SCHRODER CAPITAL FUNDS /DELAWARE/, 485APOS, 1998-01-27

SCHRODER CAPITAL FUNDS /DELAWARE/
485APOS, 1998-01-27

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As filed with the Securities and Exchange Commission on January 27, 1998

File No. 2-34215
File No. 811-1911
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 65

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 46
- --------------------------------------------------------------------------------

SCHRODER CAPITAL FUNDS (DELAWARE)
(FORMERLY SCHRODER CAPITAL FUNDS, INC.)
(Exact Name of Registrant as Specified in Charter)

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

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

Catherine S. Wooledge, Esq.
Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)

Copies of Communications to:
Timothy W. Diggins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 10005

Alexandra Poe, Esq.
Schroder Capital Management International Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019
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It is proposed that this filing will become effective:

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

Title of Securities being registered: Schroder Asia Fund; Schroder Japan Fund.
Registrant's Schroder Asia Fund and Schroder Japan Fund are structured as
master-feeder funds. This amendment is executed for the master fund.

<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(C))

PART A
(Prospectuses offering Advisor Shares and Investor Shares
of Schroder Asia Fund and Schroder Japan Fund)

<TABLE>
<S> <C> <C>
Form N-1A
ITEM NO. (CAPTION) LOCATION IN PROSPECTUS (CAPTION)

1. Cover Page Cover Page

2. Synopsis EXPENSES OF INVESTING IN THE
FUND -- Fee Table

3. Condensed Financial Information None

4. General Description of INVESTMENT OBJECTIVE AND
Registrant POLICIES; OTHER INFORMATION --
Capitalization and Voting, Fund Structure,
Certain Risks of Investing in the Portfolio

5. Management of the Fund MANAGEMENT OF THE FUND-- Boards of
Trustees; Investment Adviser and Portfolio
Managers; Administrative Services;
Distribution Plan; Shareholder Services
Plan; Expenses; Portfolio Transactions

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

6. Capital Stock and Other Securities OTHER INFORMATION -- Capitalization
and Voting; Shareholder Inquiries;
DIVIDENDS, DISTRIBUTIONS AND TAXES

7. Purchase of Securities Being Offered MANAGEMENT OF THE FUND-- Distribution
Plan; INVESTMENT IN THE FUND-- Purchase of
Shares; Retirement Plans and Individual
Retirement Accounts; Exchanges; Net Asset
Value

8. Redemption or Repurchase INVESTMENT IN THE FUND --
Redemption of Shares; Net Asset Value

9. Pending Legal Proceedings Not Applicable

</TABLE>

2
<PAGE>

CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(C))

PART B
(SAI offering Advisor Shares and Investor Shares
of Schroder Asia Fund and Schroder Japan Fund)
<TABLE>
<S> <C> <C>
Form N-1A Location in Statement of Additional
ITEM NO. (CAPTION) INFORMATION (CAPTION)

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History OTHER INFORMATION -- Organization

13. Investment Objectives and Policies ADDITIONAL INFORMATION REGARDING FUND
INVESTMENTS; INVESTMENT RESTRICTIONS

14. Management of the Fund MANAGEMENT -- Officers and Trustees;
Investment Adviser

15. Control Persons and Principal Not Applicable
Holders of Securities

16. Investment Advisory and MANAGEMENT -- Officers and
Other Services Trustees; Investment Adviser;
Administrative Services; Distribution
of Fund Shares; Fund Accounting;
PORTFOLIO TRANSACTIONS -- Investment
Decisions; Brokerage and Research
Services; OTHER INFORMATION --
Custodian; Transfer Agent and
Dividend Disbursing Agent; Legal
Counsel; Independent Accountant

17. Brokerage Allocation and PORTFOLIO TRANSACTIONS
Other Practices

18. Capital Stock and Other Securities OTHER INFORMATION -- Capitalization
and Voting

19. Purchase, Redemption and Pricing of ADDITIONAL PURCHASE AND
Securities Being Offered REDEMPTION INFORMATION

20. Tax Status Taxation

21. Underwriters MANAGEMENT -- Distribution of Fund Shares

22. Calculation of Performance Data OTHER INFORMATION -- Performance Information

23. Financial Statements Not Applicable
</TABLE>

3
<PAGE>

SCHRODER ASIA FUND
ADVISOR SHARES

The investment objective of Schroder Asia Fund (the "Fund") is to seek long-term
capital appreciation. The Fund seeks to achieve this objective primarily through
investment in equity securities of Asian companies, namely, companies domiciled
or doing business in established and emerging markets in Asia. These Asian
markets include China, Hong Kong SAR, India, Indonesia, Korea, Malaysia,
Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan, Thailand, and others in
the region ( other than Japan ) that permit foreign investors to participate in
their stock markets. The Fund is intended for investors who seek the aggressive
growth potential of foreign markets and are willing to bear the special
investment risks of investing in those markets.

The Fund invests substantially all of its assets in Schroder Asian Growth
Portfolio ( the "Portfolio"). The Portfolio is a separately managed
non-diversified investment company. Schroder Capital Management International
Inc. is the investment adviser to the Fund and to the Portfolio. The Fund is a
series of Schroder Capital Funds ( Delaware ) ( the "Trust").

This Prospectus explains concisely the information you should know before
investing in the Fund's Advisor shares. Please read it carefully and keep it for
future reference. You can find more detailed information about the Trust and the
Fund in the [April __,] 1998 Combined Statement of Additional Information
("SAI"), as amended from time to time. The SAI has been filed with the
Securities and Exchange Commission ("SEC") and is available along with other
related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). A free copy may be obtained without charge from the Trust
by writing to Two Portland Square, Portland, Maine 04101 or by 1-800-290-9826.
The SAI has been incorporated into this Prospectus by reference. The Fund has
not authorized anyone to provide you with information that is different from
what is contained in this Prospectus or in other documents to which this
Prospectus refers you.

FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FDIC, THE
FEDERAL RESERVE SYSTEM OR ANY OTHER GOVERNMENT AGENCY AND ALSO ARE NOT
OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR GUARANTEED BY, ANY BANK OR
ITS AFFILIATES. FUND INVESTMENTS 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.

PROSPECTUS
[APRIL __, 1998]

4
<PAGE>

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

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.

SCHRODER CAPITAL FUNDS ( DELAWARE ) 1-800-290-9826
SCHRODER ASIA FUND
<TABLE>
<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 INTERNATIONAL SMALLER COMPANIES FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER MIDCAP VALUE FUND
SCHRODER EMERGING MARKETS FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER JAPAN FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND SCHRODER SERIES TRUST II 1-800-464-3108
SCHRODER MICRO CAP FUND SCHRODER ALL-ASIA FUND
</TABLE>

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

5
<PAGE>

EXPENSES OF INVESTING IN THE FUND

FEE TABLE

Expenses are one of several factors to consider when investing in the
Fund's Advisor Shares. There are no transaction expenses associated with
purchases or redemptions of Advisor Shares. The "Annual Operating Expenses"
table and related "Example" estimate the expenses that your investment in
Advisor Shares would incur based upon the Fund's anticipated expenses for its
first fiscal year. Annual Operating Expenses include the Fund's pro rata portion
of all estimated operating expenses of the Portfolio. The Example shows the
cumulative expenses attributable to a hypothetical $1,000 investment in the Fund
over specified periods. See "Management of the Fund -- Fees -- Expenses".
<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
Management Fees (after fee waivers)(2)(3).......................................................... 0.95%
12b-1 Fees......................................................................................... None
Other Expenses (after fee waivers and expense reimbursements)(3)................................... 0.80%
-----
Total Fund Operating Expenses (after fee waivers and expense reimbursements)(3).................... 1.75%
</TABLE>

- -----------
(1) The Fund's expenses include the Fund's pro rata portion of all
operating expenses of the Portfolio.
(2) Management Fees reflect the fees to be paid to SCMI and Schroder
Advisors for investment advisory and administrative services if the
Fund's assets are invested in the Portfolio.
(3) SCMI and Schroder Advisors have voluntarily undertaken to waive a
portion of their fees and assume certain expenses of the Fund during
the current fiscal year in order to limit the Fund's total expenses to
[1.75]% of the Fund's average daily net assets. This undertaking cannot
be withdrawn except by a majority vote of the Trust's Board of
Trustees. See "Management of the Fund -- Expenses". Without fee
waivers, Management Fees, Other Expenses and Total Fund Operating
Expenses would be %, % and %, respectively.

EXAMPLE

The table below indicates how much you would pay in total expenses on a
$1,000 investment in the Fund, assuming: (1) a 5% annual return; and (2)
redemption at the end of each time period. The example is based on the expenses
listed above, assumes reinvestment of all dividends and other distributions, and
assumes both payment of the maximum sales charge and payment of no sales charge.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
OR RETURNS; ACTUAL EXPENSES OR RETURNS MAY VARY FROM THOSE SHOWN. FEDERAL
REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL RETURNS
WILL VARY.

PERIOD

1 YEAR..............................................................$18
3 YEARS.............................................................$55

6
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to seek long-term capital
appreciation. The Fund seeks to achieve this objective through investment
primarily in equity securities of companies domiciled or doing business in
established and emerging markets in Asia.

The Fund is intended for investors who seek the aggressive growth
potential of foreign markets and are willing to bear the special investment
risks of investing in those markets. Investments in the securities of foreign
issuers generally involve risks in addition to the risks associated with
investments in the securities of U.S. issuers.

The Fund currently seeks to achieve its investment objective by
investing its assets in the Portfolio. The Portfolio has investment objectives
that are identical to those of the Fund and has substantially similar investment
policies. There can be no assurance that the Fund or the Portfolio will achieve
its investment objective.

Although the following information describes the investment policies of
the Fund, it applies generally to the Portfolio.

As a matter of fundamental policy, under normal market conditions the
Fund invests at least 65% of its total assets in equity securities of Asian
companies.

Asian companies in which the Fund may invest include companies that:
(1) are organized under the laws of China, Hong Kong SAR, India, Indonesia,
Korea, Malaysia, Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan, or
Thailand, or any other countries (other than Japan) in the Asian region located
south of the border of the former Soviet Union, east of the borders of
Afghanistan and Iran, north of the Australian sub-continent, and west of the
International Date Line and that, in the future, permit foreign investors to
participate in their stock markets (collectively, "Asian countries", and each,
an "Asian country"); or (2) as determined by SCMI, either: (a) derive at least
75% of their revenues from goods produced or sold, investments made or services
performed in Asian countries; or (b) maintain at least 75% of their assets in
Asian countries.

Equity securities in which the Fund may invest include common stocks,
preferred stocks, convertible preferred stocks, convertible debt securities, and
stock rights and warrants to purchase any of the foregoing, as well as equity
interests in trusts, partnerships, joint ventures, or similar enterprises, and
American or Global Depositary Receipts, and other similar instruments providing
for indirect investment in securities of foreign issuers. Under certain
circumstances, the Fund may invest indirectly in equity securities by investing
in other investment companies or similar pooled vehicles. See "Investment in
Other Investment Companies". Under normal market conditions, the Fund will be
invested in at least five Asian countries.

The Fund may invest up to 10% of its total assets in debt securities,
including, for example, securities of foreign corporations or governments, or
international organizations that are unrated or rated below investment grade.
See "Debt Securities" and "Other Investment Practices and Risk Considerations".

All percentage limitations on investments apply at the time of purchase
and will not be considered violated unless an excess or a deficiency occurs or
exists immediately after and as a result of the investment, except that the
policies stated with regard to borrowing and liquidity will be observed at all
times. Additional information concerning the investment policies and
restrictions of the Fund and the Portfolio is contained in the SAI.

OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS

At times, SCMI may judge that market conditions 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,
primarily designed to reduce fluctuations in the values of the Fund's assets. In
implementing these "defensive" strategies, the Fund may invest without limit in
U.S. government securities, another high-quality debt instruments that SCMI
believes to be consistent with the Fund's best interests.

7
<PAGE>

The Fund may invest more than 25% of its total assets in issuers
located in any one of the Asian countries. To the extent that it does so, the
Fund is more exposed to factors that could adversely affect that country,
including political and economic developments and foreign exchange rate
fluctuations as discussed above. As a result of investing substantially in one
country, the value of the Fund's assets may fluctuate more widely than the value
of shares of a comparable fund with a lesser degree of geographic concentration.

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

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 in 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, currency devaluations, 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. The laws of some
foreign countries may limit the Fund's ability to invest in securities of
issuers located in those countries.

Most of the Fund's assets and income are expected to be denominated in
foreign currencies. Currency values are affected by a wide variety of economic
forces and events; thus, fluctuations in values can be difficult, if not
impossible, to predict. If the Fund purchases securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and the
Fund's income. Further, if the value of a particular currency declines between
the time the Fund incurs expenses in U.S. dollars and the time such expenses are
paid, the amount of such other currency required to be converted into U.S.
dollars in order to pay such expenses will be greater than the amount that would
have been needed at the time the expenses were incurred. 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.

Special tax considerations apply to foreign securities. In determining
whether to invest in foreign securities, SCMI considers the likely impact of
foreign taxes on the net yield available to the Fund and its shareholders.
Income and/or gains 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 the net income
available for the Fund to allocate to shareholders.

EMERGING MARKETS. The Fund intends to invest in securities of issuers
in Asian emerging market countries and may at times invest a substantial portion
of its assets in such securities. The prices of securities of issuers in
emerging market countries are subject to greater volatility than those of
issuers in 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 market 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,

8
<PAGE>

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 Asian 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 EXCHANGE CONTRACTS. 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. 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.

The Fund may enter into forward contracts for the purchase or sale of
foreign currency: (1) to "lock in" the U.S. dollar price of the securities
denominated in a foreign currency or the U.S. dollar value of interest and
dividends to be paid on such securities; or (2) to hedge against the possibility
that a foreign currency may suffer a decline against the U.S. dollar. 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. This
method of attempting to hedge against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of securities and exposes
the Fund to the risk that the counterparty is unable to perform. Although the
strategy of engaging in foreign currency 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.

The Fund does not intend to maintain a net exposure to such contracts
if the fulfillment of obligations under such contracts would obligate it to
deliver an amount of foreign currency in excess of the value of its portfolio
securities or other assets denominated in the currency. The Fund will not enter
into these contracts for speculative purposes and will not enter into
non-hedging currency contracts. The Fund will generally not enter into a forward
contract with a term of greater than one year. Forward contracts are not
exchange traded, and there can be no assurance that a liquid market will exist
at a time when the Fund seeks to close out a forward contract. Currently, only a
limited market, if any, exists for hedging transactions relating to currencies
in certain emerging markets or to securities of issuers domiciled or principally
engaged in business in certain emerging markets. This may limit the Fund's
ability to hedge its investments in those markets. These contracts involve a
risk of loss if SCMI fails to predict accurately changes in relative currency
values.

INVESTMENT IN SMALLER COMPANIES. The Fund may invest a 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 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 security.

9
<PAGE>

NON-DIVERSIFICATION. The Fund is a "non-diversified" investment company
under the Investment Company Act of 1940, as amended. This means that it may
invest its assets in a limited number of issuers. Under the Internal Revenue
Code, the Fund generally may not invest more than 25% of its assets in
securities of any one issuer other than U.S. government securities and, with
respect to 50% of its total assets, the Fund may not invest more than 5% of its
total assets in the securities of any one issuer (except U.S. government
securities). Thus, the Fund may invest up to 25% of its total assets in the
securities of each of any two issuers. To the extent the Fund invests in
securities of relatively few issuers, the value of its shares will be affected
by changes in the values of those securities more than if it had invested in a
more diversified portfolio.

DEBT SECURITIES. The Fund may seek capital appreciation through
investment in convertible or non-convertible debt securities. The Fund may
invest in debt securities issued or guaranteed by Asian governments (including
countries, provinces and municipalities) or their agencies and instrumentalities
("governmental entities"); debt securities issued or guaranteed by international
organizations designated or supported by multiple foreign governmental entities
(which are not obligations of foreign governments) to promote economic
reconstruction or development; and debt securities issued by corporations or
financial institutions.

The Fund may invest in lower-quality, high-yielding debt securities
that may be rated below investment grade. Lower-rated debt securities (commonly
called "junk bonds") are considered to be of poor standing and predominantly
speculative. Securities in the lowest rating categories may have extremely poor
prospects of attaining any real investment standing, and some of those
securities in which the Fund may invest may be in default. The rating services'
descriptions of securities in the various rating categories, including
speculative characteristics, are set forth in the SAI.

The values of lower-rated securities fluctuate in response to changes
in interest rates like those of other fixed-income securities. In addition, the
lower ratings of such securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the ability or perceived inability of an issuer to make payments of interest and
principal may also affect the value of these investments. See the SAI.

OPTIONS AND FUTURES TRANSACTIONS. Although the Fund does not presently
intend to do so, it may: (1) write covered call options on portfolio securities,
and the U.S. dollar and Asian country currencies without limit; (2) write
covered put options on portfolio securities and the U.S. dollar and Asian
country currencies with the limitation that the aggregate value of the
obligations underlying the puts determined as of the date the options are sold
will not exceed 50% of the Fund's net assets; (3) purchase call and put options
in amounts up to 5% of its total assets; and (4)(a) purchase and sell
exchange-traded futures contracts on underlying portfolio securities, any Asian
country currency, U.S. and Asian country fixed-income securities and such
indices of U.S. or Asian country equity or fixed-income securities as may exist
or come into being, and (b) purchase and write call and put options on such
futures contracts, in all cases involving such futures contracts or options on
futures contracts for hedging purposes only, and without limit, except that the
Fund may not enter into futures contracts or purchase related options if,
immediately thereafter, the amount committed to margin plus the amount paid for
premiums for unexpired options on futures contracts generally exceeds 5% of the
value of the Fund's total assets. All of the foregoing are referred to as
"Hedging Instruments".

In general, the Fund may use Hedging Instruments: (1) to protect
against declines in the market value of the Fund's portfolio securities or stock
index futures, and the currencies in which they are denominated, or (2) to
establish a position in securities markets as a temporary substitute for
purchasing securities. The Fund will not use Hedging Instruments for
speculation. Hedging Instruments have certain risks associated with them,
including: (1) the possible failure of such instruments as hedging techniques in
cases where the price movement of the securities underlying the options or
futures does not follow the price movements of the portfolio securities subject
to the hedge; (2) potentially unlimited loss associated with futures
transactions and the possible lack of a liquid secondary market for closing out
a futures position; and (3) possible losses resulting from the inability of the
Fund's investment adviser to predict the direction of stock prices, interest
rates, relative currency values and other economic factors. In addition, only a
limited market, if any, currently exists for hedging transactions relating to

10
<PAGE>

currencies in many Asian countries or to securities of issuers domiciled or
principally engaged in business in Asian countries. This may limit the Fund's
ability to hedge its investments in such Asian countries. The Fund has no plans
to enter into currency futures or options contracts but may do so in the future.
See "Options and Futures Transactions" in the SAI for additional information on
Hedging Instruments the Fund may use and the risks associated with them.

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
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 the option and futures contract, there is no
assurance that the Fund will be able to effect closing transactions at any
particular time or at any 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 SCMI's opinion, 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 or index, or
in the prices of the securities 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 invests 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 a certain regulatory and tax considerations. The Fund's
hedging transactions may affect the character or amount of its allocations to
interestholders.

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

SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The
Fund may lend portfolio securities amounting to not more than one-half of its
total assets to brokers, dealers and financial institutions meeting specified
credit conditions, and may enter into repurchase agreements without limit. 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 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.

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<PAGE>

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.

INVESTMENTS IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund is
permitted to invest in other investment companies or pooled vehicles, including
closed-end funds, that are advised by SCMI or its affiliates or by unaffiliated
parties. Pursuant to the 1940 Act, 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 1940 Act or any
orders, rules or regulations thereunder. When investing through investment
companies, the Fund may pay a premium 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.

TEMPORARY INVESTMENTS. For cash management purposes, pending investment
in accordance with the Fund's investment objective, or temporary defensive
purposes, the Fund may invest without limitation in (or enter into repurchase
agreements maturing in seven days or less with U.S. and foreign banks and
broker-dealers with respect to) short-term debt securities, including commercial
paper, U.S. Treasury bills, other short-term U.S. government securities,
certificates of deposit, and bankers' acceptances of U.S. or foreign banks. The
Fund also may hold cash and time deposits denominated in any major foreign
currency in foreign banks. To the extent that the Fund assumes a temporary
defensive position, it may not be pursuing its investment objective. See the SAI
for further information about these securities.

INVESTMENT POLICY CHANGES. The investment objective and fundamental
investment policies of the Fund may not be changed without approval of the
holders of a majority of the outstanding voting securities of the Fund. A
majority of outstanding voting securities means the lesser of: (1) 67% of the
shares present or represented at a shareholder meeting at which the holders of
more than 50% of the outstanding shares are present or represented; or (2) more
than 50% of outstanding shares. Non-fundamental investment policies may be
changed by the Trust Board without approval of the Fund's investors. All
investment policies are non-fundamental unless stated otherwise.

PORTFOLIO TURNOVER. The Fund may engage in short-term trading, but its
portfolio turnover rate is not expected to exceed 100%. High portfolio turnover
and short-term trading involve correspondingly greater commission expenses,
transaction costs and potentially higher amounts of taxable income. See
"Taxation" in the SAI.

MANAGEMENT OF THE FUND

NEW SCHRODER GRAPHIC OF WORLD

BOARDS OF TRUSTEES

The business and affairs of the Fund are managed under the direction of
the Board of Trustees of the Trust. The business and affairs of the Portfolio
are managed under the direction of the Board of Trustees of Schroder Capital
Funds (the "Core"), a Delaware business trust of which the Portfolio is a series
of shares. Information regarding the trustees and executive officers of the
Trust, as well as Core's trustees and executive officers, is contained in the
SAI under "Management, Trustees and Officers."

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<PAGE>

INVESTMENT ADVISER AND PORTFOLIO MANAGERS

SCMI is a wholly owned U.S. subsidiary of Schroders Incorporated (doing
business in New York as Schroders Holdings), the wholly owned U.S. holding
company subsidiary of Schroders plc. Schroders plc is the holding company parent
of a large world-wide group of banks and financial services companies.

SCMI serves as investment adviser to the Fund under an investment
advisory agreement with the Trust (the "Fund Advisory Agreement"). Under the
Fund Advisory Agreement, SCMI has agreed to furnish a continuous investment
program for the Fund and makes investment decisions on its behalf. For these
services, SCMI is entitled to receive an investment advisory fee payable
monthly, on assets managed directly at the Fund level, at the annual rate of
0.90% of the Fund's average daily net assets. The Fund Advisory Agreement,
however, provides that SCMI is not entitled to receive an investment advisory
fee from the Fund on assets invested in the Portfolio.

The Fund currently pursues its investment objective through investment
in the Portfolio. The Fund's investments may be withdrawn from the Portfolio at
any time if the Trust Board determines that it is in the best interests of the
Fund and its shareholders to do so. See "Other Information -- Fund Structure".

Subject to such policies as the Core Board may determine, SCMI also
furnishes a continuous investment program for the Portfolio and makes investment
decisions on its behalf. For these services, the investment advisory agreement
between SCMI and Schroder Core provides that SCMI is entitled to receive monthly
advisory fees at the annual rates of 0.70% of the Portfolio's average daily net
assets. The advisory agreement between Schroder Core and SCMI with respect to
the Portfolio is the same in all material respects as the Fund Advisory
Agreement (except as to the parties and the circumstances under which fees will
be paid).

The Fund's and the Portfolio's current investment management team includes
Louise Croset, a Trustee and President of the Trust, and Heather F. Crighton,
Vice President of the Trust. Ms. Croset and Ms. Crighton are primarily
responsible for the day-to-day management of the investment portfolio, with the
assistance of SCMI's Asian investment management teams. Ms. Croset and Ms.
Crighton are primarily responsible for management of Asian securities excluding
Japan.

Ms. Croset has managed the Fund's and the Portfolio's assets since
inception. She has been a First Vice President and Director of SCMI since 1993.
She served as a Vice President at Wellington Management Co. from 1987 to 1993.
Ms. Crighton is a Vice President of SCMI and has been employed by SCMI in the
investment research and portfolio management areas since 1992.

