485APOS 1 file1.htm FORM 485APOS



      As filed with the Securities and Exchange Commission on May 16, 2007

   Investment Company Act File No. 811-7840; Securities Act File No. 33-65632

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM N-1A

           REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

                       POST-EFFECTIVE AMENDMENT No. 38 [X]

                                     and/or
         REGISTRATION STATEMENT UNDER INVESTMENT COMPANY ACT OF 1940 [X]

                              Amendment No. 40 [X]

                              SCHRODER SERIES TRUST
             875 Third Avenue, 22nd Floor, New York, New York 10022
                                 (212) 641-3800

                             Carin F. Muhlbaum, Esq.
                Schroder Investment Management North America Inc.
                          875 Third Avenue, 22nd Floor
                            New York, New York 10022

                                   Copies to:

                            Timothy W. Diggins, Esq.
                                Ropes & Gray LLP
                             One International Place
                        Boston, Massachusetts 02110-2624

It is proposed that this filing will become effective (check appropriate box):

[_]  Immediately upon filing pursuant   [_]  On (date) pursuant to
     to paragraph (b)                        paragraph (b)

[_]  60 days after filing pursuant      [_]  On (date) pursuant to
     to paragraph (a)(1)                     paragraph (a)(1)

[X]  75 days after filing pursuant      [_]  On (date) pursuant to paragraph
     to paragraph (a)(2)                     (a)(2) of Rule 485.

If appropriate, check the following box:

[_]  This post-effective amendment designates a new effective date for a
     previously filed post-effective amendment.

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC As soon as
practicable after this registration statement becomes effective.

This post-effective amendment is being filed to include a prospectus and
statement of additional information relating to Schroder All Asset Fund (the
"Fund"), a series of Schroder Series Trust. Except as otherwise specifically
indicated, the amendment does not delete or supersede any prospectus or
statement of additional information in any prior post-effective amendment.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE FUND
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
U.S. SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

[Schroders LOGO OMITTED]

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
DATED MAY 16, 2007

PROSPECTUS
JULY ___, 2007

SCHRODER ALL ASSET FUND

A Shares
Investor Shares
R Shares

This Prospectus describes a mutual fund, Schroder All Asset Fund (the "Fund"),
offered by Schroder Series Trust (the "Trust").

SCHRODER ALL ASSET FUND seeks long-term capital appreciation through a flexible
asset allocation approach. The Fund allocates its investments among a variety of
different asset classes - including traditional asset classes and "alternative"
asset classes - in response to changing market, economic, and investment
conditions.

This Prospectus explains what you should know about the Fund before you invest.
Please read it carefully. You can call the Schroder Mutual Funds at (800)
464-3108 to find out more about the Fund and other funds in the Schroder family
of funds. From outside the United States, please call (617) 483-5000 and ask to
speak with a representative of the Schroder Mutual Funds.

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

SCHRODER SERIES TRUST

TABLE OF CONTENTS

PAGE
----
SUMMARY INFORMATION...................................................... 1
FEES AND EXPENSES........................................................ 9
PRINCIPAL RISKS OF INVESTING IN THE FUND................................. 11
NON-PRINCIPAL INVESTMENT STRATEGIES AND TECHNIQUES....................... 20
MANAGEMENT OF THE FUND................................................... 22
HOW THE FUND'S SHARES ARE PRICED......................................... 23
TYPES OF SHARES AVAILABLE................................................ 24
HOW TO BUY SHARES........................................................ 27
HOW TO SELL SHARES....................................................... 30
EXCHANGES................................................................ 33
DIVIDENDS AND DISTRIBUTIONS.............................................. 34
FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES........................ 34
PAYMENTS TO FINANCIAL INTERMEDIARIES..................................... 35
TAXES.................................................................... 36
DISCLOSURES OF FUND PORTFOLIO INFORMATION................................ 37
USA PATRIOT ACT.......................................................... 37

SUMMARY INFORMATION

INVESTMENT OBJECTIVE. To seek long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES. The Fund seeks long-term capital appreciation
through a flexible asset allocation approach, investing in traditional asset
classes and in less traditional, alternative asset classes. The Fund's adviser,
Schroder Investment Management North America Inc. ("Schroders"), or sub-adviser,
Schroder Investment Management North America Ltd. ("SIMNA Ltd."), allocates the
Fund's investments among asset classes in response to changing market, economic,
and other factors over time and their possible effects on the Fund's portfolio.

The Fund seeks to attain a rate of long-term total return, after investment
advisory fees, in excess of the rate of inflation.

The Fund's adviser or sub-adviser seeks these returns by using a combination of
the following strategies:

o Allocating to a broad array of traditional and less traditional,
alternative asset classes;

o Using cyclical asset allocation across markets and asset classes; and

o Using specialist management within certain of the underlying asset classes.
The Fund's adviser or sub-adviser applies active management in markets it
perceives as inefficient and includes access to non-Schroders active
management.

While the portfolio is designed to target a specified level of return, the
Fund's adviser or sub-adviser will emphasize the management of risk and
volatility. Generally, the Fund's adviser or sub-adviser seeks to minimize
volatility of returns by:

o Using a wide range of minimally correlated asset classes;

o Employing asset allocation positioning with the aim of providing greater
stability of returns; and

o Employing derivatives to seek to limit the potential for loss in times of
market volatility.

The portfolio is not managed with reference to a specified benchmark. Every
asset class is reviewed on an ongoing basis by the Fund's adviser or sub-adviser
to determine whether it provides the opportunity to enhance return or to reduce
risk. The portfolio will be diversified across a range of asset classes at all
times. Exposure to different asset classes and strategies will vary over time.

