SCHRODER CAPITAL FUNDS /DELAWARE/, 497, 1998-12-07

SCHRODER CAPITAL FUNDS /DELAWARE/
497, 1998-12-07

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SCHRODER CAPITAL FUNDS (DELAWARE)

SCHRODER GREATER CHINA FUND

PROSPECTUS

ADVISOR SHARES

NOVEMBER 30, 1998

SCHRODER GREATER CHINA FUND (the "Fund") seeks long-term growth of capital by
investing in securities of issuers domiciled or doing business in China, Hong
Kong SAR, and Taiwan. The Fund is a diversified series of shares of Schroder
Capital Funds (Delaware). Schroder Capital Management International Inc.
serves as investment adviser to the Fund.

This Prospectus explains concisely the information that a prospective investor
should know before investing in Advisor Shares of the Fund. Please read it
carefully and keep it for future reference. INVESTORS CAN FIND MORE DETAILED
INFORMATION ABOUT SCHRODER CAPITAL FUNDS (DELAWARE) (THE "TRUST") IN THE
NOVEMBER 30, 1998 STATEMENT OF ADDITIONAL INFORMATION, AS AMENDED FROM TIME TO
TIME. FOR A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION, PLEASE CALL
1-800-290-9826. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference. The Prospectus and the Statement of Additional Information are
available along with other related materials for reference on the SEC's Internet
Web Site (http://www.sec.gov).

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

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.

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FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
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<S> <C> <C>

SCHRODER CAPITAL FUNDS (DELAWARE) 1-800-290-9826 SCHRODER SERIES TRUST 1-800-464-3108

SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER EMERGING MARKETS FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER MIDCAP VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. DIVERSIFIED GROWTH FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER MICRO CAP FUND

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SUMMARY OF EXPENSES

Expenses are one of several factors to consider when investing in Advisor Shares
of the Fund. The "Shareholder Transaction Expenses" table below summarizes the
maximum transaction costs you would incur by investing in Advisor Shares of the
Fund. "Annual Operating Expenses" show the expenses the Fund expects to incur
during its first full fiscal year. The Example shows the cumulative expenses
attributable to a hypothetical $1,000 investment in the Fund over specified
periods.

SHAREHOLDER TRANSACTION EXPENSES

Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Purchase Charge (based on amount invested) None
Redemption Charge (based on net asset value of shares redeemed) None

ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Management Fees (after expense limitation) (1)(2) ..............0.91%
12b-1 Fees(3) .................0%
Other Expenses (after expense limitation) ..............1.34%
- ----------------------
Total Fund Operating Expenses (after expense limitation) ..............2.25%
- ----------------------

(1) Management Fees reflect the fees paid by the Fund for investment advisory
and administrative services.
(2) Management Fees and Total Operating Expenses reflect expense limitations
currently in effect. See "Management of the Fund -- Expenses." In the
absence of the expense limitation, Management Fees, Other Expenses, and
Total Fund Operating Expenses would be 1.15%, 1.34%, and 2.49%,
respectively.
(3) The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, with respect to its Advisor
Shares. Although the Trustees have not currently authorized payments under
the Distribution Plan, payments by a Fund under the Shareholder Service
Plan, which will not exceed 0.25% of the Fund's average daily net assets,
will be deemed to have been made pursuant to the Distribution Plan to the
extent such payments may be considered to be primarily intended to result
in the sale of the Fund's Advisor Shares. See "How to Buy Shares --
Distributor and Distribution Plan."

EXAMPLE

Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period.

1 YEAR 3 YEARS
Assuming no redemption $23 $70
Assuming full redemption at end of period $23 $70

THE ANNUAL OPERATING EXPENSES TABLE AND EXAMPLE DO NOT REPRESENT PAST OR FUTURE
EXPENSE LEVELS. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. FEDERAL
REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL ANNUAL
RETURN WILL VARY.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Schroder Greater China Fund's investment objective is to seek long-term growth
of capital. The Fund is designed for investors seeking growth of capital
primarily through a diversified portfolio of common stocks and other securities
of companies located in China, Hong Kong SAR and Taiwan. Dividend and interest
income is only an incidental consideration. The Fund is not intended to be a
complete investment program, and there is no assurance it will achieve its
objective.

The Fund will invest primarily in securities of companies located in China, Hong
Kong SAR, and Taiwan. The Fund's investments will normally include common
stocks, preferred stocks, securities convertible into common stocks or preferred
stocks, and warrants to purchase common stocks or preferred stocks. The Fund may
also invest to a lesser extent in debt securities and other types of investments
if SCMI believes they would help achieve the Fund's objective. The Fund may hold
a portion of its assets in cash and money market instruments.

It is anticipated that under normal market conditions the Fund will invest at
least 65% of its total assets in securities of companies located in China, Hong
Kong SAR and Taiwan. The Fund will consider an issuer of securities to be
located in China, Hong Kong SAR or Taiwan if it is organized under the laws of
China, Hong Kong SAR or Taiwan (or any political subdivision thereof); its
primary securities trading market is in China, Hong Kong SAR or Taiwan; at least
50% of the issuer's revenues or profits are derived from goods produced or sold,
investments made, or services performed in China, Hong Kong SAR or Taiwan; or at
least 50% of its assets are situated in China, Hong Kong SAR or Taiwan. Because
the Fund's investments will be concentrated in securities of issuers located in
China, Hong Kong SAR and Taiwan, the Fund will be more susceptible to the risks
of investing in those countries than would a fund investing in a geographically
more diversified portfolio. See "Special Risks of investing in China, Hong Kong
SAR and Taiwan," below.

The Fund will not limit its investments to any particular type of company. The
Fund may invest in companies, large or small, which SCMI believes offer the
potential for long-term growth of capital. These companies, many of which have
equity market capitalizations below $1 billion, may present greater
opportunities for growth of capital than other companies, but may also involve
greater risk. They may have limited product lines, markets or financial
resources, or may depend on a limited management group. Their securities may
trade less frequently and in limited volume, and only in the over-the-counter
market or on a regional securities exchange. As a result, these securities may
fluctuate in value more than those of larger, more established companies.

Debt securities in which the Fund may invest will generally be rated at least
Baa or BBB by a nationally recognized rating agency, such as Standard & Poor's
("S&P") or Moody's Investors Service, Inc. ("Moody's"). Debt securities rated
Baa or BBB (and comparable unrated securities) have speculative characteristics
and may be more likely to exhibit a weakened capacity to pay interest and repay
principal under adverse economic conditions. To the extent a security is
assigned a different rating by one or more of the various rating agencies, SCMI
will use the highest rating assigned by any agency in determining compliance
with the foregoing investment limitations.

SPECIAL RISKS OF INVESTING IN CHINA, HONG KONG SAR AND TAIWAN. Investment in
China, Hong Kong SAR and Taiwan entails significant risks. China is a communist
country, and there can be no assurance that economic or market reforms which
have occurred in recent years will continue, or that they will not be scaled

<PAGE>

back. In particular, it is possible that political instability, including
changes of leadership at various levels of government within China or a
political reaction against capitalism, will lead to economic uncertainty or to
changes in economic or market conditions which are adverse to investments in
securities of companies organized or doing business in China.

Relations between China and certain other Asian nations have historically been
unfriendly and at times hostile. Increased hostility between China and such
nations would likely have an adverse impact on the values of the Fund's
investments in China.

The People's Republic of China gained control of Hong Kong in July 1997. Changes
to political, economic, or market conditions in Hong Kong as a result of China's
control could adversely affect the values of investments in companies organized
or doing business there.

China continues to claim sovereignty over Taiwan, and continuing hostility
between China and Taiwan may have an adverse effect on investments in either
country, or make investment in such countries impracticable or impossible.
Escalation of hostility between the two countries would likely have a
significant adverse impact on the values of the Fund's investments in both
countries.

Investments in China and Taiwan are also subject to the risks described below
under "Foreign securities."

Investment in China and Taiwan involves risks not present in most other mutual
funds. The Fund is suitable only for long-term investors who can bear the risks
of an investment in those countries. An investment in the Fund should make up
only one portion of an otherwise diversified portfolio of investments.
The net asset value of the Fund will likely fluctuate substantially.

OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS

The Fund may engage in the following investment practices, each of which
involves certain special risks. The SAI contains more detailed information about
these practices (some of which may be considered "derivative" investments).

FOREIGN SECURITIES. Investments in foreign securities entail certain risks.
There may be less information publicly available about a foreign issuer than
about a U.S. issuer, and foreign issuers are not generally subject to
accounting, auditing, and financial reporting standards and practices comparable
to those in the United States. The securities of some foreign issuers are less
liquid and at times more volatile than securities of comparable U.S. issuers.
Foreign brokerage commissions and other fees are also generally higher than in
the United States. Foreign settlement procedures and trade regulations may
involve certain risks (such as delay in payment or delivery of securities or in
the recovery of the Fund's assets held abroad) and expenses not present in the
settlement of domestic investments. The willingness and ability of sovereign
issuers to pay principal and interest on government securities depends on
various economic factors, including without limitation the issuer's balance of
payments, overall debt level, and cash flow considerations related to the
availability of tax or other revenues to satisfy the issuer's obligations.

In addition, there may be a possibility of nationalization or expropriation of
assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability, and diplomatic developments that could
affect the value of the Fund's investments in certain foreign countries. Legal
remedies available to investors in certain foreign countries may be more limited
than those available with respect to investments in the United States or in
other foreign countries. In the case of securities issued by a foreign

<PAGE>

governmental entity, the issuer may in certain circumstances be unable or
unwilling to meet its obligations on the securities in accordance with their
terms, and the Fund may have limited recourse available to it in the event of
default. The laws of some foreign countries may limit the Fund's ability to
invest in securities of certain issuers located in those foreign countries.
Special tax considerations apply to foreign securities. The Fund may buy or sell
foreign currencies and options and futures contracts on foreign currencies for
hedging purposes in connection with its foreign investments. Except as otherwise
provided in this prospectus, there is no limit on the amount of the Fund's
assets that may be invested in foreign securities.

A change in the value of foreign currencies against the U.S. dollar will result
in a change in the U.S. dollar value of the Fund's assets and the Fund's income
available for distribution. In addition, although at times most of the Fund's
income may be received or realized in these currencies, the Fund will be
required to compute and distribute its income in U.S. dollars. Therefore, if the
exchange rate for any such currency declines after the Fund's income has been
earned and translated into U.S. dollars but before payment, the Fund could be
required to liquidate portfolio securities to make such distributions.
Similarly, if an exchange rate declines between the time the Fund incurs
expenses in U.S. dollars and the time such expenses are paid, the amount of such
currency required to be converted into U.S. dollars in order to pay such
expenses in U.S. dollars will be greater than the equivalent amount in any such
currency of such expenses at the time they were incurred.

In determining whether to invest in debt securities of foreign issuers, Schroder
will consider the likely impact of foreign taxes on the net yield available to
the Fund and its shareholders. Income received by the Fund from sources within
foreign countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by the Fund will reduce its
net income available for distribution to shareholders.

China and Taiwan are "emerging markets" countries, and so subject to additional
risks. The prices of securities of issuers in emerging market countries are
subject to greater volatility than those of issuers in many more developed
countries. Investments in emerging market countries are subject to the same
risks applicable to foreign investments generally, although those risks may be
increased due to conditions in such countries. For example, the securities
markets and legal systems in emerging market countries may only be in a
developmental stage and may provide few, or none, of the advantages or
protections of markets or legal systems available in more developed countries.
Although many of the securities in which the Fund may invest are traded on
securities exchanges, they may trade in limited volume, and the exchanges may
not provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Fund may also invest a substantial
portion of its assets in securities traded in the over-the-counter markets in
such countries and not on any exchange, which may affect the liquidity of the
investment and expose the Fund to the credit risk of its counterparties in
trading those investments. Emerging market countries may experience extremely
high rates of inflation, which may adversely affect these countries' economies
and securities markets.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Changes in currency exchange rates will
affect the U.S. dollar values of securities denominated in foreign currencies.
Exchange rates between the U.S. dollar and other currencies fluctuate in
response to forces of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and other economic
and financial conditions, government intervention, speculation, and other
factors, many of which may be difficult (if not impossible) to predict. The Fund
may engage in foreign currency exchanges transactions to protect against
uncertainty in the level of future exchange rates. Although the strategy of

<PAGE>

engaging in foreign currency exchange transactions could reduce the risk of loss
due to a decline in the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency.

Currently, only a limited market exists for currency exchange transactions
relating to Chinese and Taiwanese currencies. This may limit the Fund's ability
to hedge its investments in those markets or otherwise to engage in the foreign
currency exchange transactions described below.

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

SCMI may seek to enhance the Fund's investment return through active currency
management. SCMI may buy or sell foreign currencies for the Fund, on a spot or
forward basis, in an attempt to profit from inefficiencies in the pricing of
various currencies or of debt securities denominated in those currencies.

When investing in foreign securities, the Fund usually effects currency exchange
transactions on a "spot" (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market. The Fund incurs foreign exchange expenses in converting
assets from one currency to another.

A forward currency contract is an obligation to purchase or sell a specific
currency at a future date (which may be any fixed number of days from the date
of the contract agreed upon by the parties) at a price set at the time of the
contract. Forward contracts do not eliminate fluctuations in the underlying
prices of securities and expose the Fund to the risk that the counterparty is
unable to perform. Forward contracts are not exchange traded, and there can be
no assurance that a liquid market will exist at a time when the Fund seeks to
close out a forward contract. These contracts involve a risk of loss if SCMI
fails to predict accurately changes in relative currency values, the direction
of stock prices or interest rates and other economic factors.