ADMINISTRATIVE SERVICES

On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Advisors and a subadministration agreement with Forum.
Under these agreements, Schroder Advisors and Forum provide certain management
and administrative services necessary for the Fund's operations. For providing
services to the Fund, Schroder Advisors and Forum are each entitled to monthly
fees at the respective annual rates of 0.20% and 0.10% of the Fund's average
daily net assets. Schroder Advisors and Forum provide similar services to the
Portfolio, for which each is entitled to a monthly fee at the annual rate of
0.05% of the Portfolio's average daily net assets.

DISTRIBUTOR AND DISTRIBUTION PLAN

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

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<PAGE>

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.

The Trust may compensate Schroder Advisors under a distribution plan,
adopted pursuant to Rule 12b-1 under the 1940 Act (the "Distribution Plan") by
the Trust on behalf of the Fund's Advisor Shares. Payments under the
Distribution Plan would be made monthly at an annual rate of up to 0.50% of the
Fund's average daily net assets attributable to Advisor Shares. Schroder
Advisors, in turn, may use these payments to compensate others for services
provided, or to reimburse others for expenses incurred, in connection with the
distribution of Advisor Shares. The maximum annual amount payable under the
Distribution Plan is currently 0.25%, but no payments will be made under the
Distribution Plan until the Board so authorizes.

Payments under the Distribution Plan may be for various types of costs,
including: (1) advertising expenses, (2) costs of printing prospectuses and
other materials to be given or sent to prospective investors, (3) expenses of
sales employees or agents of Schroder Advisors, including salary, commissions,
travel and related expenses in connection with the distribution of Advisor
Shares, (4) payments to broker-dealers who advise shareholders regarding the
purchase, sale, or retention of Advisor Shares, and (5) payments to banks, trust
companies, broker-dealers (other than Schroder Advisors) or other financial
organizations (collectively, "Service Organizations"). Payments to a particular
Service Organization under the Distribution Plan are calculated by reference to
the average daily net assets of Advisor Shares owned beneficially by investors
who have a brokerage or other service relationship with the Service
Organization. The Fund will not be liable for distribution expenditures made by
Schroder Advisors in any given year in excess of the maximum amount payable
under the Distribution Plan in that year. Costs or expenses in excess of the
annual limit may not be carried forward to future years. Salary expenses of
sales personnel who are responsible for marketing various shares of portfolios
of the Trust may be allocated to those portfolios, including the Advisor Shares
of the Fund, that have adopted a plan similar to that of the Fund on the basis
of average daily net assets. Travel expenses may be allocated to, or divided
among, the particular portfolios of the Trust for which they are incurred.

SHAREHOLDER SERVICE PLAN

The Trust, on behalf of the Fund, has also adopted a shareholder
service plan (the "Shareholder Service Plan") pursuant to which Schroder
Advisors is authorized to pay Service Organizations a servicing fee. Payments
under the Shareholder Service Plan may be for various types of services,
including: (i) answering customer inquiries regarding the manner in which
purchases, exchanges and redemptions of shares of the Fund may be effected and
other matters pertaining to the Fund's services, (ii) providing necessary
personnel and facilities to establish and maintain shareholder accounts and
records, (iii) assisting shareholders in arranging for processing purchase,
exchange and redemption transactions, (iv) arranging for the wiring of funds,
(v) guaranteeing shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts, (vi) integrating
periodic statements with other customer transactions and (vii) providing such
other related services as the shareholder may request. The maximum amount
payable under the Shareholder Service Plan to Schroder Advisors is 0.25% of the
Fund's average daily net assets attributable to Advisor Shares.

Payments to a particular Service Organization under the Shareholder
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
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 paid to
the Service Organization by Schroder Advisors. Each Service Organization has
agreed to transmit to its clients a schedule of any such fees. Shareholders
using Service Organizations are urged to consult them regarding any such fees or
conditions.

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<PAGE>

EXPENSES

The Fund bears all costs of its operations other than expenses
specifically assumed by SCMI or Schroder Advisors. The costs borne by the Fund
include legal and accounting expenses; Trustees' fees and expenses; insurance
premiums, custodian and transfer agent fees and expenses; expenses of
registering and qualifying the Fund's shares for sale with the SEC and with
various state securities commissions; expenses of obtaining quotations on
portfolio securities and pricing of the Fund's shares; expenses of maintaining
the Trust's and the Fund's legal existence and of shareholders' meetings; and
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. For assets invested in a Portfolio, the Fund also
bears its ratable share of the Portfolio's expenses, including any investment
advisory fees payable to SCMI. Trust expenses directly attributed to the Fund
are charged to the Fund; other Trust expenses are allocated proportionately
among all the series of the Trust in relation to the net assets of each series,
and any class expenses directly attributable to a class of shares are allocated
to the particular class. [SCMI and Schroder Advisors have undertaken voluntarily
to waive a portion of their fees or assume certain expenses of the Fund in order
to limit total Fund expenses, excluding taxes, interest, brokerage commissions
and other Fund transaction expenses and extraordinary expenses chargeable to
Advisor Shares, to [1.75]% of the average daily net assets of the Fund
attributable to those shares. This expense limitation can not be modified or
withdrawn except by a vote of the Trust Board. ]If expense reimbursements are
required, they will be made on a monthly basis.SCMI, Schroder Advisors, or Forum
may waive voluntarily all or a portion of its fees, from time to time.

PORTFOLIO TRANSACTIONS

SCMI places orders for the purchase and sale of the Fund's investments
with brokers and dealers it selects and seeks "best execution" of such portfolio
transactions. The Fund may pay brokers 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. Commission rates for
brokerage transactions are fixed on many foreign securities exchanges, which may
cause higher brokerage expenses to accrue to the Fund than would be the case for
comparable transactions effected on U.S. securities exchanges.

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

INVESTMENT IN THE FUND

PURCHASE OF SHARES

Investors may purchase Advisor Shares 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"). See "Other Information -- Shareholder Inquiries". Investments
also may be made through broker-dealers and other financial institutions that
assist their customers in purchasing Fund Shares ("Financial Institutions").
Financial Institutions 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 Financial Institution should contact that organization
directly for appropriate instructions.

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). The minimum initial investment is $2,500 and the minimum
subsequent investment is $250. All purchase payments are invested in full and
fractional shares. The Fund is authorized to reject any purchase order.

15
<PAGE>

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

Schroder Asia 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.

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 Asia 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 (the "Exchange") on a day when the Exchange is open for trading are
processed at the net asset value determined as of that day. Wire orders received
after the close of the Exchange are processed at the net asset value determined.
See "Net Asset Value".

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.

RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

Fund Advisor Shares are offered in connection with tax-deferred
retirement plans. Application forms and further information about these plans,
including applicable fees, are available upon request. Before investing in the
Fund through one of these plans, investors should consult their tax advisors.

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<PAGE>

The Fund may be used as an investment vehicle for an IRA including
SEP-IRA. An IRA naming The First National Bank of Boston as custodian is
available from the Trust or the Transfer Agent. The minimum initial investment
for an IRA is $250; the minimum subsequent investment is $250. Under certain
circumstances contributions to an IRA may be tax deductible. 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. Tax advice should be obtained before
effecting a rollover.

EXCHANGES

You may exchange the Fund's Advisor Shares for "Advisor" class shares
of any fund offered by the Schroder family of funds so long as your investment
meets the initial investment minimum of the fund being purchased and you
maintain the respective minimum account balance in each fund in which you own
shares.
Exchanges between each fund are at net asset value.

For federal income tax purposes an exchange is considered to be a sale
of shares on which you may realize a capital gain or loss. If you hold Advisor
Shares through a Service Organization, you must make an exchange through the
Service Organization. If you hold Advisor Shares directly, you may make an
exchange by calling the Transfer Agent at 1-800-344-8332 see "Redemption of
Shares -- By Telephone" 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.

REDEMPTION OF SHARES

Advisor Shares are redeemed at their next determined net asset value
after receipt by the Fund (see the address set forth under "Purchase of 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".

BY TELEPHONE. Redemption requests may be made 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
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 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

17
<PAGE>

the need for signature guarantees or documentation of authority should be
directed to the Fund at the above address or by calling the telephone number
appearing on the cover of this Prospectus.

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 Exchange is restricted or that 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 Trust Board 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.

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 $2,000, 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 be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.

NET ASSET VALUE

The net asset value per share is calculated separately for each class
of shares of the Fund as of the close of the Exchange on a day on which the
Exchange is open, which excludes the following U.S. holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Net asset value
per share for a class of shares is calculated by dividing the aggregate value of
the Fund's assets allocable to a particular class, less the liabilities charged
to the class, if any, by the number of outstanding shares of that class of the
Fund.

Generally, securities that are listed on recognized stock exchanges are
valued at the last reported sale price, on the day when the securities are
valued (the "Valuation Day"), on the primary exchange on which the securities
are principally traded. Listed securities traded on recognized stock exchanges
for which there were no sales on the Valuation Day are valued at the last sale
price on the preceding trading day or at closing mid-market prices. Securities
traded in over-the-counter markets are valued at the most recent reported
mid-market price. Other securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith using
methods approved by the Core Board.

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<PAGE>

Trading in securities on non-U.S. exchanges and over-the-counter
markets may not take place on every day that the Exchange is open for trading.
Furthermore, trading takes place in various foreign markets on days on which the
Fund's net asset value is not calculated. If events materially affecting the
value of foreign securities occur between the time when their price is
determined and the time when net asset value is calculated, such securities may
be valued at fair value as determined in good faith by using methods approved by
the Core Board.

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 Fund's net asset value is calculated.

DIVIDENDS, DISTRIBUTIONS AND TAXES

THE FUND

The Fund intends to comply with the provisions of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies. By
complying therewith, the Fund will not have to pay federal income tax on that
part of its income or net realized capital gain that is distributed to
shareholders. The Fund intends to distribute substantially all of its income and
net realized capital gain, and therefore, intends not to be subject to federal
income tax.

Dividends and capital-gain distributions on Advisor Shares are
reinvested automatically in additional Advisor Shares at net asset value unless
the shareholder has elected in the account application, or otherwise in writing,
to receive dividends and other distributions in cash.

After every dividend and other distribution, the value of a Advisor
Share declines by the amount of the distribution. Purchases made shortly before
a dividend or other distribution include in the purchase price the amount of the
distribution, which will be returned to the investor in the form of a taxable
distribution.

Dividends from the Fund's income generally will be taxable to
shareholders as ordinary income, whether the dividends are invested in
additional Advisor Shares or received in cash. Distributions by the Fund of any
net long-term capital gain will be taxable to a shareholder as long-term capital
gain regardless of how long the shareholder has held the Advisor Shares. 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. Each year the Trust will notify shareholders of the tax status of
dividends and other distributions.

Dividends from the Fund are generally not expected to qualify for the
dividends-received deduction for corporate shareholders because the Fund does
not generally expect to receive dividends from domestic corporations.

A redemption of Advisor Shares may result in taxable gain or loss to
the redeeming shareholder, depending on whether the redemption proceeds are more
or less than the shareholder's basis in the redeemed Advisor Shares. If Advisor
Shares are redeemed at a loss after being held for six months or less, the loss
will be treated as a long-term, rather than a short-term, capital loss to the
extent of any capital gain distributions received on those Advisor Shares.

The Fund must withhold 31% from dividends, capital gain distributions
and redemption proceeds payable to any individuals and certain other
noncorporate shareholders who do not furnish the Fund with a correct taxpayer
identification number. Withholding at that rate also is required from dividends
and capital gain distributions payable to such shareholders who otherwise are
subject to backup withholding. Depending on the residence of a shareholder for
tax purposes, distributions from the Fund may also be subject to state and local
taxes, including withholding taxes.

In an effort to adhere to certain tax requirements, the Fund may have
to limit its investment activity in some types of instruments.

19
<PAGE>

If the Fund's dividends exceed its taxable income in any year, all or a
portion of the Fund's dividends may be treated as a return of capital to
shareholders for tax purposes. Any return of capital will reduce the cost basis
of your shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. Shareholders will be notified
by the Trust if a distribution included a return of capital.

EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the
Fund and its investments, which generally reduce the Fund's income.

If the Fund is eligible to do so, it ordinarily expects to elect to
permit its shareholders to take a credit (or a deduction), subject to certain
limitations, 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 shareholders 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, 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.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its U.S. shareholders; see the
SAI for further information. Shareholders should consult their own tax advisors
as to the tax consequences of their ownership of Advisor Shares, including with
respect to the applicability of state, local and non-U.S. taxes.

THE PORTFOLIO

The Portfolio is not required to pay federal income tax because it is
classified as a partnership for federal income tax purposes. All interest,
dividends, gains and losses of the Portfolio will be deemed to have been "passed
through" to the Fund in proportion to the Fund's holdings in the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.

The Portfolio intends to conduct its operations so as to enable the
Fund, if it invests all of its assets in the Portfolio, to qualify as a
regulated investment company.

OTHER INFORMATION

CAPITALIZATION AND VOTING

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 has
authority to issue 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 portfolios or series (such as the Fund) and may
divide portfolios or series into classes of shares (such as the Advisor Shares),
and the costs of doing so are borne by the Trust or series in accordance with
the Trust Instrument. The Trust currently consists of [twelve] separate Funds,
each of which has a separate investment objective and policies.

The Fund currently consists of two classes of shares, Advisor Shares
and Advisor Shares. Each share of the Fund is entitled to participate equally in
dividends and other distributions and the proceeds of any liquidation, except
that, due to the differing expenses borne by the classes, dividends and
liquidation proceeds for each class will likely differ.

When issued in accordance with the terms of the prospectus, Advisor
Shares are fully paid, non-assessable, and have no preemptive rights.
Shareholders have non-cumulative voting rights, which means that the holders of
more than 50% of the Trust's outstanding shares voting for the election of
Trustees can elect 100% of the Trustees if they choose to do so. A shareholder
is entitled to one vote for each full share held (and a fractional vote for each
fractional share held). Each share of the Fund has equal voting rights, except
that if a matter affects only the

20
<PAGE>

shareholders of a particular class only shareholders of that class shall have a
right to vote. On Trust matters requiring shareholder approval, shareholders of
the Trust are entitled to vote only with respect to matters that affect the
interests of the Fund or the class of shares they hold, except as otherwise
required by applicable law.

There normally are no meetings of shareholders to elect Trustees unless
and until such time as less than a majority of the Trustees holding office have
been elected by shareholders. However, the holders of not less than a majority
of the outstanding Shares of the Trust may remove any person serving as a
Trustee.

REPORTS

The Trust will send each Fund shareholder a semi-annual report and an
audited annual report, when available, containing the Fund's financial
statements.

PERFORMANCE

The Fund may include quotations of average annual total return,
cumulative total return and other performance measures for shares in
advertisements or reports to shareholders or prospective investors. Average
annual total return is based upon the overall dollar or percentage change in
value of a hypothetical investment each year over specified periods. Average
annual total returns reflect the deduction of the Fund's expenses (on an annual
basis) and assumes investment and reinvestment of all dividends and
distributions at net asset value. Cumulative total returns are calculated
similarly except that the total return is aggregated over the relevant period
instead of annualized.

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

Performance information represents only past performance and does not
necessarily indicate future results. For a description of the methods used to
determine total return and other performance measures for the Fund, see the SAI.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, Global Custody Division, is custodian of the
Fund's and of the Portfolio's assets. Forum Shareholder Services, LLC serves as
the Fund's transfer agent and dividend disbursing agent.

SHAREHOLDER INQUIRIES

Inquiries about the Fund should be directed to:

Schroder Asia Fund
P.O. Box 446
Portland, Maine 04112

Information about specific shareholder accounts may be obtained from
the Transfer Agent by calling 1-800-344-8332 or 1-207-879-1900.

21
<PAGE>

FUND STRUCTURE

CLASSES OF SHARES. The Fund has two classes of shares, Investor Shares
and Advisor Shares. Investor Shares are offered by a separate prospectus to
individual investors. Investor Shares incur lower expenses but have higher
investment minimums than Advisor 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 Fund by calling Schroder Advisors at (800)
730-2932.

THE PORTFOLIO. The Fund currently seeks to achieve its investment
objective by investing all of its investable assets in the Portfolio.
Accordingly, the Portfolio directly acquires its own securities, and the Fund
acquires an indirect interest in those securities. The Portfolio is a separate
series of Schroder Core, a business trust organized under the laws of the State
of Delaware in September 1995. Schroder Core is registered under the 1940 Act as
an open-end, management investment company and currently has eight separate
series. The assets of each Portfolio belong only to, and the liabilities of each
Portfolio are borne solely by, that Portfolio and no other portfolio of Schroder
Core.

The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. As of January 22, 1998, there are no other
investors in the Portfolio. The Portfolio may permit other investment companies
or other qualified investors to invest in it. All investors in the Portfolio
invest at the net asset value per interest of the Portfolio and generally on the
same terms and conditions as the Fund (except as described below regarding
indemnification of the Portfolio and Schroder Core's trustees by certain
investors including registered investment companies, under certain
circumstances). All investors in the Portfolio bear a proportionate share of the
Portfolio's expenses.

The Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in the Portfolio is entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On issues
subject to a vote of investors, as permitted under the 1940 Act and other
applicable law, the Board may solicit proxies from the Fund's shareholders and
vote the Fund's interest in the Portfolio based upon the vote of its
shareholders or the Board may determine to vote the Fund's interests in the
Portfolio in the same proportion as the vote of all other interestholders in the
Portfolio. If there are other investors in the Portfolio, there can be no
assurance that any issue that receives a majority of the votes cast by Fund
shareholders would receive a majority of votes cast by all investors in the
Portfolio; indeed, if other investors hold a majority interest in the Portfolio,
they would have voting control of the Portfolio.

The Portfolio does not sell its shares directly to members of the
general public. Another investor in the Portfolio, such as an investment
company, that would offer its shares to members of the general public would not
be required to sell its shares at the same public offering price as the Fund and
could have a different asset allocation in the Portfolio and different expenses
and other fees than the Fund. Fund shareholders, therefore, are likely to have
different returns than shareholders in another investment company that invests
in the Portfolio. There are currently no such other investment companies that
offers shares to the general public. Information regarding any such funds in the
future will be available from Schroder Core by calling Forum Shareholder
Services, LLC at 1-800-730-2932.

Under federal securities law, any person or entity that signs a
registration statement may be liable for a misstatement or omission of a
material fact in the registration statement. Schroder Core, its trustees and
certain of its officers are required to sign the registration statement and any
amendments of the Trust and may be required to sign the registration statements
of certain other investors in the Portfolio. In addition, under federal
securities law, Schroder Core may be liable for misstatements or omissions of a
material fact in any proxy soliciting material of a publicly offered investor in
Schroder Core, including the Fund. Each registered investment company or series
thereof, that invests in the Portfolio, including the Trust, is required to
indemnify Schroder Core and its trustees and officers ("Schroder Core
Indemnitees") against certain claims.

22
<PAGE>

Indemnified claims are those brought against Schroder Core Indemnitees
based on a misstatement or omission of a material fact in the investor's
registration statement or proxy materials. No indemnification need be made,
however, if such alleged misstatement or omission relates to information about
Schroder Core and was supplied to the investor by Schroder Core. Similarly,
Schroder Core will indemnify each investor in the Portfolio, including the Fund,
for any claims brought against the investor with respect to the investor's
registration statement or proxy materials, to the extent the claim is based on a
misstatement or omission of a material fact relating to information about
Schroder Core that is supplied to the investor by Schroder Core. In addition,
each registered investment company investor in the Portfolio will indemnify each
Schroder Core Indemnitee against any claim based on a misstatement or omission
of a material fact relating to information about a series of the registered
investment company that did not invest in the Schroder Core. The purpose of
these cross-indemnity provisions is principally to limit the liability of
Schroder Core to information that it knows or should know and can control. With
respect to other prospectuses and other offering documents and proxy materials
of investors in Schroder Core, its liability is similarly limited to information
about and supplied by it.

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

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

Each investor in the Portfolio, including the Fund, may be liable for
all obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which Schroder considers to be quite remote. Upon liquidation of
the Portfolio, investors would be entitled to share pro rata in the net assets
of the Portfolio available for distribution to investors.

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<PAGE>

INVESTMENT ADVISER
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
Global Custody Division
125 London Wall
London EC2Y 5AJ United Kingdom

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

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

24
<PAGE>

TABLE OF CONTENTS

EXPENSES OF INVESTING
IN THE FUND..................................
Fee Table......................................
Example........................................
INVESTMENT OBJECTIVE
AND POLICIES.................................
Other Investment Practices and Risk
Considerations...............................
MANAGEMENT OF THE FUND.........................
Boards of Trustees.............................
Investment Adviser and Portfolio Managers......
Administrative Services........................
Distributor and Distribution Plan..............
Shareholders Service Plan......................
Expenses.......................................
Portfolio Transactions.........................
INVESTMENT IN THE FUND.........................
Purchase of Shares.............................
Retirement Plans and Individual
Retirement Accounts..........................
Exchanges......................................
Redemption of Shares...........................
Net Asset Value................................
DIVIDENDS, DISTRIBUTIONS
AND TAXES....................................
The Fund.......................................
The Portfolio..................................
OTHER INFORMATION..............................
Capitalization and Voting......................
Reports........................................
Performance....................................
Custodian and Transfer Agent...................
Shareholder Inquiries..........................
Fund Structure.................................

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<PAGE>

SCHRODER ASIA FUND
INVESTOR SHARES

This Prospectus explains concisely the information you should know before
investing in the Fund's Investor shares. Please read it carefully and keep it
for future reference. You can find more detailed information about the Trust and
the Fund in the [April __,] 1998 Combined Statement of Additional Information
("SAI"), as amended from time to time. The SAI has been filed with the
Securities and Exchange Commission ("SEC") and is available along with other
related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). A free copy may be obtained without charge from the Trust
by writing to Two Portland Square, Portland, Maine 04101 or by 1-800-290-9826.
The SAI has been incorporated into this Prospectus by reference. The Fund has
not authorized anyone to provide you with information that is different from
what is contained in this Prospectus or in other documents to which this
Prospectus refers you.

PROSPECTUS
[APRIL __, 1998]

26
<PAGE>

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

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.

SCHRODER CAPITAL FUNDS ( DELAWARE ) 1-800-290-9826
SCHRODER ASIA FUND
<TABLE>
<S><C> <C>

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

27
<PAGE>

EXPENSES OF INVESTING IN THE FUND

FEE TABLE

Expenses are one of several factors to consider when investing in the
Fund's Investor Shares. There are no transaction expenses associated with
purchases or redemptions of Investor Shares. The "Annual Operating Expenses"
table and related "Example" estimate the expenses that your investment in
Investor Shares would incur based upon the Fund's anticipated expenses for its
first fiscal year. Annual Operating Expenses include the Fund's pro rata portion
of all estimated operating expenses of the Portfolio. The Example shows the
cumulative expenses attributable to a hypothetical $1,000 investment in the Fund
over specified periods. See "Management of the Fund -- Fees -- Expenses".

ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
Management Fees (after fee waivers)(2)(3)............................ 0.95%
12b-1 Fees........................................................... None
Other Expenses (after fee waivers and expense reimbursements)(3)..... 0.55%
-----
Total Fund Operating Expenses........................................ 1.50%

- -----------
(1) The Fund's expenses include the Fund's pro rata portion of all
operating expenses of the Portfolio.
(2) Management Fees reflect the fees to be paid to SCMI and Schroder
Advisors for investment advisory and administrative services if the
Fund's assets are invested in the Portfolio.
(3) SCMI and Schroder Advisors have voluntarily undertaken to waive a
portion of their fees and reimburse certain expenses of the Fund during
the current fiscal year in order to limit the Fund's total expenses to
[1.50]% of the Fund's average daily net assets. This undertaking cannot
be withdrawn except by a majority vote of the Trust's Board of
Trustees. See "Management of the Fund -- Expenses". Without fee waivers
and reimbursements, Management Fees, Other Expenses and Total Fund
Operating Expenses would be %, % and %,, respectively.

EXAMPLE

PERIOD

1 YEAR.............................................................$15
3 YEARS............................................................$47

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<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Although the following information describes the investment policies of
the Fund, it applies generally to the Portfolio.