The Fund's adviser or sub-adviser will rely on proprietary asset allocation
models to adjust the amount of the Fund's investments in the various asset
classes. The Fund's adviser or sub-adviser may manage the Fund's investments in
all of these asset classes directly, or the Fund's adviser or sub-adviser may
obtain exposure to one or more of these asset classes through investment in
other registered investment companies or private investment pools or through the
use of derivatives. The amount of the Fund's investment in a particular asset
class, or the types of investments it may make in a particular asset class, may
be limited by tax considerations or limitations imposed by federal securities
laws.

PRINCIPAL INVESTMENTS.

EQUITY INVESTMENTS - Equity securities of any size, of U.S. or foreign issuers.
Equity securities include common stocks, preferred stocks, and securities
convertible into common or preferred stocks, and options and warrants to
purchase common or preferred stocks. The Fund may invest any portion of its
assets in equity securities of issuers located in "emerging market" countries.
The Fund's adviser or sub-adviser may select securities based on a variety of
factors, including, for example, their prospects for earnings growth or the
adviser's or sub-adviser's view that they are undervalued.

FIXED-INCOME INVESTMENTS - Debt securities of issuers located anywhere in the
world believed to offer the potential for attractive current income, capital
appreciation, or both. Debt securities in which the Fund may invest include
securities issued or guaranteed by the U.S. Government or its agencies or

instrumentalities; debt securities of domestic or foreign corporations;
mortgage-backed and other asset-backed securities; taxable municipal bonds;
obligations of international agencies or supranational entities; debt securities
convertible into equity securities; inflation-indexed bonds; structured notes,
including hybrid or "indexed" securities, event-linked bonds, and loan
participations; and delayed funding loans and revolving credit facilities. Fixed
income securities in which the Fund invests may include securities that pay
interest at fixed rates or at floating or variable rates; payments of principal
or interest may be made at fixed intervals or only at maturity or upon the
occurrence of stated events or contingencies. The Fund may invest in securities
of any credit rating, including securities of investment grade and
higher-yielding, lower-rated securities, sometimes known as "junk" bonds. The
Fund may invest any portion of its assets in debt securities of issuers located
in "emerging market" countries.

SHORT-TERM INVESTMENTS - Short-term, high quality investments, including, for
example, commercial paper, bankers' acceptances, certificates of deposit, bank
time deposits, repurchase agreements, and investments in money market mutual
funds or similar pooled investments.

ALTERNATIVE INVESTMENTS -

REAL ESTATE - Investments in real-estate related securities, such as
real estate investment trusts ("REIT" or "REITs") (equity REITs or
mortgage REITs), real estate operating companies, brokers, developers,
and builders of residential, commercial, and industrial properties;
property management firms; finance, mortgage, and mortgage servicing
firms; construction supply and equipment manufacturing companies; and
firms dependent on real estate holdings for revenues and profits,
including lodging, leisure, timber, mining, and agriculture companies.

ABSOLUTE RETURN - Investments in portfolios of securities managed to
provide an investment return that is generally independent of changes
in the values of broad-based equity securities indices. Those
portfolios may include long and short equity or fixed-income positions
and investments in derivatives. Absolute return investments will
normally be selected for their ability to provide predictable, hedged
returns over time.

COMMODITIES - Investments intended to provide exposure to one or more
physical commodities or securities indices. Investments may include,
by way of example, futures contracts, options on futures contracts,
and forward contracts, and securities designed to provide
commodity-based exposures.

CURRENCIES - Investment positions in various foreign currencies,
including actual holdings of those currencies, forward, futures, swap,
and option contracts with respect to foreign currencies, and other
derivative strategies with respect to foreign currencies.

PRIVATE EQUITY - Investments in private companies (or private
investments in public companies) typically made in connection with the
organization or restructuring of a company, including so-called
leveraged buy-outs and management buy-outs.

The Fund's adviser or sub-adviser may seek exposure to the asset classes
described above either by investing directly in securities and other
investments, or by investing in other investment companies or investment pools.
These might include, for example, other open-end or closed-end investment
companies (including investment companies that concentrate their investments in
one or more industries or economic or market sectors), exchange-traded funds,
and unit investment trusts, and domestic or foreign private investment pools.
Some of these funds or pools may be managed or sponsored by the adviser or
sub-adviser and its affiliates, although others may not be. (The amount of the
Fund's investment in certain investment companies or investment pools is limited
by law.) The Fund may also seek to obtain, or reduce, exposure to one or more
asset classes through the use of derivatives, such as, for example, futures
contracts, interest rate swaps, total return swaps, options purchased or sold by
the Fund, and structured notes.

The Fund's investment adviser or sub-adviser may retain one or more other
additional sub-advisers to manage portions of the Fund's portfolio invested in
certain asset classes. The Fund may apply for exemptive relief from the
Securities and Exchange Commission ("SEC") to permit the Fund's adviser or
sub-adviser to retain one or more sub-advisers without approval of shareholders
of the Fund. Until the Fund receives that relief, the Fund's adviser or
sub-adviser will not generally be permitted to retain any sub-adviser (other
than the sub-advisers identified in this prospectus) without shareholder
approval, although the Fund will be permitted to terminate any sub-advisory
agreement.

