall be provided promptly by the Sub-
Administrator to the Fund or the Fund's authorized representatives. In the
event the Fund designates a successor to any of the Sub-Administrator's
obligations hereunder, the Sub-Administrator shall, at the expense and direction
of the Fund, transfer to such successor all relevant books, records and other
data established or maintained by the Sub-Administrator under this Agreement.

SECTION 5. STANDARD OF CARE. FFSI, in performing under the terms and
conditions of this Agreement, shall use its best judgment and efforts in
rendering the services described herein, and shall incur no liability for its
status hereunder or for any reasonable actions taken or omitted in good faith.
As an inducement to FFSI's undertaking to render these services, the Fund hereby
agrees to indemnify and hold harmless FFSI, its employees, agents, officers and
trustees, from any and all loss, liability and expense, including any legal
expenses, arising out of FFSI's performance under this Agreement, or status, or
any act or omission of FFSI, its employees, agents, officers and trustees;
provided that this indemnification shall not apply to FFSI's actions taken or
failures to act in cases of FFSI's own bad faith, willful misconduct or gross
negligence in the performance of its duties under this Agreement; and provided
further that FFSI shall give the Fund notice and reasonable opportunity to
defend against any such loss, claim, damage, liability or expense in the name of
the Fund or FFSI, or both. The Fund will be entitled to assume the defense of
any suit brought to enforce any such claim or demand, and to retain counsel of
good standing chosen by the Fund and approved by FFSI, which approval shall not
be withheld unreasonably. In the event the Fund does elect to assume the
defense of any
<PAGE>

such suit and retain counsel of good standing approved by FFSI, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not elect to assume
the defense of any such suit, or in case FFSI does not approve of counsel chosen
by the Fund or FFSI has been advised that it may have available defenses or
claims which are not available or conflict with those available to the Fund, the
Fund will reimburse FFSI, its officers or trustees or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any one law firm retained as counsel by FFSI or them. FFSI may, at any time,
waive its right to indemnification hereunder and assume its own defense.
Without limitation of the foregoing:

a) FFSI may rely upon the advice of the Fund or of counsel, who may be
counsel for the Fund or counsel for FFSI, and upon statements of
accountants, brokers and other persons believed by it in good faith to
be expert in the matters upon which they are consulted, and FFSI shall
not be liable to anyone for any actions taken in good faith upon such
statements.

b) FFSI may act upon any oral instruction which it receives and which it
believes in good faith was transmitted by the person or persons
authorized by the Board of the Fund to give such oral instruction.
FFSI shall have no duty or obligation to make any inquiry or effort of
certification of such Oral Instruction.

c) FFSI shall not be liable for any action taken in good faith reliance
upon any written instruction or certified copy of any resolution of
the Board of the Fund, and FFSI may rely upon the genuineness of any
such document or copy thereof reasonably believed in good faith by
FFSI to have been validly executed.

d) FFSI may rely and shall be protected in acting upon any signature,
instruction, request, letter of transmittal, certificate, opinion of
counsel, statement, instrument, report, notice, consent, order, or
other paper document believed by it to be genuine and to have been
signed or presented by the purchaser, Fund or other proper party or
parties.

SECTION 6. EXPENSES. Subject to any agreement by the Sub-Administrator or
other person to reimburse any expenses of the Fund that relate to any Series,
the Fund shall be responsible for and assume the obligation for payment of all
of its other expenses, including: (a) the fee payable under Section 7 hereof;
(b) the fees payable to the Adviser under the Advisory Agreements; (c) the fees
payable to the Administrator under the Administrative Agreement; (d) expenses of
issue, repurchase and redemption of Shares; (e) interest charges, taxes and
brokerage fees and commissions, including the fees and commissions of
introducing brokers; (f) premiums of insurance for the Fund, its Trustees and
officers and fidelity bond premiums; (g) fees, interest charges and expenses of
third parties, including the Fund's Custodian, Transfer Agent, dividend
disbursing agent and Fund Accountant; (h) fees of pricing, interest, dividend,
credit and other reporting services; (i) costs of membership in trade
associations; (j) telecommunications expenses; (l) funds transmission expenses;
(m) auditing, legal and compliance expenses; (n) costs of forming the Fund and
maintaining its existence; (o) to the extent permitted by rule 12b-1 under the
1940 Act, costs of preparing and printing the Series' Prospectuses, subscription
<PAGE>

application forms and shareholder reports and delivering them to existing
shareholders; (p) expenses of meetings of shareholders and proxy solicitations
therefore; (q) costs of maintaining books of original entry for portfolio and
fund accounting and other required books and accounts, of calculating the net
asset value of shares of the Fund and of preparing tax returns; (r) costs of
reproduction, stationery and supplies; (s) fees and expenses of the Fund's
Trustees; (t) compensation of the Fund's officers and employees who are not
employees of the Adviser or Sub-Administrator or their respective affiliated
persons and costs of other personnel (who may be employees of the Adviser, FFSI
or their respective affiliated persons) performing services for the Fund; (u)
costs of Trustee meetings; (v) Securities and Exchange Commission registration
fees and related expenses; (w) state or foreign securities laws registration
fees and related expenses; and (x) all fees and expenses paid by the Fund in
accordance with any distribution plan adopted pursuant to Rule 12b-1 under the
Act or under any shareholder service plan or agreement.

In the event that this agreement is terminated, FFSI shall be reimbursed
for reasonable charges and disbursements associated with promptly transferring
to the Administrator or successor sub-administrator the original or copies of
all accounts and records maintained by FFSI hereunder, and cooperating with, and
providing reasonable assistance to, the Administrator or successor sub-
administrator in the establishment of the accounts and records necessary to
carry out the Administrator's or successor sub-administrators responsibilities.

SECTION 7. COMPENSATION

(a) Promptly after receiving their Administrative or Advisory fees from
the Fund, the Administrator (with respect to all series of the Fund other than
the Schroder U.S. Equity Fund) or the Adviser (with respect to Schroder U.S.
Equity Fund) shall pay the Sub-Administrator a fee for administrative services
provided to such series by the Sub-Administrator pursuant to this Agreement, at
an annual rate equal to the amount set forth in Schedule B hereto. In the
alternative, the Fund may pay the sub-Administrator directly such fees upon
authorization by the Administrator (with respect to all series of the Fund other
than the Schroder U.S. Equity Fund) or the Adviser (with respect to the Schroder
U.S. Equity Fund) and the deduction of an equivalent amount from the fees paid
to the Administrator or Adviser. Such fees shall be accrued daily and shall be
payable monthly in arrears on the first day of each calendar month for services
performed under this Agreement during the prior calendar month. If the fees
payable to the Sub-Administrator pursuant to this paragraph 7 begin to accrue
before the end of any month or if this Agreement terminates before the end of
any month, the fees for the period from that date to the end of that month or
from the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating the monthly fees, the value of the net assets of each Series shall
be computed in the manner specified in its Prospectus for the computation of net
asset value. Upon the termination of this Agreement, the Fund shall pay to the
Sub-Administrator such compensation as shall be payable prior to the effective
date of such termination.
<PAGE>

(b) Notwithstanding anything in this Agreement to the contrary, the Sub-
Administrator and its affiliated persons may receive compensation or
reimbursement from the Fund with respect to (i) the provision of services on
behalf of the Series in accordance with any distribution plan adopted by the
Fund pursuant to Rule 12b-1 under the Act, or (ii) the provision of shareholder
support or other services, including fund accounting services.

SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION

(a) EFFECTIVENESS. This Agreement shall become effective on the date
first above written with respect to existing series of the Fund and shall relate
to every other Series as of the date on which the Fund's Registration Statement
relating to the shares of such Series becomes effective.

(b) DURATION: This Agreement shall continue in effect for twelve months
and, thereafter, shall be automatically renewed each year for an additional term
of one year.

(c) TERMINATION. This Agreement may be terminated with respect to a
Series at any time, without the payment of any penalty, (i) by the Board, the
Administrator (with respect to all current and future series of the Fund other
than Schroder U.S. Equity Fund), and the Adviser (with respect to Schroder U.S.
Equity Fund) on 60 days' written notice to the Sub-Administrator or (ii) by the
Sub-Administrator on 60 days' written notice to the Fund and the Administrator,
and the Adviser, as appropriate. Upon receiving notice of termination by FFSI,
the Fund shall use its best efforts to obtain a successor sub-administrator.
Upon receipt of written notice from the Fund of the appointment of the successor
sub-administrator, and upon payment to FFSI of all fees owed through the
effective termination date, and reimbursement for reasonable charges and
disbursements (as described in Section 6), FFSI shall promptly transfer to the
successor sub-administrator the original or copies of all accounts and records
maintained by FFSI hereunder including, in the case of records maintained on
computer systems, copies of such records in machine-readable form, and shall
cooperate with, and provide reasonable assistance to, the successor sub-
administrator in the establishment of the accounts and records necessary to
carry out the successor sub-administrator's responsibilities. For so long as
FFSI continues to perform any of the services contemplated by this Agreement
after termination of this Agreement (as agreed to by the Fund and FFSI), the
provisions of Sections 5 and 7 hereof shall continue in full force and effect.