As a matter of fundamental policy, under normal market conditions the
Fund invests at least 65% of its total assets in equity securities of Asian
companies.

The Fund may invest up to 10% of its total assets in debt securities,
including, for example, securities of foreign corporations or governments, or
international organizations that are unrated or rated below investment grade.
See "Other Investment Practices and Risk Considerations -- Debt Securities".

OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS

29
<PAGE>

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 in 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.

30
<PAGE>

INVESTMENTS IN SMALLER COMPANIES. The Fund may invest a 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 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 security.

31
<PAGE>

32
<PAGE>

currencies in many emerging markets or to securities of issuers domiciled or
principally engaged in business in emerging markets. This may limit the Fund's
ability to hedge its investments in such emerging market countries. The Fund has
no plans to enter into currency futures or options contracts but may do so in
the future. See "Options and Futures Transactions" in the SAI for additional
information on Hedging Instruments the Fund may use and the risks associated
with them.

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

33
<PAGE>

INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund is
permitted to invest in other investment companies or pooled vehicles, including
closed-end funds, that are advised by SCMI or its affiliates or by unaffiliated
parties. Pursuant to the 1940 Act, 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 1940 Act or any
orders, rules or regulations thereunder. When investing through investment
companies, the Fund may pay a premium 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.

MANAGEMENT OF THE FUND

NEW SCHRODER GRAPHIC OF WORLD

BOARDS OF TRUSTEES

34
<PAGE>

INVESTMENT ADVISER AND PORTFOLIO MANAGERS

ADMINISTRATIVE SERVICES

On behalf of the Fund, the Trust has entered into an administration
agreement with Schroder Advisors and a subadministration agreement with Forum.
Under these agreements, Schroder Advisors and Forum provide certain management
and administrative services necessary for the Fund's operations. For providing
services to the Fund, Schroder Advisors and Forum are each entitled to a monthly
fee at the respective annual rates of 0.20% and 0.10% of the Fund's average
daily net assets. Schroder Advisors and Forum provide similar services to the
Portfolio, for which each is entitled to a monthly fee at the annual rate of
0.05% of the Portfolio's average daily net assets.

DISTRIBUTOR

Schroder Fund Advisors Inc. ("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 Incorporated, the parent company of SCMI, and is a registered
broker-dealer organized to act as administrator and/or distributor of mutual
funds.

35
<PAGE>

EXPENSES

The Fund bears all costs of its operations other than expenses
specifically assumed by SCMI or Schroder Advisors. The costs borne by the Fund
include legal and accounting expenses; Trustees' fees and expenses; insurance
premiums, custodian and transfer agent fees and expenses; expenses of
registering and qualifying the Fund's shares for sale with the SEC and with
various state securities commissions; expenses of obtaining quotations on
portfolio securities and pricing of the Fund's shares; expenses of maintaining
the Trust's and the Fund's legal existence and of shareholders' meetings; and
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. For assets invested in a Portfolio, the Fund also
bears its ratable share of the Portfolio's expenses, including any investment
advisory fees payable to SCMI. Trust expenses directly attributed to the Fund
are charged to the Fund; other Trust expenses are allocated proportionately
among all the series of the Trust in relation to the net assets of each series,
and any class expenses directly attributable to a class of shares are allocated
to the particular class. SCMI and Schroder Advisors have undertaken voluntarily
to waive a portion of their fees or assume certain expenses of the Fund in order
to limit total Fund expenses, excluding taxes, interest, brokerage commissions
and other Fund transaction expenses and extraordinary expenses chargeable to
Advisor Shares, to [1.50]% of the average daily net assets of the Fund
attributable to those shares. This expense limitation can not be modified or
withdrawn except by a vote of the Trust Board. If expense reimbursements are
required, they will be made on a monthly basis.SCMI, Schroder Advisors, or Forum
may waive voluntarily all or a portion of its fees, from time to time.

PORTFOLIO TRANSACTIONS

36
<PAGE>

INVESTMENT IN THE FUND

PURCHASE OF SHARES

Investors may purchase Investor Shares 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"). See "Other Information -- Shareholder Inquiries". Investments
also may be made through broker-dealers and other financial institutions that
assist their customers in purchasing Fund Shares ("Financial Institutions").
Financial Institutions 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 Financial Institution should contact that organization
directly for appropriate instructions.

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). The minimum initial investment is $10,000, and the minimum
subsequent investment is $2,500. 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
Schroder Asia Fund to:

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

Subsequent purchases may be made by mailing a check, by sending a bank
wire, as indicated above. All payments should clearly indicate the shareholder's
name and account number.

Investors 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 Asia 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 (the "Exchange") on a day when the Exchange is open for trading are
processed at the net asset value determined as of that day. Wire orders received
after the close of the Exchange are processed at the net asset value next
determined. See "Net Asset Value".

37
<PAGE>

RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

Fund Investor Shares are offered in connection with tax-deferred
retirement plans. Application forms and further information about these plans,
including applicable fees, are available upon request. Before investing in the
Fund through one of these plans, investors should consult their tax advisors.

The Fund may be used as an investment vehicle for an IRA including
SEP-IRA. An IRA naming The First National Bank of Boston 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. Under certain
circumstances contributions to an IRA may be tax deductible. 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. Tax advice should be obtained before
effecting a rollover.

EXCHANGES

You may exchange the Fund's Investor Shares for "Investor" class shares
of any fund offered by the Schroder family of funds so long as your investment
meets the initial investment minimum of the fund being purchased and you
maintain the respective minimum account balance in each fund in which you own
shares.
Exchanges between each fund are at net asset value.

For federal income tax purposes an exchange is considered to be a sale
of shares on which you may realize a capital gain or loss. If you hold Investor
Shares, you must make an exchange by calling the Transfer Agent at
1-800-344-8332 see "Redemption of Shares -- By Telephone" 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 $10,000 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.

38
<PAGE>

REDEMPTION OF SHARES

Investor Shares are redeemed at their next determined net asset value
after receipt by the Fund (see the address set forth under "Purchase of 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".

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.

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 Trust Board 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

39
<PAGE>

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.

NET ASSET VALUE

DIVIDENDS, DISTRIBUTIONS AND TAXES

THE FUND

Dividends and capital-gain distributions on Investor Shares are
reinvested automatically in additional Investor Shares at net asset value unless
the shareholder has elected in the account application, or otherwise in writing,
to receive dividends and other distributions in cash.

40
<PAGE>

After every dividend and other distribution, the value of a Investor
Share declines by the amount of the distribution. Purchases made shortly before
a dividend or other distribution include in the purchase price the amount of the
distribution, which will be returned to the investor in the form of a taxable
distribution.

Dividends from the Fund's income generally will be taxable to
shareholders as ordinary income, whether the dividends are invested in
additional Investor Shares or received in cash. Distributions by the Fund of any
net long-term capital gain will be taxable to a shareholder as long-term capital
gain regardless of how long the shareholder has held the Investor Shares. 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. Each year the Trust will notify shareholders of the tax status of
dividends and other distributions.

A redemption of Investor Shares may result in taxable gain or loss to
the redeeming shareholder, depending on whether the redemption proceeds are more
or less than the shareholder's basis in the redeemed Investor Shares. If
Investor Shares are redeemed at a loss after being held for six months or less,
the loss will be treated as a long-term, rather than a short-term, capital loss
to the extent of any capital gain distributions received on those Investor
Shares.

In an effort to adhere to certain tax requirements, the Fund may have
to limit its investment activity in some types of instruments.

EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the
Fund and its investments, which generally reduce the Fund's income.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its U.S. shareholders; see the
SAI for further information. Shareholders should consult their own tax advisors
as to the tax consequences of their ownership of Investor Shares, including with
respect to the applicability of state, local and non-U.S. taxes.

41
<PAGE>

THE PORTFOLIO

The Portfolio intends to conduct its operations so as to enable the
Fund, if it invests all of its assets in the Portfolio, to qualify as a
regulated investment company.

OTHER INFORMATION

CAPITALIZATION AND VOTING

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 has
authority to issue 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 portfolios or series (such as the Fund) and may
divide portfolios or series into classes of shares (such as the Investor
Shares), and the costs of doing so are borne by the Trust or series in
accordance with the Trust Instrument. The Trust currently consists of [twelve]
separate Funds, each of which has a separate investment objective and policies.

The Fund currently consists of two classes of shares, Investor Shares
and Advisor Shares. Each share of the Fund is entitled to participate equally in
dividends and other distributions and the proceeds of any liquidation, except
that, due to the differing expenses borne by the classes, dividends and
liquidation proceeds for each class will likely differ.

When issued in accordance with the terms of the prospectus, Investor
Shares are fully paid, non-assessable, and have no preemptive rights.
Shareholders have non-cumulative voting rights, which means that the holders of
more than 50% of the Trust's outstanding shares voting for the election of
Trustees can elect 100% of the Trustees if they choose to do so. A shareholder
is entitled to one vote for each full share held (and a fractional vote for each
fractional share held). Each share of the Fund has equal voting rights, except
that if a matter affects only the shareholders of a particular class only
shareholders of that class shall have a right to vote. On Trust matters
requiring shareholder approval, shareholders of the Trust are entitled to vote
only with respect to matters that affect the interests of the Fund or the class
of shares they hold, except as otherwise required by applicable law.

REPORTS

The Trust will send each Fund shareholder a semi-annual report and an
audited annual report, when available, containing the Fund's financial
statements.

PERFORMANCE

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<PAGE>

total returns are calculated similarly except that the total return is
aggregated over the relevant period instead of annualized.

CUSTODIAN AND TRANSFER AGENT

SHAREHOLDER INQUIRIES

Inquiries about the Fund should be directed to:

Schroder Asia Fund
P.O. Box 446
Portland, Maine 04112

Information about specific shareholder accounts may be obtained from
the Transfer Agent by calling 1-800-344-8332 or 1-207-879-1900.

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 Fund by calling Schroder Advisors at (800)
730-2932.

43
<PAGE>

44
<PAGE>

those securities to cash, it would likely incur brokerage fees or other
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Trust Board would consider appropriate alternatives, including the management of
the Fund's assets in accordance with its investment objective and policies by
Schroder or the investment of all of the Fund's investable assets in another
pooled investment entity having substantially the same investment objective as
the Fund. The inability of the Fund to find a suitable replacement investment,
if the Board decided not to permit SCMI to manage the Fund's assets, could have
a significant impact on shareholders of the Fund.

45
<PAGE>

INVESTMENT ADVISER
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
Global Custody Division
125 London Wall
London EC2Y 5AJ United Kingdom

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

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

46
<PAGE>

TABLE OF CONTENTS

EXPENSES OF INVESTING
IN THE FUND..................................
Fee Table......................................
Example........................................
INVESTMENT OBJECTIVE...........................
AND POLICIES.................................
Other Investment Practices and Risk
Considerations...............................
MANAGEMENT OF THE FUND.........................
Boards of Trustees.............................
Investment Adviser and Portfolio Managers......
Administrative Services........................
Distributor....................................
Expenses.......................................
Portfolio Transactions.........................
INVESTMENT IN THE FUND.........................
Purchase of Shares.............................
Retirement Plans and Individual
Retirement Accounts..........................
Exchanges......................................
Statement of Intention.........................
Redemption of Shares...........................
Net Asset Value................................
DIVIDENDS, DISTRIBUTIONS
AND TAXES....................................
The Fund.......................................
The Portfolio..................................
OTHER INFORMATION..............................
Capitalization and Voting......................
Reports........................................
Performance....................................
Custodian and Transfer Agent...................
Shareholder Inquiries..........................
Fund Structure.................................

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<PAGE>

SCHRODER JAPAN FUND
ADVISOR SHARES

The investment objective of Schroder Japan Fund (the "Fund") is to seek
long-term capital appreciation. It seeks to achieve this objective through
investment substantially in equity securities of companies domiciled or doing
business in Japan. It is intended for investors who seek the aggressive growth
potential of a foreign market and are willing to bear the special investment
risks of investing in that market.

The Fund currently invests substantially all of its assets in Schroder Japan
Portfolio (the "Portfolio"). The Portfolio is a separately managed
non-diversified investment company. Schroder Capital Management International
Inc. is the investment adviser to the Fund and to the Portfolio. The Fund is a
series of Schroder Capital Funds, a Delaware business trust (the "Trust").

This Prospectus explains concisely the information you should know before
investing in the Fund's Advisor shares. Please read it carefully and keep it for
future reference. You can find more detailed information about the Trust and
Fund in the [April __,] 1998 Combined Statement of Additional Information
("SAI"), as amended from time to time. The SAI has been filed with the
Securities and Exchange Commission ("SEC") and is available along with other
related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). A free copy may be obtained without charge from the Trust
by writing to Two Portland Square, Portland, Maine 04101 or by calling
1-800-290-9826. The SAI has been incorporated into this Prospectus by reference.
The Fund has not authorized anyone to provide you with information that is
different from what is contained in this Prospectus or in other documents to
which this Prospectus refers you.

PROSPECTUS
[APRIL __, 1998]

48
<PAGE>

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

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.

SCHRODER CAPITAL FUNDS ( DELAWARE ) 1-800-290-9826
SCHRODER JAPAN FUND
<TABLE>
<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 INTERNATIONAL SMALLER COMPANIES FUND SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER INTERNATIONAL BOND FUND SCHRODER MIDCAP VALUE FUND
SCHRODER EMERGING MARKETS FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER ASIA FUND SCHRODER SHORT-TERM INVESTMENT FUND
SCHRODER U.S. EQUITY FUND
SCHRODER U.S. SMALLER COMPANIES FUND SCHRODER SERIES TRUST II 1-800-464-3108
SCHRODER MICRO CAP FUND SCHRODER ALL-ASIA FUND
</TABLE>

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

49
<PAGE>

EXPENSES OF INVESTING IN THE FUND

FEE TABLE

Expenses are one of several factors to consider when investing in the
Fund's Advisor Shares. . There are no transaction expenses associated with
purchases or redemptions of Advisor Shares. The "Annual Operating Expenses"
table and related "Example" estimate the expenses that your investment in
Advisor Shares would incur based upon the Fund's anticipated expenses for its
first fiscal year. Annual Operating Expenses include the Fund's pro rata portion
of all estimated operating expenses of the Portfolio. The Example shows the
cumulative expenses attributable to a hypothetical $1,000 investment in the Fund
over specified periods. See "Management of the Fund -- Fees -- Expenses".
<TABLE>
<S> <C>
Annual Fund Operating Expenses (as a percentage of average net assets)(1)
Management Fees (after fee waivers)(2)(3).......................................................... 0.80%
12b-1 Fees......................................................................................... None
Other Expenses (after fee waivers and expense reimbursements)(3)................................... 0.80%
-----
Total Fund Operating Expenses (after fee waivers and expense reimbursements)(3).................... 1.60%
</TABLE>

- -----------
(1) The Fund's expenses include the Fund's pro rata portion of all
operating expenses of the Portfolio.
(2) Management Fees reflect the fees to be paid to SCMI and Schroder
Advisors for investment advisory and administrative services if the
Fund's assets are invested in the Portfolio.
(3) SCMI and Schroder Advisors have voluntarily undertaken to waive a
portion of their fees and assume certain expenses of the Fund during
the current fiscal year in order to limit the Fund's total expenses to
[1.60]% of the Fund's average daily net assets. This undertaking cannot
be withdrawn except by a majority vote of the Trust's Board of
Trustees. See "Management of the Fund --Expenses". Without fee waivers,
Management Fees, Other Expenses and Total Fund Operating Expenses would
be %, % and %, respectively.

EXAMPLE

The table below indicates how much you would pay in total expenses on a
$1,000 investment in the Fund, assuming: (1) a 5% annual return; and (2)
redemption at the end of each time period. The example is based on the expenses
listed above and assumes reinvestment of all dividends and other distributions.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
OR RETURNS; ACTUAL EXPENSES OR RETURNS MAY VARY FROM THOSE SHOWN. FEDERAL
REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL RETURNS
WILL VARY.

PERIOD

1 YEAR................................................................$16
3 YEARS...............................................................$50

50
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to seek long-term capital
appreciation. The Fund seeks to achieve this objective through investment
substantially in equity securities of companies domiciled or doing business in
Japan.

The Fund is intended for investors who seek the aggressive growth
potential of the Japanese market and are willing to bear the special investment
risks of investing in that market. Investments in the securities of foreign
issuers generally involve risks in addition to the risks associated with
investments in the securities of U.S. issuers.

The Fund currently seeks to achieve its investment objective by
investing substantially all of its assets in the Portfolio. The Portfolio has an
identical investment objective and substantially similar investment policies to
those of the Fund. There can be no assurance that the Fund or Portfolio will
achieve its investment objective.

Although the following information describes the investment policies of
the Fund, it applies generally to the Portfolio.

Under normal market conditions, the Fund invests at least 65% of its
total assets in equity securities of Japanese issuers.

Equity securities in which the Fund may invest include common stocks,
preferred stocks, convertible preferred stocks, convertible debt securities, and
stock rights and warrants to purchase any of the foregoing, as well as equity
interests in trusts, partnerships, joint ventures, or similar enterprises, and
American or Global Depositary Receipts, and other similar instruments providing
for indirect investment in securities of foreign issuers. Under certain
circumstances, the Fund may invest indirectly in equity securities by investing
in other investment companies or similar pooled vehicles. See "Other Investment
Practices and Risk Considerations -- Investment in Other Investment Companies".

The Fund may invest up to 10% of its total assets in debt securities,
including, for example, securities of Japanese corporations or governments, or
international organizations, that are unrated or rated below investment grade.
See "Other Investment Practices and Risk Considerations -- Debt Securities."

All percentage limitations on investments apply at the time of purchase
and will not be considered violated unless an excess or a deficiency occurs or
exists immediately after and as a result of the investment, except that the
policies with regard to borrowing and liquidity will be observed at all times.
Additional information concerning the investment policies and restrictions of
the Fund and Portfolio is contained in the SAI.

OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS

At times, SCMI may judge that general market conditions make pursuing
the Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times, SCMI may

51
<PAGE>

temporarily use alternative strategies, primarily designed to reduce
fluctuations in the values of the Fund's assets. In implementing `defensive"
strategies, the Fund may invest without limit in U.S. government securities and
other high-quality debt instruments that SCMI believes to be consistent with the
Fund's best interests.

Because the Fund's investments will be concentrated in Japan,
political, economic, market and other factors affecting that country will likely
affect the values of the Fund's investments more than if the Fund's investments
were invested elsewhere or in a greater range of geographic regions. In
addition, the Fund will invest more than 25% of its total assets in issuers
located in Japan. To the extent that it invests primarily in a single country,
the Fund is more exposed to factors that could adversely affect that country,
including political and economic developments and foreign exchange rate
fluctuations as discussed above. As a result of investing substantially in one
country, the value of the Fund's assets may fluctuate more widely than the value
of shares of a comparable fund with a lesser degree of geographic concentration.

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. Differences in accounting methods make it
difficult to compare the earnings of Japanese companies with those of U.S.
companies. The securities of some foreign issuers are less liquid and at times
more volatile than securities of comparable U.S. issuers, although the Tokyo
Stock Exchange has a large volume of trading, and SCMI believes that securities
of companies traded in Japan are generally as liquid as securities of comparable
U.S. companies. While foreign brokerage commissions and other fees are also
generally higher than in the United States, brokerage commissions in Japan are
generally fixed. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or in 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, currency devaluations, and
diplomatic developments that could affect the value of the Fund's investments.
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.

Most of the Fund's assets and income are expected to be denominated in
the Japanese currency. Currency values are affected by a wide variety of
economic forces and events; thus, fluctuations in values can be difficult, if
not impossible, to predict. If the Fund purchases securities denominated in a
foreign currency, a change in the value of the currency 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. Further, if the value of the particular currency declines between
the time the Fund incurs expenses in U.S. dollars and the time such expenses are
paid, the amount of the other currency required to be converted into U.S.
dollars in order to pay such expenses will be greater than the amount that would
have been needed at the time the expenses were incurred. The Fund may buy or
sell Japanese currency and options and futures contracts on this currency for
hedging purposes in connection with its Japanese investments.

52
<PAGE>

Special tax considerations apply to Japanese securities. Income and/or
gains received by the Fund from sources within Japan may be reduced by
withholding and other taxes imposed by Japan. Any taxes paid by Fund will reduce
the net income available for the Fund to allocate to shareholders.

53
<PAGE>

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 security.

OPTIONS AND FUTURES TRANSACTIONS. Although the Fund does not presently
intend to do so, it may: (1) write covered call options on portfolio securities
and the U.S. dollar and Japanese yen without limit; (2) write covered put
options on portfolio securities and the U.S. dollar and Japanese yen with the
limitation that the aggregate value of the obligations underlying the puts
determined as of the date the options are sold will not exceed 50% of the Fund's
net assets; (3) purchase call and put options in amounts up to 5% of its total
assets; and (4)(a) purchase and sell exchange-traded futures contracts on
underlying portfolio securities, Japanese yen, U.S. and Japanese fixed-income
securities and such indices of U.S. or emerging market equity or fixed-income
securities as may exist or come into being, and (b) purchase and write call and
put options on such futures contracts, in all cases involving such futures
contracts or options on futures contracts for hedging purposes only, and without
limit, except that the Fund may not enter into futures contracts or purchase
related options if, immediately thereafter, the amount committed to margin plus
the amount paid for premiums for unexpired options on futures

54
<PAGE>

contracts generally exceeds 5% of the value of the Fund's total assets. All of
the foregoing are referred to as "Hedging Instruments".

In general, the Fund may use Hedging Instruments: (1) to protect
against declines in the market value of the Fund's portfolio securities or stock
index futures, and the currencies in which they are denominated, or (2) to
establish a position in securities markets as a temporary substitute for
purchasing securities. The Fund will not use Hedging Instruments for
speculation. Hedging Instruments have certain risks associated with them,
including: (1) the possible failure of such instruments as hedging techniques in
cases where the price movement of the securities underlying the options or
futures does not follow the price movements of the portfolio securities subject
to the hedge; (2) potentially unlimited loss associated with futures
transactions and the possible lack of a liquid secondary market for closing out
a futures position; and (3) possible losses resulting from the inability of the
Fund's investment adviser to predict the direction of stock prices, interest
rates, relative currency values and other economic factors. The Fund has no
plans to enter into currency futures or options contracts but may do so in the
future. See "Options and Futures Transactions" in the SAI for additional
information on Hedging Instruments the Fund may use and the risks associated
with them.

55
<PAGE>

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

SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. The
Fund may lend portfolio securities amounting to not more than 50% of its assets
to brokers, dealers, and financial institutions meeting specified credit
conditions, and may enter into repurchase agreements without limit. 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 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.

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.

56
<PAGE>

MANAGEMENT OF THE FUND

NEW SCHRODER GRAPHIC OF WORLD

BOARDS OF TRUSTEES

INVESTMENT ADVISER AND PORTFOLIO MANAGER

SCMI serves as investment adviser to the Fund under an investment
advisory agreement with the Trust (the "Fund Advisory Agreement"). Under the
Fund Advisory Agreement, SCMI has agreed to furnish a continuous investment
program for the Fund and makes investment decisions on its behalf. For these
services, SCMI is entitled to receive an investment advisory fee, payable
monthly, on assets managed directly at the Fund level, at the annual rate of
0.75% of the Fund's average daily net assets. The Fund Advisory Agreement,
however, provides that SCMI is not entitled to receive an investment advisory
fee from the Fund on assets invested in the Portfolio.

57
<PAGE>

Subject to such policies as the Core Board may determine, SCMI also
furnishes a continuous investment program for the Portfolio and makes investment
decisions on its behalf. For these services, the investment advisory Agreement
between SCMI and Schroder Core (the "Portfolio Advisory Agreement") provides
that SCMI is entitled to receive a monthly advisory fee at the annual rate of
0.55% of the Portfolio's average daily net assets. The Portfolio Advisory
Agreement between Schroder Core and SCMI is the same in all material respects as
the Fund Advisory Agreement (except as to the parties and the circumstances
under which fees will be paid).