The table below shows the percentages of the Fund's assets the Fund's adviser or
sub-adviser expects to be allocated to each of the identified assets classes
initially. It is likely that, initially, Schroders or SIMNA Ltd. will manage the
Fund's assets allocated to equity securities, fixed-income securities, and
short-term investments, or that the Fund will obtain exposure to those asset
classes through investment companies or pools managed by one of those entities
or an affiliate. It is likely that the Fund's exposure to alternative
investments will initially be obtained through investment in investment
companies or pools managed by other, non-affiliated investment managers or
through the use of derivatives. It is possible that the initial allocation and
advisory arrangements with respect to an asset class will be different from
those shown in the table. Allocations will change over time.

INITIAL
ESTIMATED ANTICIPATED
ASSET CLASS ALLOCATION INVESTMENT RANGES
------------------------ ---------- -----------------
Equity Investments ____% ___%
Fixed-Income Investments ____% ___%
Short-Term Investments ____% ___%
Alternative Investments ____% ___%
Real Estate ____% ___%
Absolute Return ____% ___%
Commodities ____% ___%
Currencies ____% ___%
Private Equity ____% ___%

The Fund is a diversified investment company. The Fund will seek to allocate its
investments across a variety of asset classes, which may serve to reduce overall
investment risk, although it is not a guarantee against losses. Although
Schroders will attempt to reduce the volatility of the Fund's portfolio through
investment across a variety of asset classes, there can, of course, be no
assurance that Schroders will be successful in doing so. It is possible that the
Fund could experience losses in all of the asset classes in which it has
invested at any time.

PRINCIPAL RISKS.

o It is possible to lose money on an investment in the Fund.

o EQUITY SECURITIES RISK. Equity securities are securities that
represent an ownership interest (or the right to acquire such an
interest) in a company and include common and preferred stocks. In the
event an issuer is liquidated or declares bankruptcy, the claims of
owners of bonds take priority over holders of preferred stock, whose
claims take priority over the claims of those who own common stock.

o EQUITY MARKETS RISK. The values of equity securities fluctuate in
response to issuer, political, market, and economic developments.
Equity prices can fluctuate dramatically over short time periods in
response to these developments. Different parts of the market and
different types of equity securities can react differently to these
developments. For example, large capitalization stocks can

react differently from small capitalization stocks, and "growth"
stocks can react differently from "value" stocks. Issuer, political,
or economic developments can affect a single issuer, issuers within an
industry or economic sector or geographic region, or the market as a
whole.

o SMALL AND MID CAP COMPANIES RISK. Small companies tend to be more
vulnerable to adverse developments than larger companies. The Fund may
invest in micro-cap companies, which tend to be particularly sensitive
to the risks associated with small companies. Small companies may have
limited product lines, markets, or financial resources, or may depend
on a limited management group. Their securities may trade less
frequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than the prices of securities of larger,
more widely traded companies. Also, there may be less publicly
available information about small and mid cap companies or less market
interest in their securities as compared to larger companies, and it
may take longer for the price of the securities to reflect the full
value of their issuers' earnings potential or assets.

o INITIAL PUBLIC OFFERINGS (IPOs) RISK. The Fund may purchase securities
of companies in initial public offerings of their securities, either
in the initial offering itself or shortly after the initial offering.
Such investments are subject generally to the risks described above
under "Small and Mid Cap Companies Risk." Such securities have no
trading history, and information about such companies may be available
for very limited periods. Under certain market conditions, very few
companies, if any, may determine to make initial public offerings of
their securities. At any particular time or from time to time the Fund
may not be able to invest in securities issued in IPOs or invest to
the extent desired. The investment performance of the Fund during
periods when it is unable to invest significantly or at all in initial
public offerings may be lower than during periods when the Fund is
able to do so. The prices of securities sold in initial public
offerings can be highly volatile.

o CONVERTIBLE SECURITIES RISK. The Fund may invest in preferred stocks
that are convertible into common stocks, and so subject to the risks
of investments in both preferred and common stocks. The Fund may also
invest in corporate debt securities that may be converted at either a
stated price or stated rate into underlying shares of preferred or
common stock, and so subject to the risks of investments in both debt
securities and equity securities.

o WARRANTS RISK. The Fund may invest in warrants to purchase equity
securities. The price, performance and liquidity of such warrants are
typically linked to the underlying stock, less transaction costs. In
addition to the market risk related to the underlying holdings, the
Fund bears additional counterparty risk with respect to the issuing
broker. Moreover, there is currently no active trading market for
equity-linked warrants.

o INTEREST RATE RISK. Interest rate increases can cause the price of a
debt security to decrease. In addition, if a security is prepaid in a
period of falling interest rates, the Fund may have to reinvest the
proceeds in lower-yielding investments. Interest rate risk is
generally greater in the case of securities with longer durations and
in the case of portfolios of securities with longer average durations.

o CREDIT RISK. The ability, or perceived ability, of the issuer of a
debt security to make timely payments of interest and principal on the
security will affect the value of the security.

o INFLATION/DEFLATION RISK. Inflation risk is the risk that the value of
the Fund's investments may decline as inflation reduces the value of
money. Deflation risk is the risk that prices throughout the economy
may decline over time, which may have an adverse effect on the
creditworthiness of issuers in whose securities the Fund invests.

o EXTENSION RISK. During periods of rising interest rates, the average
life of certain types of securities may be extended because of slower
than expected principal payments. This may lock in a below-market
interest rate, increase the security's duration, and reduce the value
of the security.