SECTION 9. ACTIVITIES OF SUB-ADMINISTRATOR. Except to the extent
necessary to perform its obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the Sub-Administrator's right, or the right of
any of its officers, trustees or employees (whether or not they are a Trustee,
officer, employee or other affiliated person of the Fund) to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, trust, fund, firm, individual or
association.

SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS. FFSI shall
cooperate with the Fund's independent public accountants and shall take
reasonable action
<PAGE>

to make all necessary information available to such accountants for the
performance of their duties.

SECTION 11. SERVICE DAYS. Nothing contained in this Agreement is intended
to or shall require FFSI, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Fund Business Day shall be
performed on, and as of, the next Fund Business Day, unless otherwise required
by law.

SECTION 12. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to
the Fund shall be given as follows until further notice:

Schroder Capital Funds (Delaware)
787 Seventh Avenue
New York, New York 10019

Notice to FFSI shall be given as follows until further notice:

Forum Financial Services, Inc.
2 Portland Square
Portland, Maine 04101

SECTION 13. MISCELLANEOUS

(a) MODIFICATIONS AND AMENDMENTS. No provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto.

(b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which, when so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same instrument.

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

(d) SECTION AND PARAGRAPH HEADINGS. Section and Paragraph headings in
this Agreement are included for convenience only and are not to be used to
construe or interpret this Agreement.
<PAGE>

(e) NOTICES. Notices, requests, instructions and communications received
by the parties at their respective principal addresses, or at such other address
as a party may have designated in writing, shall be deemed to have been properly
given.

(f) SUCCESSORS AND ASSIGNS. This Agreement shall extend to and shall be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the fund
without the written consent of FFSI, or by FFSI, without the written consent of
the Fund authorized or approved by a resolution of the Board.

(g) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York.

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

SCHRODER CAPITAL FUNDS SCHRODER FUND ADVISERS INC.
(DELAWARE)

__________________________________ ________________________________
Laura E. Luckyn-Malone, President

FORUM FINANCIAL SERVICES, INC. SCHRODER CAPITAL MANAGEMENT
INTERNATIONAL INC.

________________________________ ________________________________
John Y. Keffer, President

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
SUB-ADMINISTRATION AGREEMENT

SCHEDULE A
SERIES OF THE FUND

International Equity Fund
Schroder U.S. Equity Fund
Schroder U.S. Smaller Companies Fund
Schroder Latin American Fund
Schroder Emerging Markets Fund Institutional Portfolio

SCHEDULE B
SUB-ADMINISTRATION FEES

SERIES FEE AS % OF THE AVERAGE ANNUAL
DAILY NET ASSETS OF THE FUND

International Equity Fund 0.05%

All Other Existing or Future Series 0.10%

The minimum administration fee per series is $25,000, plus $12,000 per
class for any additional classes. FFSI agrees to waive the minimum fee for the
five Series of the Fund listed in Schedule A.

During any period in which Schroder Emerging markets Fund Institutional
Portfolio invests all (or substantially all) of its investment assets in a
registered, open-end management investment company, or separate series thereof
("Core Portfolio"), in accordance with Section 12(d)(1)(E) under the Investment
Company Act of 1940, the Administrator (or the Trust in compliance with Section
7 of the Sub-Administration Agreement shall pay the Sub-Administrator a monthly
fee on the first business day of each month based upon the average daily value
of the net assets of the Fund during the preceding month at an annual rate of
0.05% of the average daily value of net assets of the Fund. Forum agrees to
waive this fee, following full waiver of fees payable by the Fund or the Core
Portfolio to Schroder Capital Management International Inc. and Schroder Fund
Advisors Inc., to the extent necessary to keep the total expense ratio for the
Schroder Emerging Markets Fund Institutional Portfolio, including indirect
expenses borne by the Fund as a result of investing in the Core Portfolio, at or
below 1.60% of average daily net assets in the Fund.

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
TRANSFER AGENCY AGREEMENT

AGREEMENT made this 9th day of January, 1996, between Schroder Capital
Funds (Delaware) (the "Fund"), and Forum Financial Corp. ("FFC"), both
corporations organized under the laws of the State of Delaware.

WHEREAS, the Fund is registered under the Investment Company Act of 1940 as
an open-end management investment company and is authorized to issue shares of
common stock in separate series and classes;

WHEREAS, the Fund desires that FFC perform certain transfer agency and
related services for each series of the Fund, and class thereof, that currently
exists or in the future may be created, and FFC is willing to perform those
services on the terms and conditions set forth in this Agreement; and

WHEREAS, FFC has agreed to act as transfer agent for the purpose of
recording the transfer, issuance and redemption of Shares of the Fund,
transferring the Shares of the Fund, disbursing dividends and other
distributions to Shareholders, filing various tax forms, mailing shareholder
information and receiving and responding to various shareholder inquiries;

NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:

SECTION 1. APPOINTMENT. The Fund hereby appoints FFC as its Transfer
Agent and FFC agrees to act in such capacity upon the terms set forth in this
Agreement.

SECTION 2. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings specified, insofar as the context will allow:

a) ACT: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.

b) BOARD: The term Board shall mean the Board of Trustees of the Fund.

c) CLASS: The term Class shall mean any future classes of each Series
listed in Appendix A or any class of any Series that the Fund shall
subsequently establish.

d) CUSTODIAN; CUSTODIAN AGREEMENT: The term Custodian shall mean Chase
Manhattan Bank, NA; or any successor or other custodian acting as such
for any current or future
<PAGE>

Series of the Fund. The term Custodian Agreement shall mean the
agreement or agreements between the Fund and the Custodian or
Custodians providing for custodial services to the Fund.

e) FUND: The term Fund shall mean Schroder Capital Funds (Delaware).

f) FUND ACCOUNTANT. The term Fund Accountant shall mean FFC or any
successor thereto that is responsible for calculating the Fund's net
asset value and maintaining its accounting books and records.

g) FUND BUSINESS DAY: The term Fund Business Day shall mean each day
that the New York Stock Exchange is open for trading (which excludes
the following national business holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day).

h) ORAL INSTRUCTION: The term Oral Instruction shall mean an
authorization, instruction, approval, item or set of data, or
information of any kind transmitted to FFC in person or by telephone,
vocal telegram or other electronic means, by a person or persons
reasonably believed in good faith by FFC to be a person or persons
authorized by a resolution of the Board of Trustees of the Fund to
give Oral Instructions on behalf of the Fund. Each Oral Instruction
shall specify whether it is applicable to all of the Fund or to a
specific Series or Class.

i) PROSPECTUS: The term Prospectus shall mean the then current
prospectus forming a part of an effective Registration Statement of
the Fund under the Securities Act of 1933, as amended, and the Act
covering the Shares of a Series or Class as the case may be, as the
same may be amended or supplemented from time to time.

j) SERIES: The term Series shall mean each series listed in Appendix A
or any series that the Fund shall subsequently establish.

k) SHARE CERTIFICATES: The term Share Certificates shall mean the
certificates evidencing ownership of Shares of a series or class.

l) SHAREHOLDERS: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the share registry
records of the Fund.

m) SHARES: The term Shares shall mean the issued and outstanding shares
of common stock of the Fund, or any series or class of the Fund,
including any fractions thereof.

n) VALUATION TIME: The term Valuation Time shall mean, with respect to
each Series, the time at which the Series' net asset value is
calculated, as disclosed in the Series' Prospectus.

2
<PAGE>

o) WRITTEN INSTRUCTIONS: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or
information of any kind transmitted to FFC in original writing
containing original signatures, or a copy of such document transmitted
by facsimile, including transmission of such signature, or other
mechanical or documentary means at the request of a person or persons
reasonably believed in good faith by FFC to be a person or persons
authorized by a resolution of the Board to give Written Instructions
on behalf of the Fund. Each Written Instruction shall specify whether
it is applicable to all of the Fund or a specific Series or Class.

SECTION 3. SHARE CERTIFICATES. The Fund shall furnish to FFC a supply of
blank Share Certificates of each Class of each Series and, from time to time,
will renew such supply upon FFC's request. Blank Share Certificates shall be
signed manually or by facsimile signatures of officers of the Fund authorized to
sign by the by-laws of the Fund and, if required by FFC, shall bear the Fund's
seal or a facsimile thereof.

SECTION 4. ISSUANCE OF SHARES. FFC shall make original issues of
Shares of each Class of each Series in accordance with Section 11, and the
Fund's then current Prospectus, upon receipt of (i) Written Instructions
requesting the issuance, (ii) a certified copy of a resolution of the Board
authorizing the issuance, (iii) necessary funds for the payment of any
original issue tax applicable to such Shares, and (iv) an opinion of the
Fund's counsel as to the legality and validity of the issuance, which opinion
may provide that it is contingent upon the filing by the Fund of an
appropriate notice with the Securities and Exchange Commission, as required
by Rule 24f-2 under the Act. If the opinion described in (iv) above is
contingent upon a filing under Rule 24f-2, the Fund shall fully indemnify FFC
for any liability arising from the failure of the Fund to comply with that
rule.