From time to time, the Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign currency and
may at times involve currencies in which its portfolio securities are not then
denominated ("cross hedging"). From time to time, the Fund may also engage in
"proxy" hedging, whereby the Fund would seek to hedge the value of portfolio
holdings denominated in one currency by entering into an exchange contract on a
second currency, the valuation of which SCMI believes correlates to the value of
the first currency. Cross hedging and proxy hedging transactions involve the
risk of imperfect correlation between changes in the values of the currencies to
which such transactions relate and changes in the value of the currency or other
asset or liability that is the subject of the hedge.

INVESTMENTS IN SMALLER COMPANIES. The Fund may invest all or a substantial
portion of its assets in securities issued by small companies. Such companies
may offer greater opportunities for capital appreciation than larger companies,
but investments in such companies may involve certain special risks. Such
companies may have limited product lines, markets, or financial resources and
may be dependent on a limited management group. While the markets in securities
of such companies have grown rapidly in recent years, such securities may trade
less frequently and in smaller volume than more widely held securities. The

<PAGE>

values of these securities may fluctuate more sharply than those of other
securities, and the Fund may experience some difficulty in establishing or
closing out positions in these securities at prevailing market prices. There may
be less publicly available information about the issuers of these securities or
less market interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets.

Some securities of smaller issuers may be restricted as to resale or may
otherwise be highly illiquid. The ability of the Fund to dispose of such
securities may be greatly limited, and the Fund may have to continue to hold
such securities during periods when SCMI would otherwise have sold the
securities. It is possible that SCMI or its affiliates or clients may hold
securities issued by the same issuers, and may in some cases have acquired the
securities at different times, on more favorable terms, or at more favorable
prices, than the Fund.

OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in a variety of
transactions involving the use of options and futures contracts. The Fund may
engage in such transactions for hedging purposes or, to the extent permitted by
applicable law, to increase its current return.

The Fund may seek to increase its current return by writing covered call options
and covered put options on its portfolio securities or other securities in which
it may invest. The Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit. The Fund may also buy and sell put and call options on such
securities for hedging purposes. When the Fund writes a call option on a
portfolio security, it gives up the opportunity to profit from any increase in
the price of the security above the exercise price of the option; when it writes
a put option, the Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current market price of the
security. The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. The Fund may also from
time to time buy and sell combinations of put and call options on the same
underlying security to earn additional income.

The Fund may buy and sell index futures contracts. An "index future" is a
contract to buy or sell units of a particular index at an agreed price on a
specified future date. Depending on the change in value of the index between the
time when the Fund enters into and terminates an index future transaction, the
Fund may realize a gain or loss. The Fund may also purchase warrants, issued by
banks or other financial institutions, whose values are based on the values from
time to time of one or more securities indices.

The Fund may purchase and sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.

The Fund may also purchase and sell put and call options on foreign currencies,
futures contracts on foreign currencies, and options on foreign currency futures
contracts as an alternative, or in addition to, the foreign currency exchange
transactions described above. Such transactions are similar to options and
futures contracts on securities, except that they typically contemplate that one
party to a transaction will deliver one foreign currency to the other in return
for another currency (which may or may not be the U.S. dollar).

RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS. Options and futures
transactions involve costs and may result in losses. The use of options and
futures involves certain special risks, including the risks that the Fund may be

<PAGE>

unable at times to close out such positions, that hedging transactions may not
accomplish their purpose because of imperfect market correlations, or that SCMI
may not forecast market movements correctly.

The effective use of options and futures strategies is dependent on, among other
things, the Fund's ability to terminate options and futures positions at times
when SCMI deems it desirable to do so. Although the Fund will enter into an
option or futures contract position only if SCMI believes that a liquid
secondary market exists for that option or futures contract, there is no
assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.

The Fund generally expects that its options and futures contract transactions
will be conducted on recognized exchanges. In certain instances, however, the
Fund may purchase and sell options in the over-the-counter markets. The Fund's
ability to terminate options in the over-the-counter markets may be more limited
than for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to the Fund. The Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of SCMI, the pricing mechanism and liquidity of the
over-the-counter markets are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. The Fund will treat
over-the-counter options (and, in the case of options sold by the Fund, the
underlying securities held by the Fund) as illiquid investments as required by
applicable law.

The use of options and futures strategies also involves the risk of imperfect
correlation between movements in the prices of options and futures contracts and
movements in the value of the underlying securities, index, or currency, or in
the prices of the securities or currencies that are the subject of a hedge. The
successful use of these strategies further depends on the ability of SCMI to
forecast market movements correctly.

Because the markets for certain options and futures contracts in which the Fund
will invest (including markets located in foreign countries) are relatively new
and still developing and may be subject to regulatory restraints, the Fund's
ability to engage in transactions using such investments may be limited. The
Fund's ability to engage in hedging transactions may be limited by certain
regulatory and tax considerations. The Fund's hedging transactions may affect
the character or amount of its distributions. The tax consequences of certain
hedging transactions have been modified by the Taxpayer Relief Act of 1997 and
are discussed in more detail in the SAI.

For more information about any of the options or futures portfolio transactions
described above, see the SAI.

SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The Fund may
lend portfolio securities to brokers, dealers, and financial institutions
meeting specified credit conditions, and may enter into repurchase agreements. .
Such activities may create taxable income in excess of the cash they generate.
These transactions must be fully collateralized at all times but involve some
risk to the Fund if the other party should default on its obligation and the
Fund is delayed or prevented from recovering its assets or realizing on the
collateral. The Fund may also purchase securities for future delivery, which may
increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.

<PAGE>

INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies or pooled vehicles, including closed-end funds, that are
advised by SCMI or its affiliates or by unaffiliated parties. The Fund may
invest in the shares of other investment companies that invest in securities in
which the Fund is permitted to invest, subject to the limits and conditions
required under the Investment Company Act of 1940 (the "1940 Act") or any
orders, rules or regulations thereunder. As a shareholder in an investment
company, the Fund would bear its ratable share of the investment company's
expenses, including its advisory and administrative fees. At the same time, the
Fund would continue to pay its own fees and expenses.

LIQUIDITY. The Fund will not invest more than 15% of its net assets in
securities determined by SCMI to be illiquid. Certain securities that are
restricted as to resale may nonetheless be resold by the Fund in accordance with
Rule 144A under the Securities Act of 1933, as amended. Such securities may be
determined by SCMI to be liquid for purposes of compliance with the limitation
on the Fund's investment in illiquid securities. There can, however, be no
assurance that the Fund will be able to sell such securities at any time when
SCMI deems it advisable to do so or at prices prevailing for comparable
securities that are more widely held.

ALTERNATIVE INVESTMENTS. At times SCMI may judge that conditions in the
securities markets make pursuing the Fund's basic investment strategy
inconsistent with the best interests of its shareholders. At such times SCMI may
temporarily use alternative strategies that are primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing these defensive
strategies, the Fund may invest without limit in securities of any kind traded
primarily in U.S. markets or in other markets outside China and Taiwan,
including in cash, money market instruments or any other securities SCMI
considers consistent with such defensive strategies. It is impossible to predict
when, or for how long, these alternative strategies would be used.

PORTFOLIO TURNOVER. The length of time the Fund has held a particular security
is not generally a consideration in investment decisions. The investment
policies of the Fund may lead to frequent changes in the Fund's investments,
particularly in periods of volatile market movements. A change in the securities
held by the Fund is known as "portfolio turnover." Portfolio turnover generally
involves some expense to the Fund, including brokerage commissions or dealer
mark-ups and other transaction costs on the sale of securities and reinvestment
in other securities. Such securities sales may result in realization of taxable
capital gain. The Fund currently expects that its portfolio turnover rate for
its first full fiscal year will not exceed 100%.

HOW TO BUY SHARES

Investors may purchase Advisor Shares of the Fund directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Forum Shareholder Services, LLC, the Fund's transfer agent (the
"Transfer Agent"). Investments also may be made through broker-dealers and other
financial institutions ("Service Organizations"). Service Organizations may
charge their customers a service fee for processing orders to purchase or sell
shares. Investors wishing to purchase Shares through their accounts at a Service
Organization should contact that organization directly for appropriate
instructions. A Service Organization is responsible for forwarding all necessary
documentation to the Trust, and may charge for its services.

The Fund's Advisor Shares are offered at the net asset value next-determined
after receipt of a completed account application (at the address set forth
below)and your purchase request in good order. The minimum initial investment is
$250,000. There is no minimum subsequent investment. A Service Organization may

<PAGE>

impose higher minimums on an initial and subsequent investment. All purchase
payments are invested in full and fractional shares. The Fund is authorized to
reject any purchase order.

Purchases may be made by mailing a check (in U.S. dollars), payable to the Fund
to:
Schroder Greater China Fund -- Advisor Shares
P.O. Box 446
Portland, Maine 04112

For initial purchases, the check must be accompanied by a completed account
application in proper form. Further documentation, such as 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 subscription request.

You may make subsequent purchases by mailing a check, by sending a bank wire, or
through your Service Organization, as indicated. All payments should clearly
indicate the shareholder's name and account number.

Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:

The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account. No.: 910-2-718187
Ref.: Schroder Greater China Fund -- Advisor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)

The wire order must specify the name of the Fund, the shares' class (I.E.,
Advisor Shares), the account name and number, address, confirmation number,
amount to be wired, name of the wiring bank, and name and telephone number of
the person to be contacted in connection with the order. If the initial
investment is by wire, an account number will be assigned, and a completed
account application must be mailed to the Fund before any transaction will be
effected. Wire orders received prior to the close of the New York Stock Exchange
on a day when the Exchange is open for trading are processed at the net asset
value next determined as of that day. Wire orders received after the close of
the New York Stock Exchange are processed at the net asset value next
determined.

The Fund's Transfer Agent establishes for each shareholder of record an open
account to which all shares purchased and all reinvested dividends and other
distributions are credited. Although most shareholders elect not to receive
share certificates, certificates for full shares can be obtained by written
request to the Fund's Transfer Agent. No certificates are issued for fractional
shares.

The Transfer Agent will deem an account lost if six months have passed since
correspondence to the shareholder's address of record is returned, unless the
Transfer Agent determines the shareholder's new address. When an account is
deemed lost, dividends and other distributions are automatically reinvested. In
addition, the amount of any outstanding checks for dividends and other
distributions that have been returned to the Transfer Agent are reinvested, and
the checks are canceled.

<PAGE>

DISTRIBUTOR AND DISTRIBUTION PLAN

Schroder Fund Advisors Inc. ("Schroder Advisors"), 787 Seventh Avenue, New York,
New York 10019, serves as Distributor of the Fund's shares. Schroder Advisors
was organized in 1989 as a registered broker-dealer to serve as administrator
and distributor of the Fund and other mutual funds.

The Fund has adopted a Distribution Plan pursuant to which the Fund may pay
Schroder Advisors or others compensation in an amount limited in any fiscal year
to the annual rate of 0.50% of the Fund's average daily net assets attributable
to its Advisor Shares. Although, the Trustees have not currently authorized
payments under the Distribution Plan, payments by the Fund under the Shareholder
Service Plan, which will not exceed 0.25% of a Fund's average daily net assets,
will be deemed to have been made pursuant to the Distribution Plan to the extent
such payments may be considered to be primarily intended to result in the sale
of the Fund's Advisor Shares.

SHAREHOLDER SERVICE PLAN

The Trust has adopted a shareholder service plan (the "Service Plan") for the
Advisor Shares of the Fund. Under the Service Plan, the Fund pays fees to
Schroder Advisors or others at an annual rate of up to 0.25% of the average
daily net assets of the Fund represented by Advisor Shares. Schroder Advisors
may enter into shareholder service agreements with Service Organizations
pursuant to which the Service Organizations provide administrative support
services to their customers who are Fund shareholders. In return for providing
these support services, a Service Organization may receive payments from
Schroder Advisors at a rate not exceeding 0.25% of the average daily net assets
of the Advisor Shares of the Fund for which the Service Organization is the
Service Organization of record. These administrative services may include, but
are not limited to, the following functions: establishing and maintaining
accounts and records relating to clients of the Service Organization; answering
shareholder inquiries regarding the manner in which purchases, exchanges, and
redemptions of Advisor Shares of the Trust may be effected and other matters
pertaining to the Trust's services; providing necessary personnel and facilities
to establish and maintain shareholder accounts and records; assisting
shareholders in arranging for processing purchase, exchange, and redemption
transactions; arranging for the wiring of funds; guaranteeing shareholder
signatures in connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request. Payments to a particular Service Organization under the
Service Plan are calculated by reference to the average daily net assets of
Advisor Shares owned beneficially by investors who have a service relationship
with the Service Organization. Some Service Organizations may impose additional
conditions or fees, such as requiring clients to invest more than the minimum
amounts required by the Trust for initial or subsequent investments or charging
a direct fee for services. Such fees would be in addition to any amounts which
might be paid to the Service Organization by Schroder Advisors.
Please contact your Service Organization for details.

RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

Advisor Shares are offered in connection with tax-deferred retirement plans,
including traditional and Roth IRAs. 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, investors should consult their
tax advisors.

<PAGE>

subsequent investment is $250. Generally, contributions and investment earnings
in a traditional IRA grow tax-deferred until withdrawn. In contrast,
contributions to a Roth IRA are not tax-deductible, but investment earnings
generally grow tax-free. IRAs are available to individuals (and their spouses)
who receive compensation or earned income whether or not they are active
participants in a tax-qualified or government-approved retirement plan. An IRA
contribution by an individual or spouse who 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 qualified plan.
Consult your tax advisor.

EXCHANGES

You may exchange the Fund's Advisor Shares for Advisor Shares of any fund
offered by the Schroder family of funds so long as the investment meets the
initial investment minimum of the fund being purchased, and the shareholder
maintains the applicable minimum account balance in the fund in which the Shares
are held. Exchanges between funds are made at net asset value.