o VALUATION RISK. Due to the nature of some of the Fund's investments
and the market environment, a portion of the Fund's assets may be
valued by Schroders at fair value pursuant to

guidelines established by the Board of Trustees. The Fund's assets may
be valued using prices provided by a pricing service or,
alternatively, a broker-dealer or other market intermediary (sometimes
just one broker-dealer or other market intermediary) when other
reliable pricing sources may not be available. There can be no
assurance that such prices accurately reflect the price the Fund would
receive upon sale of a security, and to the extent the Fund sells a
security at a price lower than the price it has been using to value
the security, its net asset value will be adversely affected.

o U.S. GOVERNMENT SECURITIES RISK. Securities issued or guaranteed by
certain agencies and instrumentalities of the U.S. Government are not
supported by the full faith and credit of the United States. For
example, mortgage-backed bonds issued by Fannie Mae or Freddie Mac are
backed only by the credit of those issuers. Investments in these
securities are also subject to interest rate risk (as described above
under "Interest Rate Risk"), prepayment risk (as described below under
"Mortgage and Asset-Backed Securities Risk"), extension risk (as
described above under "Extension Risk"), and the risk that the value
of the securities will fluctuate in response to political, market, or
economic developments.

o MORTGAGE- AND ASSET-BACKED SECURITIES RISK. Mortgage-backed and
asset-backed investments tend to increase in value less than other
debt securities when interest rates decline, but are subject to
similar risk of decline in market value during periods of rising
interest rates. The values of mortgage-backed and asset-backed
securities become more volatile as interest rates rise. In a period of
declining interest rates, the Fund may be required to reinvest more
frequent prepayments on mortgage-backed and asset-backed investments
in lower-yielding investments. In addition to interest rate risk (as
described above under "Interest Rate Risk"), investments in
mortgage-backed securities composed of subprime mortgages may be
subject to a higher degree of credit risk, valuation risk and
liquidity risk (as described above under "Credit Risk" and "Valuation
Risk" and below under "Liquidity Risk"). Asset-backed securities in
which the Fund invests may have underlying assets that include motor
vehicle installment sales or installment loan contracts, leases of
various types of real and personal property and receivables from
credit card agreements. Like mortgages underlying mortgage-backed
securities, underlying automobile sales contracts or credit card
receivables are subject to prepayment, which may reduce the overall
return to certificate holders. Certificate holders may also experience
delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the
Trust because of unanticipated legal or administrative costs of
enforcing the contracts or because of depreciation or damage to the
collateral (usually automobiles) securing certain contracts, or other
factors.

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

o FOREIGN INVESTMENT RISK. Adverse political, regulatory, market, or
economic developments in foreign countries can affect issuers located
in those countries. Investments in foreign countries may also be
subject to foreign withholding taxes.

o FOREIGN CURRENCIES RISK. Investments in foreign securities are
normally denominated and traded in foreign currencies. The value of
the Fund's assets may be affected favorably or unfavorably by currency
exchange rates, currency exchange control regulations, and
restrictions or prohibitions on the repatriation of foreign
currencies.

o EMERGING MARKETS SECURITIES RISK. The Fund may invest in "emerging
market" countries whose securities markets may experience heightened
levels of volatility. The risks of investing in emerging markets
include greater political and economic uncertainties than in foreign
developed markets,

currency transfer restrictions, a more limited number of potential
buyers, and an emerging market country's dependence on revenue from
particular commodities or international aid. Additionally, the
securities markets and legal systems in emerging market countries may
only be in a developmental stage and may provide few, or none, of the
advantages or protections of markets or legal systems available in
more developed countries. Emerging market countries may experience
extremely high levels of inflation, which may adversely affect those
countries' economies, currencies, and securities markets. Also,
emerging market issuers are often smaller and less well-known than
larger, more widely held companies, and involve certain special risks
associated with smaller capitalization companies described above under
"Small and Mid Cap Companies Risk."

The Fund's adviser and sub-adviser currently consider "emerging
market" countries to be countries not included at the time of
investment in the Morgan Stanley International World Index of major
world economies. Countries currently in this Index include: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece,
Hong Kong SAR, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United
Kingdom, and the United States. The Fund's adviser or sub-adviser may
at times determine based on its own analysis that an economy included
in the Index should nonetheless be considered an emerging market
country, in which case that country would constitute an emerging
market country for purposes of the Fund's investments. The Fund's
adviser and sub-adviser have determined, based on an analysis of
current economic and political factors pertaining to Hong Kong SAR,
that Hong Kong SAR should be considered as an emerging market country
for purposes of the Fund's eligible investments.

o GEOGRAPHIC FOCUS RISK. To the extent the Fund invests a substantial
amount of its assets in one country, its performance may at times be
worse than the performance of other mutual funds that invest more
broadly.

o DERIVATIVES RISK. Derivative transactions typically involve leverage
and may be highly volatile. It is possible that a derivative
transaction will result in a loss greater than the principal amount
invested, and the Fund may not be able to close-out a derivative
transaction at a favorable time or price.

o OVER-THE-COUNTER RISK. Securities traded in over-the-counter markets
may trade in smaller volumes, and their prices may be more volatile,
than securities principally traded on securities exchanges. Such
securities may be less liquid than more widely traded securities. In
addition, the prices of such securities may include an undisclosed
dealer markup, which the Fund pays as part of the purchase price.

o LIQUIDITY RISK. The Fund may find it difficult to sell or to close out
certain investments at favorable prices or times. Illiquid securities
may be highly volatile and difficult to value. If the Fund invests in
an investment company that is not part of the Schroder group of funds,
it will not be permitted to require that investment company to redeem
more than one percent of the investment company's outstanding shares
in any 30-day period; as a result, the Fund may be required to
consider shares of such an investment company to be illiquid to the
extent they may not be immediately redeemable by the Fund.