SECTION 5. TRANSFER OF SHARES. Transfers of Shares of each Class of each
Series shall be registered on the Shareholder records maintained by FFC. In
registering transfers of Shares, FFC may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the opinion
of FFC's counsel, protect FFC and the Fund from liability arising from (i) not
requiring complete documentation, (ii) registering a transfer without an adverse
claim inquiry, (iii) delaying registration for purposes of such inquiry or (iv)
refusing registration whenever an adverse claim requires such refusal. As
Transfer Agent, FFC will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code.

SECTION 6. ISSUANCE AND TRANSFER OF SHARE CERTIFICATES. Subject to the
provisions of Section 8, new Share Certificates shall be issued by FFC upon
surrender of outstanding Share Certificates in the form deemed by FFC to be
properly endorsed for transfer and satisfactory evidence of compliance with all
applicable laws relating to the payment or collection of taxes. FFC shall
forward Share Certificates in "non-negotiable" form by first-class or registered
mail, or by whatever means FFC deems equally reliable and expeditious. While in
transit to the addressee, all deliveries of Share Certificates shall be insured
as FFC deems appropriate. FFC shall not mail Share Certificates in "negotiable"
form unless requested in writing by the Fund and fully indemnified by the Fund
to FFC's satisfaction. FFC may issue new

3
<PAGE>

Share Certificates in place of those lost, destroyed or stolen, upon receiving
indemnity satisfactory to FFC, and may issue new Share Certificates in exchange
for, and upon surrender of, mutilated Share Certificates as FFC deems
appropriate. Unless otherwise directed by the Fund, FFC may issue or register
Share Certificates reflecting the signature, or facsimile thereof, of an officer
who has died, resigned or been removed by the Fund. The Fund shall file
promptly with FFC approval, adoption or ratification of such action as may be
required by law or FFC. All share certificates submitted for transfer or
replacement shall be marked "cancelled" or destroyed by FFC following the
issuance in lieu of the Share Certificate of a new or replacement Share
Certificate or shares not evidenced by a Share Certificate.

SECTION 7. MAINTENANCE OF STOCK RECORDS. FFC shall maintain customary
stock registry records for each Class of each Series, noting the issuance,
transfer or redemption of Shares and the issuance and transfer of Share
Certificates. FFC will also maintain for each Class of each Series an account
entitled "Unissued Certificate Account" (or similar name) in which it will
record the Shares issued and outstanding from time to time for which issuance of
Share Certificates has not been requested. FFC is authorized to keep records
for each Class of each Series, containing the names and addresses of record of
Shareholders, and the number of Shares from time to time owned by them for which
no Share Certificates are outstanding. Each Shareholder account will be
assigned a single account number for each Class of each Series, even though
Shares for which Certificates have been issued will be accounted for separately.

SECTION 8. RECORDS REFLECTING ISSUANCES AND REDEMPTIONS. FFC shall issue
Share Certificates for Shares only upon receipt of a written request from a
Shareholder. If Shares are purchased without such request, FFC shall merely
note on its stock registry records the issuance of the Shares and credit the
Unissued Certificate Account and the respective Shareholders' accounts with the
Shares. Whenever Shares owned by Shareholders are surrendered for redemption,
FFC shall make appropriate entries in the stock transfer records and debit the
Unissued Certificate Account, if appropriate, and the record of issued Shares
outstanding; and shall cancel any Share Certificate surrendered for redemption.

SECTION 9. RELIANCE BY FFC. In performing its duties hereunder, FFC may
rely conclusively and act without further investigation upon any list,
instruction, certification, authorization, Share Certificate or other instrument
or paper reasonably believed by it in good faith to be genuine and unaltered,
and to have been signed, countersigned or executed or authorized by a duly-
authorized person or persons, or by the Fund, or upon the advice of counsel for
the Fund or for FFC. FFC may record any transfer of Share Certificates which it
reasonably believes in good faith to have been duly-authorized, or may refuse to
record any transfer of Share Certificates if, in good faith, it deems such
refusal necessary in order to avoid any liability on the part of either the Fund
or FFC. The Fund agrees to indemnify and hold harmless FFC from and against any
and all losses, claims, damages, liabilities or expenses that it may suffer or
incur by reason of such good faith reliance, action or failure to act.

SECTION 10. INSPECTION OF RECORDS. FFC shall notify the Fund of any
request or demand for the inspection of the Fund's share records. FFC shall
abide by the Fund's

4
<PAGE>

instructions for granting or denying the inspection; provided, however, FFC may
grant the inspection without such instructions if it is advised by counsel to
FFC that failure to do so will result in liability to FFC.

SECTION 11. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS.

(a) Shares shall be issued to investors at the net asset value next
determined after FFC receives a completed purchase order.

(b) A purchase order shall be complete when FFC receives:

(1) an instruction directing investment in a Series or Class of a
Series of the Fund;

(2) a check or wire in the amount designated in the instruction; and,

(3) in the case of an initial purchase, a completed account
application; or,

(4) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar contract
with a financial intermediary.

(c) Shares issued after receipt of a completed purchase order shall be
eligible to receive dividend and capital gain distributions:

(1) in the case of Series that do not declare dividends daily, on the
next Fund Business Day after FFC receives the completed purchase order;

(2) in the case of Series that are money market funds, on the same
Fund Business Day as FFC receives Federal Funds; and,

(3) in the case of Series, other than money market funds, that declare
dividends daily, on the next Fund Business Day after FFC receives Federal
Funds.

(d) Shareholder payments shall be considered Federal Funds no later than
on the day indicated below unless such other times shall be noted in a
Prospectus:

(1) for a wire received, at the time of the receipt of the wire;

(2) for a check drawn on a member bank of the Federal Reserve System
and received prior to 12:00 noon, Eastern time on a Fund Business Day, on
the Fund Business Day following receipt;

5
<PAGE>

(3) for a check drawn on a member bank of the Federal Reserve System
and received at or after 12:00 noon, Eastern time on a Fund Business Day,
on the second Fund Business Day following receipt; and

(4) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as the Transfer Agent actually
receives Federal funds in respect of that check.

SECTION 12. COMPUTATION OF NET ASSET VALUE; CONFIRMATIONS.

(a) On each Fund Business Day, as soon as possible after each Valuation
Time for a Series, FFC shall obtain from the Fund Accountant a quotation (on
which it may conclusively rely) of the net asset value for each Class of the
Series as of that Valuation Time. FFC shall use the net asset value determined
as of the Valuation Time to compute the number of Shares of each Class of a
Series to be purchased and the aggregate purchase proceeds to be deposited with
the Custodian based on the completed purchase orders received by FFC on that day
prior to the Valuation Time for the Series. FFC shall thereupon pay the
Custodian the aggregate net asset value of shares of each Class of the Series
purchased for which payment has been received by FFC.

(b) As necessary but no more frequently than once daily (unless a more
frequent basis is agreed to by FFC), FFC shall issue the proper number of Shares
to be purchased pursuant to subsection (a) above. Promptly thereafter FFC shall
send written confirmation of such purchase to the Custodian and the Fund or Fund
Accountant.

(c) FFC shall also credit each Shareholder's separate account with the
number of Shares purchased by such Shareholder. FFC shall promptly thereafter
mail written confirmation of the purchase to each Shareholder and to the Fund if
requested. Each confirmation shall indicate the prior Share balance, the new
Share balance, the amount invested and the price paid for the newly-purchased
Shares.

SECTION 13. SHARE REDEMPTIONS. Prior to each Valuation Time for a Series
on each Fund Business Day, as specified in accordance with Section 11, FFC shall
process all requests to redeem Shares of each Series or Class of the Series in
accordance with Section 8. Upon confirmation of the net asset value by the Fund
Accountant, FFC shall notify the Fund and the Custodian of the redemption
amount, apply the redemption proceeds in accordance with Section 13 and the
Prospectus, record the redemption in the stock registry books, and debit the
redeemed Shares from the Unissued Certificates Account, if appropriate, and the
account of the Shareholder, and mark "cancelled" or destroy any Share
Certificates evidencing the redeemed shares.

In lieu of carrying out the redemption procedures described in the
preceding paragraph, FFC may, at the request of the Fund, sell Shares of each
class of each Series to the Fund as repurchases from Shareholders, provided that
the sale price is not less than the applicable redemption price. The redemption
procedures shall then be appropriately modified. The Fund

6
<PAGE>

may authorize FFC by Written Instruction to effect any redemptions upon
provision of an indemnity satisfactory in form to FFC.

SECTION 14. REDEMPTION PROCEEDS. The proceeds of redemption shall be
remitted by FFC in accordance with the Prospectus as follows:

(a) By check mailed to the Shareholder at the Shareholder's address of
record. The redemption request and Share Certificates, if any, for Shares being
redeemed must reflect a guarantee of the owner's signature as described in
Section 22; or

(b) By other procedures commonly followed by mutual funds, as set forth in
the Prospectus and in a Written Instruction from the Fund and mutually agreed
upon by the Fund and FFC. For purposes of redemption of shares of any Class of
any Series that have been purchased by check within fifteen (15) days prior to
receipt of the redemption request, the Fund shall provide FFC with Written
Instructions concerning the time within which such requests may be honored. The
authority of FFC to perform its responsibilities under Sections 12 and 13 shall
be suspended if FFC receives notice of the suspension of the determination of
the Fund's net asset value.