For federal income tax purposes an exchange is considered to be a sale of shares
on which a shareholder may realize a capital gain or loss. If a shareholder owns
Advisor Shares through a Service Organization, the shareholder must make an
exchange through the Service Organization. If a shareholder owns Advisor Shares
directly, the shareholder may make an exchange by calling the Transfer Agent at
1-800-344-8332 (see "How to Sell Shares -- Telephone Requests") or by mailing
written instructions to Schroder Capital Funds (Delaware), P.O. Box 446,
Portland, Maine 04112. Exchange privileges may be exercised only in those states
where shares of the other funds of the Schroder family of funds may legally be
sold. Exchange privileges may be amended or terminated at any time upon sixty
(60) days' notice.

HOW TO SELL SHARES

A shareholder can sell his or her Advisor Shares in the Fund to the Fund any day
the New York Stock Exchange is open, either through the Service Organization or
directly to the Fund. If Shares are held in the name of a Service Organization,
a shareholder may only sell the shares through that Service Organization. The
Trust will only redeem shares for which it has received payment.

Advisor Shares are redeemed at their next determined net asset value after
receipt by the Fund (see the address set forth under "How to Buy Shares") of a
redemption request in proper form. Redemption requests that are received prior
to the close of the Exchange on a day on which the Exchange is open are
processed at the net asset value determined as of that day. Redemption requests
that are received after the close of the Exchange are processed at the net asset
value next determined. See "Net Asset Value".

TELEPHONE REQUESTS

Redemption requests may be made by a shareholder of record by telephoning the
Transfer Agent at the telephone number on the cover page of this Prospectus. A
shareholder must provide the Transfer Agent with the class of shares, the dollar
amount or number of shares to be redeemed, shareholder account number, 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 or otherwise in writing. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone, reasonable
procedures will be followed by the Transfer Agent to confirm that telephone
instructions are genuine. The Transfer Agent and the Trust generally will not be
liable for any losses due to unauthorized or fraudulent redemption requests, but
either or both may be liable if they do not follow these procedures. Shares for

<PAGE>

which certificates have been issued may not be redeemed by telephone. In times
of drastic economic or market change 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 a shareholder of record by letter to the Fund
specifying the class of Shares, the dollar amount or number of Shares to be
redeemed, and the shareholder account number. The letter must also 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 Transfer Agent. Such
institutions include certain banks, brokers, dealers (including municipal and
government securities brokers and dealers), credit unions and savings
associations. Notaries public are not acceptable. Further documentation may be
requested 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 1-800-290-9826.

If Advisor Shares to be redeemed are held in certificate form, the certificates
must be enclosed with the redemption request, 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 owners' 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 Trust suggests that
certificates be sent by registered mail.

ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds normally are
mailed within seven days. No redemption proceeds are mailed until checks in
payment for the purchase of the Advisor Shares to be redeemed have been cleared,
which may take up to 15 calendar days from the purchase date. Unless other
instructions are given in proper form, a check for the proceeds of a redemption
is sent to the shareholder's address of record.

The Fund may suspend the right of redemption during any period when: (1) trading
on the New York Stock Exchange is restricted or that the New York Stock Exchange
is closed; (2) the SEC has by order permitted such suspension; or (3) an
emergency (as defined by rules of the SEC) exists making disposal of portfolio
investments or determination of the Fund's net asset value not reasonably
practicable.

If the Board of Trustees determines 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 redeem Advisor Shares in whole or in part by a
distribution in kind of portfolio securities in lieu of cash. The Fund will,
however, redeem Advisor 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 Advisor 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" 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.

<PAGE>

the account falls below that amount solely as a result of market activity.
Shareholders will be notified that the value of the account is less than the
required minimum and will be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.

The Trust may also redeem shares if a shareholder owns shares of any Fund above
a maximum amount set by the Trustees. There is currently no maximum, but the
Trustees may establish one at any time, which could apply to both present and
future shareholders.

OTHER INFORMATION

DETERMINATION OF NET ASSET VALUE

The Fund calculates the net asset value of its Advisor Shares by dividing the
total value of its assets attributable to its Advisor Shares, less its
liabilities attributable to those shares, by the number of its Advisor Shares
outstanding. Shares are valued as of the close of the New York Stock Exchange (
normally 4:00 p.m. Eastern time) each day the Exchange is open. Portfolio
securities for which market quotations are readily available are stated at
market value. Short-term investments that will mature in 60 days or less are
stated at amortized cost, which approximates market value. All other securities
and assets are valued at their fair values determined by SCMI. The net asset
value of the Fund's Advisor Shares will generally differ from that of its other
classes of shares due to the variance in daily net income realized by and
dividends paid on each class of shares, and differences in the expenses of the
different classes. All assets and liabilities of the Fund denominated in foreign
currencies are valued in U.S. dollars based on the exchange rate last quoted by
a major bank prior to the time when the net asset value of the Fund is
calculated.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund distributes any net investment income and any net realized capital gain
at least annually. Distributions from net capital gain are made after applying
any available capital loss carryovers.

DISTRIBUTION OPTIONS: (1) reinvest all distributions in additional Advisor
Shares of the Fund; (2) receive distributions from net investment income in cash
while reinvesting capital-gain distributions in additional Advisor Shares; (3)
receive distributions from net investment income in additional Advisor Shares
while receiving capital-gain distributions in cash; or (4) receive all
distributions in cash. An investor can change the distribution option by
notifying the Transfer Agent in writing. If the investor does not select an
option when the account is opened, all distributions by the Fund will be
reinvested in Advisor Shares of the Fund. Investors will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the period in which the reinvestment occurs.

TAXES

The Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gain it distributes to
shareholders. The Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis.

<PAGE>

All Fund distributions will be taxable to a shareholder as ordinary income,
except that any distributions of net long-term capital gain will be taxed as
such, regardless of how long the shareholder has held the shares. Long-term
capital gain will be subject to a maximum rate of 28% or 20%, depending upon the
holding period of the portfolio investment generating the gain. Distributions
will be taxable as described above whether received in cash or in shares through
the reinvestment of distributions.

Early in each year the Trust will notify each shareholder of the amount and tax
status of distributions paid to the shareholder by the Fund for the preceding
year.

The foregoing is a summary of certain federal income tax consequences of
investing in the Fund. Investors should consult their tax advisors to determine
the precise effect of an investment in the Fund on their particular tax
situation.

CERTAIN INFORMATION REGARDING FOREIGN TAXES. Foreign governments may impose
taxes on the Fund and its investments, which generally would reduce the income
of the Fund. However, an offsetting tax credit or deduction may be available to
investors.

The Fund, provided that it is eligible to do so, intends to elect to permit its
shareholders to take a credit (or a deduction) for the Fund's share of foreign
income taxes paid by the Fund. If the Fund does make such an election, its
shareholders would include as gross income in their federal income tax returns
both: (1) distributions received from the Fund and (2) the amount that the Fund
advises is their 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. Shareholders then would be entitled, subject to certain limitations
( including, with respect to a foreign tax credit, a holding period
requirement), to take a foreign tax credit against their 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.

MANAGEMENT OF THE TRUST

The Board of Trustees of the Trust is responsible for generally overseeing the
conduct of the Trust's business. Information regarding the Trustees and
executive officers of the Trust may be found in the SAI under "Management
- --Trustees and Officers".

Schroder Capital Management International Inc. is the investment adviser to the
Fund. SCMI is a wholly owned U.S. subsidiary of Schroders U.S. Holdings Inc.,
which engages through its subsidiary firms in the investment banking, asset
management and securities businesses. Affiliates of Schroders U.S. Holdings Inc.
(or their predecessors) have been investment managers since 1927. SCMI and its
United Kingdom affiliate, Schroder Capital Management International, Ltd.,
served as investment managers for over $27 billion in the aggregate as of June
30, 1998. Schroders U.S. Holdings Inc. is an indirect, wholly owned U.S.
subsidiary of Schroders plc, a publicly owned holding company organized under
the laws of England. Schroders plc and its affiliates ("Schroder Group") engage
in international merchant banking and investment management businesses, and as
of June 30, 1998, had under management assets of approximately $195 billion.
Schroder Fund Advisors Inc. ("Schroder Advisors") is a wholly owned subsidiary
of SCMI.

For its investment advisory services SCMI is entitled to a monthly fee at the
annual rate of .90% of the Fund's average daily net assets.

<PAGE>

ADMINISTRATIVE SERVICES. The Trust, on behalf of the Fund, has entered into an
administration agreement with Schroder Advisors pursuant to which Schroder
Advisors provides certain management and administrative services necessary the
Fund. The Trust, on behalf of the Fund, has entered into a subadministration
agreement with Forum Administrative Services, LLC, Two Portland Square,
Portland, Maine 04101 ("FAdS"), pursuant to which FAdS provides certain
management and administrative services necessary for the Fund's operations.
Schroder Advisors is entitled to compensation at an annual rate of 0.25% of the
Fund's average daily net assets. FAdS is entitled to compensation at the annual
rate of 0.10% of the Fund's average daily net assets.

In order to limit the Fund's expenses, SCMI and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of the Fund) with respect to the Fund to the extent that the
Fund's expenses chargeable to Advisor Shares exceed the annual rate of 2.25%
FAdS may waive voluntarily all or a portion of its subadvisory fees, from time
to time. The Trust pays all expenses not assumed by SCMI and Schroder Advisors,
including Trustees' fees, auditing, legal, custodial, and investor servicing,
and shareholder reporting expenses.

The current portfolio manager at SCMI with primary responsibility for managing
the Fund is Heather F. Crighton. Ms. Crighton, who has managed the Fund since
its inception, is a Vice President of SCMI and has been employed by SCMI in the
investment research and portfolio management areas since 1992.

SCMI places all orders for purchases and sales of the Fund' securities. In
selecting broker-dealers, SCMI may consider research and brokerage services
furnished to it and its affiliates. Schroder & Co. Inc. and Schroder Securities
Limited, affiliates of SCMI, may receive brokerage commissions from the Fund in
accordance with procedures adopted by the Trustees under the 1940 Act which
require periodic review of these transactions. Subject to seeking the most
favorable price and execution available, SCMI may consider sales of shares of
the Fund as a factor in the selection of broker-dealers.

YEAR 2000

The Fund receives services from its investment adviser, administrators,
distributor, transfer agent and custodian which rely on the smooth functioning
of their respective systems and the systems of others to perform those services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the year 1999 because of the inability
of the software to distinguish the year 2000 from the year 1900. SCMI is taking
steps that is believes are reasonably designed to address this potential Year
2000 problem and to obtain satisfactory assurances that comparable steps are
being taken by each of the Fund's other major service providers. There can be no
assurance, however, that these steps will be sufficient to avoid any adverse
impact on the Fund from this problem.

PERFORMANCE INFORMATION

Total return data relating to Advisor Shares of the Fund may from time to time
be included in advertisements about the Fund. The Fund's total return with
respect to Advisor Shares is calculated for the past year, the past five years,
and the past ten years (or if the Fund's Advisor Shares have been offered for a
period shorter than five or ten years, that period will be substituted) since
the establishment of the Fund, as more fully described in the SAI. Total return
quotations assume that all dividends and distributions are reinvested when paid.

ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE
PERFORMANCE. Investment performance of the Fund's Advisor Shares, which will
vary, is based on many factors, including market conditions, the composition of

<PAGE>

the Fund's portfolio, and the Fund's operating expenses attributable to its
Advisor Shares. Investment performance also often reflects the risks associated
with the Fund's investment objectives and policies. Quotations of total return
for any period when an expense limitation is in effect will be greater than if
the limitation had not been in effect. These factors should be considered when
comparing the investment results of the Fund's Advisor Shares to those of
various classes of other mutual funds and other investment vehicles. Performance
for the Fund's Advisor Shares may be compared to various indices. See the SAI
for a fuller discussion of performance information.

ADDITIONAL INFORMATION ABOUT THE TRUST

The Trust was organized as a Maryland corporation on July 30, 1969, reorganized
on February 29, 1988 as Schroder Capital Funds, Inc. and reorganized as a
Delaware business trust on January 9, 1996. The Trust has an unlimited number of
shares of beneficial interest that may, without shareholder approval, be divided
into an unlimited number of series of such shares, which, in turn, may be
divided into an unlimited number of classes of such shares. The Trust's shares
of beneficial interest are presently divided into ten different series. The
Fund's shares are presently divided into two classes, Advisor Shares, which are
offered through this Prospectus, and Investor Shares, which are offered through
a separate prospectus. Unlike Advisor Shares, Investor Shares are not subject to
shareholder service and distribution fees, which will affect their performance
relative to Investor Shares. To obtain more information about Investor Shares,
contact Schroder Capital Funds (Delaware) at 1-800 290-9826. The Trust's
principal office is located at Two Portland Square, Portland, Maine 04101, and
its telephone number is 1-207-879-8903.

Each share has one vote, with fractional shares voting proportionally.
Shareholders of a class of shares or series generally have separate voting
rights with respect to matters that affect only that class or series. See
"Organization and Capitalization" in the SAI. Shares are freely transferable and
are entitled to dividends and other distributions as declared by the Trustees.
Dividends paid by the Fund on its two classes of shares will normally differ in
amount due to the differing expenses borne by the two classes. If the Fund were
liquidated, each class of shares would receive the net assets of the Fund
attributable to that class. The Trust may suspend the sale of the Fund's shares
at any time and may refuse any order to purchase shares. Although the Trust is
not required to hold annual meetings of its shareholders, shareholders have the
right to call a meeting to elect or remove Trustees, or to take other actions as
provided in the Declaration of Trust.