o REAL ESTATE RISK. The Fund may invest in real estate-linked derivative
instruments that subject it to risks similar to those associated with
direct ownership of real estate. An investment in a REIT may be
subject to risks similar to those associated with direct ownership of
real estate, including losses from casualty or condemnation, and
changes in local and general economic conditions, supply and demand,
interest rates, zoning laws, regulatory limitations on rents, property
taxes and operating expenses. In addition, an investment in a REIT is
subject to additional risks, such as poor performance by the manager
of the REIT, adverse changes to the tax laws or failure by the REIT to
qualify for tax-free pass-through of income under the Internal Revenue
Code of 1986, as amended (the "Code"). In addition, some REITs have
limited diversification because they invest in a limited number of
properties, a narrow geographic area, or a single type of property.
Also, the organizational documents of a REIT may contain provisions
that make changes in control of the REIT difficult and time-consuming.
As a shareholder in a REIT the Fund, and indirectly the Fund's
shareholders, would

bear its ratable share of the REIT's expenses and would at the same
time continue to pay its own fees and expenses.

o INVESTMENTS IN POOLED VEHICLES RISK. The Fund may invest in shares of
other open-end or closed-end investment companies (including single
country funds), exchange-traded funds, and investment pools not
registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). Investing in another investment company exposes the Fund
to all the risks of that investment company, and, in general, subjects
it to a pro rata portion of the other investment company's fees and
expenses. Unregistered investment pools are not subject to the same
level of regulation as are registered investment companies, including
investor protection laws, rules, and regulations.

o AFFILIATED FUND RISK. In managing the Fund, the adviser or sub-adviser
will have authority to select and substitute underlying funds managed
by it or its affiliates. The adviser or sub-adviser may be subject to
potential conflicts of interest in selecting underlying funds because
the fees paid to it by some underlying funds are higher than the fees
paid by the Fund or by other underlying funds.

o DEPOSITARY RECEIPTS RISK. The Fund may invest in sponsored or
unsponsored Depositary Receipts. Investments in non-U.S. issuers
through Depositary Receipts and similar instruments may involve
certain risks not applicable to investing in U.S. issuers, including
changes in currency rates, application of local tax laws, changes in
governmental administration or economic or monetary policy or changed
circumstances in dealings between nations. Costs may be incurred in
connection with conversions between various currencies.

o MANAGEMENT RISK. Because the Fund is actively managed, its investment
return depends on the ability of its adviser or sub-adviser to manage
its portfolio successfully. The Fund's adviser or sub-adviser and the
investment team will apply investment techniques and risk analyses in
making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. The Fund's
ability to achieve its investment objective depends upon the adviser's
or sub-adviser's ability to select the best mix of underlying funds
and securities and strategic asset allocation. There is a risk that
the Fund's adviser or sub-adviser may be incorrect in its analysis of
economic trends, countries, industries, companies, and the relative
attractiveness of asset classes or other matters.

o PRIVATE PLACEMENTS AND RESTRICTED SECURITIES. The Fund may invest in
securities that are purchased in private placements. Because there may
be relatively few potential purchasers for such

investments, especially under adverse market or economic conditions or
in the event of adverse changes in the financial condition of the
issuer, the Fund could find it more difficult to sell such securities
when the Fund's adviser or sub-adviser believes it advisable to do so
or may be able to sell such securities only at prices lower than if
such securities were more widely held. At times, it may also be more
difficult to determine the fair value of such securities for purposes
of computing the Fund's net asset value. The Fund's sale of such
investments may also be restricted under securities laws.

o FREQUENT TRADING/PORTFOLIO TURNOVER RISK. Frequent trading of the
Fund's portfolio securities will result in relatively high transaction
costs and may result in taxable capital gains.

o VOLATILITY OF THE MUNICIPAL BOND MARKET RISK. The municipal bond
market is volatile and can be significantly affected by adverse tax,
legislative, or political changes and the financial condition of the
issuers of municipal bonds.

o STATE AND ISSUER RISK. Investing in bonds issued by a state or by
state agencies or political subdivisions in the same state may make
the Fund more vulnerable to that state's economy and to issues
affecting its municipal bond issuers. Geographic or sector
concentration may cause the value of the Fund's shares to change more
than the value of shares of funds that invest in a greater variety of
investments. The Fund may also invest a substantial portion of its
assets in a particular issue, and to that extent the Fund's investment
performance and net asset value will be adversely affected by a
decrease in the value of that issue more than if such Fund invested in
a greater number of securities.

Performance Information. The Fund recently commenced operations and does not yet
have historical investment performance.

----------

Changes in investment objective and policies. Except for any policy
described in this prospectus or in the Statement of Additional Information (the
"SAI") as fundamental, the Fund's investment objectives and policies may be
changed by the Trustees without a vote of the shareholders.

FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.

SHAREHOLDER FEES (paid directly from your investment):

A SHARES INVESTOR SHARES R SHARES
---------- --------------- ----------
MAXIMUM SALES LOAD IMPOSED ON
PURCHASES [_](1) None None
MAXIMUM DEFERRED SALES LOAD None(2) None None
MAXIMUM SALES LOAD IMPOSED ON
REINVESTED DIVIDENDS None None None
REDEMPTION FEE [2.00%(3)] [2.00%(3)] [2.00%(3)]
EXCHANGE FEE None None None

(1) You may be entitled to a sales load discount based on the amount you invest
or you may be eligible for a sales load waiver. You will pay no initial
sales load on purchases of $1 million or more of A Shares. See "Types of
Shares Available - A Shares" for details.