SECTION 15. DIVIDENDS. Upon the declaration with respect to a Series or
Class of a Series of each dividend and capital gain distribution by the Board,
the Fund shall notify FFC of the date of such declaration, the amount payable
per Share, the record date for determining the Shareholders entitled to payment,
and the payment and reinvestment date. On or before each payment date the Fund
will transfer, or cause the Custodian to transfer, to FFC the total amount of
the dividend or distribution currently payable. FFC will, as of the ex-dividend
date, reinvest all dividends and distributions in additional Shares of the same
Series or Class of a Series and promptly mail to each Shareholder at his address
of record, a statement showing the number of Shares (rounded to three decimal
places) of that Class then owned by the Shareholder and the net asset value of
such Shares, or transmit such information in accordance with any arrangement
between the Shareholder and FFC; provided, however, that if a Shareholder elects
to receive dividends and distributions in cash, FFC shall prepare a check in the
appropriate amount and mail it to the Shareholder at the Shareholder's address
of record within five (5) Fund Business Days after the designated payment date
or transmit the appropriate amount in Federal funds in accordance with any
arrangement between the Shareholder and FFC.

SECTION 16. BOOKS AND RECORDS.

(a) The Fund shall deliver or cause to be delivered over to FFC (i) an
accurate list of Shareholders of the Fund, showing each Shareholder's address of
record, number of Shares owned and whether such Shares are represented by
outstanding Share Certificates or by non-certificated Share accounts and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by FFC under this Agreement
(collectively referred to as the "Materials"). The Fund shall indemnify and
hold harmless FFC from and against any and all losses, claims, damages,
liabilities or expenses arising out of or in connection with any error,
omission, inaccuracy or other deficiency of the Materials, or out of the

7
<PAGE>

failure of the Fund to provide any portion of the Materials or to provide any
information in the Fund's possession needed by FFC to knowledgeably perform its
functions.

(b) FFC shall prepare and maintain or cause to be prepared and maintained
records in such form for such periods and in such locations as may be required
by applicable regulations, all documents and records relating to the services
provided to the Fund pursuant to this Agreement required to be maintained
pursuant to the Act, rules and regulations of the Securities and Exchange
Commission, the Internal Revenue Service and any other national, state or local
government entity with jurisdiction over the Fund. The books and records
pertaining to the Fund which are in possession of FFC shall be the property of
the Fund. The Fund, or the Fund's authorized representatives, shall have access
to such books and records at all times during FFC's normal business hours. Upon
the reasonable request of the Fund, copies of any such books and records shall
be provided promptly to the Fund or the Fund's authorized representatives. In
the event the Fund designates a successor to any of FFC's obligations hereunder,
FFC shall, at the expense and direction of the Fund, transfer to such successor
all relevant books, records and other data established or maintained by FFC
under this Agreement.

SECTION 17. COOPERATION WITH INDEPENDENT ACCOUNTANTS. FFC shall cooperate
with the Fund's independent public accountants and shall take reasonable action
to make all necessary information available to such accountants for the
performance of their duties.

SECTION 18. OTHER SERVICES. In addition to the services described above,
FFC will perform other services for the Fund as mutually agreed upon in writing
from time to time, including but not limited to preparing and filing federal tax
forms with the Internal Revenue Service, mailing federal tax information to
Shareholders, mailing Shareholder reports, preparing the annual list of
Shareholders, mailing notices of Shareholders' meetings, proxies and proxy
statements and tabulating proxies. FFC shall answer certain Shareholder
inquiries related to their share accounts and other correspondence requiring an
answer from the Fund.

SECTION 19. SERVICE DAYS. Nothing contained in this Agreement is intended
to or shall require FFC, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Fund Business Day shall be
performed on, and as of, the next Fund Business Day, unless otherwise required
by law.

SECTION 20. COMPENSATION. The Fund agrees to pay to FFC compensation for
its services as set forth in Appendix B attached hereto, or as shall be set
forth in written amendments to Appendix B approved by the Fund and FFC from time
to time. These fees shall be paid monthly in advance. Fees will begin to
accrue for each Series on the latter of the effective date of this Agreement or
the date of commencement of operations of such Series.

FFC shall be reimbursed for its out of pocket and ancillary costs incurred
in providing any transfer agency services hereunder, including the cost of (or
appropriate share of the cost of): (i) any and all forms and stationery used or
specially prepared for the purpose; (ii) postage; (iii)

8
<PAGE>

telephone services; (iv) bank fees; (v) electronic or facsimile transmission;
and (vi) any items the Fund is responsible for as described in the Fund's
agreements with FFC, Forum Financial Services, Inc., Schroder Capital Management
International Inc., or Schroder Capital Distributors Inc. The Fund shall
reimburse FFC for all expenses and employee time attributable to any review of
the Fund's accounts and records by the Fund's independent public accountants or
any regulatory body outside of routine and normal periodic reviews. In the
event that this agreement is terminated and a successor transfer agent is
appointed, FFC shall be reimbursed for reasonable charges and disbursements
associated with promptly transferring to the successor transfer agent the
original or copies of all books and records maintained by FFC hereunder, and
cooperating with, and providing reasonable assistance to, the successor transfer
agent in the establishment of the books and records necessary to carry out the
successor transfer agent's responsibilities.

Except as permitted by this Agreement with regard to indemnity, the
foregoing shall be full and complete compensation and reimbursement for all
FFC's expenses incurred in connection with the services contemplated by this
Agreement, and FFC shall be entitled to no additional expense reimbursement or
other payments of any nature.

SECTION 21. TAXES. FFC shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed on any basis whatsoever in
connection with the Fund or any Shareholder, excluding taxes assessed against
FFC for compensation received by it hereunder.

SECTION 22. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION.
FFC, in performing under the terms and conditions of this Agreement, shall use
its best judgment and efforts in rendering the services described herein, and
shall incur no liability for its status hereunder or for any reasonable actions
taken or omitted in good faith. As an inducement to FFC's undertaking to render
these services, the Fund hereby agrees to indemnify and hold harmless FFC, its
employees, agents, officers and trustees, from any and all loss, liability and
expense, including any legal expenses, arising out of FFC's performance under
this Agreement, or status, or any act or omission of FFC, its employees, agents,
officers and trustees; provided that this indemnification shall not apply to
FFC's actions taken or failures to act in cases of FFC's own bad faith, willful
misconduct or gross negligence in the performance of its duties under this
Agreement; and provided further that FFC shall give the Fund notice and
reasonable opportunity to defend against any such loss, claim, damage, liability
or expense in the name of the Fund or FFC, or both. The Fund will be entitled to
assume the defense of any suit brought to enforce any such claim or demand, and
to retain counsel of good standing chosen by the Fund and approved by FFC, which
approval shall not be withheld unreasonably. In the event the Fund does elect
to assume the defense of any such suit and retain counsel of good standing
approved by FFC, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them; but in case the
Fund does not elect to assume the defense of any such suit, or in case FFC does
not approve of counsel chosen by the Fund or FFC has been advised that it may
have available defenses or claims which are not available or conflict with those
available to the Fund, the Fund will reimburse FFC, its officers or trustees or
the controlling person or persons named as defendant or defendants in such suit,
for the fees and expenses of any one law firm retained as counsel by FFC or
them. FFC may, at any time, waive

9
<PAGE>

its right to indemnification hereunder and assume its own defense. Without
limitation of the foregoing:

(a) FFC may rely upon the advice of the Fund or counsel to the Fund or
FFC, and upon statements of accountants, brokers and other persons believed
by FFC in good faith to be expert in the matters upon which are consulted.
FFC shall not be liable for any action taken in good faith reliance upon
such advice or statements;

(b) FFC shall not be liable for any action reasonably taken in good faith
reliance upon any Written Instructions or certified copy of any resolution
of the Board; provided, however, that upon receipt of a Written Instruction
countermanding a prior Instruction that has not been fully executed by FFC,
FFC shall verify the content of the second Instruction and honor it, to the
extent possible. FFC may rely upon the genuineness of any such document,
or copy thereof, reasonably believed by FFC in good faith to have been
validly executed;

(c) FFC may rely, and shall be protected by the Fund in acting, upon any
signature, instruction, request, letter of transmittal, certificate,
opinion of counsel, statement, instrument, report, notice, consent, order,
or other paper or document reasonably believed by it in good faith to be
genuine and to have been signed or presented by the proper party or
parties; and

(d) FFC may, with the consent of the Fund, which consent shall not be
withheld unreasonably, subcontract the performance of all, or any portion
of, the services to be provided hereunder with respect to any Shareholder
or group of Shareholders to any Processing Organization or agent of FFC and
may reimburse any such Processing Organization or agent for the services it
performs; provided that no such reimbursement will increase the amount
payable by the Fund pursuant to this Agreement.