<PAGE>

TABLE OF CONTENTS

INVESTMENT OBJECTIVE
AND POLICIES................................4

HOW TO BUY SHARES............................10

HOW TO SELL SHARES...........................13

OTHER INFORMATION............................15

MANAGEMENT OF THE TRUST......................16

<PAGE>

[Logo]

SCHRODER CAPITAL FUNDS (DELAWARE)

SCHRODER GREATER CHINA FUND

Schroder Capital Funds (Delaware)
P.O. Box 446
Portland, Maine 04112
1-800-290-9826

ADVISOR SHARES

PROSPECTUS
November 30, 1998

<PAGE>

INVESTMENT ADVISOR
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019

ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019

SUBADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101

CUSTODIAN
The Chase Manhattan Bank
Chase MetroTech Center
Brooklyn, New York 11245
and
Global Custody Division
125 London Wall
London EC2Y 5AJ, United Kingdom

TRANSFER & DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
PO Box 446
Portland, Maine 04112

COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, Massachusetts 02109

<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)

SCHRODER GREATER CHINA FUND

PROSPECTUS

INVESTOR SHARES

NOVEMBER 30, 1998

SCHRODER GREATER CHINA FUND ( the "Fund") seeks growth of capital by investing
in securities of issuers domiciled or doing business in China, Hong Kong SAR,
and Taiwan. The Fund is a diversified series of shares of Schroder Capital Funds
(Delaware). Schroder Capital Management International Inc. serves as investment
adviser to the Fund.

This Prospectus explains concisely the information that a prospective investor
should know before investing in Investor Shares of the Fund. Please read it
carefully and keep it for future reference. INVESTORS CAN FIND MORE DETAILED
INFORMATION ABOUT SCHRODER CAPITAL FUNDS (DELAWARE) (THE "TRUST") IN THE
- -NOVEMBER 30, 1998 STATEMENT OF ADDITIONAL INFORMATION, AS AMENDED FROM TIME TO
TIME. FOR A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION, PLEASE CALL
1-800-290-9826. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference. The Prospectus and the Statement of Additional Information are
available along with other related materials for reference on the Securities and
Exchange Commission's ("SEC") Internet Web Site (http://www.sec.gov).

================================================================================

FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL FOR COMPLETE INFORMATION AND TO OBTAIN A PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.

<TABLE>
<S> <C> <C>
SCHRODER CAPITAL FUNDS (DELAWARE) 1-800-290-9826 SCHRODER SERIES TRUST 1-800-464-3108

================================================================================
</TABLE>

<PAGE>

SUMMARY OF EXPENSES

Expenses are one of several factors to consider when investing in Investor
Shares of the Fund. The "Shareholder Transaction Expenses" table below
summarizes the maximum transaction costs you would incur by investing in
Investor Shares of the Fund. "Annual Operating Expenses" show the expenses the
Fund expects to incur during its first full fiscal year. The Example shows the
cumulative expenses attributable to a hypothetical $1,000 investment in the Fund
over specified periods.

SHAREHOLDER TRANSACTION EXPENSES

ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Management Fees (after expense limitation) (1)(2) 0.91%
12b-1 Fees None
Other Expenses (after expense limitation) 1.09%
- ----------------------
Total Fund Operating Expenses (after expense limitation) (2) 2.00%
- ----------------------------

EXAMPLE

Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period.

1 YEAR 3 YEARS
------ -------
Assuming no redemption $20 $63
Assuming full redemption at end of period $20 $63

THE TABLE AND EXAMPLE DO NOT REPRESENT PAST OR FUTURE EXPENSE LEVELS. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. FEDERAL REGULATIONS REQUIRE
THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL ANNUAL RETURN WILL VARY.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund will invest primarily in securities of companies located in China, Hong
Kong SAR and Taiwan. The Fund's investments will normally include common stocks,
preferred stocks, securities convertible into common stocks or preferred stocks,
and warrants to purchase common stocks or preferred stocks. The Fund may also
invest to a lesser extent in debt securities and other types of investments if
SCMI believes they would help achieve the Fund's objective. The Fund may hold a
portion of its assets in cash and money market instruments.

<PAGE>

Investments in China, Hong Kong SAR and Taiwan are also subject to the risks
described below under "Foreign securities."

Investment in China, Hong Kong SAR and Taiwan involves risks not present in most
other mutual funds. The Fund is suitable only for long-term investors who can
bear the risks of an investment in those countries. An investment in the Fund
should make up only one portion of an otherwise diversified portfolio of
investments. The net asset value of the Fund will likely fluctuate
substantially.

OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS

<PAGE>

other foreign countries. In the case of securities issued by a foreign
governmental entity, the issuer may in certain circumstances be unable or
unwilling to meet its obligations on the securities in accordance with their
terms, and the Fund may have limited recourse available to it in the event of
default. The laws of some foreign countries may limit the Fund's ability to
invest in securities of certain issuers located in those foreign countries.
Special tax considerations apply to foreign securities. The Fund may buy or sell
foreign currencies and options and futures contracts on foreign currencies for
hedging purposes in connection with its foreign investments. Except as otherwise
provided in this prospectus, there is no limit on the amount of the Fund's
assets that may be invested in foreign securities.

Income received by the Fund from sources within foreign countries may be reduced
by withholding and other taxes imposed by such countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Any such taxes paid by the Fund will reduce its net income available for
distribution to shareholders.

<PAGE>

due to a decline in the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency.

<PAGE>

be less publicly available information about the issuers of these securities or
less market interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets.

The Fund may purchase and sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.

<PAGE>

accomplish their purpose because of imperfect market correlations, or that SCMI
may not forecast market movements correctly.

For more information about any of the options or futures portfolio transactions
described above, see the SAI.

SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The Fund may
lend portfolio securities to brokers, dealers, and financial institutions
meeting specified credit conditions, and may enter into repurchase agreements.
Such activities may create taxable income in excess of the cash they generate.
These transactions must be fully collateralized at all times but involve some
risk to the Fund if the other party should default on its obligation and the
Fund is delayed or prevented from recovering its assets or realizing on the
collateral. The Fund may also purchase securities for future delivery, which may
increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.

<PAGE>

invest in the shares of other investment companies that invest in securities in
which the Fund is permitted to invest, subject to the limits and conditions
required under the Investment Company Act of 1940 (the "1940 Act") or any
orders, rules or regulations thereunder. As a shareholder in an investment
company, the Fund would bear its ratable share of the investment company's
expenses, including its advisory and administrative fees. At the same time, the
Fund would continue to pay its own fees and expenses.

HOW TO BUY SHARES

Investors may purchase Investor Shares of the Fund directly from the Trust.
Prospectuses, sales material and account applications can be obtained from the
Trust or through Forum Shareholder Services, LLC, the Fund's transfer agent (the
"Transfer Agent"). Investments also may be made through broker-dealers and other
financial institutions ("Service Organizations"). Service Organizations may
charge their customers a service fee for processing orders to purchase or sell
shares. Investors wishing to purchase Shares through their accounts at a Service
Organization should contact that organization directly for appropriate
instructions. A Service Organization is responsible for forwarding all necessary
documentation to the Trust, and may charge for its services.

The Fund's Investor Shares are offered at the net asset value next-determined
after receipt of a completed account application (at the address set forth
below)and your purchase request in good order. The minimum initial investment is
$250,000. There is no minimum subsequent investment. A Service Organization may
impose higher minimums on an initial and subsequent investment. All purchase
payments are invested in full and fractional shares. The Fund is authorized to
reject any purchase order.

<PAGE>

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

Schroder Greater China Fund -- Investor Shares
P.O. Box 446
Portland, Maine 04112

Investors and Service Organizations (on behalf of their customers) may transmit
purchase payments by Federal Reserve Bank wire directly to the Fund as follows:

The Chase Manhattan Bank
New York, NY
ABA No.: 021000021
For Credit To: Forum Shareholder Services, LLC
Account. No.: 910-2-718187
Ref.: Schroder Greater China Fund -- Investor Shares
Account of: (shareholder name)
Account No.: (shareholder account number)

The wire order must specify the name of the Fund, the shares' class (I.E.,
Investor Shares), the account name and number, address, confirmation number,
amount to be wired, name of the wiring bank, and name and telephone number of
the person to be contacted in connection with the order. If the initial
investment is by wire, an account number will be assigned, and a completed
account application must be mailed to the Fund before any transaction will be
effected. Wire orders received prior to the close of the New York Stock Exchange
on a day when the New York Stock Exchange is open for trading are processed at
the net asset value next determined as of that day. Wire orders received after
the close of the New York Stock Exchange are processed at the net asset value
next determined.

<PAGE>

RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

Investor Shares are offered in connection with tax-deferred retirement plans,
including traditional and Roth IRAs. 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, investors should consult their
tax advisors.

The Fund may be used as an investment vehicle for an IRA including SEP-IRA. An
IRA naming BankBoston as custodian is available from the Trust or the Transfer
Agent. The minimum initial investment for an IRA is $2,000; the minimum
subsequent investment is $250. Generally, contributions and investment earnings
in a traditional IRA grow tax-deferred until withdrawn. In contrast,
contributions to a Roth IRA are not tax-deductible, but investment earnings
generally grow tax-free. IRAs are available to individuals (and their spouses)
who receive compensation or earned income whether or not they are active
participants in a tax-qualified or government-approved retirement plan. An IRA
contribution by an individual or spouse who 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 qualified plan.
Consult your tax advisor.

EXCHANGES

You may exchange the Fund's Investor Shares for Investor Shares of any fund
offered by the Schroder family of funds so long as the investment meets the
initial investment minimum of the fund being purchased, and the shareholder
maintains the applicable minimum account balance in the fund in which the Shares
are held. Exchanges between funds are made at net asset value.

For federal income tax purposes an exchange is considered to be a sale of shares
on which a shareholder may realize a capital gain or loss. If a shareholder owns
Investor Shares through a Service Organization, the shareholder must make an
exchange through the Service Organization. If a shareholder owns Investor Shares
directly, the shareholder may make an exchange by calling the Transfer Agent at
1-800-344-8332 (see "How to Sell Shares -- Telephone Requests") or by mailing
written instructions to Schroder Capital Funds (Delaware), P.O. Box 446,
Portland, Maine 04112. Exchange privileges may be exercised only in those states
where shares of the other funds of the Schroder family of funds may legally be
sold. Exchange privileges may be amended or terminated at any time upon sixty
(60) days' notice.

STATEMENT OF INTENTION

Investor Share investors also may meet the minimum initial investment
requirement based on cumulative purchases by means of a written Statement of
Intention, expressing the investor's intention to invest $250,000 or more in
Investor Shares of the Fund within a period of 13 months.

Investors wishing to enter into a Statement of Intention in conjunction with
their initial investment in shares of the Fund should complete the appropriate
portion to the account application form. Current Fund shareholders can obtain a
Statement of Intention form by contacting the Transfer Agent. The Fund reserves
the right to redeem Shares in any account if, at the end of the Statement of
Intention period, the account does not have a value of at least the minimum
investment amount.

<PAGE>

HOW TO SELL SHARES

A shareholder can sell his or her Investor Shares in the Fund to the Fund any
day the New York Stock Exchange is open, either through the Service Organization
or directly to the Fund. If Shares are held in the name of a Service
Organization, a shareholder may only sell the shares through that Service
Organization. The Trust will only redeem shares for which it has received
payment.

Investor Shares are redeemed at their next determined net asset value after
receipt by the Fund (see the address set forth under "How to Buy Shares") of a
redemption request in proper form. Redemption requests that are received prior
to the close of the Exchange on a day on which the Exchange is open are
processed at the net asset value determined as of that day. Redemption requests
that are received after the close of the Exchange are processed at the net asset
value next determined. See "Net Asset Value".

TELEPHONE REQUESTS

WRITTEN REQUESTS

If Investor Shares to be redeemed are held in certificate form, the certificates
must be enclosed with the redemption request, 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 owners' 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 Trust suggests that
certificates be sent by registered mail.

<PAGE>

ADDITIONAL REDEMPTION INFORMATION. Checks for redemption proceeds normally are
mailed within seven days. No redemption proceeds are mailed until checks in
payment for the purchase of the Investor Shares to be redeemed have been
cleared, which may take up to 15 calendar days from the purchase date. Unless
other instructions are given in proper form, a check for the proceeds of a
redemption is sent to the shareholder's address of record.

If the Board of Trustees determines 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 redeem Investor Shares in whole or in part by a
distribution in kind of portfolio securities in lieu of cash. The Fund will,
however, redeem Investor 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 Investor 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" 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 account does not have a value of at least $100,000, unless the value of
the account falls below that amount solely as a result of market activity.
Shareholders will be notified that the value of the account is less than the
required minimum and will be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.

<PAGE>
OTHER INFORMATION

DETERMINATION OF NET ASSET VALUE

The Fund calculates the net asset value of its Investor Shares by dividing the
total value of its assets attributable to its Investor Shares, less its
liabilities attributable to those shares, by the number of its Investor Shares
outstanding. Shares are valued as of the close of the New York Stock Exchange (
normally 4:00 p.m. Eastern time) each day the Exchange is open. Portfolio
securities for which market quotations are readily available are stated at
market value. Short-term investments that will mature in 60 days or less are
stated at amortized cost, which approximates market value. All other securities
and assets are valued at their fair values determined by SCMI. The net asset
value of the Fund's Investor Shares will generally differ from that of its other
classes of shares due to the variance in daily net income realized by and
dividends paid on each class of shares, and differences in the expenses of the
different classes. All assets and liabilities of the Fund denominated in foreign
currencies are valued in U.S. dollars based on the exchange rate last quoted by
a major bank prior to the time when the net asset value of the Fund is
calculated.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund distributes any net investment income and any net realized capital gain
at least annually. Distributions from net capital gain are made after applying
any available capital loss carryovers.

DISTRIBUTION OPTIONS: (1) reinvest all distributions in additional Investor
Shares of the Fund; (2) receive distributions from net investment income in cash
while reinvesting capital-gain distributions in additional Investor Shares; (3)
receive distributions from net investment income in Additional Investor Shares
while receiving capital-gain distributions in cash; or (4) receive all
distributions in cash. An investor can change the distribution option by
notifying the Transfer Agent in writing. If the investor does not select an
option when the account is opened, all distributions by the Fund will be
reinvested in Investor Shares of the Fund. Investors will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the period in which the reinvestment occurs.