The Fund's and the Portfolio's current portfolio manager is Donald M.
Farquharson. Mr. Farquarson is primarily responsible for the day-to-day
management of the investment portfolio, with the assistance of SCMI's Japanese
investment management team. Mr. Farquharson, who has managed the Fund and
Portfolio since inception, is a First Vice President of SCMI. He originally
joined SCMI as an equity analyst in 1988, served as the head of SCMI's Japanese
Equity Research group in Tokyo from 1993 to 1995, and thereafter has served as a
fund manager for SCMI.

ADMINISTRATIVE SERVICES

DISTRIBUTOR AND DISTRIBUTION PLAN

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.

58
<PAGE>

SHAREHOLDER SERVICE PLAN

The Trust, on behalf of the Fund, has also adopted a shareholder
service plan (the "Shareholder Service Plan") pursuant to which Schroder
Advisors is authorized to pay Service Organizations a servicing fee. Payments
under the Shareholder Service Plan may be for various types of services,
including: (1) answering customer inquiries regarding the manner in which
purchases, exchanges and redemptions of shares of the Fund may be effected and
other matters pertaining to the Fund's services, (2) providing necessary
personnel and facilities to establish and maintain shareholder accounts and
records, (3) assisting shareholders in arranging for processing purchase,
exchange and redemption transactions, (4) arranging for the wiring of funds, (5)
guaranteeing shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts, (6) integrating
periodic statements with other customer transactions and (7) providing such
other related services as the shareholder may request. The maximum amount
payable under the Shareholder Service Plan to Schroder Advisors is 0.25% of the
Fund's average daily net assets attributable to Advisor Shares.

EXPENSES

59
<PAGE>

expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. For assets invested in a Portfolio, the Fund also
bears its ratable share of the Portfolio's expenses, including any investment
advisory fees payable to SCMI. Trust expenses directly attributed to the Fund
are charged to the Fund; other Trust expenses are allocated proportionately
among all the series of the Trust in relation to the net assets of each series,
and any class expenses directly attributable to a class of shares are allocated
to the particular class. SCMI and Schroder Advisors have undertaken voluntarily
to waive a portion of their fees or assume certain expenses of the Fund in order
to limit total Fund expenses, excluding taxes, interest, brokerage commissions
and other Fund transaction expenses and extraordinary expenses chargeable to
Advisor Shares, to [1.60]% of the average daily net assets of the Fund
attributable to those shares. This expense limitation can not be modified or
withdrawn except by a vote of the Trust Board. If expense reimbursements are
required, they will be made on a monthly basis. SCMI, Schroder Advisors, or
Forum may waive voluntarily all or a portion of its fees, from time to time.

PORTFOLIO TRANSACTIONS

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

INVESTMENT IN THE FUND

PURCHASE OF SHARES

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). The minimum initial investment is $2,500 and the minimum
subsequent investment is $250. 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
Schroder Japan Fund to:

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Schroder Japan Fund -- Advisor Shares
P.O. Box 446
Portland, Maine 04112

Subsequent purchases may be made by mailing a check, by sending a bank
wire, or through a shareholder's Service Organization, as indicated above. 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 Financial Corp.
Account. No.: 910-2-718187
Ref.: Schroder Japan 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 trading on the New
York Stock Exchange (the "Exchange") on a day when the Exchange is open for
trading are processed at the net asset value determined as of that day. Wire
orders received after the close of the Exchange are processed at the net asset
value next determined. See "Net Asset Value".

RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

Fund Advisor Shares are offered in connection with various 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.

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investment for an IRA in the Fund is $250; 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. Tax advice should be obtained before
effecting a rollover.

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 your investment meets
the initial investment minimum of the fund being purchased and you maintain the
respective minimum account balance in each fund in which you own shares.
Exchanges between each fund are at net asset value.

For federal income tax purposes an exchange is considered to be a sale
of shares on which you may realize a capital gain or loss. If you hold Advisor
Shares through a Service Organization, you must make an exchange through your
Service Organization. If you hold Advisor Shares directly, you may make an
exchange by calling the Transfer Agent at 1-800-344-8332, see "Redemption of
Shares -- By Telephone", 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.

REDEMPTION OF SHARES

BY TELEPHONE. Redemption requests may be made by telephoning the Transfer
Agent at 1-800-344-8332. 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 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.

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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 telephone number appearing on the cover of this Prospectus.

The Fund may suspend the right of redemption during any period when:
(1) trading on an exchange is restricted or an 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 Trust Board determines that it would be detrimental to the best
interest of the Fund's remaining shareholders 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.

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 $10,000, 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 be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.

NET ASSET VALUE

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Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Net asset value
per share for a class of shares is calculated by dividing the aggregate value of
the Fund's assets allocable to a particular class, less the liabilities charged
to the class, if any, by the number of outstanding shares of that class of the
Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES

THE FUND

Dividends and capital-gain distributions on Advisor Shares are
reinvested automatically in additional Shares at net asset value unless the
shareholder has elected in the account application, or otherwise in writing, to
receive dividends and other distributions in cash.

After every dividend and other distribution, the value of a Share
declines by the amount of the distribution. Purchases made shortly before a
dividend or other distribution include in the purchase price the amount of the
distribution, which will be returned to the investor in the form of a taxable
distribution.

Dividends from the Fund's income generally will be taxable to
shareholders as ordinary income, whether the dividends are invested in
additional Shares or received in cash. Distributions by the Fund of any net
long-term capital gain will be taxable to a shareholder as long-term capital
gain regardless of how long the shareholder has held the Shares. 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. Each year the Trust will notify shareholders of the tax status of
dividends and other distributions.

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A redemption of Shares may result in taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's basis in the redeemed Shares. If Shares are redeemed
at a loss after being held for six months or less, the loss will be treated as a
long-term, rather than a short-term, capital loss to the extent of any capital
gain distributions received on those Shares.

In an effort to adhere to certain tax requirements, the Fund may have
to limit its investment activity in some types of instruments.

EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the Fund
and its investments,
which generally reduce the Fund's income.

Pursuant to the tax convention between the U.S. and Japan ( the "
Convention "), a Japanese withholding tax at the maximum rate of 15% is, with
certain exceptions, imposed upon dividends paid by Japanese corporations to the
Fund. Pursuant to the present terms of the Convention, interest received by the
Fund from sources within Japan is subject to a Japanese withholding tax at a
maximum rate of 10%. Capital gains of the Fund arising from its investments as
described herein are not taxable in Japan.

Generally, the Fund will be subject to the Japanese securities
transaction tax on its sale of certain securities in Japan. The current rates of
such tax range from 0.03% to 0.30% depending upon the particular type of
securities involved. Transactions involving equity securities are currently
taxed at the highest rate.

If the Fund is eligible to do so, it ordinarily expects to elect to
permit its shareholders to take a credit (or a deduction), subject to certain
limitations, 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, to take a foreign tax credit
against their federal income tax liability

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for the amount of such foreign taxes or else to deduct such foreign taxes as an
itemized deduction from gross income.

THE PORTFOLIO

The Portfolio intends to conduct its operations so as to enable the
Fund, if it invests all of its assets in the Portfolio, to qualify as a
regulated investment company.

OTHER INFORMATION

CAPITALIZATION AND VOTING

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 has
authority to issue 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 portfolios or series (such as the Fund) and may
divide portfolios or series into classes of shares (such as the Advisor Shares),
and the costs of doing so are borne by the Trust or series in accordance with
the Trust Instrument. The Trust currently consists of eleven separate Funds,
each of which has a separate investment objective and policies.

When issued in accordance with the terms of the prospectus, shares are
fully paid, non-assessable, and have no preemptive rights. Shareholders have
non-cumulative voting rights, which means that the holders of more than 50% of
the Trust's outstanding shares voting for the election of Trustees can elect
100% of the Trustees if they choose to do so. A shareholder is entitled to one
vote for each full share held (and a fractional vote for each fractional share
held). Each share of the Fund has equal voting rights, except that if a matter
affects only the shareholders of a particular class only shareholders of that
class shall have a right to vote. On Trust matters requiring shareholder
approval, shareholders of the Trust are entitled to vote only with respect to
matters that affect the interests of the Fund or the class of shares they hold,
except as otherwise required by applicable law.

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as a Trustee and the Trust Board will call a special meeting of shareholders to
consider removal of one or more Trustees if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the Trust.

REPORTS

The Trust sends each Fund shareholder a semi-annual report and an
audited annual report, when available, containing the Fund's financial
statements.

PERFORMANCE

The Fund may include quotations of average annual total return,
cumulative total return and other performance measures for shares in
advertisements or reports to shareholders or prospective investors. Average
annual total return of a class of shares is based upon the overall dollar or
percentage change in value of a hypothetical investment each year over specified
periods. Average annual total returns reflect the deduction of the Fund's
expenses (on an annual basis) and assumes investment and reinvestment of all
dividends and distributions at net asset value. Cumulative total returns are
calculated similarly except that the total return is aggregated over the
relevant period instead of annualized.

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

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank is custodian of the Fund's and of the
Portfolio's assets. Forum Shareholder Services, LLC serves as the Fund's
transfer agent and dividend disbursing agent.

SHAREHOLDER INQUIRIES

Inquiries about the Fund should be directed to:

Schroder Japan Fund
P.O. Box 446
Portland, Maine 04112

Information about specific shareholder accounts may be obtained from
the Transfer Agent by calling 1-800-344-8332 or 1-207-879-1900.

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FUND STRUCTURE

THE PORTFOLIO. The Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, which has the same
investment objective and substantially similar policies as those of the Fund.
Accordingly, the Portfolio directly acquires its own securities, and the Fund
acquires an indirect interest in those securities. The Portfolio is a separate
series of Schroder Core, a business trust organized under the laws of the State
of Delaware in September 1995. Schroder Core is registered under the 1940 Act as
an open-end, management investment company and currently has eight separate
series. The assets of the Portfolio, a diversified portfolio, belong only to,
and the liabilities of each Portfolio are borne solely by, that Portfolio and no
other portfolio of Schroder Core.

The Fund's investment in the Portfolio is in the form of a
non-transferable beneficial interest. As of January 22, 1998, there are no
investors in the Portfolio. The Portfolio may permit other investment companies
or other qualified investors to invest in it. All other investors in the
Portfolio will invest on the same terms and conditions as the Fund and will pay
a proportionate share of the Portfolio's expenses.

The Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in the Portfolio is entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On most issues
subject to a vote of investors, as permitted under the 1940 Act and other
applicable law, the Board may solicit proxies from the Fund's shareholders and
vote the Fund's interest in a Portfolio based upon the vote of its shareholders
or the Board may determine to vote the Fund's interests in a Portfolio in the
same proportion as the vote of all other interestholders in the Portfolio. If
there are other investors in the Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders would
receive a majority of votes cast by all investors in the Portfolio; indeed, if
other investors hold a majority interest in the Portfolio, they could have
voting control of the Portfolio.

The Portfolio does not sell its shares directly to members of the
general public. Another investor in the Portfolio, such as an investment
company, that might sell its shares to members of the general public would not
be required to sell its shares at the same offering price as the Fund and could
have different fees and expenses than the Fund. Therefore, Fund shareholders may
have different returns than shareholders in another investment company that
invests exclusively in the Portfolio. There is currently no such other
investment company that offers its shares to members of the general public.
Information regarding any such funds in the future is available from Schroder
Core by calling Forum Shareholder Services, LLC at (800) 730-2932.

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of the Trust and may be required to sign the registration statements of certain
other investors in the Portfolio. In addition, under federal securities law,
Schroder Core may be liable for misstatements or omissions of a material fact in
any proxy soliciting material of a publicly offered investor in Schroder Core,
including the Fund. Each investor in the Portfolio, including the Trust, has
agreed to indemnify Schroder Core and its Trustees and officers ("Schroder Core
Indemnitees") against certain claims.

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

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

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Each investor in the Portfolio, including the Fund, may be liable for
all obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be quite remote. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.

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INVESTMENT ADVISER
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
Global Custody Division
125 London Wall
London EC2Y 5AJ United Kingdom

TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
Two Portland Square
Portland, Maine 04101

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

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TABLE OF CONTENTS

EXPENSES OF INVESTING
IN THE FUND..................................
Fee Table......................................
Example........................................
INVESTMENT OBJECTIVE
AND POLICIES.................................
Other Investment Practices and Risk
Considerations...............................
MANAGEMENT OF THE FUND.........................
Boards of Trustees.............................
Investment Adviser and Portfolio Manager.......
Administrative Services........................
Distributor and Distribution Plan..............
Shareholders Service Plan......................
Expenses.......................................
Portfolio Transactions.........................
INVESTMENT IN THE FUND.........................
Purchase of Shares.............................
Retirement Plans and Individual
Retirement Accounts..........................
Exchanges......................................
Redemption of Shares...........................
Net Asset Value................................
DIVIDENDS, DISTRIBUTIONS
AND TAXES....................................
The Fund.......................................
The Portfolio..................................
OTHER INFORMATION..............................
Capitalization and Voting......................
Reports........................................
Performance....................................
Custodian and Transfer Agent...................
Shareholder Inquiries..........................
Fund Structure.................................

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SCHRODER JAPAN FUND
INVESTOR SHARES

This Prospectus explains concisely the information you should know before
investing in the Fund's Investor shares. Please read it carefully and keep it
for future reference. You can find more detailed information about the Trust and
Fund in the [April __,] 1998 Statement of Additional Information ("SAI"), as
amended from time to time. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is available along with other related materials
for reference on the SEC's Internet Web Site (http://www.sec.gov). A free copy
may be obtained without charge from the Trust by writing to Two Portland Square,
Portland, Maine 04101 or by calling 1-800-290-9826. The SAI has been
incorporated into this Prospectus by reference. The Fund has not authorized
anyone to provide you with information that is different from what is contained
in this Prospectus or in other documents to which this Prospectus refers you.

PROSPECTUS
[APRIL __, 1998]

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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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EXPENSES OF INVESTING IN THE FUND

FEE TABLE

Expenses are one of several factors to consider when investing in the
Fund's Investor Shares. . There are no transaction expenses associated with
purchases or redemptions of Investor Shares. The "Annual Operating Expenses"
table and related "Example" estimate the expenses that your investment in
Investor Shares would incur based upon the Fund's anticipated expenses for its
first fiscal year. Annual Operating Expenses include the Fund's pro rata portion
of all estimated operating expenses of the Portfolio in which the Fund invests.
The Example shows the cumulative expenses attributable to a hypothetical $1,000
investment in the Fund over specified periods. See "Management of the Fund --
Fees -- Expenses".

Annual Fund Operating Expenses (as a percentage of average net assets)(1)
Management Fees (after fee waivers)(2)(3)............................ 0.80%
12b-1 Fees........................................................... None
Other Expenses (after fee waivers and expense reimbursements)(3)..... 0.55%
-----
Total Fund Operating Expenses........................................ 1.35%

- -----------
(1) The Fund's expenses include the Fund's pro rata portion of all
operating expenses of the Portfolio.
(2) Management Fees reflect the fees to be paid to SCMI and Schroder
Advisors for investment advisory and administrative services if the
Fund's assets are invested in the Portfolio.
(3) SCMI and Schroder Advisors have voluntarily undertaken to waive a
portion of their fees and reimburse certain expenses of the Fund during
the current fiscal year in order to limit the Fund's total expenses to
[1.35]% of the Fund's average daily net assets. This undertaking cannot
be withdrawn except by a majority vote of the Trust's Board of
Trustees. See "Management of the Fund -- Expenses". Without fee waivers
and reimbursements, Management Fees, Other Expenses and Total Fund
Operating Expenses would be %, % and %,, respectively.

EXAMPLE

The table below indicates how much you would pay in total expenses on a
$1,000 investment in the Fund, assuming: (1) a 5% annual return; and (2)
redemption at the end of each time period. The example is based on the expenses
listed above and assumes reinvestment of all dividends and other distributions.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
OR RETURNS; ACTUAL EXPENSES OR RETURNS MAY VARY FROM THOSE SHOWN. FEDERAL
REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT ACTUAL RETURNS
WILL VARY.

PERIOD

1 YEAR...........................................................$14
3 YEARS..........................................................$43

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INVESTMENT OBJECTIVE AND POLICIES

Although the following information describes the investment policies of
the Fund, it applies generally to the Portfolio.

Under normal market conditions, the Fund invests at least 65% of its
total assets in equity securities of Japanese issuers.

Equity securities in which the Fund may invest include common stocks,
preferred stocks, convertible preferred stocks, convertible debt securities, and
stock rights and warrants to purchase any of the foregoing, as well as equity
interests in trusts, partnerships, joint ventures, or similar enterprises, and
American or Global Depositary Receipts, and other similar instruments providing
for indirect investment in securities of foreign issuers. Under certain
circumstances, the Fund may invest indirectly in equity securities by investing
in other investment companies or similar pooled vehicles. See "Other Investment
Practices and Risk Considerations -- Investment in Other Investment Companies".

All percentage limitations on investments apply at the time of purchase
and will not be considered violated unless an excess or a deficiency occurs or
exists immediately after and as a result of the investment, except that the
policies with regard to borrowing and liquidity will be observed at all times.
Additional information concerning the investment policies and restrictions of
the Fund and Portfolio is contained in the SAI.

OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS

At times, SCMI may judge that general market conditions 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,
primarily designed to reduce fluctuations in the values of the Fund's assets. In
implementing `defensive" strategies, the Fund may invest without limit in U.S.
government securities and other high-quality debt instruments that SCMI believes
to be consistent with the Fund's best interests.

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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. Differences in accounting methods make it
difficult to compare the earnings of Japanese companies with those of U.S.
companies. The securities of some foreign issuers are less liquid and at times
more volatile than securities of comparable U.S. issuers, although the Tokyo
Stock Exchange has a large volume of trading, and SCMI believes that securities
of companies traded in Japan are generally as liquid as securities of comparable
U.S. companies. While foreign brokerage commissions and other fees are also
generally higher than in the United States, brokerage commissions in Japan are
generally fixed. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or in 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, currency devaluations, and
diplomatic developments that could affect the value of the Fund's investments.
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.

Special tax considerations apply to Japanese securities. Income and/or
gains received by the Fund from sources within Japan may be reduced by
withholding and other taxes imposed by Japan. A tax conventions between Japan
and the United States may reduce or eliminate such taxes. Any taxes paid by Fund
will reduce the net income available for the Fund to allocate to shareholders.

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

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may hold cash and time deposits denominated in any major foreign currency in
foreign banks. To the extent that the Fund assumes a temporary defensive
position, it may not be pursuing its investment objective. See the SAI for
further information about these securities.

MANAGEMENT OF THE FUND

NEW SCHRODER GRAPHIC OF WORLD

BOARDS OF TRUSTEES

INVESTMENT ADVISER AND PORTFOLIO MANAGER

SCMI serves as investment adviser to the Fund under an investment
advisory agreement with the Trust (the "Fund Advisory Agreement"). Under the
Fund Advisory Agreement, SCMI has agreed to furnish a continuous investment
program for the Fund and makes investment decisions on its behalf. For these
services, SCMI is entitled to receive an investment advisory fee, payable
monthly, on assets managed directly at the Fund level, at the annual rate of
0.75% of the Fund's average daily net assets. The Fund Advisory Agreement,
however, provides that SCMI is not entitled to receive an investment advisory
fee from the Fund on assets invested in the Portfolio.

Subject to such policies as the Core Board may determine, SCMI also
furnishes a continuous investment program for the Portfolio and makes investment
decisions on its behalf. For these services, the investment advisory Agreement
between SCMI and Schroder Core provides that SCMI is entitled to receive a
monthly advisory fee at the annual rate of 0.55% of the Portfolio's average
daily net assets. The advisory agreement between Schroder Core and SCMI with
respect to the Portfolio is the same in all material respects as the Fund
Advisory Agreement (except as to the parties and the circumstances under which
fees will be paid).

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ADMINISTRATIVE SERVICES

DISTRIBUTOR

EXPENSES

The Fund bears all costs of its operations other than expenses
specifically assumed by SCMI or Schroder Advisors. The costs borne by the Fund
include legal and accounting expenses; trustees' fees and expenses; insurance
premiums, custodian and transfer agent fees and expenses; expenses of
registering and qualifying the Fund's shares for sale with the SEC and with
various state securities commissions; expenses of obtaining quotations on
portfolio securities and pricing of the Fund's shares; expenses of maintaining
the Trust's and the Fund's legal existence and of shareholders' meetings; and
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses. For assets invested in a Portfolio, the Fund also
bears its ratable share of the Portfolio's expenses, including any investment
advisory fees payable to SCMI. Trust expenses directly attributed to the Fund
are charged to the Fund; other Trust expenses are allocated proportionately
among all the series of the Trust in relation to the net assets of each series,
and any class expenses directly attributable to a class of shares are allocated
to the particular class. SCMI and Schroder Advisors have undertaken voluntarily
to waive a portion of their fees or assume certain expenses of the Fund in order
to limit total Fund expenses, excluding taxes, interest, brokerage commissions
and other Fund transaction expenses and extraordinary expenses chargeable to
Investor Shares, to [1.35]% of the average daily net assets of the Fund
attributable to those shares. This expense limitation can not be modified or
withdrawn except by a vote of the Trust Board. If expense reimbursements are
required, they will be made on a monthly basis. SCMI, Schroder Advisors, or
Forum may waive voluntarily all or a portion of its fees, from time to time.

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PORTFOLIO TRANSACTIONS

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

INVESTMENT IN THE FUND

PURCHASE OF SHARES

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). The minimum initial investment is $10,000, and the minimum
subsequent investment is $2,500. 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
Schroder Japan Fund to:

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

Subsequent purchases may be made by mailing a check or by sending a
bank wire, as indicated above. All payments should clearly indicate the
shareholder's name and account number.

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Investors 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 Financial Corp.
Account. No.: 910-2-718187
Ref.: Schroder Japan 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 trading on the New
York Stock Exchange (the "Exchange") on a day when the Exchange is open for
trading are processed at the net asset value determined as of that day. Wire
orders received after the close of the Exchange are processed at the net asset
value next determined. See "Net Asset Value".

RETIREMENT PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

Fund Investor Shares are offered in connection with various 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 a
SEP-IRA. An IRA naming The First National Bank of Boston as custodian is
available from the Trust or the Transfer Agent. The minimum initial investment
for an IRA in the Fund is $2,000; the minimum subsequent investment is $2000.
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. Tax advice should be obtained before
effecting a rollover.

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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 your investment meets
the initial investment minimum of the fund being purchased and you maintain the
respective minimum account balance in each fund in which you own shares.
Exchanges between each fund are at net asset value.

For federal income tax purposes an exchange is considered to be a sale
of shares on which you may realize a capital gain or loss. If you hold Investor
Shares directly, you may make an exchange by calling the Transfer Agent at
1-800-344-8332, see "Redemption of Shares -- By Telephone", 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

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.

REDEMPTION OF SHARES

WRITTEN REQUESTS. Redemptions may be made 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

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the need for signature guarantees or documentation of authority should be
directed to the Fund at the above address or by calling the telephone number
appearing on the cover of this Prospectus.

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 are sent to the shareholder's address of record.

If the Trust Board determines that it would be detrimental to the best
interest of the Fund's remaining shareholders 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 $10,000, 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 be allowed at least 30 days to make an additional
investment to increase the account balance to at least the required minimum
amount.

NET ASSET VALUE

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DIVIDENDS, DISTRIBUTIONS AND TAXES

THE FUND

Dividends and capital-gain distributions on Investor Shares are
reinvested automatically in additional Shares at net asset value unless the
shareholder has elected in the account application, or otherwise in writing, to
receive dividends and other distributions in cash.

In an effort to adhere to certain tax requirements, the Fund may have
to limit its investment activity in some types of instruments.

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<PAGE>

EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the Fund
and its investments, which generally reduce the Fund's income.

Pursuant to the tax convention between the U.S. and Japan (the "
Convention "), a Japanese withholding tax at the maximum rate of 15% is, with
certain exceptions, imposed upon dividends paid by Japanese corporations to the
Fund. Pursuant to the present terms of the Convention, interest received by the
Fund from sources within Japan is subject to a Japanese withholding tax at a
maximum rate of 10%. Capital gains of the Fund arising from its investments as
described herein are not taxable in Japan.

If the Fund is eligible to do so, it ordinarily expects to elect to
permit its shareholders to take a credit (or a deduction), subject to certain
limitations, 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, 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.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its U.S. shareholders; see the
SAI for further information. Shareholders should consult their own tax advisors
as to the tax consequences of their ownership of Investor Shares, including with
respect to the applicability of state, local and non-U.S. taxes.