SECTION 23. SIGNATURE GUARANTEES. Upon receipt of Written Instructions,
FFC is authorized to make payment upon redemption of Shares or otherwise effect
any transaction or class of transaction without a signature guarantee, and the
Fund hereby agrees to indemnify and hold FFC harmless from any and all expenses,
damages, claims, suits, liabilities, actions, demands or losses whatsoever
arising out of or in connection with such payment or transactions if made in
accordance with such Written Instructions. Signature guarantees may be provided
by any eligible institution, as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, that is authorized to guarantee signatures, and is
acceptable to FFC.

SECTION 24. ADOPTION OF PROCEDURES. The parties hereto may adopt
procedures as may be appropriate or practical under the circumstances, and FFC
may conclusively rely on the determination of the Fund that any procedure that
has been approved by the Fund does not conflict with or violate any requirement
of its Trust Instrument or Registration Statement, or any rule, regulation or
requirement of any regulatory body.

10
<PAGE>

SECTION 25. BOARD RESOLUTIONS. The Fund shall file with FFC a certified
copy of the operative resolution of the Board authorizing the execution of
Written Instructions or the transmittal of Oral Instructions.

SECTION 26. RETURNED CHECKS. In the event that any check or other order
for the payment of money is returned unpaid for any reason, FFC shall promptly
notify the Fund of the non-payment.

SECTION 27. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to
the Fund shall be given as follows until further notice:

Schroder Capital Funds (Delaware)
787 Seventh Avenue .
New York, New York 10019

Notice to FFC shall be given as follows until further notice:

Forum Financial Corp.
Two Portland Square
Portland, Maine 04101

SECTION 28. REPRESENTATIONS AND WARRANTIES. The Fund represents and
warrants to FFC that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly authorized by
resolution of the Board. FFC represents and warrants to the Fund that the
execution and delivery of this Agreement by the undersigned officer of FFC has
also been duly and validly authorized.

SECTION 29. EFFECTIVENESS, DURATION AND TERMINATION.

a) EFFECTIVENESS. This Agreement shall become effective as of the date first
above written with respect to existing series of the Fund, and shall relate
to every other Series as of the date on which the Fund's Registration
Statement relating to the shares of such Series becomes effective.

b) DURATION. This Agreement shall remain in effect indefinitely.

c) TERMINATION This Agreement may be terminated with respect to any Series,
or Class thereof, without the payment of any penalty, (i) by a vote of a
majority of the Fund's Board on 60 days' written notice to FFC or (ii) by
FFC on not less than 60 days' written notice to the Fund. Such termination
shall be effective as of the date specified in the notice. Upon receiving
notice of termination by FFC, the Fund shall use its best efforts to obtain
a

11
<PAGE>

successor transfer agent. Upon receipt of written notice from the Fund of
the appointment of the successor transfer agent and Oral or Written
Instructions, and upon payment to FFC of all fees owed through the
effective termination date, and reimbursement for reasonable charges and
disbursements (as described in Section 19), FFC shall promptly transfer to
the successor transfer agent the original or copies of all books and
records maintained by FFC hereunder including, in the case of records
maintained on computer systems, copies of such records in machine-readable
form, and shall cooperate with, and provide reasonable assistance to, the
successor transfer agent in the establishment of the books and records
necessary to carry out the successor transfer agent's responsibilities. For
so long as FFC continues to perform any of the services contemplated by
this Agreement after termination of this Agreement (as agreed to by the
Fund and FFC), the provisions of Sections 19 and 21 hereof shall continue
in full force and effect.

SECTION 30. MISCELLANEOUS.

a) MODIFICATIONS AND AMENDMENTS. No provisions of this Agreement may be
amended or modified in any manner except by a written agreement
properly authorized and executed by both parties hereto.

b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which, when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and
the same instrument.

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

d) SECTION AND PARAGRAPH HEADINGS. Section and Paragraph headings in
this Agreement are included for convenience only and are not to be
used to construe or interpret this Agreement.

e) NOTICES. Notices, requests, instructions and communications received
by the parties at their respective principal addresses, or at such
other address as a party may have designated in writing, shall be
deemed to have been properly given.

f) SUCCESSORS AND ASSIGNS. This Agreement shall extend to and shall be
binding upon the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of FFC, or by FFC,
without the written consent of the Fund authorized or approved by a
resolution of the Board.

12
<PAGE>

g) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Maryland.

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

SCHRODER CAPITAL FUNDS (DELAWARE)

___________________________________
Mark. J. Smith, Vice-President

FORUM FINANCIAL CORP.

___________________________________
John Y. Keffer, President

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
TRANSFER AGENCY AGREEMENT

APPENDIX A

SERIES OF SCHRODER CAPITAL FUNDS (DELAWARE)
AS OF JANUARY 9, 1996

International Equity Fund

Schroder U.S. Equity Fund

Schroder U.S. Smaller Companies Fund

Schroder Latin American Fund

Schroder Emerging Markets Fund
<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
TRANSFER AGENCY AGREEMENT

APPENDIX B

For its services hereunder, FFC will receive fees calculated as follows:
(i) a fee of $12,000 per year with respect to each series, such amounts to be
computed and paid monthly in advance by the Fund; (ii) Annual Shareholder
Account Fees of $25.00 per shareholder account; such fees to be paid monthly and
computed as of the last business day of the prior month; (iii) for series with
multiple share classes, an additional fee of $12,000 per additional class per
year; and (iv) out-of-pocket expenses billed at cost.

The rates set forth above shall remain fixed through December 31, 1995. On
January 1, 1996, and on each successive January 1, the rates shall be adjusted
to reflect changes in the Consumer Price Index for the preceding calendar year,
as published by the U.S. Department of Labor, Bureau of Labor Statistics.

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)

FUND ACCOUNTING AGREEMENT

THIS AGREEMENT dated as of the 9th day of January, 1996, by and between
Schroder Capital Funds (Delaware) (the "Fund") and Forum Financial Corp.
("FFC"), both corporations organized under the laws of the State of Delaware.

WHEREAS, the Fund is registered under the Investment Company Act of 1940 as
an open-end management investment company and is authorized to issue shares of
common stock in separate Series and Classes;

WHEREAS, the Fund currently consists of five Series portfolios:
International Equity Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller
Companies Fund, Schroder Emerging Markets Fund Institutional Portfolio and
Schroder Latin American Fund;

WHEREAS, the Fund desires that FFC perform certain fund accounting and
related services for each Series of the Fund, and Class thereof, that currently
exists or in the future may be created, and FFC is willing to perform those
services on the terms and conditions set forth in this Agreement; and

NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund and FFC agree as follows:

SECTION 1. APPOINTMENT. The Fund hereby appoints FFC as Accounting
Services Agent of the Fund and FFC hereby accepts such appointment, all in
accordance with the terms and conditions of this Agreement.

SECTION 2. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings specified, insofar as the context will allow:

a) ACT: The term Act shall mean the Investment Company Act of 1940, as
amended from time to time.

b) BOARD: The term Board shall mean the Board of Trustees of the Fund.

c) CLASS: The term Class shall mean any future classes of each Series
listed in Appendix A or any class of any Series that the Fund shall
subsequently establish.

d) CUSTODIAN: The term Custodian shall mean Chase Manhattan Bank, NA; or
any successor or other custodian acting as such for any current or
future Series of the Fund.

e) FUND: The term Fund shall mean Schroder Capital Funds (Delaware).
<PAGE>

f) FUND BUSINESS DAY. The term Fund Business Day shall mean each day
that the New York Stock Exchange is open for trading (which excludes
the following national business holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day).

g) ORAL INSTRUCTION: The term Oral Instruction shall mean an
authorization, instruction, approval, item or set of data, or
information of any kind transmitted to FFC in person or by telephone,
vocal telegram or other electronic means, by a person or persons
reasonably believed in good faith by FFC to be a person or persons
authorized by a resolution of the Board of the Fund to give Oral
Instructions on behalf of the Fund. Each Oral Instruction shall
specify whether it is applicable to all of the Fund or to a specific
Series or Class.

h) PROSPECTUS: The term Prospectus shall mean the then-current
prospectus forming a part of an effective Registration Statement of
the Fund under the Securities Act of 1933, as amended, and the Act
covering the Shares of a Series or Class as the case may be, as the
same may be amended or supplemented from time to time.

i) SERIES: The term Series shall mean each series listed in Appendix A
or any series that the Fund shall subsequently establish.

j) SHAREHOLDERS: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the share registry
records of the Fund.

k) SHARES: The term Shares shall mean the issued and outstanding shares
of common stock of the Fund, including any fractions thereof.

l) WRITTEN INSTRUCTIONS: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or
information of any kind transmitted to FFC in original writing
containing original signatures, or a copy of such document transmitted
by facsimile, including transmission of such signature, or other
mechanical or documentary means at the request of a person or persons
reasonably believed in good faith by FFC to be a person or persons
authorized by a resolution of the Board to give Written Instructions
on behalf of the Fund. Each Written Instruction shall specify whether
it is applicable to all of the Fund or a specific Series or Class.