TAXES

Early in each year the Trust will notify each shareholder of the amount and tax
status of distributions paid to the shareholder by the Fund for the preceding
year.

<PAGE>

MANAGEMENT OF THE TRUST

Schroder Capital Management International Inc. is the investment adviser to the
Fund. SCMI is a wholly owned U.S. subsidiary of Schroders U.S. Holdings Inc.,
which engages through its subsidiary firms in the investment banking, asset
management and securities businesses. Affiliates of Schroders U.S. Holdings Inc.
(or their predecessors) have been investment managers since 1927. SCMI and its
United Kingdom affiliate, Schroder Capital Management International, Ltd.,
together served as investment managers for over $27 billion as of June 30, 1998.
Schroders U.S. Holdings Inc. is an indirect, wholly owned U.S. subsidiary of
Schroders plc, a publicly owned holding company organized under the laws of
England. Schroders plc and its affiliates ("Schroder Group") engage in
international merchant banking and investment management businesses, and as of
June 30, 1998, had under management assets of approximately $195 billion.
Schroder Fund Advisors Inc. ("Schroder Advisors") is a wholly owned subsidiary
of SCMI.

For its investment advisory services, SCMI is entitled to a monthly fee at the
annual rate of .90% of the Fund's average daily net assets.

<PAGE>

In order to limit the Fund's expenses, SCMI and Schroder Advisors have
voluntarily agreed to reduce their compensation (and, if necessary, to pay
certain expenses of the Fund) with respect to the Fund to the extent that the
Fund's expenses chargeable to Investor Shares exceed the annual rate of 2.00%.
FAdS may waive voluntarily all or a portion of its subadvisory fees, from time
to time. The Trust pays all expenses not assumed by SCMI and Schroder Advisors,
including Trustees' fees, auditing, legal, custodial, and investor servicing,
and shareholder reporting expenses.

YEAR 2000

The Fund receives services from its investment adviser, administrator,
distributor, transfer agent and custodian which rely on the smooth functioning
of their respective systems and the systems of others to perform those services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the year 1999 because of the inability
of the software to distinguish the year 2000 from the year 1900. SCMI is taking
steps that is believes are reasonably designed to address this potential Year
2000 problem and to obtain satisfactory assurances that comparable steps are
being taken by each of the Fund's other major service providers. There can be no
assurance, however, that these steps will be sufficient to avoid any adverse
impact on the Fund from this problem.

PERFORMANCE INFORMATION

Total return data relating to Investor Shares of the Fund may from time to time
be included in advertisements about the Fund. The Fund's total return with
respect to Investor Shares is calculated for the past year, the past five years,
and the past ten years (or if the Fund's Investor Shares have been offered for a
period shorter than five or ten years, that period will be substituted) since
the establishment of the Fund, as more fully described in the SAI. Total return
quotations assume that all dividends and distributions are reinvested when paid.

ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE
PERFORMANCE. Investment performance of the Fund's Investor Shares, which will
vary, is based on many factors, including market conditions, the composition of
the Fund's portfolio, and the Fund's operating expenses attributable to its
Investor Shares. Investment performance also often reflects the risks associated
with the Fund's investment objectives and policies. Quotations of total return
for any period when an expense limitation is in effect will be greater than if
the limitation had not been in effect. These factors should be considered when
comparing the investment results of the Fund's Investor Shares to those of
various classes of other mutual funds and other investment vehicles. Performance
for the Fund's Investor Shares may be compared to various indices. See the SAI
for a fuller discussion of performance information.

<PAGE>

ADDITIONAL INFORMATION ABOUT THE TRUST

The Trust was organized as a Maryland corporation on July 30, 1969, reorganized
on February 29, 1988 as Schroder Capital Funds, Inc. and reorganized as a
Delaware business trust on January 9, 1996. The Trust has an unlimited number of
shares of beneficial interest that may, without shareholder approval, be divided
into an unlimited number of series of such shares, which, in turn, may be
divided into an unlimited number of classes of such shares. The Trust's shares
of beneficial interest are presently divided into ten different series. The
Fund's shares are presently divided into two classes, Investor Shares, which are
offered through this Prospectus, and Advisor Shares, which are offered through a
separate prospectus. Unlike Investor Shares, Advisor Shares are subject to
shareholder service and distribution fees, which will affect their performance
relative to Investor Shares. To obtain more information about Advisor Shares,
contact Schroder Capital Funds (Delaware) at 1-800-290-9826. The Trust's
principal office is located at Two Portland Square, Portland, Maine 04101, and
its telephone number is 1-207-879-8903.

<PAGE>

TABLE OF CONTENTS

INVESTMENT OBJECTIVE
AND POLICIES................................4

HOW TO BUY SHARES............................10

HOW TO SELL SHARES...........................13

OTHER INFORMATION............................15

MANAGEMENT OF THE TRUST......................16

<PAGE>

[Logo]

SCHRODER CAPITAL FUNDS (DELAWARE)

SCHRODER GREATER CHINA FUND

Schroder Capital Funds (Delaware)
P.O. Box 446
Portland, Maine 04112
1-800-290-9826

INVESTOR SHARES

PROSPECTUS
November 30, 1998

<PAGE>

INVESTMENT ADVISOR
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019

ADMINISTRATOR & DISTRIBUTOR
Schroder Fund Advisors Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019

SUBADMINISTRATOR
Forum Administrative Services, LLC
Two Portland Square
Portland, Maine 04101

CUSTODIAN
The Chase Manhattan Bank
Chase MetroTech Center
Brooklyn, New York 11245
and
Global Custody Division
125 London Wall
London EC2Y 5AJ, United Kingdom

TRANSFER & DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112

COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, Massachusetts 02109

<PAGE>
SCHRODER CAPITAL FUNDS (DELAWARE)

SCHRODER GREATER CHINA FUND

STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 30, 1998

INVESTMENT ADVISER
Schroder Capital Management International Inc. ("SCMI")
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors Inc. ("Schroder Advisors")
SUBADMINISTRATOR
Forum Administrative Services, LLC ("FAdS")
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC ("Forum")

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

Investor Shares of GREATER CHINA FUND (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's Advisor Shares also are
offered for sale at net asset value, with no sales charge, to individual
investors, in most cases through Service Organizations (as defined in the
prospectuses) at lower investment minimums but higher expenses than Investor
Shares.

This Statement of Additional Information ("SAI") is not a prospectus and is
authorized for distribution only when preceded or accompanied by the Fund's
current prospectus dated November 30, 1998, as may be amended from time to time
for each of the Investor Shares and the Advisor Shares ( each, a "Prospectus"
and, collectively, the "Prospectuses"). This SAI contains additional and more
detailed information than that set forth in each Prospectus and should be read
in conjunction with the applicable Prospectus and retained for future reference.
The Prospectuses and this SAI are available along with other related materials
for reference on the Securities and Exchange Commission's ("SEC") Internet Web
Site (http://www.sec.gov). All terms used in this SAI that are defined in the
Prospectuses have the meaning assigned in the Prospectuses. You may obtain an
additional copy of the applicable Prospectus(es) without charge by writing to
the Trust at Two Portland Square, Portland, Maine 04101 or calling the numbers
listed above.

<PAGE>

TABLE OF CONTENTS

INVESTMENT OBJECTIVES AND POLICIES
OF THE FUND AND RISK CONSIDERATIONS........................3
Options......................................................3
Futures Contracts............................................5
Special Risks of Transactions in Futures
Contracts and Related Options..............................7
Forward Commitments..........................................8
Repurchase Agreements........................................9
When-Issued Securities.......................................9
Loans of Fund Securities.....................................9
Foreign Securities..........................................10
Foreign Currency Transactions...............................10
Zero-Coupon Securities......................................12
Warrants and Stock Rights...................................13
Convertible Securities......................................13
Indexed Securities..........................................14
Investment in Other Investment Companies....................14
Rule 144A Securities........................................14
Loans of Fund Securities....................................14
INVESTMENT RESTRICTIONS.....................................15
MANAGEMENT..................................................16
Officers and Trustees.......................................16
Investment Adviser..........................................18
Administrative Services.....................................19
Distribution of Fund Shares.................................20
Shareholder Servicing and Processing Organizations..........21
Fund Accounting.............................................21
PORTFOLIO TRANSACTIONS......................................22
Investment Decisions........................................22
Brokerage and Research Services.............................22
ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION.................................24
Determination of Net Asset Value Per Share..................24
Redemptions In-Kind.........................................24
TAXATION....................................................24
OTHER INFORMATION...........................................28
Fund Structure..............................................28
Organization of the Trust...................................30
Capitalization and Voting...................................30
Performance Information.....................................31
Custodian...................................................32
Transfer Agent and Dividend Disbursing Agent................32
Legal Counsel...............................................32
Independent Accountant......................................32
Year 2000 Issues............................................32
Registration Statement......................................32
APPENDIX A - RATINGS OF CORPORATE
DEBT INSTRUMENTS..........................................33

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES OF THE FUND AND RISK CONSIDERATIONS

This Statement of Additional Information contains additional information
concerning certain investment practices and investment restrictions of the Trust
and the Fund.

Except as described below under "Investment Restrictions", the investment
policies described in the Prospectuses and in this SAI are not fundamental, and
the Trustees may change the non-fundamental policies of the Fund without an
affirmative vote of shareholders of the Fund.

OPTIONS

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

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

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

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

The Fund may terminate a call option that it has written before it expires
by entering into a closing purchase transaction. The Fund may enter into closing
purchase transactions in order to free itself to sell the underlying security or
to write another call on the security, realize a profit on a previously written
call option, or protect a security from being called in an unexpected market
rise. Any profits from a closing purchase transaction may be offset by a decline
in the value of the underlying security. Conversely, because increases in the
market price of a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from a closing purchase
transaction is likely to be offset in whole or in part by unrealized
appreciation of the underlying security owned by the Fund.

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

<PAGE>

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

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

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

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

The Fund may also purchase put and call options to enhance its current
return.

OPTIONS ON FOREIGN SECURITIES. The Fund may purchase and sell options on
foreign securities if in SCMI's opinion the investment characteristics of such
options, including the risks of investing in such options, are consistent with
the Fund's investment objectives. Risks related to such options should generally
be similar to risks related to options on U.S. securities. However, position
limits and other rules of foreign exchanges may differ from those in the U.S. In
addition, options markets in some countries, many of which are relatively new,
may be less liquid than comparable markets in the U.S.

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

<PAGE>

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

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

Options that are not traded on national securities exchanges may be closed
out only with the other party to the option transaction. For that reason, it may
be more difficult to close out unlisted options than listed options.
Furthermore, unlisted options are not subject to the protection afforded
purchasers of listed options by The Options Clearing Corporation.

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

FUTURES CONTRACTS

In order to hedge against the effects of adverse market changes, the Fund
may buy and sell futures contracts on debt securities of the type in which the
Fund may invest and on indexes of debt securities. In addition, the Fund may
purchase and sell stock index futures to hedge against changes in stock prices.
The Fund may also, to the extent permitted by applicable law, buy and sell
futures contracts and options on futures contracts to increase the Fund's
current return.

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

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

<PAGE>

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

On other occasions, the Fund may take a "long" position by purchasing
futures on debt securities. This would be done, for example, when the Fund
expects to purchase particular securities when it has the necessary cash, but
expects the rate of return available in the securities markets at that time to
be less favorable than rates currently available in the futures markets. If the
anticipated rise in the price of the securities should occur (with its
concomitant reduction in yield), the increased cost to the Fund of purchasing
the securities may be offset, at least to some extent, by the rise in the value
of the futures position taken in anticipation of the subsequent securities
purchase.

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

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

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

<PAGE>

The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index is composed of
100 selected common stocks, most of which are listed on the New York Stock
Exchange. The S&P 100 Index assigns relative weightings to the common stocks
included in the Index, and the Index fluctuates with changes in the market
values of those common stocks. In the case of the S&P 100 Index, contracts are
to buy or sell 100 units. Thus, if the value of the S&P 100 Index were $180, one
contract would be worth $18,000 (100 units x $180). The stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the contract.
For example, if the Fund enters into a futures contract to buy 100 units of the
S&P 100 Index at a specified future date at a contract price of $180 and the S&P
100 Index is at $184 on that future date, the Fund will gain $400 (100 units x
gain of $4). If the Fund enters into a futures contract to sell 100 units of the
stock index at a specified future date at a contract price of $180 and the S&P
100 Index is at $182 on that future date, the Fund will lose $200 (100 units x
loss of $2).

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

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

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

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

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

<PAGE>

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

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

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

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

SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS

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

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

<PAGE>

in such options with the result that the Fund would have to exercise the options
in order to realize any profit.

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

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

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

FORWARD COMMITMENTS

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

<PAGE>

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

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements. A repurchase agreement is a
contract under which the Fund acquires a security for a relatively short period
(usually not more than 7 days) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. government or its
agencies or instrumentalities or other high quality short term debt obligations.
Repurchase agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. SCMI will monitor such
transactions to ensure that the value of the underlying securities will be at
least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale including accrued interest are less than the resale price provided in the
agreement including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, the Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if the Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.

WHEN-ISSUED SECURITIES

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

LOANS OF FUND SECURITIES

The Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) the Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate

<PAGE>

market value of securities of any Fund loaned will not at any time exceed
one-third of the total assets of the Fund. In addition, it is anticipated that
the Fund may share with the borrower some of the income received on the
collateral for the loan or that it will be paid a premium for the loan. Before
the Fund enters into a loan, SCMI considers all relevant facts and circumstances
including the creditworthiness of the borrower. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay in
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Although voting rights or rights to consent with
respect to the loaned securities pass to the borrower, the Fund retains the
right to call the loans at any time on reasonable notice, and it will do so in
order that the securities may be voted by the Fund if the holders of such
securities are asked to vote upon or consent to matters materially affecting the
investment. The Fund will not lend portfolio securities to borrowers affiliated
with the Fund.