THE PORTFOLIO

The Portfolio intends to conduct its operations so as to enable the
Fund, if it invests all of its assets in the Portfolio, to qualify as a
regulated investment company.

OTHER INFORMATION

CAPITALIZATION AND VOTING

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 has
authority to issue 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 portfolios or series (such as the Fund) and may
divide portfolios or series into classes of shares (such as the Investor
Shares), and the costs of doing so are borne by the Trust or series in
accordance with the Trust Instrument. The Trust currently consists of eleven
separate Funds, each of which has a separate investment objective and policies.

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

REPORTS

The Trust sends each Fund shareholder a semi-annual report and an
audited annual report, when available, containing the Fund's financial
statements.

PERFORMANCE

The Fund may include quotations of average annual total return,
cumulative total return and other performance measures for shares in
advertisements or reports to shareholders or prospective investors. Average
annual total return of a class of shares is based upon the overall dollar or
percentage change in value of a hypothetical investment each year over specified
periods. Average annual total returns reflect the deduction of the Fund's
expenses (on an annual basis) and assumes investment and reinvestment of all
dividends and distributions at net asset value. Cumulative total returns are
calculated similarly except that the total return is aggregated over the
relevant period instead of annualized.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank is custodian of the Fund's and of the
Portfolio's assets. Forum Shareholder Services, LLC serves as the Fund's
transfer agent and dividend disbursing agent.

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SHAREHOLDER INQUIRIES

Inquiries about the Fund should be directed to:

Schroder Japan Fund
P.O. Box 446
Portland, Maine 04112

Information about specific shareholder accounts may be obtained from
the Transfer Agent by calling 1-800-344-8332 or 1-207-879-1900.

FUND STRUCTURE

THE PORTFOLIO. The Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, which has the same
investment objective and substantially similar policies as those of the Fund.
Accordingly, the Portfolio directly acquires its own securities, and the Fund
acquires an indirect interest in those securities. The Portfolio is a separate
series of Schroder Core, a business trust organized under the laws of the State
of Delaware in September 1995. Schroder Core is registered under the 1940 Act as
an open-end, management investment company and currently has four separate
series. The assets of the Portfolio, a diversified portfolio, belong only to,
and each liabilities of the Portfolio are borne solely by, that Portfolio and no
other portfolio of Schroder Core.

The Portfolio normally will not hold meetings of investors except as
required by the 1940 Act. Each investor in the Portfolio is entitled to vote in
proportion to its relative beneficial interest in the Portfolio. On most issues
subject to a vote of investors, as permitted under the 1940 Act and other
applicable law, the Board may solicit proxies from the Fund's shareholders and
vote the Fund's interest in a Portfolio based upon the vote of its shareholders
or the Board may determine to vote the Fund's interests in a Portfolio in the
same proportion as the vote of all other interestholders in the Portfolio. If
there are other investors in the Portfolio, there can be no assurance that any
issue that receives a majority of the votes cast by Fund shareholders would
receive a majority of votes cast by all investors in the Portfolio; indeed, if
other investors hold a majority interest in the Portfolio, they could have
voting control of the Portfolio.

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Under federal securities law, any person or entity that signs a
registration statement may be liable for a misstatement or omission of a
material fact in the registration statement. Schroder Core, its trustees and
certain of its officers are required to sign the registration statement and
amendments thereto of the Trust and may be required to sign the registration
statements of certain other investors in the Portfolio. In addition, under
federal securities law, Schroder Core may be liable for misstatements or
omissions of a material fact in any proxy soliciting material of a publicly
offered investor in Schroder Core, including the Fund. Each investor in the
Portfolio, including the Trust, has agreed to indemnify Schroder Core and its
Trustees and officers ("Schroder Core Indemnitees") against certain claims.

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

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

Each investor in the Portfolio, including the Fund, may be liable for
all obligations of the Portfolio. The risk to an investor in the Portfolio of
incurring financial loss on account of such liability, however, is limited to
circumstances in which the Portfolio is unable to meet its obligations, the
occurrence of which SCMI considers to be quite remote. Upon liquidation of the
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.

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INVESTMENT ADVISER
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
Global Custody Division
125 London Wall
London EC2Y 5AJ United Kingdom

TRANSFER AND DIVIDEND DISBURSING AGENT
Forum Shareholder Services, LLC
Two Portland Square
Portland, Maine 04101

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

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TABLE OF CONTENTS

EXPENSES OF INVESTING
IN THE FUND..................................
Fee Table......................................
Example........................................
INVESTMENT OBJECTIVE
AND POLICIES.................................
Other Investment Practices and Risk
Considerations...............................
MANAGEMENT OF THE FUND.........................
Boards of Trustees.............................
Investment Adviser and Portfolio Manager.......
Administrative Services........................
Distributor....................................
Expenses.......................................
Portfolio Transactions.........................
INVESTMENT IN THE FUND.........................
Purchase of Shares.............................
Retirement Plans and Individual
Retirement Accounts..........................
Exchanges......................................
Statement of Intention.........................
Redemption of Shares...........................
Net Asset Value................................
DIVIDENDS, DISTRIBUTIONS
AND TAXES....................................
The Fund.......................................
The Portfolio..................................
OTHER INFORMATION..............................
Capitalization and Voting......................
Reports........................................
Performance....................................
Custodian and Transfer Agent...................
Shareholder Inquiries..........................
Fund Structure.................................

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SCHRODER ASIA FUND
AND
SCHRODER JAPAN FUND

COMBINED STATEMENT OF ADDITIONAL INFORMATION
APRIL__, 1998

[WORLD GRAPHIC]

INVESTMENT ADVISER
Schroder Capital Management International Inc. ("SCMI")
ADMINISTRATOR AND DISTRIBUTOR
Schroder Fund Advisors Inc. ("Schroder Advisors")
SUBADMINISTRATOR
Forum Administrative Services, LLC ("Forum")
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 Schroder Asia and Japan Funds (each, a "Fund" and together,
the "Funds") are offered for sale at net asset value with no sales charge as an
investment vehicle for individuals, institutions, corporations and fiduciaries.
The Funds' Advisor Shares also are offered for sale at net asset value 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 Funds'
current prospectuses dated April __, 1998, as may be amended from time to time
(each, individually, the "Prospectus", and together, the "Prospectuses"). This
SAI contains additional and more detailed information than that set forth in the
applicable Prospectus and should be read in conjunction with the Prospectuses
and retained for future reference. Each Prospectus and this SAI are available
along with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). All terms used in this SAI that are defined in a
Prospectus have the meaning assigned in the Prospectus. You may obtain an
additional copy of the Prospectus of the Fund in which you are interested
without charge by writing to the Trust at Two Portland Square, Portland, Maine
04101 or calling the numbers listed above.

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TABLE OF CONTENTS

ADDITIONAL INFORMATION
REGARDING INVESTMENTS.............................3
Warrants and Stock Rights...........................3
Depositary Receipts.................................3
Debt Securities.....................................3
Convertible Securities..............................4
Debt-to-Equity Conversions..........................4
Brady Bonds.........................................4
Zero-coupon and Payment in Kind Bonds...............4
Indexed Securities..................................4
Foreign Exchange Contracts..........................5
Options and Futures Transactions....................5
Options on Foreign Currencies.......................6
Covered Call Writing................................7
Covered Put Writing.................................8
Purchasing Call and Put Options.....................8
Risks of Options Transactions.......................9
Futures Contracts..................................10
Interest-Rate Futures Contracts....................10
Currency Futures Contracts.........................11
Index Futures Contracts............................11
Options on Futures Contracts.......................11
Limitations on Futures Contracts and
Options on Futures Contracts.....................12
Risks of Transactions in Futures Contracts
and Related Options..............................12
Interest-Rate Transactions.........................14
When-Issued and Delayed Delivery Securities
and Forward Commitments..........................14
When, As and If Issued Securities..................14
Investment in Other Investment
Companies or Vehicles............................14
Temporary Investments..............................15
Short-Term Debt Securities.........................15

Repurchase Agreements..............................15
Restricted Securities..............................16
Rule 144A Securities...............................16
U.S. Government Securities.........................16
Bank Obligations...................................16
Loans of Portfolio Securities......................16
INVESTMENT RESTRICTIONS............................17
MANAGEMENT.........................................18
Officers and Trustees..............................18
Investment Adviser.................................20
Administrative Services............................21
Distribution of Fund Shares........................21
Glass-Steagall Act.................................22
Fund Accounting....................................23
PORTFOLIO TRANSACTIONS.............................23
Investment Decisions...............................23
Brokerage and Research Services....................23
ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION........................25
Determination of Net Asset Value Per Share.........25
Redemption In-Kind.................................26
TAXATION...........................................26
OTHER INFORMATION..................................29
Organization.......................................29
Capitalization and Voting..........................30
Performance Information............................30
Principal Shareholders.............................31
Custodian..........................................31
Transfer Agent and Dividend Disbursing Agent.......31
Legal Counsel......................................31
Independent Accountant.............................31
Registration Statement.............................32
Financial Statements...............................32
APPENDIX..........................................A-1

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ADDITIONAL INFORMATION REGARDING FUND INVESTMENTS

WARRANTS AND STOCK RIGHTS. Each 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, each 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, neither Fund
intends to invest more than 5% of its total net assets (at the time of
investment) in stock rights.

DEPOSITARY RECEIPTS. As described in the applicable Prospectus, each
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, a 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.

DEBT SECURITIES. Each Fund may seek capital appreciation through
investment in foreign non-convertible or convertible debt securities. See
"Convertible Securities". Capital appreciation in debt securities may arise as a
result of a favorable change in relative foreign exchange rates, in relative
interest-rate levels, or in the creditworthiness of issuers. The receipt of
income from debt securities is incidental to a Fund's objective of long-term
capital appreciation. Such income can be used, however, to offset the operating
expenses of the Fund. In accordance with its investment objectives, neither Fund
will seek to benefit from anticipated short-term fluctuations in currency
exchange rates. A Fund also may invest to a certain extent in debt securities in
order to participate in debt-to-equity conversion programs incident to corporate
reorganizations.

Each Fund may invest in debt securities issued or guaranteed by: (1)
governments (including countries, provinces and municipalities) or their
agencies ("governmental entities") of Asian Countries; or (2) Asian Companies;
or (3) international organizations designated or supported by multiple foreign
governmental entities (which are not obligations of foreign governments) to
promote economic reconstruction or development.

Each Fund may invest up to 10% of its total assets in debt securities,
including securities that are unrated or rated below investment grade (below
"Baa" by Moody's or "BBB" by S&P). For a further description of S&P's and
Moody's securities ratings, please see the Appendix. Note that even debt
securities rated "Baa" by Moody's are considered to have speculative
characteristics. Below investment-grade securities and unrated securities of
comparable quality ("high yield/high risk securities") are predominantly
speculative with respect to the capacity to pay interest and repay principal and
generally involve a greater volatility of price than securities in higher rating
categories. These securities are commonly referred to as "junk" bonds. The risks
associated with junk bonds are generally greater than those associated with
higher-rated securities. See "Risk Considerations -- High Yield/High Risk
Securities". The Funds are not obligated to dispose of securities due to rating
changes by Moody's, S&P or other rating agencies. Neither Fund is authorized to
purchase debt securities that are in default.

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CONVERTIBLE SECURITIES. Each 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. 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.

DEBT-TO-EQUITY CONVERSIONS. Each Fund may invest up to 5% of its net
assets in debt-to-equity conversions. Debt-to-equity conversion programs are
sponsored in varying degrees by certain foreign countries and permit investors
to use external debt of a country to make equity investments in local companies.
Many conversion programs relate primarily to investments in transportation,
communication, utilities and similar infrastructure-related areas. The terms of
the programs vary from country to country but include significant restrictions
on the application of proceeds received in the conversion and on the
repatriation of investment profits and capital. When inviting conversion
applications by holders of eligible debt, a government usually specifies the
minimum discount from par value that it will accept for conversion. SCMI
believes that debt-to-equity conversion programs may offer opportunities to
invest in otherwise restricted equity securities that have a potential for
significant capital appreciation. SCMI, therefore, may invest a Fund's assets to
a limited extent in such programs under appropriate circumstances. There can be
no assurance that debt-to-equity conversion programs will continue to be
successful or that the Fund will be able to convert all or any of its emerging
market debt portfolio into equity investments.

BRADY BONDS. Each Fund may invest a portion of its assets in Brady
Bonds, which are securities created through the exchange of existing commercial
bank loans to sovereign entities for new obligations in connection with debt
restructurings. Brady Bonds have been issued only recently and, therefore, do
not have a long payment history. Brady Bonds may have collateralized and
uncollateralized components, are issued in various currencies, and are actively
traded in the over-the-counter secondary market. Brady Bonds are not considered
U.S. government securities. In light of the residual risk associated with the
uncollateralized portions of Brady Bonds and, among other factors, the history
of defaults with respect to commercial bank loans by public and private entities
of countries issuing Brady Bonds, investments in Brady Bonds are considered
speculative. Brady Bonds acquired by a Fund could be subject to restructuring
arrangements or to requests for new credit, which could cause the Fund to suffer
a loss of interest or principal on its holdings.

ZERO-COUPON AND PAYMENT IN KIND BONDS. Each Fund may at times invest in
" zero-coupon" bonds and "payment-in-kind" bonds. Zero-coupon bonds are issued
at a significant discount from face value and pay interest only at maturity
rather than at intervals during the life of the security. Payment-in-kind bonds
allow the issuer, at its option, to make current interest payments on the bonds
either in cash or in additional bonds. The values of zero-coupon bonds and
payment-in-kind bonds are subject to greater fluctuation in response to changes
in market interest rates than bonds which pay interest currently, and may
involve greater credit risk than such bonds.

A Fund will not necessarily dispose of a security when its debt rating
is reduced below its rating at the time of purchase, although SCMI will monitor
the investment to determine whether continued investment in the security will
assist in meeting the Fund's investment objective. If a security's rating is
reduced below investment grade, an investment in that security may entail the
risks of lower-rated securities described below.

INDEXED SECURITIES. Each 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

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security may then reduce the principal amount payable on maturity. Further,
indexed securities may be more volatile than the reference instruments
underlying indexed securities.

FOREIGN EXCHANGE CONTRACTS. 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. When
investing in foreign securities, a Fund usually effects currency exchange
transactions on a spot (I.E., cash) basis at the spot rate prevailing in the
foreign exchange market. A Fund incurs foreign exchange expenses in converting
assets from one currency to another.

Each Fund may enter into forward contracts for the purchase or sale of
foreign currency: (1) to "lock in" the U.S. dollar price of the securities
denominated in a foreign currency or the U.S. dollar value of interest and
dividends to be paid on such securities; or (2) to hedge against the possibility
that a foreign currency may suffer a decline against the U.S. dollar. 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. This
method of attempting to hedge against a decline in the value of a currency does
not eliminate fluctuations in the underlying prices of securities and exposes a
Fund to the risk that the counterparty is unable to perform. Although the
strategy of engaging in foreign currency 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.

Neither Fund intends to maintain a net exposure to such contracts if
the fulfillment of obligations under such contracts would obligate it to deliver
an amount of foreign currency in excess of the value of its portfolio securities
or other assets denominated in the currency. A Fund will not enter into these
contracts for speculative purposes and will not enter into non-hedging currency
contracts. A Fund will generally not enter into a forward contract with a term
of greater than one year. Forward contracts are not exchange traded, and there
can be no assurance that a liquid market will exist at a time when a Fund seeks
to close out a forward contract. Currently, only a limited market, if any,
exists for hedging transactions relating to currencies in certain emerging
markets or to securities of issuers domiciled or principally engaged in business
in certain emerging markets. This may limit a Fund's ability to hedge its
investments in those markets. These contracts involve a risk of loss if SCMI
fails to predict accurately changes in relative currency values. See "Risk
Considerations -- Currency Fluctuations and Devaluations".

OPTIONS AND FUTURES TRANSACTIONS. Although neither Fund presently
intends to do so, it may: (1) write covered call options on portfolio
securities, and the U.S. dollar and emerging market currencies without limit;
(2) write covered put options on portfolio securities, the U.S. dollar and
emerging market currencies with the limitation that the aggregate value of the
obligations underlying the puts determined as of the date the options are sold
will not exceed 50% of a Fund's net assets; (3) purchase call and put options in
amounts up to 5% of its total assets; and (4)(a) purchase and sell
exchange-traded futures contracts on underlying portfolio securities, any
emerging market currency, U.S. and emerging market fixed-income securities and
such indices of U.S. or emerging market equity or fixed-income securities as may
exist or come into being, and (b) purchase and write call and put options on
such futures contracts, in all cases involving such futures contracts or options
on futures contracts for hedging purposes only, and without limit, except that
neither Fund may enter into futures contracts or purchase related options if,
immediately thereafter, the amount committed to margin plus the amount paid for
premiums for unexpired options on futures contracts generally exceeds 5% of the
value of the Fund's total assets. All of the foregoing are referred to as
"Hedging Instruments".

In general, a Fund may use Hedging Instruments: (1) to protect against
declines in the market value of the Fund's portfolio securities or stock index
futures, and the currencies in which they are denominated, or (2) to establish a
position in securities markets as a temporary substitute for purchasing
securities. A Fund will not use Hedging Instruments for speculation. Hedging
Instruments have certain risks associated with them, including: (1) the possible
failure of such instruments as hedging techniques in cases where the price
movement of the securities

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underlying the options or futures does not follow the price movements of the
portfolio securities subject to the hedge; (2) potentially unlimited loss
associated with futures transactions and the possible lack of a liquid secondary
market for closing out a futures position; and (3) possible losses resulting
from the inability of a Fund's investment adviser to predict the direction of
stock prices, interest rates, relative currency values and other economic
factors. In addition, only a limited market, if any, currently exists for
hedging transactions relating to currencies in many emerging markets or to
securities of issuers domiciled or principally engaged in business in emerging
markets. This may limit the Fund's ability to hedge its investments in such
emerging market countries. Neither Fund plans to enter into currency futures or
options contracts but may do so in the future. See "Options and Futures
Transactions" in this SAI for additional information on Hedging Instruments A
Fund may use and the risks associated with them.

OPTIONS ON FOREIGN CURRENCIES. Each Fund may purchase and write options
on foreign currencies for purposes similar to those involved with investing in
forward foreign currency exchange contracts. For example, in order to protect
against declines in the dollar value of portfolio securities that are
denominated in a foreign currency, a Fund may purchase put options on an amount
of such foreign currency equivalent to the current value of the portfolio
securities involved. As a result, the Fund would be able to sell the foreign
currency for a fixed amount of U.S. dollars, thereby securing the dollar value
of the portfolio securities (less the amount of the premiums paid for the
options). Conversely, a Fund may purchase call options on foreign currencies in
which securities it anticipates purchasing are denominated to secure a set U.S.
dollar price for such securities and protect against a decline in the value of
the U.S. dollar against such foreign currency. A Fund may also purchase call and
put options to close out written option positions.

Each Fund also may write covered call options on foreign currency to
protect against potential declines in its portfolio securities that are
denominated in foreign currencies. If the U.S. dollar value of the portfolio
securities falls as a result of a decline in the exchange rate between the
foreign currency in which it is denominated and the U.S. dollar, then a loss to
a Fund occasioned by such value decline would be ameliorated by receipt of the
premium on the option sold. At the same time, however, that Fund gives up the
benefit of any rise in value of the relevant portfolio securities above the
exercise price of the option and, in fact, only receives a benefit from the
writing of the option to the extent that the value of the portfolio securities
falls below the price of the premium received. A Fund also may write options to
close out long call option positions. A covered put option on a foreign currency
would be written by a Fund for the same reason it would purchase a call option,
namely, to hedge against an increase in the U.S. dollar value of a foreign
security that the Fund anticipates purchasing. In this case, the receipt of the
premium would offset, to the extent of the size of the premium, any increased
cost to the Fund resulting from an increase in the U.S. dollar value of the
foreign security. However, the Fund could not benefit from any decline in the
cost of the foreign security that is greater than the price of the premium
received. A Fund also may write options to close out long put option positions.

Markets in foreign currency options are relatively new, and a Fund's
ability to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although a Fund will not purchase or
write such options unless and until, in the opinion of the SCMI, the market for
them has developed sufficiently to ensure that their risks are not greater than
the risks in connection with the underlying currency, there can be no assurance
that a liquid secondary market will exist for a particular option at any
specific time. In addition, options on foreign currencies are affected by all of
those factors that influence foreign exchange rates and investments generally.

The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar, with the result that the price
of the option position may vary with changes in the value of either or both
currencies and may have no relationship to the investment merits of a foreign
security, including foreign securities held in a "hedged" investment portfolio.
Because foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.

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

COVERED CALL WRITING. Each Fund is permitted to write covered call
options on portfolio securities, and on the U.S. dollar and foreign currencies
in which they are denominated, without limit. Generally, a call option is
"covered" if a Fund owns or has the right to acquire without additional cash
consideration (or for additional cash consideration held for the Fund by its
custodian in a segregated account) the underlying security (currency) subject to
the option. In the case of call options on U.S. Treasury Bills, however, the
Fund might own U.S. Treasury Bills of a different series from those underlying
the call option but with a principal amount and value corresponding to the
exercise price and a maturity date no later than that of the security (currency)
deliverable under the call option. A call option is also covered if the Fund
holds a call on the same security as the underlying security (currency) of the
written option, where the exercise price of the call used for coverage is equal
to or less than the exercise price of the call or greater than the exercise
price of the call written if the mark-to-market difference is maintained by the
Fund in cash, U.S. government or other high-grade debt obligations, or other
high-quality liquid securities, held by the Fund in a segregated account
maintained with its custodian.

A Fund receives a premium from the purchaser in return for a call it
has written. Receipt of such premiums may enable the Fund to earn a higher level
of current income than it would earn from only holding the underlying securities
(currencies). Moreover, the premium received offsets a portion of the potential
loss incurred by the Fund if the securities (currencies) underlying the option
are ultimately sold (exchanged) by the Fund at a loss. Furthermore, a premium
received on a call written on a foreign currency ameliorates any potential loss
of value on the portfolio security due to a decline in the value of the
currency. However, during the option period, the covered call writer has, in
return for the premium, given up the opportunity for capital appreciation above
the exercise price should the market price of the underlying security (or the
exchange rate of the currency in which it is denominated) increase but has
retained the risk of loss should the price of the underlying security (or the
exchange rate of the currency in which it is denominated) decline. The premium
received fluctuates with varying economic market conditions. If the market value
of the portfolio securities (or the currencies in which they are denominated)
upon which call options have been written increases, a Fund may receive a lower
total return from the portion of its portfolio upon which calls have been
written than it would have received had such calls not been written.

With respect to listed options and certain OTC options, during the
option period a Fund may be required, at any time, to deliver the underlying
security (currency) against payment of the exercise price on any calls it has
written (exercise of certain listed and OTC options may be limited to specific
expiration dates). This obligation terminates upon the expiration of the option
period or at such earlier time when the writer effects a closing purchase
transaction. A closing purchase transaction is accomplished by purchasing an
option of the same series as the option previously written. However, once a Fund
has been assigned an exercise notice, the Fund will be unable to effect a
closing purchase transaction.

Closing purchase transactions are ordinarily effected to realize a
profit on an outstanding call option, to prevent an underlying security
(currency) from being called, to permit the sale of an underlying security (or
the exchange of the underlying currency) or to enable a Fund to write another
call option on the underlying security (currency) with either a different
exercise price or expiration date or both. A Fund may realize a net gain or loss
from a closing purchase transaction depending upon whether the amount of the
premium received on the call option is more or less than the cost of effecting
the closing purchase transaction. Any loss incurred in a closing purchase
transaction may be wholly or partially offset by unrealized appreciation in the
market value of the underlying security (currency). Conversely, a gain resulting
from a closing purchase transaction could be offset in whole or in part or
exceeded by a decline in the market value of the underlying security (currency).