SECTION 3. FURNISHING OF EXISTING ACCOUNTS AND RECORDS. The Fund shall
promptly turn over to FFC such of the Accounts and Records (as defined in
Section 4(a)) previously maintained by or for it as are necessary for FFC to
perform its functions under this Agreement. The Fund authorizes FFC to rely on
such Accounts and Records turned over to it and hereby indemnifies and will hold
FFC, its successors and assigns, harmless of and from any and all expenses,
damages, claims, suits, liabilities, actions, demands and losses whatsoever
arising out of or in connection with any error, omission, inaccuracy or other
deficiency of such Accounts and Records or in the failure of the Fund to provide
any portion of such or to provide any information needed by FFC to knowledgeably
perform its functions.

2
<PAGE>

SECTION 4. SERVICES TO BE PERFORMED. For each Series and Class thereof,
FFC shall perform the services listed in this Section. FFC and the Fund's
administrator, Schroder Fund Advisors Inc., or sub-administrator, Forum
Financial Services, Inc. ("Forum"), may from time to time adopt such procedures
as they agree upon to implement the terms of this Section.

(a) PREPARATION AND MAINTENANCE OF ACCOUNTS AND RECORDS. To the extent it
receives the necessary information from the Fund and its agents by Written or
Oral Instructions (as defined in Section 4), FFC shall maintain, in accordance
with Rule 31a-1 under the Act, the following accounts and records ("Accounts and
Records") relating to the business of the Fund, and each Series and Class
thereof, in such form as may be mutually agreed to between the Fund and FFC:

1) Cash Receipts Journal

2) Cash Disbursements Journal

3) Dividends Paid Record

4) Purchase and Sales Journal - Portfolio Securities

5) Subscription and Redemption Journals

6) Security Ledgers

7) Broker-Dealer Ledger

8) General Ledger

9) Daily Expense Accruals

10) Daily Interest Accruals

11) Securities and Monies borrowed or loaned and collateral therefore

12) Daily Trial Balances

13) Investment Income Journal

14) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end
management investment companies, but limited to those provisions
of the Rule applicable to portfolio transactions (but not the
records the adviser is required to maintain pursuant to
31a-1(b)(5), (6) and (7)), or as agreed upon by the parties
hereto.

<PAGE>

The Accounts and Records shall be prepared and maintained in such form, for
such periods and in such locations as may be required by Rule 31a-2 under the
Act. The Accounts and Records maintained by FFC shall be the property of the
Fund, and shall be made available to the Fund promptly upon request. FFC shall
assist the Fund's independent auditors, or upon approval of the Fund, or upon
demand, any regulatory body, in any requested review of the Fund's Accounts and
Records, but shall be reimbursed for all expenses and employee time invested in
any such review outside of routine and normal periodic reviews. Upon receipt
from the Fund of the necessary information, FFC shall supply the necessary data
for the Fund or accountant's completion of any necessary tax returns,
questionnaires, periodic reports to shareholders and such other reports and
information requests as the Fund and FFC shall agree upon from time to time.

The Fund, prior to 4:00 p.m., Eastern time, will furnish FFC with Written
or Oral Instructions containing all necessary information (exclusive of
portfolio prices) to perform the above functions and to calculate the net asset
value of each Series of the Fund. The Fund shall indemnify and hold harmless
FFC from and against any liability arising from any discrepancy between the
information received by FFC and used in such calculations and any subsequent
information received from the Fund or any of its designated agents or pricing
services.

It shall be the responsibility of the Fund to furnish or cause to be
furnished to FFC, the declaration, record, payment dates and amounts of any
dividends or income and any other special actions required on or concerning each
of its portfolio securities.

(b) CALCULATION OF NET ASSET VALUE. FFC shall perform the ministerial
calculations necessary to calculate the net asset value of each Series and Class
of the Fund daily, in accordance with the Fund's current Prospectus except where
the Fund has given or caused to be given specific Written or Oral Instructions
to utilize a different method of calculation. If required because quotes are
not available, portfolio securities shall be given such values as the Fund or
its agent provides by Written or Oral Instructions. FFC shall have no
responsibility or liability for the accuracy of the information supplied by the
Fund; or for any loss, liability, damage or cost arising out of any inaccuracy
of such data. FFC shall have no responsibility or duty to include information
or valuations to be provided by the Fund or its designated agent in any
computation unless and until it is timely supplied to FFC in useable form.
Unless the necessary information to calculate the net asset value daily is
furnished by Written or Oral Instructions from the Fund or its designated agent,
FFC shall incur no liability, and the Fund shall indemnify and hold harmless FFC
from and against any liability arising from any failure to provide complete
information or from any discrepancy between the information received by FFC and
used in such calculation and any subsequent information received from the Fund
or any of its designated agents.

SECTION 5. WRITTEN AND ORAL INSTRUCTIONS. Each Written Instruction shall
set forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered proper instructions if FFC reasonably believes
them to have been given by a person authorized to give such instructions with
respect to the transactions involved. The Fund shall cause all Oral

<PAGE>

Instructions to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the Board of the
Fund, Oral Instructions may include communications effected directly between
electromechanical or electronic devices, provided that the Board and FFC are
satisfied that such procedures afford adequate safeguards for the Fund's assets.

SECTION 6. RELIANCE ON INSTRUCTIONS. For all purposes under this
Agreement, FFC is authorized to act upon receipt of the first of any Written or
Oral Instruction it receives from the Fund or its agents on behalf of the Fund.
In cases where the first Instruction is an Oral Instruction, a confirming
Written Instruction shall be delivered, and in cases where FFC receives an
Instruction, whether Written or Oral, to enter a portfolio transaction on the
records, the Fund shall cause the broker-dealer executing the trade to send a
written confirmation to FFC. FFC shall be entitled to rely on the first
Instruction received, and for any act or omission undertaken in compliance
therewith shall be free of liability and fully indemnified and held harmless by
the Fund, provided however, that in the event a Written or Oral Instruction
received by FFC is countermanded by a timely later Written or Oral Instruction
received by FFC prior to acting upon such countermanded Instruction, FFC shall
act upon such later Written or Oral Instruction. The sole obligation of FFC
with respect to any follow-up or confirming Written Instruction, Oral
Instruction in documentary or written form, or Broker-Dealer written
confirmation shall be to make reasonable efforts to detect any discrepancy
between the original Instruction and such confirmation and to report such
discrepancy to the Fund. The Fund shall be responsible, at the Fund's expense
for taking any action, including any reprocessing, necessary to correct any
discrepancy or error, and to the extent such action requires FFC to act, the
Fund shall give FFC specific Written Instructions as to the action required.

SECTION 7. MONTHLY STATEMENTS. At the end of each month, the Fund shall
cause the Custodian to forward to FFC a monthly statement of cash and portfolio
transactions, which FFC shall reconcile with FFC's Accounts and Records
maintained for the Fund. FFC will report any discrepancies to the Custodian,
and report any unreconciled items to the Fund.

SECTION 8. PERIODIC REPORTS. FFC shall promptly supply daily and periodic
reports to the Fund or its agents as requested by the Fund and agreed upon by
FFC. FFC shall prepare and maintain appropriate work papers to support the
accounts that it maintains pursuant to this Agreement. FFC will prepare the
following financial reports: (a) Daily trial balances; (b) Semi-annual and
annual reports containing required financial statements; and (c) Schedules of
purchases and sales of securities.

SECTION 9. SHARE INFORMATION. The Fund shall, and shall require each of
its agents (including without limitation its Transfer Agent and its Custodian),
to provide FFC as of the close of each business day, or on such other schedule
as the Fund determines is necessary, (to be delivered to FFC by 10:00 a.m. the
next following business day) all data and information necessary for FFC to
maintain the Fund's Accounts and Records and FFC may conclusively assume that
the information to be received is complete and accurate. Among the information
to be received by FFC are reports of share purchases, redemptions, and total
shares outstanding on
<PAGE>

the next business day after each net asset valuation. If supplied by the Fund,
any such information shall be supplied by Written or Oral Instructions.

SECTION 10. OTHER PROCEDURES. FFC and the Fund may from time to time
adopt such procedures as they agree upon in writing, and FFC may conclusively
rely on a determination by the Fund that any procedure approved by the Fund, or
directed by the Fund, does not conflict with or violate any requirements of the
respective Prospectus, Trust Instrument, or any rule or regulation of any
regulatory body or governmental agency. The Fund shall be responsible for
notifying FFC of any changes in regulations or rules which might necessitate
changes in FFC's procedures, and for working out with FFC such changes.