(2) Contingent deferred sales load of [1.00]% applies for purchases of $1
million or more of A Shares if these shares are sold within [18 months] of
purchase. Certain redemptions and distributions are not subject to this
load. Please see "Types of Shares Available - A Shares" in this Prospectus
and the Fund's SAI.

[(3) Shares of the Fund held for two months or less are subject to a redemption
fee of 2.00%, subject to certain exceptions described herein. See "How to
Sell Shares - Redemption Fee."]

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets):

A SHARES INVESTOR SHARES R SHARES
-------- --------------- --------
Management Fees (1) [_]% [_]% [_]%
Distribution
(12b-1) Fees [_]% None [_]%
Other Expenses
(1)(2) [_]% [_]% [_]%
Acquired Fund Fees
and Expenses (4) [_]% [_]% [_]%
Total Annual Fund
Operating Expenses [_]% [_]% [_]%
Less: Fee Waiver and Expense
Limitation(4) [_]% [_]% [_]%
Net Expenses (4) (5) [_]% [_]% [_]%

(1) Management Fees for the Fund include all fees payable to the Fund's adviser
and its affiliates for investment advisory and fund administration
services. The Fund also pays sub-administrative fees directly to SEI
Investments Global Fund Services, and those fees are included under "Other
Expenses."

(2) "Other Expenses" for the Fund are based on estimated amounts for the Fund's
current fiscal year.

(3) The "Acquired Fund Fees and Expenses" are indirectly borne by the Fund and
these fees and expenses are not subject to waiver and are not subject to
the expense limitations of the Fund.

(4) The "Net Expenses" shown for the Fund reflect the effect of contractually
imposed fee waivers and/or expense limitations, in effect until July [ ],
2008, on the Total Annual Fund Operating Expenses of the Fund. In order to
limit the expenses of the Fund's shares, the Fund's adviser has
contractually agreed to reduce its compensation (and, if necessary, to pay
other Fund expenses) to the extent that the Total Annual Fund Operating
Expenses of the Fund (other than Acquired Fund Fees and Expenses, interest,
taxes, and extraordinary expenses, which may include typically
non-recurring expenses such as, for example, organizational expenses,
litigation expenses, and shareholder meeting expenses) allocable to each
share class of the Fund exceed the following annual rates (based on the
average daily net assets attributable to each of the Fund's share classes
taken separately): A Shares: [__]%; Investor Shares [__]%; and R Shares:
[__]%. The fee waivers and/or expense limitations for the Fund may only be
terminated during their term by the Board of Trustees.

(5) The "Net Expenses" shown in the table includes any expenses incurred
indirectly by the Fund as a result of its investments in one or more funds,
including ETFs and money market funds, as applicable.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in a share class of the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment earns a 5% return each
year and that the Fund's operating expenses for each year are the same as the
Fund's Total Annual Fund Operating Expenses shown above (except that, in the
first year, the operating expenses are the same as the Fund's Net Expenses shown
above). Your actual costs may be higher or lower. Based on these assumptions,
your costs would be:

1 YEAR 3 YEARS
------ -------
A SHARES $[_] $[_]
INVESTOR SHARES $[_] $[_]
R SHARES $[_] $[_]

PRINCIPAL RISKS OF INVESTING IN THE FUND

The Fund may not achieve its objective. The following provides more detail about
certain of the Fund's principal risks and the circumstances which could
adversely affect the value of the Fund's shares or its investment return. Unless
a strategy or policy described below is specifically prohibited by the Fund's
investment restrictions as set forth in this Prospectus or under "Investment
Restrictions" in the Fund's SAI, or by applicable law, the Fund may engage in
each of the practices described below.

o EQUITY SECURITIES RISK. The principal risks of investing in the Fund
include the risk that the value of the equity securities in the
portfolio will fall, or will not appreciate as anticipated by the
Fund's adviser or sub-adviser, due to factors that adversely affect
equities markets generally or particular companies in the portfolio.
Common stocks represent an equity or ownership interest in an issuer
and are subject to issuer and market risks that may cause their prices
to fluctuate over time. Preferred stocks represent an equity or
ownership interest in an issuer that typically pays dividends at a
specified rate and that has priority over common stock in the payment
of dividends and in liquidation. If interest rates rise, the fixed
dividend on preferred stocks may be less attractive, causing the price
of preferred stocks to decline. Different types of investments tend to
shift into and out of favor with investors depending on changes in
market and economic conditions.

o CONVERTIBLE SECURITIES RISK. The Fund may invest in convertible
securities, which are corporate debt securities that may be converted
at either a stated price or stated rate into underlying shares of
preferred or common stock, and so subject to the risks of investments
in both debt securities and equity securities. The Fund may also
invest in preferred stocks that are convertible into common stocks,
and so subject to the risks of investments in both preferred and
common stocks. The market value of convertible securities tends to
decline as interest rates increase and, conversely, tends to increase
as interest rates decline. In addition, because of the conversion
feature, the market value of convertible securities tends to vary with
fluctuations in the market value of the underlying preferred and
common stocks and, therefore, also will react to variations in the
general market for equity securities.

o WARRANTS RISK. The Fund may invest in warrants to purchase equity
securities. The price, performance and liquidity of such warrants are
typically linked to the underlying stock.

o FOREIGN INVESTMENT RISK. The Fund may invest in foreign securities.
Investments in foreign securities entail certain risks. There may be a
possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability, and
diplomatic developments that could affect the value of the Fund's
investments in certain foreign countries. In addition, there may be
less information publicly available about a foreign issuer than about
a U.S. issuer, and foreign issuers are not generally subject to
accounting, auditing, and financial reporting standards and practices
comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. Foreign brokerage commissions
and other fees are also generally higher than in the United States.
Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or
in the recovery of the Fund's assets held abroad) and expenses not
present in the settlement of domestic investments.