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If a call option expires unexercised, a Fund realizes a gain in the
amount of the premium on the option less the commission paid. Such a gain,
however, may be offset by depreciation in the market value of the underlying
security (currency) during the option period. If a call option is exercised, a
Fund realizes a gain or loss from the sale of the underlying security (currency)
equal to the difference between the purchase price of the underlying security
(currency) and the proceeds of the sale of the security (currency) plus the
premium received on the option less the commission paid.

Options written by a Fund normally have expiration dates of up to
eighteen months from the date written. The exercised price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.

COVERED PUT WRITING. As a writer of a covered put option, each Fund
would incur an obligation to buy the security underlying the option from the
purchaser of the put, at the option's exercise price at any time during the
option period, at the purchaser's election (certain listed and OTC put options
written by the Fund will be exercisable by the purchaser only on a specific
date). A put is "covered" if at all times the Fund maintains with its custodian
(in a segregated account) cash, U.S. government or other high-grade obligations,
or other high-quality liquid securities, in an amount equal to at least the
exercise price of the option. Similarly, a short put position could be covered
by a Fund by its purchase of a put option on the same security (currency) as the
underlying security of the written option, where the exercise price of the
purchased option is equal to or more than the exercise price of the put written
or less than the exercise price of the put written if the marked to market
difference is maintained by the Fund in cash, U.S. government or other
high-grade debt obligations, or other high-quality liquid securities, that the
Fund holds in a segregated account maintained at its custodian. In writing puts,
a Fund assumes the risk of loss should the market value of the underlying
security (currency) decline below the exercise price of the option (any loss
being decreased by the receipt of the premium on the option written). In the
case of listed options, during the option period a Fund may be required, at any
time, to make payment of the exercise price against delivery of the underlying
security (currency). The operation of and limitations on covered put options in
other respects are substantially identical to those of call options.

Each Fund will write put options for three purposes: (1) to receive the
income derived from the premiums paid by purchasers; (2) when SCMI wishes to
purchase the security (or a security denominated in the currency underlying the
option) underlying the option at a price lower than its current market price (in
which case it will write the covered put at an exercise price reflecting the
lower purchase price sought); and (3) to close out a long put option position.
The potential gain on a covered put option is limited to the premium received on
the option (less the commissions paid on the transaction) while the potential
loss equals the differences between the exercise price of the option and the
current market price of the underlying securities (currencies) when the put is
exercised, offset by the premium received (less the commissions paid on the
transaction).

PURCHASING CALL AND PUT OPTIONS. Each Fund may purchase listed and OTC
call and put options in amounts equaling up to 5% of its total assets. A Fund
may purchase a call option in order to close out a covered call position (see
"Covered Call Writing"), to protect against an increase in price of a security
it anticipates purchasing or, in the case of a call option on foreign currency,
to hedge against an adverse exchange rate move of the currency in which the
security it anticipates purchasing is denominated vis-a-vis the currency in
which the exercise price is denominated. The purchase of the call option to
effect a closing transaction on a call written over-the-counter may be a listed
or an OTC option. In either case, the call purchased is likely to be on the same
securities (currencies) and have the same terms as the written option. If
purchased over-the-counter, the option would generally be acquired from the
dealer or financial institution that purchased the call written by the Fund.

Each Fund may purchase put options on securities (currencies) that it
holds in its portfolio to protect itself against a decline in the value of the
security and to close out written put option positions. If the value of the
underlying security (currency) were to fall below the exercise price of the put
purchased in an amount greater than the premium paid for the option, a Fund
would incur no additional loss. In addition, a Fund may sell a put option it has
previously purchased prior to the sale of the securities (currencies) underlying
such option. Such a sale would result in a net gain or loss depending upon
whether the amount received on the sale is more or less than the premium and
other transaction costs paid on the put option that is sold. Any such gain or
loss could be offset in whole or in

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part by a change in the market value of the underlying security (currency). If a
put option purchased by a Fund expired without being sold or exercised, the
premium would be lost.

RISKS OF OPTIONS TRANSACTIONS. During the option period, the covered
call writer has, in return for the premium on the option, given up the
opportunity for capital appreciation above the exercise price if the market
price of the underlying security (or the value of its denominated currency)
increases, but the writer has retained the risk of loss if the price of the
underlying security (or the value of its denominated currency) declines. The
writer has no control over the time when it may be required to fulfill its
obligation as a writer of the option. Once an option writer has received an
exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver or receive the
underlying securities at the exercise price.

Prior to exercise or expiration, an option position can only be
terminated by entering into a closing purchase or sale transaction. If a covered
call option writer is unable to effect a closing purchase transaction or to
purchase an offsetting OTC option, it cannot sell the underlying security until
the option expires or the option is exercised. Accordingly, a covered call
option writer may not be able to sell an underlying security at a time when it
might otherwise be advantageous to do so. A covered put option writer who is
unable to effect a closing purchase transaction or to purchase an offsetting OTC
option would continue to bear the risk of decline in the market price of the
underlying security until the option expires or is exercised. In addition, a
covered put writer would be unable to utilize the amount held in cash, U.S.
government or other high-grade short-term obligations, or other high-quality
liquid securities, as security for the put option for other investment purposes
until the exercise or expiration of the option.

A Fund's ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market on option exchanges.
There is no assurance that such a market will exist, particularly in the case of
OTC options, since such options will generally only be closed out by entering
into a closing purchase transaction with the purchasing dealer. However, a Fund
may be able to purchase an offsetting option that does not close out its
position as a writer but constitutes an asset of equal value to the obligation
under the option written. If the Fund is not able to either enter into a closing
purchase transaction or purchase an offsetting position, it will be required to
maintain the securities subject to the call, or the collateral underlying the
put, even though it might not be advantageous to do so, until a closing
transaction can be entered into (or the option is exercised or expires).

Among the possible reasons for the absence of a liquid secondary market
on an exchange are: (1) insufficient trading interest in certain options; (2)
restrictions on transactions imposed by an exchange; (3) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities; (4) interruption of the normal
operations on an exchange; (5) inadequacy of the facilities of an exchange or
the OCC to handle current trading volume; or (6) a decision by one or more
exchanges to discontinue the trading of options (or a particular class or series
of options), in which event the secondary market on that exchange (or in that
class or series of options) would cease to exist.

In the event of the bankruptcy of a broker through which a Fund engages
in transactions in options, that Fund could experience delays and/or losses in
liquidating open positions purchased or sold through the broker and/or incur a
loss of all or part of its margin deposits with the broker. Similarly, in the
event of the bankruptcy of the writer of an OTC option purchased by a Fund, that
Fund could experience a loss of all or part of the value of the option.
Transactions will be entered into by a Fund only with brokers or financial
institutions deemed creditworthy by SCMI.

Exchanges have established limitations governing the maximum number of
options on the same underlying security or futures contract (whether or not
covered) that may be written by a single investor, whether acting alone or in
concert with others (regardless of whether such options are written on the same
or different exchanges or are held or written on one or more accounts or through
one or more brokers). An exchange may order the liquidation of positions found
to be in violation of these limits and it may impose other sanctions or
restrictions. These position limits may restrict the number of listed options
which the Funds may write.

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The hours of trading for options may not conform to the hours during
which the underlying securities are traded. If the option markets close before
the markets for the underlying securities, significant price and rate movements
can take place in the underlying markets that cannot be reflected in the option
markets.

The extent to which either Fund may enter into transactions involving
options may be limited by the Internal Revenue Code's requirements for
qualification as a regulated investment company and the underlying Portfolio's
intention to operate in such a manner as to permit a fund invested in that
Portfolio to qualify as such See "Taxation".

FUTURES CONTRACTS. Each Fund may purchase and sell interest-rate,
currency, and index futures contracts ("futures contracts") that are traded on
U.S. and foreign commodity exchanges, on such underlying securities as U.S.
Treasury bonds, notes and bills, and/or any foreign government fixed-income
security ("interest-rate futures contracts"), on various currencies ("currency
futures contracts"), and on such indices of U.S. and foreign securities as may
exist or come into being ("index futures contracts").

Each Fund may purchase or sell interest-rate futures contracts for the
purpose of hedging some or all of the value of its portfolio securities (or
anticipated portfolio securities) against changes in prevailing interest rates.
If SCMI anticipates that interest rates may rise and, concomitantly, that the
price of certain of its portfolio securities fall, a Fund may sell an
interest-rate futures contract. If declining interest rates are anticipated, a
Fund may purchase an interest-rate futures contract to protect against a
potential increase in the price of securities the Fund intends to purchase.
Subsequently, appropriate securities may be purchased by the Fund in an orderly
fashion; as securities are purchased, corresponding futures positions would be
terminated by offsetting sales of contracts.

Each Fund may purchase or sell currency futures contracts on currencies
in which its portfolio securities (or anticipated portfolio securities) are
denominated for the purposes of hedging against anticipated changes in currency
exchange rates. A Fund may enter into currency futures contracts for the same
reasons as set forth above for entering into forward foreign currency exchange
contracts; namely, to secure the value of a security purchased or sold in a
given currency vis-a-vis a different currency or to hedge against an adverse
currency exchange rate movement of a portfolio security's (or anticipated
portfolio security's) denominated currency vis-a-vis a different currency.

Each Fund may purchase or sell index futures contracts for the purpose
of hedging some or all of its portfolio (or anticipated portfolio) securities
against changes in their prices. If SCMI anticipates that the prices of
securities a Fund holds may fall, that Fund may sell an index futures contract.
Conversely, if SCMI wishes to hedge the portfolio against anticipated price
rises in those securities that a Fund intends to purchase, that Fund may
purchase an index futures contract.

In addition to the above, interest-rate, currency and index futures
contracts will be bought or sold in order to close out short or long positions
maintained by a Fund in corresponding futures contracts.

Although most interest-rate futures contracts call for actual delivery
or acceptance of securities, the contracts usually are closed out before the
settlement date without making or taking delivery. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of the specific type of security (currency) and the same delivery date.
If the sale price exceeds the offsetting purchase price, the seller would be
paid the difference and would realize a gain. If the offsetting purchase price
exceeds the sale price, the seller would pay the difference and would realize a
loss. Similarly, a futures contract purchase is closed out by effecting a
futures contract sale for the same aggregate amount of the specific type of
security (currency) and the same delivery date. If the offsetting sale price
exceeds the purchase price, the purchaser would realize a gain, whereas if the
purchase price exceeds the offsetting sale price, the purchaser would realize a
loss. There is no assurance that the Funds will be able to enter into a closing
transaction.

INTEREST-RATE FUTURES CONTRACTS. When a Fund enters into an
interest-rate futures contract, it is initially required to deposit with its
custodian (in a segregated account in the name of the broker performing the
transaction) an "initial margin" of cash, U.S. government or other high-grade
short-term obligations, or other high-quality liquid

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securities, equal to approximately 2% of the contract amount. Initial margin
requirements are established by the exchanges on which futures contracts trade
and may change. In addition, brokers may establish margin deposit requirements
in excess of those required by the exchanges.

Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
money by a brokers' client but is, rather, a good faith deposit on the futures
contract that will be returned to a Fund upon the proper termination of the
futures contract. The margin deposits made are marked to market daily, and the
Fund may be required to make subsequent deposits with its futures contract
clearing broker of cash or U.S. government securities (called "variation
margin") that are reflective of price fluctuations in the futures contract.

CURRENCY FUTURES CONTRACTS. Generally, foreign currency futures
contracts provide for the delivery of a specified amount of a given currency, on
the exercise date, for a set exercise price denominated in U.S. dollars or other
currency. Foreign currency futures contracts would be entered into for the same
reason and under the same circumstances as forward foreign currency exchange
contracts. SCMI assesses such factors as cost spreads, liquidity and transaction
costs in determining whether to use futures contracts or forward contracts in
its foreign currency transactions and hedging strategy.

Purchasers and sellers of foreign currency futures contracts are
subject to the same risks that apply generally to the buying and selling of
futures contracts. In addition, there are risks associated with foreign currency
futures contracts and their use as a hedging device similar to those associated
with options on foreign currencies described above. Further, settlement of a
foreign currency futures contract must occur within the country issuing the
underlying currency. Thus, a Fund must accept or make delivery of the underlying
foreign currency in accordance with any U.S. or foreign restrictions or
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and may be required to pay any fees, taxes or charges associated with
such delivery that are assessed in the issuing country.

INDEX FUTURES CONTRACTS. Each Fund may invest in index futures
contracts. An index futures contract sale creates an obligation by a Fund, as
seller, to deliver cash at a specified future time. An index futures contract
purchase creates an obligation by a Fund, as purchaser, to take delivery of cash
at a specified future time. Futures contracts on indices do not require the
physical delivery of securities but provide for a final cash settlement on the
expiration date that reflects accumulated profits and losses credited or debited
to each party's account.

Each Fund is required to maintain margin deposits with brokerage firms
through which it effects index futures contracts in a manner similar to that
described above for interest-rate futures contracts. In addition, due to current
industry practice, daily variations in gain and loss on open contracts are
required to be reflected in cash in the form of variation margin payments. A
Fund may be required to make additional margin payments during the term of the
contract.

At any time prior to expiration of the futures contract, a Fund may
elect to close the position by taking an opposite position, which will operate
to terminate the Funds' position in the futures contract. A final determination
of variation margin is then made, additional cash may be required to be paid by
or released to the Fund, and it realizes a loss or gain.

OPTIONS ON FUTURES CONTRACTS. Each Fund may purchase and write call and
put options on futures contracts traded on an exchange and may enter into
closing transactions with respect to such options to terminate an existing
position. An option on a futures contract gives the purchaser the right (in
return for the premium paid) to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the term of the option. Upon
exercise of the option, the delivery of the position in the futures contract by
the writer of the option to the holder of the option is accompanied by delivery
of the accumulated balance in the writer's futures margin account, which
represents the amount by which the market price of the futures contract at the
time of exercise exceeds, in case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.

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Each Fund may purchase and write options on futures contracts for
purposes identical to those set forth above for the purchase of a futures
contract (purchase of a call option or sale of a put option) and the sale of a
futures contract (purchase of a put option or sale of a call option), or to
close out a long or short position in futures contracts. If, for example, SCMI
wished to protect against an increase in interest rates and the resulting
negative impact on the value of a portion of its fixed-income portfolio, a Fund
might write a call option on an interest-rate futures contract, the underlying
security of which correlates with the portion of the portfolio that SCMI seeks
to hedge. Any premiums received in the writing of options on futures contracts
may provide a further hedge against losses resulting from price declines in
portions of the Fund's investment portfolio.

Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts is
relatively new. The ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. To reduce this risk,
a Fund will not purchase or write options on foreign currency futures contracts
unless and until, in SCMI's opinion, the market for such options has developed
sufficiently that the risks in connection with them are not greater than the
risks in connection with transactions in the underlying foreign currency futures
contracts.

LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
Neither Fund may enter into futures contracts or purchase related options
thereon if, immediately thereafter, the amount committed to margin plus the
amount paid for premiums for unexpired options on futures contracts exceeds 5%
of the value of that Fund's total assets, after taking into account unrealized
gain and unrealized loss on such contracts it has entered into, provided,
however, that in the case of an option that is in-the-money (the exercise price
of the call (put) option is less (more) than the market price of the underlying
security) at the time of purchase, the in-the-money amount may be excluded in
calculating the 5%. However, there is no overall limitation on the percentage of
a Fund's assets that may be subject to a hedge position. In addition, in
accordance with the regulations of the Commodity Futures Trading Commission
under which each Fund is excluded from registration as a commodity pool
operator, a Fund may only enter into futures contracts and options on futures
contracts transactions for purposes of hedging a part or all of its portfolio.
Except as described above, there are no other limitations on the use of futures
and options thereon by a Fund.

The writer of an option on a futures contract is required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to futures contracts. Premiums received from the writing of an option
on a futures contract are included in initial margin deposits.

RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. Each
Fund may sell a futures contract to protect against the decline in the value of
securities (or the currency in which they are denominated) it holds. However, it
is possible that the futures market may advance and the value of the Funds'
securities (or the currency in which they are denominated) may decline. If this
occurs, a Fund will lose money on the futures contract and also experience a
decline in value of its portfolio securities. While this might occur for only a
very brief period or to a very small degree, over time the value of a
diversified portfolio will tend to move in the same direction as the futures
contracts.

If a Fund purchases a futures contract to hedge against the increase in
value of securities it intends to buy (or the currency in which they are
denominated) and the value of such securities (currencies) decreases, then a
Fund may determine not to invest in the securities as planned and will realize a
loss on the futures contract that is not offset by a reduction in the price of
the securities.

If a Fund has sold a call option on a futures contract, it will cover
this position by holding (in a segregated account maintained by its custodian)
cash, U.S. government securities or other high-grade debt obligations, or other
high-quality liquid securities, equal in value (when added to any initial or
variation margin on deposit) to the market value of the securities (currencies)
underlying the futures contract or the exercise price of the option. Such a
position may also be covered by owning the securities (currencies) underlying
the futures contract or by holding a call option permitting the Fund to purchase
the same contract at a price no higher than the price at which the short
position was established.

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In addition, if a Fund holds a long position in a futures contract, it
will hold cash, U.S. government or other high-grade debt obligations, or other
high-quality liquid securities, equal to the purchase price of the contract
(less the amount of initial or variation margin on deposit) in a segregated
account maintained by the Fund's custodian. Alternatively, that Fund could cover
its long position by purchasing a put option on the same futures contract with
an exercise price as high or higher than the price of the contract held by the
Fund.

Exchanges limit the amount by which the price of a futures contract may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased. In the event of adverse price movements, a Fund would
continue to be required to make daily cash payments of variation margin on open
futures contract positions. In such situations, if the Fund has insufficient
cash, it may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition, a
Fund may be required to take or make delivery of the instruments underlying
interest-rate futures contracts it holds at a time when it is disadvantageous to
do so. The inability to close out options and futures contract positions could
also have an adverse impact on the Fund's ability to effectively hedge its
portfolio.

Futures contracts and options thereon that are purchased or sold on
foreign commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges, and brokerage
commissions, and clearing costs and other transaction costs may be higher.
Greater margin requirements may limit the Funds' ability to enter into certain
commodity transactions on foreign exchanges. Moreover, differences in clearance
and delivery requirements on foreign exchanges may cause delays in the
settlement of a Fund's foreign exchange transactions.

In the event of the bankruptcy of a broker through which a Fund engages
in transactions in futures or options thereon, that Fund could experience delays
and/or losses in liquidating open positions purchased or sold through the broker
and/or incur a loss of all or part of its margin deposits with the broker.
Similarly, in the event of the bankruptcy of the writer of an OTC option
purchased by a Fund, that Fund could experience a loss of all or part of the
value of the option. Transactions are entered into by a Fund only with brokers
or financial institutions deemed creditworthy by SCMI.

While the futures contracts and options transactions in which a Fund
engages for the purpose of hedging its portfolio securities are not speculative
in nature, there are risks inherent in the use of such instruments. One such
risk that may arise in employing futures contracts to protect against the price
volatility of portfolio securities (and the currencies in which they are
denominated) is that the prices of securities and indices subject to futures
contracts (and thereby the futures contract prices) may correlate imperfectly
with the behavior of the cash prices of a Fund's portfolio securities (and the
currencies in which they are denominated). Another such risk is that prices of
interest-rate futures contracts may not move in tandem with the changes in
prevailing interest rates against which a Fund seeks a hedge. A correlation may
also be distorted by the fact that the futures market is dominated by short-term
traders seeking to profit from the difference between a contract or security
price objective and cost of borrowed funds. Such distortions are generally minor
and are expected to diminish as the contract approaches maturity.

There may exist an imperfect correlation between the price movements of
futures contracts purchased by a Fund and the movements in the prices of the
securities (currencies) that are the subject of the hedge. If participants in
the futures market elect to close out their contracts through offsetting
transactions rather than meet margin deposit requirements, distortions in the
normal relationship between the debt securities or currency markets and futures
markets could result. Price distortions could also result if investors in
futures contracts choose to make or take delivery of underlying securities
rather than engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, because the deposit requirements
in the futures markets are less onerous than margin requirements in the cash
market, increased participation by speculators in the futures market can be
anticipated with the resulting speculation causing temporary price distortions.
Due to the possibility of price distortions in the futures contracts market and
because of the imperfect correlation between movements in the prices of
securities and movements in the prices of futures contracts, a correct forecast
of interest-rate trends may still not result in a successful hedging
transaction.

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There is no assurance that a liquid secondary market will exist for
futures contracts and related options in which a Fund may invest. In the event a
liquid market does not exist, it may not be possible to close out a futures
position, and, in the event of adverse price movements, a Fund would continue to
be required to make daily cash payments of variation margin. In addition,
limitations imposed by an exchange or board of trade on which futures contracts
are traded may compel a Fund to close, or prevent it from closing, out a
contract, which may result in reduced gain or increased loss to that Fund. The
absence of a liquid market in futures contracts might cause a Fund to make or
take delivery of the underlying securities (currencies) at a time when it may be
disadvantageous to do so.

The extent to which either Fund may enter into transactions involving
futures contracts and options thereon may be limited by the Internal Revenue
Code's requirements for qualification as a regulated investment company and the
underlying Portfolio's intention to operate in such a manner as to permit a fund
invested in that Portfolio to qualify as such See "Taxation".

INTEREST-RATE TRANSACTIONS. In order to attempt to protect the value of
its portfolio from interest-rate fluctuations and to adjust the interest-rate
sensitivity of its portfolio, each Fund may enter into interest-rate swaps and
other interest-rate transactions, such as interest-rate caps, floors, and
collars. Interest-rate swaps involve the exchange by a Fund with another party
of different types of interest-rate streams (E.G., an exchange of floating-rate
payments for fixed-rate payments with respect to a notional amount of
principal). The purchase of an interest-rate cap entitles the purchaser to
receive payments on a notional principal amount from the party selling the cap
to the extent that a specified index exceeds a predetermined interest rate or
amount. The purchase of a floor entitles the purchaser to receive payments on a
notional principal amount from the party selling the floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar is
a combination of a cap and a floor that preserves a certain return within a
predetermined rate of interest rates or values. Each Fund intends to use these
interest-rate transactions as a hedge and not as a speculative investment. A
Fund's ability to engage in certain interest rate transactions is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. If SCMI
were incorrect in its forecasts of market values, interest rates, or other
applicable factors, a Fund's investment performance would be less favorable than
it would have been if this investment technique were not used.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS.
Each Fund may purchase securities on a when-issued or delayed delivery basis or
may purchase or sell securities on a forward commitment basis. When such
transactions are negotiated, the price is fixed at the time of the commitment,
but delivery and payment may take place a month or more after the date of the
commitment. There is no overall limit on the percentage of a Fund's assets that
may be committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis. An increase in the percentage of a Fund's
assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of that Fund's
net asset value.

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

INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. Pursuant to the
1940 Act, each Fund may invest in the shares of other investment companies that
invest in securities that the Fund is permitted to purchase subject to the
limits permitted under the 1940 Act or any orders, rules or regulations
thereunder. From time to time, such investment funds may be the sole means by
which a Fund may invest in equity securities of certain Asian companies or
Japanese companies. When investing through investment companies, a Fund may pay
substantial premiums above such investment companies' net asset value per share.
As a shareholder in an investment company, each 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.

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TEMPORARY INVESTMENTS. As described in the applicable Prospectus, a
Fund may hold and/or invest its assets without limitation in cash and/or
Temporary Investments (as defined below) for cash management purposes, pending
initial investment in accordance with the Fund's investment objective and
policies. In addition, each Fund may hold these investments for temporary
defensive purposes. A Fund may assume a temporary defensive posture when, owing
to political, market or other factors broadly affecting markets in one or more
Asian countries or Japan, SCMI determines either that opportunities for capital
appreciation in those markets may be significantly limited or that significant
diminution in value of the securities traded in those markets may occur. A Fund
may invest without limitation in (or enter into repurchase agreements maturing
in seven days or less with banks and broker-dealers with respect to) short-term
debt securities, including commercial paper, U.S. Treasury bills, other
short-term U.S. government securities, certificates of deposit, and bankers'
acceptances of U.S. or foreign banks. A Fund also may hold cash and time
deposits denominated in any major foreign currency in foreign banks. To the
extent that a Fund invests in Temporary Investments, it may not achieve its
investment objective.