SECTION 11. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION.
FFC, in performing under the terms and conditions of this Agreement, shall use
its best judgment and efforts in rendering the services described herein, and
shall incur no liability for its status hereunder or for any reasonable actions
taken or omitted in good faith. As an inducement to FFC's undertaking to render
these services, the Fund hereby agrees to indemnify and hold harmless FFC, its
employees, agents, officers and trustees, from any and all loss, liability and
expense, including any legal expenses, arising out of FFC's performance under
this Agreement, or status, or any act or omission of FFC, its employees, agents,
officers and trustees; provided that this indemnification shall not apply to
FFC's actions taken or failures to act in cases of FFC's own bad faith, willful
misconduct or gross negligence performance of its duties under this Agreement;
and provided further that FFC shall give the Fund notice and reasonable
opportunity to defend against any such loss, claim, damage, liability or expense
in the name of the Fund or FFC, or both. The Fund will be entitled to assume
the defense of any suit brought to enforce any such claim or demand, and to
retain counsel of good standing chosen by the Fund and approved by FFC, which
approval shall not be withheld unreasonably. In the event the Fund does elect
to assume the defense of any such suit and retain counsel of good standing
approved by FFC, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them; but in case the
Fund does not elect to assume the defense of any such suit, or in case FFC does
not approve of counsel chosen by the Fund or FFC has been advised that it may
have available defenses or claims which are not available or conflict with those
available to the Fund, the Fund will reimburse FFC, its officers or trustees or
the controlling person or persons named as defendant or defendants in such suit,
for the fees and expenses of any one law firm retained as counsel by FFC or
them. FFC may, at any time, waive its right to indemnification hereunder and
assume its own defense. Without limitation of the foregoing:

a) FFC may rely upon the advice of the Fund or of counsel, who may be
counsel for the Fund or counsel for FFC and upon statements of
accountants, brokers and other persons believed by it in good faith to
be expert in the matters upon which they are consulted, and FFC shall
not be liable to anyone for any actions taken in good faith upon such
statements.

b) FFC may act upon any Oral Instruction which it receives and which it
believes in good faith was transmitted by the person or persons
authorized by the Board of the Fund to
<PAGE>

give such Oral Instruction. FFC shall have no duty or obligation to
make any inquiry or effort of certification of such Oral Instruction.

c) FFC shall not be liable for any action taken in good faith reliance
upon any Written Instruction or certified copy of any resolution of
the Board of the Fund, and FFC may rely upon the genuineness of any
such document or copy thereof reasonably believed in good faith by FFC
to have been validly executed.

d) FFC may rely and shall be protected in acting upon any signature,
instruction, request, letter of transmittal, certificate, opinion of
counsel, statement, instrument, report, notice, consent, order, or
other paper document believed by it to be genuine and to have been
signed or presented by the purchaser, Fund or other proper party or
parties.

SECTION 12. COMPENSATION

(a) FEE. For the services provided by FFC pursuant to this Agreement, the
Fund shall pay to FFC a fee with respect to each Series as calculated in
accordance with Appendix B hereto. These fees shall be paid monthly in advance.
Fees will begin to accrue for each Series on the latter of the effective date of
this Agreement or the date of commencement of operations of the Series.

(b) REIMBURSEMENT OF EXPENSES. The Fund shall reimburse FFC for all out
of pocket and ancillary costs incurred in providing any fund accounting services
hereunder, including the cost of (or appropriate share of the cost of) (i)
pricing services; (ii) any and all forms and stationery used or specially
prepared for the purpose; (iii) postage; (iv) telephone services; (v) bank fees;
(vi) electronic or facsimile transmission; and (vii) any items the Fund is
responsible for as described in the Fund's agreements with FFC, Forum Financial
Services, Inc., Schroder Capital Management International Inc., or Schroder Fund
Advisers Inc. The Fund shall reimburse FFC for all expenses and employee time
attributable to any review of the Fund's accounts and records by the Fund's
independent public accountants or any regulatory body outside of routine and
normal periodic reviews. In the event that this agreement is terminated and a
successor fund accountant is appointed, FFC shall be reimbursed for reasonable
charges and disbursements associated with promptly transferring to the successor
fund accountant the original or copies of all books and records maintained by
FFC hereunder, and cooperating with, and providing reasonable assistance to, the
successor fund accountant in the establishment of the books and records
necessary to carry out the successor fund accountant's responsibilities.

SECTION 13. EFFECTIVENESS, DURATION AND TERMINATION.

(a) EFFECTIVENESS. This Agreement shall become effective as of the date
first above written with respect to the International Equity Fund, Schroder U.S.
Equity Fund, Schroder U.S. Smaller Companies Fund and Schroder Emerging Markets
Fund Institutional Portfolio and shall relate to any other Series as of the date
on which FFC first calculates the NAV for that Series.
<PAGE>

(b) DURATION. This Agreement shall remain in effect indefinitely.

(c) TERMINATION. This Agreement may be terminated with respect to any
Series, or Class thereof, without the payment of any penalty, (i) by a vote of a
majority of the Fund's Board on 60 days' written notice to FFC or (ii) by FFC on
not less than 60 days' written notice to the Fund. Such termination shall be
effective as of the date specified in the notice. Upon receiving notice of
termination by FFC, the Fund shall use its best efforts to obtain a successor
fund accountant. Upon receipt of written notice from the Fund of the
appointment of the successor fund accountant and Oral or Written Instructions,
and upon payment to FFC of all fees owed through the effective termination date,
and reimbursement for reasonable charges and disbursements (as described in
Section 12), FFC shall promptly transfer to the successor fund accountant the
original or copies of all books and records maintained by FFC hereunder
including, in the case of records maintained on computer systems, copies of such
records in machine-readable form, and shall cooperate with, and provide
reasonable assistance to, the successor fund accountant in the establishment of
the books and records necessary to carry out the successor fund accountant's
responsibilities. For so long as FFC continues to perform any of the services
contemplated by this Agreement after termination of this Agreement (as agreed to
by the Fund and FFC), the provisions of Sections 11 and 12 hereof shall continue
in full force and effect.

SECTION 14. SERVICE DAYS. Nothing contained in this Agreement is intended
to or shall require FFC, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on days other than a Fund Business Day such days shall
be performed on, and as of, the next Fund Business Day. Notwithstanding the
foregoing, FFC shall compute the net asset value of the Fund on each day
required pursuant to Rule 22 c-1 promulgated under the Act.

SECTION 15. BOARD RESOLUTIONS. The Fund shall file with FFC a certified
copy of the operative resolution of the Board authorizing the execution of
Written Instructions or the transmittal of Oral Instructions.

SECTION 16. NOTICES. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing and
shall be delivered in person, or by first-class mail, postage prepaid, or by
overnight or two-day private mail service to the respective party. Notice to
the Fund shall be given as follows until further notice:

Schroder Capital Funds (Delaware)
Two Portland Square
Portland, Maine 04101
<PAGE>

Notice to FFC shall be given as follows until further notice:

Forum Financial Corp.
Two Portland Square
Portland, Maine 04101

SECTION 17. REPRESENTATIONS AND WARRANTIES. The Fund represents and
warrants to FFC that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly authorized by
resolution of the Board. FFC represents and warrants to the Fund that the
execution and delivery of this Agreement by the undersigned officer of FFC has
also been duly and validly authorized.

SECTION 18. MISCELLANEOUS.

a) MODIFICATIONS AND AMENDMENTS. No provisions of this Agreement may be
amended or modified in any manner except by a written agreement
properly authorized and executed by both parties hereto.

d) SECTION AND PARAGRAPH HEADINGS. Section and Paragraph headings in
this Agreement are included for convenience only and are not to be
used to construe or interpret this Agreement.

g) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York.
<PAGE>

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

SCHRODER CAPITAL FUNDS (DELAWARE)

___________________________________
Laura E. Luckyn-Malone, President

FORUM FINANCIAL CORP.

___________________________________
John Y. Keffer, President

10
<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
FUND ACCOUNTING AGREEMENT
APPENDIX A

SERIES OF SCHRODER CAPITAL FUNDS (DELAWARE)
AS OF JANUARY 9, 1995

International Equity Fund

Schroder U.S. Equity Fund

Schroder U.S. Smaller Companies Fund

Schroder Emerging Markets Fund Institutional Portfolio

Schroder Latin American Fund

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
FUND ACCOUNTING AGREEMENT
APPENDIX B

Standard Fee per Series with one Class $36,000/year

Fee for each additional Class $12,000/year

Plus additional surcharges for each of:

Global or International Funds $24,000/year

Tax Free Money Market Funds $12,000/year

Series with more than 25% of net assets
invested in asset backed securities $1000/month

Series with more than 50% of net assets
invested in asset backed securities $1000/month

Series with more than 100 security positions $1,000/month

Series with a monthly portfolio turnover
rate of 10% or greater $1,000/month

Monthly surcharges are determined based upon the total assets or security
positions as of the end of the prior month and on the portfolio turnover rate
for the prior month. Portfolio turnover rate shall have the meaning ascribed
thereto in Securities and Exchange Commission Form N-1A.

Notwithstanding the foregoing, FFC agrees, with respect to the Schroder
U.S. Smaller Companies Fund, to waive its surcharge for Series with more than
100 security positions for so long as the number of security positions remains
close to 100 security positions. If the number of security positions held by
Schroder U.S. Smaller Companies Fund materially exceeds 100 security positions
for any consecutive two month period, FFC shall have the right, following
notification to the Fund, to be paid the surcharge set forth above for Series
having more than 100 security positions.