FOREIGN SECURITIES

Investments in foreign securities involve considerations different from
investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment against
a foreign issuer.

In addition, to the extent that the Fund's foreign investments are not
United States dollar-denominated, the Fund may be affected favorably or
unfavorably by changes in currency exchange rates or exchange control
regulations and may incur costs in connection with conversion between
currencies.

Income received by the Fund from sources within foreign countries may be
reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to be invested in
various countries is not known, and tax laws and their interpretations may
change from time to time and may change without advance notice. Any such taxes
paid by the Fund will reduce its net income available for distribution to
shareholders.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

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

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

<PAGE>

interest payment is declared, and the date on which such payments are made or
received.

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

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

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

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

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

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

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency.

<PAGE>

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

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

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

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

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

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

The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions

<PAGE>

occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots. There is no systematic
reporting of last sale information for foreign currencies and there is no
regulatory requirement that quotations available through dealers or other market
sources be firm or revised on a timely basis. Available quotation information is
generally representative of very large transactions in the interbank market and
thus may not reflect relatively smaller transactions (less than $1 million)
where rates may be less favorable. The interbank market in foreign currencies is
a global, around-the-clock market. To the extent that the U.S. options markets
are closed while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying markets
that cannot be reflected in the U.S. options markets.

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

ZERO-COUPON SECURITIES

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

Zero-coupon securities may include U.S. Treasury bills issued directly by
the U.S. Treasury or other short-term debt obligations, and longer-term bonds or
notes and their unmatured interest coupons which have been separated by their
holder, typically a custodian bank or investment brokerage firm. A number of
securities firms and banks have stripped the interest coupons from the
underlying principal (the "corpus") of U.S. Treasury securities and resold them
in custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and Certificates of Accrual on
Treasuries ("CATS"). CATS and TIGRS are not considered U.S. Government
Securities. The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer securities
(I.E., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof.

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

<PAGE>

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

WARRANTS AND STOCK RIGHTS.

The Fund 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). 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 Fund'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.

In addition, the Fund may invest to a limited degree 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. Currently, the Fund does not
intend to invest more than 5% of its total net assets (at the time of
investment) in stock rights.

DEPOSITARY RECEIPTS.

The Fund may invest in American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), and other similar instruments providing for
indirect investment in securities of foreign issuers. Due to the absence of
established securities markets in certain foreign countries and restrictions in
certain countries on direct investment by foreign entities, the Fund may invest
in certain issuers through the purchase of sponsored and unsponsored ADRs or
other similar securities, such as American Depositary Shares, Global Depositary
Shares or International Depositary Receipts. 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 unsponsored 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.

CONVERTIBLE SECURITIES.

The Fund may invest in convertible preferred stocks and convertible debt
securities ("convertible 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, carry less risk than the corporation's common stock.

<PAGE>

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). Because convertible debt is
convertible into stock under specified conditions, the value of convertible debt
also is affected normally by changes in the value of the issuer's equity
securities.

INDEXED SECURITIES.

The Fund may invest in indexed securities, the values of which are linked
to currencies, interest rates, commodities, indices, or other financial
indicators. Investment in indexed securities involves certain risks. In addition
to the credit risk of the securities issuer and normal risks of price changes in
response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of the reference
instruments. Also, in the case of certain indexed securities where the interest
rate is linked to a reference instrument, the interest rate may be reduced to
zero and any further declines in the value of the security may then reduce the
principal amount payable on maturity. Further, indexed securities may be more
volatile than the reference instruments underlying indexed securities.

INVESTMENT IN OTHER INVESTMENT COMPANIES.

The Fund may invest in the shares of other investment companies subject to
the limits permitted under the 1940 Act or any orders, rules or regulations
thereunder. When investing through investment companies, the Fund may pay
substantial premiums above such investment companies' net asset value per share.
As a shareholder in an investment company, the Fund would bear its ratable share
of the investment company's expenses, including its advisory and administrative
fees. At the same time, the Fund would continue to pay its own fees and
expenses.

RULE 144A SECURITIES.

The Fund may purchase certain restricted securities ("Rule 144A
securities") for which there is a secondary market of qualified institutional
buyers, as contemplated by rule 144A under the Securities Act of 1933 (the
"Securities Act"). Rule 144A provides an exemption from the registration
requirements of the Securities Act for resale of certain restricted securities
to qualified institutional buyers. One effect of Rule 144A is that certain
restricted securities may now be deemed to be liquid, though there is no
assurance that a liquid market for any particular Rule 144A security will
develop or be maintained. SCMI will make liquidity determinations subject to
guidelines approved by the Board. If any Rule 144A security previously
determined to be liquid is later determined to be illiquid, such security will
be subject to the Fund's 15% limitation on illiquid securities.

LOANS OF FUND SECURITIES.

The Fund may lend its portfolio securities subject to the restrictions
stated in its Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral must: (1) on each business day, at least
equal the market value of the loaned securities; and (2) consist of cash, bank
letters of credit, U.S. government securities, other cash equivalents or liquid
securities 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 SCMI. When lending portfolio securities, 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 plus the interest

<PAGE>

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 if it realizes at least a minimum amount
of interest required by the lending guidelines established by the Board. The
Fund will not lend its portfolio securities to any officer, trustee, employee or
affiliate of the Fund or SCMI. The terms of any 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. The market value of portfolio securities purchased with cash collateral
may decline. Loans of securities by the Fund are 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 Board.

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may not be changed without
approval by the holders of a majority of the outstanding shares of the Fund, the
Fund may not:

1. Purchase any security (other than U.S. Government securities) if as a
result: (i) as to 75% of the Fund's total assets, more than 5% of the Fund's
total assets (taken at current value) would then be invested in securities of a
single issuer, or (ii) more than 25% of the Fund's total assets would be
invested in a single industry.

2. Acquire more than 10% of the voting securities of any issuer.

3. Act as underwriter of securities of other issuers except to the extent
that, in connection with the disposition of portfolio securities, it may be
deemed to be an underwriter under certain federal securities laws.

4. Issue any class of securities which is senior to the Fund's shares of
beneficial interest, except as contemplated by restriction 6 below.

5. Purchase or sell real estate or interests in real estate, including real
estate mortgage loans, although it may purchase and sell securities which are
secured by real estate and securities of companies that invest or deal in real
estate or real estate limited partnership interests (for purposes of this
restriction, investments by the Fund in mortgage-backed securities and other
securities representing interests in mortgage pools shall not constitute the
purchase or sale of real estate or interests in real estate or real estate
mortgage loans.)

6. Borrow more than 33 1/3% of the value of its total assets less all
liabilities and indebtedness (other than such borrowings).

7. Purchase and sell commodities or commodity contracts, except that the
Fund may purchase or sell financial futures contracts, options on futures
contracts, and futures contracts, forward contracts and options with respect to
foreign currencies, and may enter into swap transactions.

8. Make loans, except by purchase of debt obligations in which the Fund may
invest consistent with its investment policies, by entering into repurchase
agreements, or by lending its portfolio securities.

<PAGE>

In addition, it is contrary to the current policy of the Fund which policy
may be changed without shareholder approval, to invest in (i) securities which
at the time of such investment are not readily marketable; (ii) securities
restricted as to resale (excluding securities determined by Trustees of the
Trust, or the person designated by the Trustees to make such determinations, to
be readily marketable), and (iii) repurchase agreements maturing in more than
seven days, if, as a result, more than 15% of the Fund's net assets (taken at
current value) would then be invested in securities described in (i), (ii), and
(iii).

Except for the policies on borrowing and illiquid securities, all
percentage limitations on investments will apply at the time of investment and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Except for the investment
restrictions listed above as a fundamental or to the extent designated as such
in a Prospectus with respect to the Fund, the other investment policies
described in this Statement or in a Prospectus are not fundamental and may be
changed by approval of the Trustees.

The Investment Company Act of 1940, as amended (the "1940 Act"), provides
that a "vote of a majority of the outstanding voting securities" of the Fund
means the affirmative vote of the lesser of (i) more than 50% of the outstanding
shares of the Fund, and (ii) 67% or more of the shares present at a meeting if
more than 50% of the outstanding shares are represented at the meeting in person
or by proxy.

MANAGEMENT

OFFICERS AND TRUSTEES. The following information relates to the principal
occupations during the past five years of each Trustee and executive officer of
the Trust and shows the nature of any affiliation with SCMI. Except as noted,
each of these individuals currently serves in the same capacity for Schroder
Capital Funds, Schroder Capital Funds II and Schroder Series Trust, other
registered investment companies in the Schroder family of funds.

PETER E. GUERNSEY, 75, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Insurance Consultant since August 1986; prior thereto
Senior Vice President, Marsh & McLennan, Inc., insurance brokers.

JOHN I. HOWELL, 80, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Private Consultant since February 1987; Honorary Director,
American International Group, Inc.; Director, American International Life
Assurance Company of New York.

CLARENCE F. MICHALIS, 75, c/o the Trust, Two Portland Square, Portland, Maine -
Trustee of the Trust; Chairman of the Board of Directors, Josiah Macy, Jr.
Foundation (charitable foundation).

HERMANN C. SCHWAB, 77, c/o the Trust, Two Portland Square, Portland, Maine -
Chairman and Trustee of the Trust; retired since March, 1988; prior thereto,
consultant to SCMI since February 1, 1984.

HON. DAVID N. DINKINS, 69, c/o the Trust, Two Portland Square, Portland, Maine,
Trustee of the Trust; Professor, Columbia University School of International and
Public Affairs; Director, American Stock Exchange, Carver Federal Savings Bank,
Transderm Laboratory Corporation, and The Cosmetic Center, Inc.; formerly,
Mayor, The City of New York.

PETER S. KNIGHT, 46, c/o the Trust, Two Portland Square, Portland, Maine,
Trustee of the Trust; Partner, Wunder, Knight, Levine, Thelen & Forcey;
Director, Comsat Corp., Medicis Pharmaceutical Corp., and Whitman Education
Group Inc., Formerly, Campaign Manager, Clinton/Gore `96.

<PAGE>

SHARON L. HAUGH*, 51, 787 Seventh Avenue, New York, New York, Trustee of the
Trust; Chairman, Schroder Capital Management Inc. ("SCM"), Executive Vice
President and Director, SCMI; Chairman and Director, Schroder Advisors.

MARK J. SMITH*, 35, 33 Gutter Lane, London, England - President and Trustee of
the Trust; Senior Vice President and Director of SCMI since April 1990; Director
and Senior Vice President, Schroder Advisors.

MARK ASTLEY, 33, 787 Seventh Avenue, New York, New York - Vice President of the
Trust; First Vice President of SCMI, prior thereto, employed by various
affiliates of SCMI in various positions in the investment research and portfolio
management areas since 1987.

FERGAL CASSIDY, 29, 787 Seventh Avenue, New York, New York - Treasurer of the
Trust; Acting Controller and Assistant Vice President of SCM and SCMI since
September 1997; Assistant Vice President of SCM and SCMI from April 1997 to
September 1997; Associate, SCMI, from August 1995 to March 1997; and prior
thereto Senior Accountant of Concurrency Mgt., Greenwich, Connecticut from
November 1994 to August 1995, and Senior Accountant, Schroder Properties,
London, September 1990 to November 1993.

ROBERT G. DAVY, 36, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Director of SCMI and Schroder Capital Management International Ltd.
since 1994; First Vice President of SCMI since July, 1992; prior thereto,
employed by various affiliates of SCMI in various positions in the investment
research and portfolio management areas since 1986.

MARGARET H. DOUGLAS-HAMILTON, 55, 787 Seventh Avenue, New York, New York - Vice
President of the Trust; Secretary of SCM since July 1995; Senior Vice President
(since April 1997) and General Counsel of Schroders U.S. Holdings Inc. since May
1987; prior thereto, partner of Sullivan & Worcester, a law firm.

RICHARD R. FOULKES, 51, 787 Seventh Avenue, New York, New York - Vice President
of the Trust; Deputy Chairman of SCMI since October 1995; Director and Executive
Vice President of Schroder Capital Management International Ltd. since 1989.

JOHN Y. KEFFER, 54, Two Portland Square, Portland, Maine - Vice President of the
Trust; President of FFC, the Fund's transfer and dividend disbursing agent and
other affiliated entities including Forum Financial Services, Inc., Forum
Administrative Services, LLC, and Forum Advisors, Inc.

JANE P. LUCAS, 35, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Director and Senior Vice President SCMI; Director of SCM since
September 1995; Director of Schroder Advisors since September 1996; Assistant
Director Schroder Investment Management Ltd. since June 1991.

ALAN MANDEL, 41, 787 Seventh Avenue, New York, New York - Assistant Treasurer of
the Trust; Vice President of SCMI since September 1998; prior thereto Director
of Mutual Fund Administration for Salomon Brothers Asset Management since 1995;
prior thereto Chief Financial Officer and Vice President of Mutual Capital
Management since 1991.

<PAGE>

CATHERINE A. MAZZA, 37, 787 Seventh Avenue, New York, New York - Vice President
of the Trust; President of Schroder Advisors since 1997; First Vice President of
SCMI and SCM since 1996; prior thereto, held various marketing positions at
Alliance Capital, an investment adviser, since July 1985.

CARIN MUHLBAUM, 36, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust; Vice President of SCMI since 1998; prior thereto an investment
management attorney with Seward & Kissel since 1998; prior thereto an investment
management attorney with Gordon Altman Butowsky Weitzen Shalov & Wein since
1989.

MICHAEL PERELSTEIN, 41, 787 Seventh Avenue, New York, New York - Vice President
of the Trust; Director since May 1997 and Senior Vice President of SCMI since
January 1997; prior thereto, Managing Director of MacKay - Shields Financial
Corp.