Temporary Investments are high quality debt securities (rated "AA" or
above by Standard & Poor's Corporation ("S&P") or "Aa" or above by Moody's
Investors Services, Inc. ("Moody's") or with an equivalent rating by other
nationally recognized securities rating organizations) denominated in U.S.
dollars or in another freely convertible currency including: (1) short-term
(less than 12 months to maturity) and medium-term (not more than five years to
maturity) obligations issued or guaranteed by: (a) the U.S. Government, its
agencies instrumentalities, or government-sponsored enterprises; or (b)
international organizations designated or supported by multiple foreign
governmental entities to promote economic reconstruction or development
("supranational entities"); (2) U.S. finance company obligations, corporate
commercial paper and other short-term commercial obligations; (3) obligations
(including certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks; and (4) repurchase agreements with respect to securities
in which a Fund may invest. The banks whose obligations may be purchased by a
Fund and the banks and broker-dealers with which a Fund may enter into
repurchase agreements include any member bank of the Federal Reserve System and
any U.S. broker-dealer or any foreign bank that has been determined by the
investment adviser to be creditworthy.

SHORT-TERM DEBT SECURITIES. For cash management, pending investment or
other temporary purposes, each Fund may invest in commercial paper -- short-term
unsecured promissory notes issued in bearer form by bank holding companies,
corporations and finance companies. The commercial paper purchased by a Fund for
temporary defensive purposes consists of direct obligations of domestic issuers
that at the time of investment are rated "P-1" by Moody's Investors Service
("Moody's") or "A-1" by Standard & Poor's ("S&P"), or securities that, if not
rated, are issued by companies having an outstanding debt issue currently rated
"Aaa" or "Aa" by Moody's or "AAA" or "AA" by S&P. The rating "P-1" is the
highest commercial paper rating assigned by Moody's, and the rating "A-1" is the
highest commercial paper rating assigned by S&P. Each Fund also may invest in
variable rate master demand notes, which are obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangements between the issuer and a commercial bank acting as agent for the
payer of such notes. Generally both parties have the right to vary the amount of
the outstanding indebtedness on the notes.

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

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

If SCMI determines that a "restricted security" is liquid pursuant to
guidelines adopted by the Schroder Core Board ( the " Core Board ), the security
is not deemed illiquid. These guidelines take into account trading activity for
the securities and the availability of reliable pricing information, among other
factors. If there is a lack of trading interest in a particular restricted
security, that security may become illiquid, which could affect a Fund's
liquidity.

RULE 144A SECURITIES. Each 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 Schroder Core 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.

U.S. GOVERNMENT SECURITIES. Each Fund may invest in securities issued
or guaranteed by the U.S. Government (or its agencies, instrumentalities or
government-sponsored enterprises). Agencies, instrumentalities and
government-sponsored enterprises that have been established or sponsored by the
U.S. Government and issue or guarantee debt securities include the Bank for
Cooperatives, the Export-Import Bank, the Federal Farm Credit System, the
Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation, the Federal
Intermediate Credit Banks, the Federal Land Banks, the Federal National Mortgage
Association, the Government National Mortgage Association and the Student Loan
Marketing Association. Except for obligations issued by the U.S. Treasury and
the Government National Mortgage Association, none of the obligations of the
other agencies, instrumentalities or government-sponsored enterprises referred
to above are backed by the full faith and credit of the U.S. Government. There
can be no assurance that the U.S. Government will provide financial support to
these obligations where it is not obligated to do so.

BANK OBLIGATIONS. Each Fund may invest in obligations of U.S. and
foreign banks (including certificates of deposit and bankers' acceptances) whose
total assets at the time of purchase exceed $1 billion. Each Fund also may hold
cash and time deposits denominated in any major currency in foreign banks. A
certificate of deposit is an interest-bearing negotiable certificate issued by a
bank against funds deposited in the bank. A bankers' acceptance is a short-term
draft drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction. Although the borrower is liable for
payment of the draft, the bank unconditionally guarantees to pay the draft at
its face value on the maturity date. A time deposit is a non-negotiable receipt
issued by a bank in exchange for the deposit of funds. Similar to a certificate
of deposit, a time deposit earns a specified rate of interest over a definite
time period; however, it cannot be traded in the secondary markets.

LOANS OF FUND SECURITIES. Each 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 the0market 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 a Fund is
permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by a Fund if the demand meets the terms
of the letter. Such terms and the issuing bank must be satisfactory to SCMI.
When

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lending portfolio securities, a 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 on the collateral securities (less any
finders' or administrative fees the Fund pays in arranging the loan). Each 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. A Fund will not lend its portfolio
securities to any officer, trustee, employee or affiliate of the Funds 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 a Fund are subject to termination at the
Fund's or the borrower's option. A 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

The following investment restrictions restate or are in addition to
those described under "Investment Restrictions" and "Investment Policies" in the
Prospectus. These restrictions, unless otherwise indicated, are fundamental
policies of each Fund and cannot be changed without the vote of a "majority" of
the Fund's outstanding shares. Under the 1940 Act, such a "majority" vote is
defined as the vote of the holders of the lesser of: (1) 67% of more of the
shares present or represented by proxy at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares are present; or (2) more than
50% of the outstanding shares. Under these additional restrictions, a Fund will
not:

1. INDUSTRY CONCENTRATION

purchase a security if, as a result, more than 25% of the
Fund's total assets would be invested in securities of issuers
conducting their principal business activities in the same
industry. For purposes of this limitation, there is no limit
on: (1) investments in U.S. government securities, in
repurchase agreements covering U.S. government securities, in
securities issued by the states, territories or possessions of
the United States ("municipal securities") or in foreign
government securities; or (2) investment in issuers domiciled
in a single jurisdiction. Notwithstanding anything to the
contrary, to the extent permitted by the 1940 Act, a Fund may
invest in one or more investment companies; provided that,
except to the extent the it invests in other investment
companies pursuant to Section 12(d)(1)(A) of the 1940 Act, the
Fund treats the assets of the investment companies in which it
invests as its own for purposes of this policy.

2. BORROWING

borrow money if, as a result, outstanding borrowings would
exceed an amount equal to 50% of a Fund's total assets.

3. REAL ESTATE

purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall
not prevent a Fund from investing in securities or other
instruments backed by real estate or securities of companies
engaged in the real estate business).

4. LENDING

make loans to other parties. For purposes of this limitation,
entering into repurchase agreements, lending securities and
acquiring any debt security are not deemed to be the making of
loans.

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5. COMMODITIES

purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but
this shall not prevent a Fund from purchasing or selling
options and futures contracts or from investing in securities
or other instruments backed by physical commodities).

6. UNDERWRITING

underwrite (as that term is defined in the Securities Act of
1933, as amended) securities issued by other persons except,
to the extent that in connection with the disposition of its
assets, a Fund may be deemed to be an underwriter.

7. SENIOR SECURITIES

issue any class of senior securities except to the extent
consistent with the 1940 Act.

NONFUNDAMENTAL LIMITATIONS

Each Fund has adopted the following nonfundamental investment
limitations. A nonfundamental policy does not override a fundamental limitation.
A Fund's nonfundamental policies may be changed by the Board of Trustees without
approval of Fund shareholders.

1. DIVERSIFICATION

The Funds are each "non-diversified" as that term is defined
in the 1940 Act. To the extent required to qualify as a
regulated investment company under the Code, a Fund may not
purchase a security (other than a U.S. government security or
a security of an investment company) if, as a result: (1) with
respect to 50% of its assets, more than 5% of the Fund's total
assets would be invested in the securities of any single
issuer; (2) with respect to 50% of its assets, the Fund would
own more than 10% of the outstanding securities of any single
issuer; or (3) more than 25% of the Fund's total assets would
be invested in the securities of any single issuer.

2. BORROWING

For purposes of the limitation on borrowing, the following are
not treated as borrowings to the extent they are fully
collateralized: (1) the delayed delivery of purchased
securities (such as the purchase of when-issued securities);
(2) reverse repurchase agreements; (3) dollar-roll
transactions; and (5) the lending of securities ("leverage
transactions"). (See Fundamental Limitation No. 3 "Borrowing".

3. LIQUIDITY

Neither Fund may invest more than 15% of its net assets in:
(1) securities that cannot be disposed of within seven days at
their then-current value; (2) repurchase agreements not
entitling the holder to payment of principal within seven
days; and (3) securities subject to restrictions on the sale
of the securities to the public without registration under the
1933 Act ("restricted securities") that are not readily
marketable. A Fund may treat certain restricted securities as
liquid pursuant to guidelines adopted by the Board or Schroder
Core Board, as the case may be.

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4. EXERCISING CONTROL OF ISSUERS

Neither Fund may make investments for the purpose of
exercising control of an issuer. Investments by the Fund or
Portfolio in entities created under the laws of foreign
countries solely to facilitate investment in securities in
that country will not be deemed the making of investments for
the purpose of exercising control.

5. OTHER INVESTMENT COMPANIES

Each Fund may invest in securities of another investment
company to the extent permitted by the 1940 Act.

6. SHORT SALES AND PURCHASING ON MARGIN

A Fund will not sell securities short, unless it owns or has
the right to obtain securities equivalent in kind and amount
to the securities sold short (short sales "against the box"),
and provided that transactions in futures contracts and
options are not deemed to constitute selling securities short.

A Fund will not purchase securities on margin, except that the
Fund may use short-term credit for the clearance of its
portfolio transactions, and provided that initial and
variation margin payments in connection with futures contracts
and options on futures contracts shall not constitute
purchasing securities on margin.

7. LENDING

lend a security if, as a result, the amount of loaned
securities would exceed an amount equal to one half of the
Fund's total assets.

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.

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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.

SHARON L. HAUGH*, 51, 787 Seventh Avenue, New York, New York, Trustee
of the Trust; Chairman, Schroder Capital Management Inc., 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.

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 Incorporated 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.

FERGAL CASSIDY ____, 787 Seventh Avenue, New York, New York - Treasurer
of the Trust; Treasurer of Schroder Series Trust II, _____________

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. 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.

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.

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.

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<PAGE>

THOMAS G. SHEEHAN, 42, Two Portland Square, Portland, Maine - Acting
Treasurer, since September, 1997, and Assistant Secretary of the Trust;
Counsel, Forum Financial Services, Inc. since 1993; prior thereto,
Special Counsel, U.S. Securities and Exchange Commission, Division of
Investment Management, Washington, D.C.

FARIBA TALEBI, 36, 787 Seventh Avenue, New York, New York - Vice
President of the Trust; Group Vice President of SCMI since April 1993,
employed in various positions in the investment research and portfolio
management areas since 1987; Director of SCM since April 1997.

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.

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.

CATHERINE S. WOOLEDGE, 55, Two Portland Square, Portland, Maine -
Assistant Treasurer and Assistant Secretary of the Trust - Counsel,
Forum Financial Services, Inc. since November 1996. Prior thereto,
associate at Morrison & Foerster, Washington, D.C. from October 1994 to
November 1996, associate corporate counsel at Franklin Resources, Inc.
from September 1993 to September 1994, and prior thereto associate at
Drinker Biddle & Reath, Philadelphia, PA.

* 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 Incorporated, which in turn is an indirect, wholly
owned U.S. subsidiary of Schroders plc. Schroder Capital Management Inc. ("SCM")
is also a wholly owned subsidiary of Schroders Incorporated.

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 annually a base fee of $11,000 and an additional fee of $6,000 for
attending the regular Board and committee meetings. Neither Fund has any bonus,
profit sharing, pension or retirement plans.

The following table provides the fees paid to each Trustee of the Trust
for certain funds' fiscal year ended October 31, 1997.
<TABLE>
<S> <C> <C> <C> <C>
Pension or Total
Retirement Compensation From
Aggregate Benefits Accrued Estimated Annual Trust And Fund
Compensation From As Part of Trust Benefits Upon Complex Paid To
Name of Trustee Trust Expenses Retirement Trustees
- -------------------------------- -------------------- -------------------- --------------------- -------------------
Mr. Guernsey $0 $0 $0 $0
Mr. Howell 0 0 0 0
Mr. Michalis 0 0 0 0
Mr. Schwab 0 0 0 0
Mr. Dinkins 0 0 0 0
Mr. Knight 0 0 0 0
</TABLE>

As of January 15, 1998, the Funds have no outstanding shares.

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<PAGE>

INVESTMENT ADVISER

SCMI, 787 Seventh Avenue, New York, New York 10019, serves as
investment adviser to each Portfolio under an investment advisory agreement
between Schroder Core and SCMI (the "Core Advisory Agreement"). SCMI is a wholly
owned U.S. subsidiary of Schroders Incorporated, the wholly owned U.S. holding
company subsidiary of Schroders plc. Schroders plc is the holding company parent
of a large worldwide group of banks and financial service companies (referred to
as the "Schroder Group"), with associated companies and branch and
representative offices in eighteen countries. The Schroder Group specializes in
providing investment management services, with funds under management currently
in excess of $1750 billion as of September 30, 1997.

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

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

Each Fund currently invests all of its assets in a Portfolio. As long
as a Fund remains completely invested in a Portfolio (or any other investment
company), SCMI is not entitled to receive an investment advisory fee with
respect to the Fund. A Fund may withdraw its investment from a Portfolio at any
time if the Trust Board determines that it is in the best interests of the Fund
and its shareholders to do so. Accordingly, the Trust retains SCMI as investment
adviser to manage a Fund's assets in the event a Fund so withdraws its
investment. The investment advisory agreement between the Trust and SCMI with
respect to the Funds is the same in all material respects as the Investment
Advisory Agreement with respect to the Portfolios (except as to the parties, the
circumstances under which fees will be paid, and the jurisdiction whose laws
govern the agreement). During a time that a Fund did not have substantially all
of its assets invested in a Portfolio or another investment company, for
providing investment advisory services under the investment advisory agreement
for the Fund, SCMI would be entitled to receive an advisory fee of 1.00% of that
Fund's average daily net assets.

Each Fund Advisory Agreement continues in effect provided such
continuance is approved annually: (1) by the holders of a majority of the
outstanding voting securities of the Funds 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. Each Fund
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, and it
terminates automatically if assigned. Each Fund's Advisory Agreement also
provides that, with respect to the Funds, 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 either 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 each 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 each 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 each
Fund, including coordination of the services performed by each Fund's investment
adviser, transfer agent, custodian, independent accountants, legal counsel and
others. Schroder Advisors is a wholly owned subsidiary of SCMI and is a
registered broker-dealer organized to act as administrator and distributor of
mutual funds.

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<PAGE>

For providing administrative services Schroder Advisors is entitled to
receive from the Funds a fee, payable monthly, at the annual rate of [0.10%] of
each Fund's average daily net assets. The Administration Agreement is terminable
with respect to each 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 Forum.
Under its Agreement, Forum assists Schroder Advisors with certain of its
responsibilities under the Administration Agreement, including shareholder
reporting and regulatory compliance. For providing its services, Forum is
entitled to receive a monthly fee from each Fund at the annual rate of [0.10%]
of the Fund's average daily net assets. The Subadministration Agreement is
terminable with respect to each Fund without penalty, at any time, by the Trust
Board, upon 60 days' written notice to Forum or by Forum upon 60 days' written
notice to the Fund.

Schroder Advisors and Forum provide similar services to the Portfolios
pursuant to administration and subadministration agreements between Schroder
Core and each of these entities, for which Schroder Advisors and Forum are each
compensated at the annual rate of 0.05% of each Portfolio's average daily net
assets. The administration and subadministration agreements are the same in all
material respects as the Funds' respective agreements (except as to the parties
and the fees payable thereunder).

The fees paid by the Funds and Portfolios to SCMI and Schroder Advisors
may equal up to [1.00%] of each Fund's average daily net assets. Such fees as a
whole are higher than advisory and management fees charged to mutual funds which
invest primarily in U.S. securities but not necessarily higher than those
charged to funds with investment objectives similar to that of the Funds.

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

Under a Distribution Plan (the "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 a 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. The
maximum annual amount currently payable under the Plan is 0.25%, but no payments
may be made under the Plan until the Trust Board so authorizes. Any payment made
pursuant to the Plan is contingent upon the Trust Board's approval. A 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 that 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

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<PAGE>

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 each
Fund and its shareholders.

Without shareholder approval, the Plan may not be amended to increase
materially the costs that any 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 a 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. During the periods ended October 31, 1997, neither Fund had any shares
outstanding and, therefore, neither accrued nor paid any dollars under the Plan.

GLASS-STEAGALL ACT

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

FUND ACCOUNTING

Forum Accounting Services, LLC ("Forum Accounting"), an affiliate of
Forum, performs fund accounting services for each Fund pursuant to an agreement
with the Trust. The Accounting Agreement is terminable with respect to each Fund
without penalty, at any time, by the Trust Board 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 each Fund that are required to be maintained under the 1940 Act,
calculates the net asset value per share of each Fund, calculates dividends and
capital-gain distributions, and prepares periodic reports to shareholders and
the SEC. For its services to each 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
each 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.

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

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<PAGE>

Accounting's actions taken or failures to act with respect to a Fund or based,
if applicable, upon information, instructions or requests with respect to a Fund
given or made to 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 Funds or the Portfolios 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. Each Portfolio'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 a Fund are placed with foreign broker-dealers,
certain portfolio transaction costs for a 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.

Each Fund's Advisory Agreement and the Core Advisory Agreements
authorize and direct SCMI to place orders for the purchase and sale of a Fund's
or a Portfolio'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 execution available. A Fund
or a Portfolio may, however, pay higher than the lowest available commission
rates when SCMI believes it is reasonable to do so in light of the value of the
brokerage and research services provided by the broker effecting the
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 a Fund or a Portfolio), although not all of these
services are necessarily useful and of

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value in managing a Fund or a Portfolio. The investment advisory fee paid by a
Fund or a Portfolio is not reduced because SCMI and its affiliates receive such
services.

As permitted by Section 28(e) of the 1934 Act, SCMI may cause a Fund or
a Portfolio 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 a Fund or a
Portfolio toward payment of Fund or Portfolio expenses, such as custodian fees.

Subject to the general policies of a Fund or a Portfolio regarding
allocation of portfolio brokerage as set forth above, the Core Board has
authorized SCMI to employ: (1) Schroder Wertheim & Company, Incorporated
("Schroder Wertheim") an affiliate of SCMI, to effect securities transactions of
a Fund or a Portfolio 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 of a Fund or a Portfolio
on various foreign securities exchanges on which Schroder Securities has trading
privileges, provided certain other conditions are satisfied as described below.

Payment of brokerage commissions to Schroder Wertheim or Schroder
Securities for effecting such transactions is subject to Section 17(e) of the
1940 Act, which requires, among other things, that commissions for transactions
on a securities exchange paid by a registered investment company to a broker
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 each Fund and of each
Portfolio that commissions paid to Schroder Wertheim or Schroder Securities
will, in SCMI's opinion, be: (1) at least as favorable as commissions
contemporaneously charged by Schroder Wertheim or Schroder Securities, as the
case may be, on comparable transactions for their most favored unaffiliated
customers; and (2) at least as favorable as those which would be charged on
comparable transactions by other qualified brokers having comparable execution
capability. The Trust Board and Core 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
Wertheim or Schroder Securities by a Fund or a Portfolio satisfy the foregoing
standards. Such procedures are reviewed periodically by the applicable Board,
including a majority of the non-interested Trustees. Each Board also reviews all
transactions at least quarterly for compliance with such procedures.

It is further a policy of the Funds and the Portfolios that all such
transactions effected by Schroder Wertheim on the New York Stock Exchange be in
accordance with Rule 11a2-2(T) promulgated under the 1934 Act, which requires in
substance that a member of such exchange not associated with Schroder Wertheim
actually execute the transaction on the exchange floor or through the exchange
facilities. Thus, while Schroder Wertheim will bear responsibility for
determining important elements of execution such as timing and order size,
another firm will actually execute the transaction.

Schroder Wertheim pays a portion of the brokerage commissions it
receives from a Fund or a Portfolio to the brokers executing the transactions on
the New York Stock Exchange. In accordance with Rule 11a2-2(T), Schroder Core
has entered into an agreement with Schroder Wertheim permitting it to retain a
portion of the brokerage commissions paid to it by a Fund or a Portfolio. Each
Board, including a majority of the non-interested Trustees, have approved this
agreement.

None of the Funds or the Portfolios has any understanding or
arrangement to direct any specific portion of its brokerage to Schroder Wertheim
or Schroder Securities, and none will direct brokerage to Schroder Wertheim or
Schroder Securities in recognition of research services.

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

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ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

DETERMINATION OF NET ASSET VALUE PER SHARE

The net asset value per share of each class of a 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 a 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 Portfolio'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.

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 a Fund and could
affect adversely the liquidity of its investment portfolio.

TAXATION

Under the Internal Revenue Code of 1986, as amended (the "Code"), each
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.

Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code each year so long as such qualification is in the best
interests of its shareholders. To do so, each Fund intends to distribute to
shareholders at least 90% of its "investment company taxable income" as defined
in the Code (which includes, among other items, dividends, interest and the
excess of any net short-term capital 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, each Fund will not be subject to federal
income tax on its investment company taxable income and "net

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capital gain" (the excess of net long-term capital gain over net short-term
capital loss) distributed to shareholders. If a 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, each 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 a 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 dividends received deduction available to corporations. However, if a
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 a Fund on the reinvestment date.
Shareholders will be notified annually as to the federal tax status of
distributions.

Distributions by a 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.

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Dividends and interest received (and, in certain circumstances,
realized capital gain) by a 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 a 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
alien individual or a foreign corporation may be subject to U.S. withholding tax
on the income resulting from a 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. Each Fund will
report annually to its shareholders the amount per share of such withholding
taxes.

Pursuant to the tax convention between the U.S. and Japan ( the "
Convention "), a Japanese withholding tax at the maximum rate of 15% is, with
certain exceptions, imposed upon dividends paid by Japanese corporations to
Japan Fund. Pursuant to the present terms of the Convention, interest received
by Japan Fund from sources within Japan is subject to a Japanese withholding tax
at a maximum rate of 10%. Capital gains of Japan Fund arising from its
investments as described herein are not taxable in Japan.

Generally, Japan Fund will be subject to the Japanese securities
transaction tax on its sale of certain securities in Japan. The current rates of
such tax range from 0.03% to 0.30% depending upon the particular type of
securities involved. Transactions involving equity securities are currently
taxed at the highest rate.

Due to investment laws in certain emerging market countries, it is
anticipated that a 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 a 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. A 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.

Each 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 a Fund to recognize income in a particular year in
excess of the distributions received from such PFICs.

Each Fund may write, purchase or sell options or futures contracts.
Unless a 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 a Fund's transactions in options and futures contracts. Under
Section 1092, a 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 a 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 each Fund.

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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, a 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 a
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, a 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 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
a Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder. Ordinarily, income from a Fund will not be treated as so
"effectively connected."

If the income from a 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 a Fund's election (described above) to "pass through" the amount
of non-U.S. taxes paid by a 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, a 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 a 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 a Fund which are designated as
undistributed capital gains and any gains realized upon the sale of shares of a
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.

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Transfers of shares of a 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 a
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
a 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 a 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

ORGANIZATION

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
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.
Forum 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
Funds) 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).

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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 a 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 a 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:

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.

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PRINCIPAL SHAREHOLDERS

As of January 15, 1998, neither Fund had any outstanding shares.

CUSTODIAN

The Chase Manhattan Bank, through its Global Custody Division located
in London, England, acts as custodian of the Funds' and the Portfolios' assets
but plays no role in making decisions as to the purchase or sale of portfolio
securities for the Funds or the Portfolios. Pursuant to rules adopted under the
1940 Act, a Portfolio 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 Core Trust
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
Portfolio; 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
Portfolio assets.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Forum Shareholder Services, LLC, Two Portland Square, Portland, Maine
04101, acts as the Funds' transfer agent and dividend disbursing agent.

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 Funds.

INDEPENDENT ACCOUNTANT

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

REGISTRATION STATEMENT

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

FINANCIAL STATEMENTS

The fiscal year end of each Fund is October 31. Financial statements
for each Fund's semi-annual period and fiscal year will be distributed to
shareholders of record. The Board in the future may change the fiscal year end
of a Fund.

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APPENDIX

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.

"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.

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

COMMERCIAL PAPER RATINGS

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

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

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

FIXED-INCOME SECURITY RATINGS

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

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

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

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

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

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

"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.