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

Special tax considerations apply to the Fund's investments in foreign
securities. In determining whether to invest the Fund's assets in debt
securities of foreign issuers, the Fund's adviser or sub-adviser
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
its income available for distribution to shareholders. Certain of
these risks may also apply to some extent to investments in U.S.
companies that are traded in foreign markets, or investments in U.S.
companies that have significant foreign operations.

In addition, the Fund's investments in foreign securities or foreign
currencies may increase or accelerate the Fund's recognition of
ordinary income and may affect the timing or character of the Fund's
distributions.

o FOREIGN CURRENCIES RISK. Since foreign securities normally are
denominated and traded in foreign currencies, the value of the Fund's
assets may be affected favorably or unfavorably by currency exchange
rates, currency exchange control regulations, foreign withholding
taxes, and restrictions or prohibitions on the repatriation of foreign
currencies. The Fund may, but is not required to, buy or sell foreign
securities and options and futures contracts on foreign securities for
hedging purposes in connection with its foreign investments.

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 available for distribution. Officials in foreign
countries may from time to time take actions in respect of their
currencies which could significantly affect the value of the Fund's
assets denominated in those currencies or the liquidity of such
investments. For example, a foreign government may unilaterally
devalue its currency against other currencies, which would typically
have the effect of reducing the U.S. dollar value of investments
denominated in that currency. A foreign government may also limit the
convertibility or repatriation of its currency or assets denominated
in its currency, which would adversely affect the U.S. dollar value
and liquidity of investments denominated in that currency. In
addition, although at times most of the Fund's income may be received
or realized in these currencies, the Fund will be required to compute
and distribute its income in U.S. dollars. As a result, if the
exchange rate for any such currency declines after the Fund's income
has been earned and translated into U.S. dollars but before payment to
shareholders, the Fund could be required to liquidate portfolio
securities to make such distributions. Similarly, if the Fund incurs
an expense in U.S. dollars and the exchange rate declines before the
expense is paid, the Fund would have to convert a greater amount of
U.S. dollars to pay for the expense at that time than it would have
had to convert at the time the Fund incurred the expense. The Fund
may, but is not required to, buy or sell foreign currencies and
options and futures contracts on foreign currencies for hedging
purposes in connection with its foreign investments.

o EMERGING MARKETS SECURITIES RISK. Investing in emerging market
securities poses risks different from, and/or greater than, risks of
investing in domestic securities or in the securities of foreign,
developed countries. These risks include: smaller market
capitalization of securities markets, which may suffer periods of
relative illiquidity; significant price volatility; restrictions on
foreign investment; and possible repatriation of investment income and
capital. In addition, foreign investors may be required to register
the proceeds of sales, and future economic or political crises could
lead to price controls, forced mergers, expropriation or confiscatory
taxation, seizure, nationalization or the creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. dollar, and devaluation may
occur subsequent to investments in these currencies by the Fund.
Inflation and rapid fluctuations in inflation rates have had, and may
continue to have, negative effects on the economies and securities
markets of certain emerging market countries. Although many of the
emerging market securities in which the Fund may invest are traded on
securities exchanges, they may trade in

limited volume, and the exchanges may not provide all of the
conveniences or protections provided by securities exchanges in more
developed markets.

Additional risks of emerging market securities may include: greater
social, economic and political uncertainty and instability; more
substantial governmental involvement in the economy; less governmental
supervision and regulation; unavailability of currency hedging
techniques; companies that are newly organized and small; differences
in auditing and financial reporting standards, which may result in
unavailability of material information about issuers; and less
developed legal systems. In addition, emerging securities markets may
have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or
otherwise make it difficult to engage in such transactions. Settlement
problems may cause the Fund to miss attractive investment
opportunities, hold a portion of its assets in cash pending
investment, or be delayed in disposing of a portfolio security. Such a
delay could result in possible liability to a purchaser of the
security.

o GEOGRAPHIC FOCUS RISK. To the extent that the Fund invests a
substantial amount of its assets in one country or group of countries,
its performance may at times be worse than the performance of other
mutual funds that invest more broadly.

o EQUITY MARKETS RISK. Although stocks may outperform other asset
classes over the long term, their prices tend to fluctuate more
dramatically over the shorter term. These movements may result from
factors affecting individual companies, or from broader influences
like changes in interest rates, market conditions, investor confidence
or announcements of economic, political or financial information.
While potentially offering greater opportunities for capital growth
than larger, more established companies, the stocks of smaller
companies may be particularly volatile, especially during periods of
economic uncertainty. These companies may face less certain growth
prospects, or depend heavily on a limited line of products and
services or the efforts of a small number of key management personnel.