During any period in which International Equity Fund or Schroder Emerging
Markets Fund Institutional Portfolio, or any other series of the Trust, invests
all (or substantially all) of its
<PAGE>

investment assets in a registered, open-end management investment company, or
separate series thereof, in accordance with Section 12(d)(1)(E) under the
Investment Company Act of 1940, the fee payable hereunder shall be $12,000
annually for each series so invested.

A3.

<PAGE>

JACOBS PERSINGER & PARKER
77 Water Street
New York, New York 10005

January 9, 1996

Schroder Capital Funds (Delaware)
Two Portland Square
Portland, Maine 04101

Dear Sir or Madam:

We have acted as special counsel for Schroder Capital Funds (Delaware), a
Delaware business trust with transferable shares (the "Trust"), in connection
with the organization of the Trust, the registration of the Trust under the
Investment Company Act of 1940 (the "1940 Act") and the registration of an
indefinite number of shares of beneficial interest of its International Equity
Fund, Schroder U.S. Equity Fund, Schroder Smaller Companies Fund and Schroder
Emerging Markets Fund Institutional Portfolio (the "Funds") under the
Securities Act of 1933.

As such counsel, we have reviewed the Registration Statement on Form
N-1A (the "Registration Statement") and the prospectuses contained therein
(the "Prospectuses") relating to such shares and have examined and relied
upon such records of the Trust and such other documents, including
certificates as to factual matters, as we have deemed necessary to render the
opinions expressed herein.

Based on such examination, we are of the opinion that:

1. The Trust has been duly organized and is validly existing as a business
trust with transferable shares of the type commonly called a Delaware business
trust.

2. The Trust is authorized to issue an unlimited number of shares. The
currently issued and outstanding shares of each class of each of the Funds of
the Trust have been validly and legally issued and are fully paid and non-
assessable shares of beneficial interest of the Trust (the "Outstanding
Shares"). The shares to be offered for sale by the Prospectuses (the
"Registered Shares") and the Outstanding Shares have been duly and validly
authorized by all trust requisite action.

<PAGE>

3. When the Registered Shares have been duly sold, issued, and paid for as
contemplated by the Prospectuses, they will be validly and legally issued, fully
paid and non-assessable by the Trust.

Our opinion above stated is expressed as members of the bar of the State of
New York. This opinion does not extend to the securities or "blue sky" laws of
any state.

We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to our firm under the caption "Counsel" in the Statement of Additional
Information of the Funds.

Very truly yours,

/s/ Jacobs Persinger & Parker

-A6-

<PAGE>

[COOPERS & LYBRAND LETTERHEAD]

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference, into the Prospectus and
Statements of Additional Information in Post-Effective Amendment No 46 to the
Registration Statement on Form N-1A of Schroder Captial Funds (Delaware):
International Equity Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller
Companies Fund and Schroder Emerging Markets Fund Institutional Portfolio of
our reports dated December 27, 1995 on the financial statements and financial
highlights included in the October 31, 1995 Annual Reports to Shareholders of
Schroder Capital Funds, Inc.: International Equity Fund, Schroder U.S. Equity
Fund, Schroder U.S. Smaller Companies Fund and Schroder Emerging Markets Fund
Institutional Portfolio.

We further consent to the references to our Firm under the headings "Financial
Highlights" in the Prospectus and "Independent Accountants" in the Statements of
Additional Information.

/s/ COOPERS & LYBRAND L.L.P.

Boston, Massachusetts COOPERS & LYBRAND L.L.P.
January 9, 1996

<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)

DISTRIBUTION PLAN

WHEREAS, Schroder Capital Funds (Delaware) (the "Trust") is registered as
an open-end management investment company under the Investment Company Act of
1940 (the "1940 Act") and is authorized to issue shares of common stock in
separate classes of shares with each such class representing interests in a
separate portfolio of securities and other assets; and

WHEREAS, the Trust intends to engage investment advisers (the "Advisers")
to render investment management services with respect to separate investment
portfolios (the "Funds") as the Trust's Board of Trustees shall establish and
designate from time to time;

WHEREAS, the Trust intends itself, or through an Adviser or a broker-dealer
registered under the Securities Exchange Act of 1934 (such Adviser or broker-
dealer, if so designated, shall be hereinafter referred to as the
"Distributor"), to distribute shares of the Trust;

WHEREAS, the Board of Trustees of the Trust has determined to adopt this
Distribution Plan (the "Plan") in accordance with the requirements of the 1940
Act.

NOW THEREFORE, the Trust hereby adopts the Plan on the following terms and
conditions:

1. The Plan shall pertain to such Funds as shall be designated from time
to time by the Trustees of the Trust as listed in Appendix A.

2. The Trust will pay directly or will reimburse the Distributor for
costs and expenses incurred in connection with the distribution and marketing of
shares of the Funds listed in Appendix A. Such distribution costs and expenses
would include (i) advertising by radio, television, newspapers, magazines,
brochures, sales literature, direct mail or any other form of advertising, (ii)
expenses of sales employees or agents of the Distributor, including salary,
commissions, travel and related expense for services in connection with the
distribution of shares, (iii) payments to broker-dealers and financial
institutions for services in connection with the distribution of shares,
including fees calculated with reference to the average daily net asset value of
shares held by shareholders who have a brokerage or other service relationship
with the broker-dealer of institution receiving such fees, (iv) costs of
printing prospectuses and other materials to be given or sent to prospective
investors and (v) such other similar services as the Trustees determine to be
reasonably calculated to result in the sale of Fund shares.

The Distributor will be reimbursed for such costs, expenses or payments on
a monthly basis, subject to annual limits based on each Fund's average daily net
assets as shall be set forth with respect to a Fund listed in Appendix A.
Payments made out of or charged against the assets of a Fund must be in payment
of, or reimbursement for, distribution services rendered for or on
<PAGE>

behalf of the Fund. The Distributor also may receive and retain brokerage
commissions with respect to portfolio transactions for a portfolio to the extent
not prohibited by the Prospectus or Statement of Additional Information for the
Fund.

3. The Funds shall pay all costs and expenses in connection with
preparation, printing and distribution of its prospectuses other than as
contemplated by paragraph 2 and the implementation and operation of the Plan.

4. The Plan shall not take effect with respect to a Fund until it has
been approved by a vote of at least a majority (as defined in the 1940 Act) of
the outstanding voting securities of that Fund. With respect to the submission
of the Plan for such a vote, it shall have been effectively approved with
respect to the Fund if a majority of the outstanding voting securities of the
Fund votes for approval of the Plan, notwithstanding that the matter has not
been approved by a majority of the outstanding voting securities of the Trust.
The Plan shall take effect with respect to any other Fund established in the
Trust provided the Plan is approved with respect to such Fund as set forth in
this paragraph and provided the Trustees have determined it to be listed in
Appendix A as set forth in paragraph 1.

5. The Plan shall not take effect with respect to a Fund until it has
been approved together with any related agreements, by votes of a majority of
both (a) the Board of Trustees of the Trust, and (b) those Trustees of the Trust
who are not "interested persons" of the Fund (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to it (the "Plan Trustees"), cast in person at a meeting
(or meetings) called for the purpose of voting on the Plan and such related
agreements.

6. The Plan shall continue in effect with respect to a Fund so long as
such continuance is specifically approved at least annually in the manner
provided for approval of the Plan in paragraph 5.

7. Any person authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Plan or any related agreement shall provide
to the Trust's Board of Trustees, and the Board shall review at least quarterly,
a written report of the amounts so expended and the purposes for which such
expenditures were made.

8. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated with respect to a portfolio
at any time, without payment of any penalty, by vote of a majority of the
outstanding voting securities of the Fund, on not more than sixty days written
notice to any other party to the agreement; and (b) that such agreement shall
terminate automatically in the event of its assignment.

9. The Plan may be terminated at any time, without payment of any
penalty, with respect to a Fund by vote of a majority of the Plan Trustees, or
by vote of a majority of the outstanding voting securities of the Fund.

11
<PAGE>

10. The Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the costs which a
Fund may bear for distribution pursuant to the Plan shall be effective only upon
approval by a vote of the outstanding voting securities of the Fund, and (b) any
material amendments of the terms of the Plan shall become effective only upon
approval as provided in paragraph 5 hereof.

11. While the Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the 1940 Act) of the Trust shall
be committed to the discretion of the Trustees who are not interested persons of
the Trust.

12. The Trust shall preserve copies of the Plan and any related
agreements, and all reports made pursuant to paragraph 7 hereof, for a period of
not less than six years from the date of the Plan, the agreements or such
report, as the case may be, the first two years of which shall be in an easily
accessible place.

12
<PAGE>

DRAFT

SCHRODER CAPITAL FUNDS (DELAWARE)
DISTIBUTION PLAN

APPENDIX A

Fee as a % of
the Annual Average Daily
Fund Name Net Assets of the Fund
- --------- ------------------------

Schroder U.S. Smaller Companies Fund 0.50%

Schroder Latin American Fund 0.50%

International Equity Fund 0.50%

Schroder Emerging Markets Fund Institutional Portfolio 0.50%