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<PAGE>

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

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

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

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

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

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

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

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

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

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

COMMERCIAL PAPER RATINGS

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

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

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

"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".

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<PAGE>

"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.

130
<PAGE>

PART C
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS:

Not Applicable.

(B) EXHIBITS:

EXHIBIT

NOTE: * INDICATES THAT THE EXHIBIT IS INCORPORATED HEREIN BY REFERENCE. ALL
REFERENCES TO A POST-EFFECTIVE AMENDMENT ("PEA") OR PRE-EFFECTIVE AMENDMENT
("PREEA") ARE TO PEAS AND PREEAS TO REGISTRANT'S REGISTRATION STATEMENT ON FORM
N-1A, FILE NO. 2-34215.

(1)* Trust Instrument of Registrant (filed as Exhibit(1) to PEA No.
46 via EDGAR on January 10, 1996, accession number 0000912057-
96-000285).

(2)* BYLAWS dated September 8, 1995 (filed as Exhibit (2) to
Registrant's PEA No. 61 via EDGAR on April 18, 1997, accession
number 0000912057-97-013527).

(3) Not Applicable.

(4)* Sections 2.04 and 2.06 of Registrant's Trust Instrument
provide as follows:

SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided
by the Trustees, Shares shall be transferable on the records
of the Trust only by the record holder thereof or by his agent
thereunto duly authorized in writing, upon delivery to the
Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of
such execution and authorization and of such other matters as
may be required by the Trustees. Upon such delivery the
transfer shall be recorded on the register of the Trust. Until
such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor the Trust, nor any transfer agent or
registrar nor any officer, employee or agent of the Trust
shall be affected by any notice of the proposed transfer.

SECTION 2.06 ESTABLISHMENT OF SERIES. The Trust created hereby
shall consist of one or more Series and separate and distinct
records shall be maintained by the Trust for each Series and
the assets associated with any such Series shall be held and
accounted for separately from the assets of the Trust or any
other Series. The Trustees shall have full power and
authority, in their sole discretion, and without obtaining any
prior authorization or vote of the Shareholders of any Series
of the Trust, to establish and designate and to change in any
manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers,
rights and privileges of such Series or classes thereof as the
Trustees may from time to time determine, to divide or combine
the Shares or any Series or classes thereof into a greater or
lesser number, to classify or reclassify any issued Shares or
any Series or classes thereof into one or more Series or
classes of Shares, and to take such other action with respect
to the Shares as the Trustees may deem desirable. The
establishment and designation of any Series shall be effective
upon the adoption of a resolution by a majority of the
Trustees setting forth such establishment and designation and
the relative rights and preferences of the Shares of such
Series. A Series may issue any number of Shares and need not
issue shares. At any time that there are no Shares outstanding
of any particular Series previously established and
designated, the Trustees may by a majority vote abolish that
Series and the establishment and designation thereof.

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<PAGE>

All references to Shares in this Trust Instrument shall be
deemed to be Shares of any or all Series, or classes thereof,
as the context may require. All provisions herein relating to
the Trust shall apply equally to each Series of the Trust, and
each class thereof, except as the context otherwise requires.

Each Share of a Series of the Trust shall represent an equal
beneficial interest in the net assets of such Series. Each
holder of Shares of a Series shall be entitled to receive his
pro rata share of all distributions made with respect to such
Series. Upon redemption of his Shares, such Shareholder shall
be paid solely out of the funds and property of such Series of
the Trust.

(5) (a)* Form of Investment Advisory Agreement between the Trust
and Schroder Capital Management International Inc.
dated January 9, 1996, with respect to Schroder
Emerging Markets Fund Institutional Portfolio, (filed
as Exhibit 5(a) to Registrant's PEA No. 46 via EDGAR on
January 10, 1996, accession number
0000912057-96-000285).

(b)* Investment Advisory Agreement between the Trust and
Schroder Capital Management International Inc. dated
January 9, 1996, with respect to Schroder U.S. Equity
Fund (filed as Exhibit (5) to Registrant's PEA No. 61
via EDGAR on April 18, 1997, accession number
0000912057-97-013527).

(c)* Investment Advisory Agreement between the Trust and
Schroder Capital Management International, Inc. dated
January 9, 1996, with respect to Schroder U.S. Smaller
Companies Fund, Schroder Latin America Fund and
International Equity Fund (filed as Exhibit 5(c) to
Registrant's PEA No. 63 via EDGAR on July 18, 1997,
accession number 0001004402-97-000035).

(d)* Investment Advisory Agreement between the Trust and
Schroder Capital Management International Inc. dated
March 15, 1996, with respect to Schroder International
Smaller Companies Fund and Schroder Global Asset
Allocation Fund (filed as Exhibit 5(d) to Registrant's
PEA No. 63 via EDGAR on July 18, 1997, accession number
0001004402-97-000035).

(6) (a)* Distribution Agreement between the Trust and Schroder
Fund Advisors Inc. dated January 9, 1996, with respect
to Schroder U.S. Equity Fund (filed as Exhibit (6) to
Registrant's PEA No. 61 via EDGAR on April 18, 1997,
accession number 0000912057-97-013527).

(b)* Form of Distribution Agreement between the Trust and
Schroder Fund Advisors Inc. dated January 9, 1996, as
amended, with respect to Schroder Emerging Markets Fund
Institutional Portfolio, Schroder U.S. Smaller
Companies Fund, Schroder Latin American Fund, Schroder
International Fund, Schroder International Smaller
Companies Fund and Schroder Global Asset Allocation
Fund (filed as Exhibit (6) to Registrant's Post
Effective Amendment No. 46 via EDGAR on January 10,
1996, accession number 0000912057-96-000285).

(7) Not Applicable.

(8)* Global Custody Agreement between the Trust and The Chase
Manhattan Bank, N.A. dated January 9, 1996, as amended May 3,
1996 (filed as Exhibit (8) to Registrant's PEA No. 61 via EDGAR
on April 18, 1997, accession number 0000912057-97-013527).

(9) (a)* Administration Agreement between the Trust and Schroder
Fund Advisors Inc. dated November 26, 1996, with
respect to Schroder International Fund, Schroder U.S.
Smaller Companies Fund, Schroder Latin American Fund,
Schroder Emerging Markets Fund Institutional Portfolio,
Schroder International Smaller Companies Fund and
Schroder

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<PAGE>

Global Asset Allocation Fund (filed as Exhibit 9(a)
to Registrant's Post-Effective Amendment No. 64 via
EDGAR on September 30 1997, accession number 0001004402-
97-000103).

(b)* Subadministration Agreement between the Trust and Forum
Administrative Services, LLC dated February 1, 1997,
with respect to Schroder International Fund, Schroder
U.S. Equity Fund, Schroder U.S. Smaller Companies Fund,
Schroder Latin American Fund, Schroder Emerging Markets
Fund Institutional Portfolio, Schroder International
Smaller Companies Fund and Schroder Global Asset
Allocation Fund (filed as Exhibit 9(b) to Registrant's
Post-Effective Amendment No. 61 via EDGAR on April 18,
1997, accession number 0000912057-97-013527).

(c)* Form of Transfer Agency Agreement between the Trust and
Forum Financial Corp. dated January 9, 1996, as
amended, with respect to Schroder International Fund,
Schroder U.S. Equity Fund, Schroder U.S. Smaller
Companies Fund, Schroder Latin American Fund, Schroder
Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund and Schroder
Global Asset Allocation Fund (filed as Exhibit 9(c) to
Registrant's PEA No. 46 via EDGAR on January 10, 1996,
accession number 0000912057-96-000285).

(d)* Fund Accounting Agreement between the Trust and Forum
Financial Corp. dated January 9, 1996, as amended, with
respect to Schroder International Fund, Schroder U.S.
Equity Fund, Schroder U.S. Smaller Companies Fund,
Schroder Latin American Fund, Schroder Emerging Markets
Fund Institutional Portfolio, Schroder International
Smaller Companies Fund and Schroder Global Asset
Allocation Fund (filed as Exhibit 9(d) to Registrant's
PEA No. 61 via EDGAR on April 18, 1997, accession
number 0000912057-97-013527).

(10) To be filed by Post-Effective Amendment.

(11) Not Applicable.

(12) Not Applicable.

(13) Not Applicable.

(14) Not Applicable.

(15)* Distribution Plan adopted by Registrant (filed as Exhibit
15(a) to Registrant's PEA No. 46 via EDGAR on January 10,
1996, accession number 0000912057-96-000285).

(16) (a)* Schedule of Sample Performance Calculations -- Schroder
U.S. Equity Fund (filed as Exhibit 16 to Registrant's
PEA No. 61 via EDGAR on April 18, 1997, accession
number 0000912057-97-013527).

(b)* Schedule of Sample Performance Calculations -- Schroder
U.S. Smaller Companies Fund (filed as Exhibit 16(b) to
Registrant's PEA No. 64 via EDGAR on September 30,
1997, accession number 0001004402-97-000103).

(17) Not Applicable.

(18) Multiclass (Rule 18f-3) Plan adopted by Trust (filed herewith).

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<PAGE>

Other Exhibits:

* Copies of Power of Attorney pursuant to which the Trustees and
President have signed this Post-Effective Amendment (filed as
an Other Exhibit to PEA No. 62 via EDGAR on June 30, 1997,
accession number 0001004402-97-000030).

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------- --- -------------------------------------
NUMBER OF RECORDHOLDERS
TITLE OF CLASS (FUND) AS OF 12/31/97
- ---------------------------------------------------------------------- -------------------------------------
ADVISOR INVESTOR
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder U.S. Equity Fund 0 582
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder International Fund 0 602
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder U.S. Smaller Companies Fund 2 521
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder Emerging Markets Fund Institutional Portfolio 4 25
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder International Smaller Companies Fund 0 2
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder Emerging Markets Fund 0 2
- ---------------------------------------------------------------------- ---------------- -----------------
Schroder Micro Cap Fund N/A 8
- ---------------------------------------------------------------------- ---------------- -----------------
</TABLE>

ITEM 27. INDEMNIFICATION.

In accordance with Section 3803 of the Delaware Business Trust Act, Section
10.02 of the Registrant's Trust Instrument provides as follows:

"Section 10.02 Indemnification.

"(a) Subject to the exceptions and limitations contained in subsection 10.02(b):

"(i) every person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as a "Covered Person") shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;

"(ii) the words "claim," "action," "suit," or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened while in office or thereafter, and the words
"liability" and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

"(b) No indemnification shall be provided hereunder to a Covered Person:

"(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Holders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the Covered Person's office or (B) not to have
acted in good faith in the reasonable belief that Covered Person's action was in
the best interest of the Trust; or

"(ii) in the event of a settlement, unless there has been a determination that
such Trustee or officer did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
Trustee's or officer's office, (A) By the court or other body approving the
settlement; (B) By at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) By written opinion of independent legal counsel based upon a review of

134
<PAGE>
readily available facts (as opposed to a full trial-type inquiry);

provided, however, that any Holder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.

"(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.

"(d) Expenses in connection with the preparation and presentation of a defense
to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Subsection 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Section 10.02."

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

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

David M. Salisbury. Chief Executive Officer, Director and Chairman of
SCMI; Joint Chief Executive and Director of Schroder Ltd.; and
Director of Schroders plc.

Richard R. Foulkes. Deputy Chairman/Executive Vice President of SCMI;
and Director of Schroder Ltd.

John A. Troiano. Chief Executive and Director of SCMI; and Director of
Schroder Ltd.

David Gibson. Senior Vice President and Director of SCMI; Director of
Schroder Capital Management; and Senior Vice President of Schroder
Ltd.

John S. Ager. Senior Vice President and Director of SCMI; and Director
of Schroder Ltd.

Sharon L. Haugh. Executive Vice President and Director of SCMI;
Director and Chairman of Schroder Advisors Inc.; and Director of
Schroder Ltd.

Gavin D.L. Ralston. Senior Vice President and Managing Director of
SCMI; Director of Schroder Ltd.

Mark J. Smith. Senior Vice President and Director of SCMI; and
Director of Schroder Ltd.

Robert G. Davy. Senior Vice President; Director of Schroder Ltd.; and
an officer of open end investment companies for which SCMI and/or its
affiliates provide investment services.

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<PAGE>

Jane P. Lucas. Senior Vice President and Director of SCMI; Director of
Schroder Advisors Inc.; and Director of Schroder Capital Management.

C. John Govett. Director of SCMI; Group Managing Director of Schroder
Ltd.; and Director of Schroders plc.

Phillipa J. Gould. Senior Vice President and Director of SCMI.

Louise Croset. First Vice President and Director of SCMI and First
Vice President of Schroder Ltd.

Abdallah Nauphal. Group Vice President and Director of SCMI.

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) Schroder Fund Advisors Inc., the Registrant's principal underwriter, also
serves as principal underwriter for Schroder Series Trust.

(b) Following is information with respect to each officer and director of
Schroder Fund Advisors Inc., the Distributor of the shares of Schroder
International Fund, Schroder U.S. Equity Fund, Schroder U.S. Smaller Companies
Fund, Schroder Emerging Markets Fund Institutional Portfolio, Schroder
International Smaller Companies Fund, Schroder International Bond Fund and
Schroder Latin American Fund (each, a series of the Registrant):

Catherine A. Mazza. President.

Mark J. Smith. Director and Senior Vice President.

Sharon L. Haugh. Chairman and Director.

Fergal Cassidy. Treasurer and CFO.

Alexandra Poe. Secretary and Senior Vice President.

Jane E. Lucas. Director.

* Address for each is 787 Seventh Avenue, New York, New York 10019 except for
Mark J. Smith, whose address is 33 Gutter Lane, London, England, EC2V 8AS.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

The accounts, books and other documents required to be maintained by Registrant
with respect to Registrant's series pursuant to Section 31(a) of the Investment
Company Act of 1940 and the Rules thereunder are maintained at the offices of
Schroder Capital Management International Inc. (investment management records)
and Schroder Fund Advisors Inc. (administrator and distributor records), 787
Seventh Avenue, New York, New York 10019, except that certain items are
maintained at the following locations:

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

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

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<PAGE>

ITEM 31. MANAGEMENT SERVICES.

None.

ITEM 32. UNDERTAKINGS.

(a) Registrant undertakes to file a post-effective amendment(s), using
financial statements that need not be certified, within four to six
months from the latter of the effective date of Registrant's
post-effective amendment to its Securities Act of 1933 Registration
Statement relating to the prospectuses offering Advisor Shares and
Investor Shares of Schroder Asia Fund and/or Schroder Japan Fund or the
commencement of operation of each of the respective Funds; and

(b) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to
shareholders relating to the portfolio or class thereof to which the
prospectus relates upon request and without charge.

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 with respect to Rule 485(a) under the Securities Act of
1933, the Registrant has duly caused this amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York, and State of New York on the 21st day of
January, 1998.

SCHRODER CAPITAL FUNDS (DELAWARE)

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

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment has been signed below by the following persons on the 21st
day of January, 1998.

SIGNATURES TITLE
- ---------- ------

(a) Principal Executive Officer

Mark J. Smith President

By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan, Attorney-in-Fact

(b) Principal Financial and
Accounting Officer

/s/ Fergal Cassidy
--------------------------------
Fergal Cassidy Treasurer

Peter E. Guernsey* Trustee
John I. Howell* Trustee
Hermann C. Schwab* Trustee
Clarence F. Michalis* Trustee
Mark J. Smith* Trustee
Hon. David N. Dinkins Trustee
Peter S. Knight Trustee
Sharon L. Haugh Trustee

*By: /s/ Thomas G. Sheehan
------------------------------
Thomas G. Sheehan, Attorney-in-Fact

138
<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this amendment to its Registration Statement for
Schroder Capital Funds (Delaware) to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York and the State of New York on
the 23rd day of January, 1998.

SCHRODER CAPITAL FUNDS

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

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment of Schroder Capital Funds (Delaware) has been signed below
by the following persons on the 21st day of January, 1998.

SIGNATURES TITLE
- ---------- -----

(a) Principal Executive Officer

Mark J. Smith President

By: /s/ Thomas G. Sheehan
----------------------------
Thomas G. Sheehan, Attorney-in-Fact

(b) Principal Financial and
Accounting Officer

/s/ Thomas G. Sheehan
-----------------------------
Thomas G. Sheehan Treasurer

*By: /s/ Thomas G. Sheehan
-------------------------------
Thomas G. Sheehan, Attorney-in-Fact

139
<PAGE>

INDEX TOEXHIBITS

EXHIBIT

(18) Schroder Capital Funds (Delaware) Multiclass (Rule 18f-3) Plan

140

EXHIBIT (18)

SCHRODER CAPITAL FUNDS (DELAWARE)
MULTICLASS (RULE 18F-3) PLAN
March 15, 1996, as revised November 26, 1996,
March 5, 1997 and June 4, 1997

This Plan is adopted by Schroder Capital Funds (Delaware) (the "Trust")
pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the "Act") in
order to document the separate arrangements and expense allocations of each
class (each, a "Class") of shares of beneficial interest ("Shares") of the
series of the Trust specified on Schedule A attached hereto (each, a "Multiclass
Fund").

SECTION 1. CLASS DESIGNATIONS

For each Multiclass Fund, the types of Classes are "Investor Shares"
and "Advisor Shares." Each Class has a different arrangement for shareholder
services or distribution or both, as follows:

(a) INVESTOR SHARES. Are offered by the related Multiclass Fund with no
sales charges or distribution expenses, provided that Investor Shares of
Schroder Emerging Markets Fund Institutional Portfolio are offered subject to a
purchase charge of 0.50% and a redemption charge of 0.50%. The investment
minimum for Investor Shares of each Multiclass Fund generally is higher than
that for Advisor Shares for the Multiclass Fund, subject to reduction by
Schroder Fund Advisors Inc. ("Schroder Advisors"), the Trust's administrator, or
Forum Administrative Services, Limited Liability Company ("Forum"), the Trust's
sub-administrator.

(b) ADVISOR SHARES. Are offered by the related Multiclass Fund with no
sales charges, provided that Advisor Shares of Schroder Emerging Markets Fund
Institutional Portfolio are offered subject to a purchase charge of 0.50% and a
redemption charge of 0.50%; and further provided that Advisor Shares of each
Multiclass Funs are sold subject to an asset-based sales charge under a
distribution plan adopted in accordance with Rule 12b-1 under the Act and,
further, Advisor Shares of each Multiclass Fund are sold subject to a servicing
fee under a Shareholder Service Plan, each as described in the applicable
prospectus. The investment minimum for Advisor Shares of each Multiclass Fund is
generally lower than that for Investor Shares for the Multiclass Fund.

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<PAGE>

SECTION 2. VOTING

Each Class shall have exclusive voting rights on any matter submitted
to a shareholder vote that relates solely to the Class' arrangement for
shareholder service or distribution, and each Class shall have separate voting
rights with respect to any matter submitted to a shareholder vote in which the
interests of one Class differ from the interests of another Class.

SECTION 3. EXPENSES

(a) DISTRIBUTION EXPENSES. All expenses incurred under a Class's
distribution plan adopted in accordance with Rule 12b-1 under the Act, if any,
shall be allocated to that Class.

(b) SHAREHOLDER SERVICE EXPENSES. All expenses incurred under a Class's
shareholder service plan, if any, shall be allocated to that Class.

(c) OTHER CLASS EXPENSES. The following expenses, which are incurred by
Classes in different amounts or reflect differences in the amount or kind of
services that different Classes receive (collectively with expenses under
Sections 3(a) and 3(b), "Class Expenses"), shall be allocated to the Class that
incurred the expenses to the extent practicable:

(i) Administration and transfer agent fees and expenses;
(ii) Litigation, legal and audit fees;
(iii) State and foreign securities registration fees;
(iv) Shareholder report expenses;
(v) Trustee fees and expenses;
(vi) Preparation, printing and related fees and expenses for proxy
statements and, with respect to current shareholders,
prospectuses and statements of additional information;
(vii) Expenses incurred in connection with shareholder meetings; and
(viii) Subject to approval by the Trustees, such other fees and
expenses as Schroder Advisors or Forum, pursuant to Rule 18f-3,
deems to be allocable to specified Classes.

(d) CLASS EXPENSE ALLOCATIONS. Class Expenses are to be borne solely by
the Class to which they relate. Item (i) of Section 3(c) in its entirety is
incurred by each Multiclass Fund on a Class-by-Class basis and, accordingly, is
wholly allocated to the specific Class to which it relates. All fees of a
Multiclass Fund's investment adviser AND custodian and administrator and all
portfolio based fees of a Multiclass Fund's fund accountant are incurred by a
Multiclass Fund and not by an individual Class of the Fund. All other items in
Section 3(c) are allocated to a specific Class to the extent they are
attributable to each Class in different amounts.

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SECTION 4. OTHER ALLOCATIONS AND WAIVERS/REIMBURSEMENTS

(a) EXPENSES APPLICABLE TO MORE THAN ONE FUND. Expenses (other than
Class Expenses) incurred by the Trust on behalf of one series of the Trust,
including the Multiclass Funds (each, a "Fund"), shall be allocated to that
Fund, and expenses (other than Class Expenses) incurred by the Trust on behalf
of more than one Fund shall be allocated among the Funds that incurred the
expenses based on the net asset values of the Funds in relation to the net asset
value of all Funds to which the expense relates.

(b) OTHER ALLOCATIONS. Income, realized and unrealized capital gain and
loss, and other expenses (excluding Class Expenses related to a Multiclass Fund)
shall be allocated to each Class on the basis of the net asset value of that
Class in relation to the net asset value of the Multiclass Fund.

(c) WAIVERS AND REIMBURSEMENTS. Nothing in this Plan shall be construed
as limiting the ability of any person to waive any fee paid by a Fund or Class
to that person or to reimburse any or all expenses of a Fund or Class; provided,
however, that no waiver or reimbursement shall be made such that the waiver or
reimbursement is, in effect, a DE FACTO modification of the fees provided for in
the Fund's various service agreements.

SECTION 5. EXCHANGES

Shareholders of a Class may exchange their Shares for Shares of the
same Class of any other Fund in accordance with Section 11(a) of the Act, the
rules thereunder and, if permitted by each Multiclass Fund pursuant to its
then-current prospectus, the requirements of such prospectus.

SECTION 6. AMENDMENTS AND BOARD REVIEW

(a) NON-MATERIAL AMENDMENTS. Non-material amendments to this Plan
may be made at any time by Schroder Advisors.

(b) MATERIAL AMENDMENTS. Material amendments to this Plan may only be
made by a majority of the Trustees of the Trust, including a majority of the
Trustees who are not interested persons of the Trust as defined by the Act, upon
a finding that the amendment is in the best interests of the Classes and/or Fund
affected by the amendment and of the Trust. Prior to any material amendment to
this Plan, the Board of Trustees (the "Board") shall request such information as
may be reasonably necessary to evaluate the Plan as proposed to be amended.

(c) BOARD REVIEW. The Board, including a majority of those Trustees who
are not interested persons of the Trust as defined in the Act, shall review
periodically review: (i) this Plan for its continuing appropriateness; and (ii)
any fee waivers and expense reimbursements to determine that the Multiclass
Funds are in compliance with Section 4(c) of the Plan.

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SCHEDULE A

SCHRODER CAPITAL FUNDS (DELAWARE) FUNDS
TO WHICH THE MULTICLASS PLAN APPLIES

Fund Date Subject to Plan
---- --------------------
Schroder International Fund March 15, 1996

Schroder Emerging Markets Fund
Institutional Portfolio March 15, 1996

Schroder U.S. Smaller Companies Fund March 15, 1996

Schroder Latin American Fund March 15, 1996

Schroder Global Asset Allocation Fund March 15, 1996

Schroder International Smaller
Companies Fund March 15, 1996

Schroder U.S. Equity Fund November 26, 1996

Schroder Emerging Markets Fund November 26, 1996

Schroder European Growth Fund November 26, 1996

Schroder Japan Fund November 26, 1996

Schroder Asia Fund November 26, 1996

Schroder United Kingdom Fund November 26, 1996

Schroder International Bond Fund March 5, 1997

Schroder Cash Reserves Fund March 5, 1997

Schroder Micro Cap Fund June 4, 1997

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