ALEXANDRA POE, 37, 787 Seventh Avenue, New York, New York - Secretary and Vice
President of the Trust; Vice President of SCMI since August 1996; Fund Counsel
and Senior Vice President of Schroder Advisors since August 1996; Secretary of
Schroder Advisors; prior thereto, an investment management attorney with Gordon
Altman Butowsky Weitzen Shalov & Wein since July 1994; prior thereto counsel and
Vice President of Citibank, N.A. since 1989.

NICHOLAS ROSSI, 35, 787 Seventh Avenue, New York, New York - Assistant Secretary
of the Trust, Associate of SCMI since October 1997 and Assistant Vice President
Schroder Advisors since March 1998; prior thereto Mutual Fund Specialist,
Willkie Farr & Gallagher since May 1996; prior thereto, Fund Administrator with
Furman Selz LLC since 1992.

THOMAS G. SHEEHAN, 42, Two Portland Square, Portland, Maine - Assistant
Treasurer and Assistant Secretary of the Trust; Relationship Manager, Forum
Administrative Services, LLC since 1993; prior thereto, Special Counsel, U.S.
Securities and Exchange Commission, Division of Investment Management,
Washington, D.C.

JOHN A. TROIANO, 38, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Director of SCM since April 1997; Chief Executive Officer, since July
1, 1997, of SCMI and Managing Director and Senior Vice President of SCMI since
October 1995; prior thereto, employed by various affiliates of SCMI in various
positions in the investment research and portfolio management areas since 1981.

CHERYL O. TUMLIN, 32, Two Portland Square, Portland, Maine - Assistant Treasurer
and Assistant Secretary of the Trust; Assistant Counsel, Forum Administrative
Services, LLC since July 1996, prior thereto, attorney with the U.S. Securities
and Exchange Commission, Division of Market Regulation since 1995; prior
thereto, attorney with Robinson Silverman Pearce Aronsohn & Berman since 1991.

IRA L. UNSCHULD, 31, 787 Seventh Avenue, New York, New York - Vice President of
the Trust; Vice President of SCMI since April, 1993 and an Associate from July,
1990 to April, 1993.

* Interested Trustee of the Trust within the meaning of the 1940 Act.

Schroder Advisors is a wholly owned subsidiary of SCMI, which is a wholly
owned subsidiary of Schroders U.S. Holdings Inc., which in turn is an indirect,
wholly owned U.S. subsidiary of Schroders plc. SCM is also a wholly owned
subsidiary of Schroders U.S. Holdings Inc..

<PAGE>

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 retainer of $11,000 and additional fees of $1,250 per meeting
attended in person or $500 per meeting attended by telephone. Members of an
Audit Committee for one or more of the investment companies receive an
additional $1,000 per year. Payment of the annual retainer is allocated among
the various investment companies in the Schroder family of funds based on their
relative net assets. Payment of meeting fees is allocated only among those
investment companies to which the meeting relates. None of the registered
investment companies in the Schroder family of funds has any bonus, profit
sharing, pension or retirement plans.

The following table provides the fees paid to each independent Trustee of
the Trust for the year ended May 31, 1998.

PENSION OR TOTAL COMPENSATION
RETIREMENT FROM TRUST AND
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL FUND COMPLEX PAID
COMPENSATION FROM AS PART OF TRUST BENEFITS UPON TO TRUSTEES
NAME OF TRUSTEE TRUST EXPENSES RETIREMENT
- -------------------------------- -------------------- -------------------- -------------------- --------------------

Mr. Guernsey $2,289 $0 $0 $7,000
Mr. Howell $1,680 $0 $0 $7,000
Mr. Michalis $2,289 $0 $0 $7,000
Mr. Schwab $2,539 $0 $0 $7,750
Mr. Dinkins $1,430 $0 $0 $5,000
Mr. Knight $1,430 $0 $0 $6,250

</TABLE>

* In addition to the Trust, the "Fund Complex" includes three other
registered investment companies (Schroder Capital Funds II, an open-end company;
Schroder Capital Funds, an open-end company; and Schroder Series Trust, an
open--end company) for which SCMI or its affiliate Schroder Capital Management,
Inc., serves as investment adviser for each series.

As of June 30, 1998, the officers and Trustees of the Trust owned, in the
aggregate, less than 1% of the Trust's outstanding shares.

INVESTMENT ADVISER

SCMI, 787 Seventh Avenue, New York, New York 10019, serves as investment
adviser to the Fund under an investment advisory agreement between the Trust and
SCMI. SCMI is a wholly owned U.S. subsidiary of Schroders U.S. Holdings Inc.,
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 in eighteen countries. The
Schroder Group specializes in providing investment management services, with
funds under management of approximately $195 billion as of June 30, 1998.

Under the advisory agreement, SCMI is responsible for managing the
investment program for the Fund. . In this regard, it is SCMI's responsibility
to make decisions relating to portfolio investments and to place purchase and
sale orders regarding such investments with brokers or dealers it selects. SCMI
also furnishes the Trust Board with periodic reports on the investment
performance of the Fund. Under the terms of the advisory agreement, SCMI is

<PAGE>

required to manage the investment portfolio in accordance with applicable laws
and regulations.

The advisory agreement for the Fund continues in effect more than two years
following its effective date provided such continuance is approved annually: (1)
by the holders of a majority of the outstanding voting securities of the Fund or
by the Board; and, in either case, (2) by a majority of the Trustees who are not
parties to the agreement or "interested persons" (as defined in the 1940 Act) of
any such party. The advisory agreement may be terminated without penalty by vote
of the Trustees or the Fund's shareholders on 60 days' written notice to the
investment adviser, or by the investment adviser on 60 days' written notice to
the Trust, as the case may be, and each terminates automatically if assigned.
The advisory agreement also provides that 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 duties to the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of any obligations and duties under the agreement.

ADMINISTRATIVE SERVICES

On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Advisors, under which Schroder Advisors provides
management and administrative services necessary for the operation of the Fund,
including: (1) preparation of shareholder reports and communications; (2)
regulatory compliance, such as reports to and filings with the SEC and state
securities commissions; and (3) general supervision of the operation of the
Fund, including coordination of the services performed by its 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.

For providing administrative services Schroder Advisors is entitled to
receive a monthly fee at the annual rate set out in the Prospectus as to the
Fund's average daily net assets. The administration agreement is terminable with
respect to the Fund without penalty, at any time, by the Trust Board, upon 60
days' written notice to Schroder Advisors or by Schroder Advisors upon 60 days'
written notice to the Trust.

The Trust has entered into a subadministration agreement with FAdS. Under
its agreement, FAdS assists Schroder Advisors with certain of its
responsibilities under the administration agreement, including shareholder
reporting and regulatory compliance. For providing its services, FAdS is
entitled to receive a monthly fee from the Fund at the annual rate set out in
the Prospectus as to the Fund's average daily net assets. The subadministration
agreement is terminable with respect to the Fund without penalty, at any time,
by the Trust, upon 60 days' written notice to FAdS or by FAdS upon 60 days'
written notice to the Trust.

The fees paid by the Fund to SCMI and Schroder Advisors may equal up the
totals set forth in the Prospectus as to the Fund's average daily net assets.
Such fees as a whole are higher than advisory and management fees charged to
mutual funds that 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

Schroder Advisors, 787 Seventh Avenue, New York, New York 10019, serves as
Distributor of Fund shares under a Distribution Agreement. Schroder Advisors is
a wholly owned subsidiary of Schroders U.S. Holdings Inc., the parent company of

<PAGE>

SCMI, and is a registered broker-dealer organized to act as administrator and/or
distributor of mutual funds.

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 for printing and distributing prospectuses and
other sales materials to prospective investors, advertising expenses, and the
salaries and expenses of its employees or agents in connection with the
distribution of Fund shares.

Under a Distribution Plan (the "Plan," which is of the type known as a
reimbursement plan) adopted by the Trust with respect to Advisor Shares only,
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, being a "Distributor" of the Fund's shares) monthly (subject to a
limit of 0.50% per annum of that Fund's average daily net assets) for: (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 (other than the Distributor) or
other organizations 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. Although the Trustees have not
currently authorized payments under the Plan, payments by a Fund under the
Shareholder Service Plan, which will not exceed 0.25% of a Fund's average daily
net assets, will be deemed to have been made pursuant to the Plan to the extent
such payments may be considered to be primarily intended to result in the sale
of the Fund's Advisor Shares. Under the Plan, the Fund is not liable for
distribution expenditures of 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 expenses of sales staff responsible for
marketing shares of the Fund may be allocated among various series of the Trust
that have adopted a Plan similar to that of the Fund on the basis of average net
assets; travel expenses are allocated among the series of the Trust. The Trust
Board has concluded that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders.

Without shareholder approval, the Plan may not be amended to increase
materially the costs that the Fund may bear. Other material amendments to the
Plan must be approved by the Trust , and by 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 operation of the Plan or in any related
agreement (the "disinterested Trustees"), 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 disinterested Trustees. The Plan has been approved, and is subject to annual
approval, by the Trust Board and by the disinterested Trustees, by vote cast in
person at a meeting called for the purpose of voting on the Plan. The Plan is
terminable with respect to the Fund at any time by a vote of a majority of the
disinterested Trustees or by vote of the holders of a majority of the shares of
the Fund.

<PAGE>

SHAREHOLDER SERVICING PLAN AND SERVICE ORGANIZATIONS

Under the Shareholder Service Plan approved by the Trust for the Fund's
Advisor Shares, the Trust may also contract with banks, trust companies,
broker-dealers or other financial organizations ("Service Organizations") to
provide certain administrative services for shareholders of the Fund's Advisor
Shares. The Fund may pay fees (which may vary depending upon the services
provided) to Service Organizations in amounts up to an annual rate of 0.25% of
the daily net asset value of the Fund's Advisor Shares owned by shareholders
with whom the Service Organization has a servicing relationship. Services
provided by Service Organizations may include: (1) providing personnel and
facilities necessary to establish and maintain certain shareholder accounts and
records; (2) assisting in processing purchase, exchange and redemption
transactions; (3) arranging for the wiring of funds or transmitting and
receiving funds in connection with client orders to purchase or redeem shares;
(4) verifying and guaranteeing client signatures in connection with redemption
orders, transfers among, and changes in client-designated accounts; (5)
providing periodic statements of a client's account balances and, to the extent
practicable, integrating such information with other client transactions; (6)
furnishing periodic and annual statements and confirmations of all purchases and
redemptions of shares in a client's account; (7) transmitting proxy statements,
annual reports, and updating prospectuses and other communications from the Fund
to clients; and (8) 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 has no intention of making any such payments to
Service Organizations with respect to accounts of institutional investors and,
in any event, would make no such payments until the Trust Board specifically so
authorizes.

Some Service Organizations may impose additional or different conditions on
their clients, such as requiring them to invest more than the minimum
investments specified by the Fund or charging a direct fee for servicing. If
imposed, these fees would be in addition to any amounts that might be paid to
the Service Organization by the Fund. Each Service Organization agrees 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.

FUND ACCOUNTING

Forum Accounting Services, LLC ("Forum Accounting"), an affiliate of Forum,
performs fund accounting services for the Fund under an agreement with the
Trust. The Accounting Agreement is terminable with respect to the Fund without
penalty, at any time, by the Trust upon 60 days' written notice to Forum
Accounting or by Forum Accounting upon 60 days' written notice to the Trust.

Under its agreement, Forum Accounting prepares and maintains the books and
records of the Fund that are required to be maintained under the 1940 Act,
calculates the net asset value per share of the Fund, calculates dividends and
capital-gain distributions, and prepares periodic reports to shareholders and
the SEC. For its services to the Fund, Forum Accounting is entitled to receive
from the Trust a fee of $36,000 per year plus $12,000 per year for each class of
the Fund above one. Forum Accounting is entitled to an additional $24,000 per
year with respect to global and international funds. In addition, Forum
Accounting also is entitled to an additional $12,000 per year with respect to
tax-free money market funds, funds with more than 25% of their total assets
invested in asset-backed securities, funds that have more than 100 security
positions, or funds that have a monthly portfolio turnover rate of 10% or
greater. During any period in which Schroder Greater China Fund, or any other
series of the Trust, 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 1940 Act, the fee
payable to Forum Accounting under the agreement is $12,000 annually for each
series so invested.

<PAGE>

Forum Accounting is required to use its best judgment and efforts in
rendering fund accounting services and is not liable to the Trust for any action
or inaction in the absence of bad faith, willful misconduct or gross negligence.
Forum Accounting 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. The
Trust has agreed to indemnify and hold harmless Forum Accounting and 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 all other expenses arising out of or in any way
related to Forum Accounting's actions taken or failures to act with respect to
the Fund or based, if applicable, upon information, instructions or requests
with respect to the Fund given or made to Forum Accounting by an officer of the
Trust duly authorized. This indemnification does not apply to Forum Accounting's
actions taken or failures to act in cases of Forum Accounting's own bad faith,
willful misconduct or gross negligence.

PORTFOLIO TRANSACTIONS

INVESTMENT DECISIONS

Investment decisions for the Fund and for SCMI's other investment advisory
clients 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, and a particular security
may be 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 other 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 that, 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. The Fund's
portfolio transaction costs are borne pro rata by its investors, including the
Fund that invests in it.

BROKERAGE AND RESEARCH SERVICES

Transactions on U.S. stock exchanges and other agency transactions involve
the payment of negotiated brokerage commissions. Such commissions vary among
brokers. Also, a particular broker may charge different commissions according to
the difficulty and size of the transaction; for example, 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 are 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, SCMI seeks 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 U.S. There is generally no stated commission in the case of
securities traded in the over-the-counter markets, but the price paid usually
includes an undisclosed dealer commission or mark-up. In underwritten offerings,
the price paid includes a disclosed, fixed commission or discount retained by
the underwriter or dealer.

The Fund's advisory agreement authorizes and directs SCMI to place orders
for the purchase and sale of the Fund's investments with brokers or dealers it
selects 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 through a substantial number of brokers and dealers. In so
doing, SCMI uses its best efforts to obtain the most favorable price and

<PAGE>

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
considers all factors it deems relevant (including price, transaction size, the
nature of the market for the security, the commission amount, 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).

Historically, investment advisers, including advisers of investment
companies and other institutional investors, have received research services
from broker-dealers that execute portfolio transactions for the advisers'
clients. Consistent with this practice, SCMI may receive research services from
broker-dealers with which it places 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 that provides SCMI with "brokerage and research services"
(as defined in the 1934 Act) an amount of disclosed commission for effecting a
securities transaction in excess of the commission which another broker-dealer
would have charged for effecting that transaction. In addition, although it does
not do so currently 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, each Board of Trustees has authorized
SCMI to employ: (1) Schroder & Co. Inc. ("Schroder Inc.") an affiliate of SCMI,
to effect securities transactions on the New York Stock Exchange only; and (2)
Schroder Securities Limited and its affiliates (collectively, "Schroder
Securities"), affiliates of SCMI, to effect securities transactions 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 Inc. 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 that 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 policy of the Trust that
commissions paid to Schroder Inc. or Schroder Securities must be, in SCMI's
opinion: (1) at least as favorable as commissions contemporaneously charged by
Schroder Inc. or Schroder Securities, as the case may be, on comparable
transactions for their most favored unaffiliated customers; and (2) 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 respective non-interested Trustees, have each adopted procedures
pursuant to Rule 17e-1 under the 1940 Act to ensure that commissions paid to
Schroder Inc. or Schroder Securities by the Fund satisfy the foregoing
standards. Such procedures are reviewed periodically by the Board, including a

<PAGE>

majority of the non-interested Trustees. The Board also reviews all transactions
at least quarterly for compliance with such procedures.

It is further a policy of the Fund that all such transactions effected by
Schroder Inc. 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 Inc. actually execute the
transaction on the exchange floor or through the exchange facilities. Thus,
while Schroder Inc. will bear responsibility for determining important elements
of execution such as timing and order size, another firm will actually execute
the transaction.

Schroder Inc. pays a portion of the brokerage commissions it receives from
the Fund to the brokers executing the transactions on the New York Stock
Exchange. In accordance with Rule 11a2-2(T), the Board has entered into an
agreement with Schroder Inc. permitting it to retain a portion of the brokerage
commissions paid to it by the Fund.

The Fund does not have any understanding or arrangement to direct any
specific portion of its brokerage to Schroder Inc. or Schroder Securities, and
neither will direct brokerage to Schroder Inc. or Schroder Securities in
recognition of research services

From time to time, the Fund may purchase securities of a broker or dealer
through which it regularly engages in securities transactions.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

DETERMINATION OF NET ASSET VALUE PER SHARE

The net asset value per share of each class of the Fund is determined as of
the close of trading on the New York Stock Exchange each day that the Exchange
is open. 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, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

The Board has established procedures for the valuation of the Fund's
securities: (1) 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); (2) 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; (3)
securities (including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures; (4) 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 (5) 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.

<PAGE>

When an option is written, an amount equal to the premium received is
recorded in the 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. Options 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.

REDEMPTIONS IN-KIND

In the event that payment for redeemed shares is made wholly or partly in
portfolio securities, shareholders may incur brokerage costs in converting the
securities to cash. An in-kind distribution of portfolio securities is generally
less liquid than cash. The shareholder may have difficulty 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 portfolio securities could
result in a less diversified portfolio of investments for the Fund and could
affect adversely the liquidity of its investment portfolio.

TAXATION

Under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund and
each other series established from time to time by the Trust Board is treated as
a separate taxpayer for federal income tax purposes with the result that: (1)
each such series must meet separately the income and distribution requirements
for qualification as a regulated investment company; and (2) the amounts of
investment income and capital gain earned are determined on a series-by-series
(rather than on a Trust-wide) basis.

The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. To do so, the Fund must 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 gain over net long-term capital loss), 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 gain" (the excess of net
long-term capital gain over net short-term capital loss) 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 this, 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 gain
or loss) for the calendar year; (2) at least 98% of the excess of its capital
gain over capital loss realized during the one-year period ending October 31 of
such year; and (3) all such ordinary income and capital gain 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 net realized
short-term capital gain) are taxable to shareholders as ordinary income.
Generally, it is not expected that such distributions will be eligible for the

<PAGE>

dividends received deduction available to corporations. However, if the Fund
acquires at least 10% of the stock of a foreign corporation that has U.S. source
income, a portion of that Fund's ordinary income dividends attributable to such
income may be eligible for such deduction, if certain requirements are met.
Distributions of net long-term capital gain are taxable to shareholders as
long-term capital gain, regardless of the length of time Fund shares have been
held by a shareholder and are not eligible for the dividends received deduction.
Such distributions will qualify for the new reduced rates for capital gains on
assets held for more than 18 months to the extent they represent gains on the
sale of such assets. A loss realized by a shareholder on the sale of Fund shares
with respect to which capital-gain distributions have been paid will, to the
extent of such capital-gain distributions, be treated as long-term capital loss
(even though 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
distribution 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 to shareholders are taxable whether reinvested in
additional shares or received in cash. Shareholders that reinvest distributions
will have for federal income tax purposes a cost basis 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 that
Fund's shares. If a distribution reduces 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 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, which will be returned to the investor
in the form of a taxable distribution.

Upon redemption or sale of shares, a shareholder will realize a taxable
gain or loss, which 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, and generally will qualify for the new reduced rates for capital gains
if the shares have been held for more than 18 months.

Ordinary income dividends paid to Fund shareholders who are nonresident
aliens are 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 advisors concerning
the applicability of the U.S. withholding tax.

Dividends and interest received (and, in certain circumstances, realized
capital gain) 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, that Fund will be eligible, and ordinarily expects, 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

<PAGE>

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, that 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 that Fund as a dividend to its shareholders.

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

Code Section 1092, which applies to certain "straddles," may affect the
taxation of 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.

In general, gain from "foreign currencies" and from foreign currency
options, foreign currency futures contracts 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 contracts 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 gain or loss 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 gain or loss 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 the Code Section 988 loss exceeds 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 loss
was realized but in the same taxable year would be recharacterized as a return

<PAGE>

of capital to shareholders, thereby reducing each shareholder's basis in his or
her Fund shares.

The Trust is required to report to the Internal Revenue Service ("IRS") all
distributions and 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 it
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 advisors about the
applicability of the backup withholding provisions.

U.S. federal income taxation of a shareholder who, under the Code, is a
non-resident alien individual, a foreign trust or estate, foreign corporation or
foreign partnership ("non-U.S. shareholder") depends on whether the income from
the Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder. Ordinarily, income from the Fund will not be treated as so
"effectively connected."

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

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

If the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by a non-U.S. shareholder, then distributions of net
investment income (which includes short-term capital gains) whether received in
cash or reinvested in shares net long-term capital gains and amounts otherwise
includable in income, such as amounts retained by the Fund which are designated
as undistributed capital gains and any gains realized upon the sale of shares of
the Fund will be subject to U.S. federal income tax at the graduated rates
applicable to U.S. taxpayers. Non-U.S. shareholders that are corporations may
also be subject to the branch profits tax.

<PAGE>

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

The income tax and estate tax consequences to a non-U.S. shareholder
entitled to claim the benefits of an applicable tax treaty may be different from
those described herein. Non-U.S. shareholders may be required to provide
appropriate documentation to establish their entitlement to the benefits of such
a treaty.

Non-U.S. shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in shares of
the Fund.

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, foreign, state and local taxation.

OTHER INFORMATION

FUND STRUCTURE

CLASSES OF SHARES. The Fund has two classes of shares, Investor Shares and
Advisor Shares. Advisor Shares are offered by a separate prospectus to
individual investors, in most cases through Service Organizations. Advisor
Shares incur more expenses but have lower investment minimums than Investor
Shares. Except for certain class differences, each share of each class
represents an undivided, proportionate interest in the Fund. Each share of the
Fund is entitled to participate equally in dividends and other distributions and
the proceeds of any liquidation of the Fund except that, due to the differing
expenses borne by the two classes, the amount of dividends and other
distributions differs between the classes. Information about the other class of
shares is available from the Trust by calling Schroder Advisors at
1-800-730-2932.

ORGANIZATION OF THE TRUST

The Trust was organized as a Maryland corporation on July 30, 1969;
reorganized on February 29, 1988 as Schroder Capital Funds, Inc.; and
reorganized on January 9, 1996, as a Delaware business trust. The Trust is
registered as an open-end management investment company under the 1940 Act.

Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. 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

<PAGE>

circumstances in which Delaware law does not apply (or no contractual limitation
of liability was in effect) and the series is unable to meet its obligations.
Schroder believes that, in view of the above, there is no risk of personal
liability to shareholders.

CAPITALIZATION AND VOTING

The Trust has authorized an unlimited number of shares of beneficial
interest. The Trust Board may, without shareholder approval, divide the
authorized shares into an unlimited number of separate series (such as the Fund)
and may divide series into classes of shares, and the costs of doing so may be
borne by a series or a class or the Trust in accordance with the Trust
Instrument. The Trust currently consists of eleven series. Each series offers
two classes of shares, Investor Shares and Advisor Shares.

When issued for the consideration described in the relevant Prospectus or
under the dividend reinvestment plan, shares are fully paid, nonassessable, and
have no preferences as to conversion, exchange, dividends, retirement or other
features. Shares have no preemptive rights and 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.
Each shareholder of record is entitled to one vote for each full share held (and
a fractional vote for each fractional share held).

The Trust does 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 are not submitted to
shareholders unless a meeting of shareholders is held for some other reason,
such as those indicated below. Each Trustee serves until death, resignation or
removal. Vacancies are 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. Similarly, the selection of independent accountants
and renewal of investment advisory agreements for future years is performed
annually by the Trust 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 independent accountants
if the employment of the Trust's independent accountants has been terminated,
and to seek any other shareholder approval required under the 1940 Act. The
Trust Board has the power to call a meeting of shareholders at any time when it
believes it is necessary or appropriate.

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 at any meeting of the shareholders.

PERFORMANCE INFORMATION

Performance quotations of the average annual total return and
cumulative total return of the Fund is provided in advertisements or reports to
shareholders or prospective investors.

Quotations of average annual total return are expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund or class over periods of 1, 5 and 10 years (or since commencement of
operations if any of these periods are not available), calculated pursuant to
the following formula:

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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 reflect the deduction of fund and any class expenses (net of any
reimbursed expenses) on an annual basis and generally assume that all dividends
and distributions, when paid, are reinvested in shares of the same class.

Quotations of cumulative total return reflect only the performance of a
hypothetical investment in a fund or a class during the particular time period
shown. cumulative total returns vary based on changes in market conditions and
the level of a fund's and any applicable class's expenses, and no reported
performance figure should be considered an indication of performance which may
be expected in the future.

In communications to current or prospective shareholders, performance
figures such as cumulative total return, also may be compared with the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indexes that may assume reinvestment of dividends but generally do not
reflect deductions for administrative and management costs.

Investors who purchase and redeem shares through a customer account
maintained at a financial institution or a Service Organization may be charged
one or more of the following types of fees as agreed upon by the financial
institution or Service Organization and the investor, with respect to the
customer services provided: (1) account fees (a fixed amount per month or per
year); (2) transaction fees (a fixed amount per transaction processed); (3)
compensating balance requirements (a minimum dollar amount a customer must
maintain in order to obtain the services offered); or (4) 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 have the effect of reducing
the average annual or cumulative total returns for those investors.

CUSTODIAN The Chase Manhattan Bank, 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 currently 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 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 Shareholder Services, LLC, Two Portland Square, Portland, Maine
04101, acts as the Fund's transfer agent and dividend disbursing agent.

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LEGAL COUNSEL

Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624,
counsel to the Trust, passes upon certain legal matters in connection with the
shares offered by the Fund.

INDEPENDENT ACCOUNTANT

PricewaterhouseCoopers LLP serves as independent accountants for the Trust.
PricewaterhouseCoopers LLP provides audit services and consultation in
connection with review of U.S. SEC filings. Their address is One Post Office
Square, Boston, Massachusetts 02109.

YEAR 2000 DISCLOSURE

The Fund receives services from the investment advisor, administrators,
distributor, transfer agent and custodian which rely on the smooth functioning
of their respective systems and the systems of others to perform those services.
It is generally recognized that certain systems in use today may not perform
their intended functions adequately after the Year 1999 because of the inability
of the software to distinguish the year 2000 from the year 1900. Schroder
Advisors is taking steps that it believes are reasonably designed to address
this potential "Year 2000" problem and to obtain satisfactory assurances that
comparable steps are being taken by the Fund's other major service providers.
There can be no assurance, however, that these steps will be sufficient to avoid
any adverse impact on the Fund from this problem.

REGISTRATION STATEMENT

This SAI and the Prospectuses do not contain all the information
included in the Trust's registration statement filed with the SEC 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
SEC. The registration statement, including the exhibits filed therewith, may be
examined at the office of the SEC in Washington, D.C.

Statements contained herein and in the Prospectuses 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.

<PAGE>

APPENDIX A

RATINGS OF CORPORATE DEBT INSTRUMENTS

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

FIXED-INCOME SECURITY RATINGS

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

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

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

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

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

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

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

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"Caa" Fixed-income securities which are rated "Caa" are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest. "Ca" Fixed-income securities which are rated "Ca"
present obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings.

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

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

COMMERCIAL PAPER RATINGS

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

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

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

FIXED-INCOME SECURITY RATINGS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

COMMERCIAL PAPER RATINGS

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

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

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

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

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