o SMALL AND MID CAP COMPANIES RISK. The Fund may invest in companies
that are smaller and less well-known than larger, more widely held
companies. Micro, small and mid cap companies may offer greater
opportunities for capital appreciation than larger companies, but may
also involve certain special risks. They are more likely than larger
companies to have limited product lines, markets or financial
resources, or to depend on a small, inexperienced management group.
Securities of smaller companies may trade less frequently and in
lesser volume than more widely held securities and their values may
fluctuate more sharply than other securities. They may also trade in
the over-the-counter market or on a regional exchange, or may
otherwise have limited liquidity. These securities may therefore be
more vulnerable to adverse developments than securities of larger
companies, and the Fund may have difficulty establishing or closing
out its securities positions in smaller companies at prevailing market
prices. Also, there may be less publicly available information about
smaller companies or less market interest in their securities as
compared to larger companies, and it may take longer for the prices of
the securities to reflect the full value of their issuers' earnings
potential or assets.

o INITIAL PUBLIC OFFERINGS (IPOs) RISK. The Fund may also purchase
securities of companies in initial public offerings (IPOs), which
frequently are smaller companies. Such securities have no trading
history, and information about these companies may be available for
very limited periods. The prices of securities sold in IPOs also can
be highly volatile. Under certain market conditions, very few
companies, if any, may determine to make initial public offerings of
their securities. At any particular time or from time to time the Fund
may not be able to invest in securities issued in IPOs or invest to
the extent desired, because, for example, only a small portion (if
any) of the securities being offered in an IPO may be made available
to the Fund. The investment performance of the Fund during periods
when they are unable to invest significantly or at all in initial
public offerings may be lower than during periods when the Fund is
able to do so.

o PRIVATE PLACEMENTS AND RESTRICTED SECURITIES. The Fund may invest in
securities that are purchased in private placements. Because there may
be relatively few potential purchasers for such investments,
especially under adverse market or economic conditions or in the event
of

adverse changes in the financial condition of the issuer, the Fund
could find it more difficult to sell such securities when the Fund's
adviser or sub-adviser believes it advisable to do so or may be able
to sell such securities only at prices lower than if such securities
were more widely held. At times, it may also be more difficult to
determine the fair value of such securities for purposes of computing
the Fund's net asset value. The Fund's sale of such investments may
also be restricted under securities laws. In the event that the
Trustees, or persons designated by the Trustees, determine that a
security is "readily marketable" pursuant to these procedures, and the
Fund is not able to sell such security at the price that such persons
anticipate, the Fund's net asset value will decrease.

o DERIVATIVES RISK. Derivatives are financial contracts whose value
depends on, or derives from, the value of an underlying asset,
reference rate, or index. The Fund's use of derivative instruments
involves risks different from, and possibly greater than, the risks
associated with investing directly in securities and other traditional
investments. Derivatives are subject to a number of risks described
elsewhere in this section, such as liquidity risk, interest rate risk,
and credit risk, and the risk that a derivative transaction may not
have the effect the Fund's adviser or sub-adviser anticipated.
Derivatives also involve the risk of mispricing or improper valuation
and the risk that changes in the value of the derivative may not
correlate perfectly with the underlying asset, rate, or index.
Derivative transactions typically involve leverage and may be highly
volatile. Use of derivatives other than for hedging purposes may be
considered speculative, and when the Fund invests in a derivative
instrument it could lose more than the principal amount invested.
Also, suitable derivative transactions may not be available in all
circumstances and there can be no assurance that the Fund will engage
in these transactions to reduce exposure to other risks when that
would be beneficial. Many derivative transactions are entered into
"over the counter" (not on an exchange or contract market); as a
result, the value of such a derivative transaction will depend on the
ability and willingness of the Fund's counterparty to perform its
obligations under the transaction. The Fund may be required to
segregate certain of its assets on the books of its custodian in
respect of derivatives transactions entered into by the Fund. See the
Fund's SAI for more information. Special tax considerations apply to
the Fund's investments in derivatives.

o LIQUIDITY RISK. Liquidity risk exists when particular investments are
difficult to purchase or sell. The Fund's investments in illiquid
securities may reduce the returns of the Fund because it may be unable
to sell the illiquid securities at an advantageous time or price.
Investments in foreign securities, derivatives, or securities with
substantial market and/or credit risk tend to have the greatest
exposure to liquidity risk. Illiquid securities may be highly volatile
and difficult to value.

o REAL ESTATE RISK. The Fund may invest in real estate-linked derivative
instruments and REITs that subject it to risks similar to those
associated with direct ownership of real estate, including losses from
casualty or condemnation, and changes in local and general economic
conditions, supply and demand, interest rates, zoning laws, regulatory
limitations on rents, property taxes and operating expenses. In
addition, an investment in a REIT is subject to additional risks, such
as poor performance by the manager of the REIT, adverse changes to the
tax laws or failure by the REIT to qualify for tax-free pass-through
of income under the Code. In addition, some REITs have limited
diversification because they invest in a limited number of properties,
a narrow geographic area, or a single type of property. Also, the
organizational documents of a REIT may contain provisions that make
changes in control of the REIT difficult and time-consuming. As a
shareholder in a REIT, the Fund, and indirectly the Fund's
shareholders, would bear its ratable share of the REIT's expenses and
would at the same time continue to pay its own fees and expenses.

o MORTGAGE AND ASSET-BACKED SECURITIES RISK. Mortgage-backed securities,
including collateralized mortgage obligations and certain stripped
mortgage-backed securities represent a participation in, or are
secured by, mortgage loans. Asset-backed securities are structured
like mortgage-backed securities, but instead of mortgage loans or
interests in mortgage loans, the underlying assets may include such
items as motor vehicle installment sales or installment loan
contracts, leases of various types of real and personal property and
receivables from credit card agreements.

Traditional debt investments typically pay a fixed rate of interest
until maturity, when the entire principal amount is due. By contrast,
payments on mortgage-backed and many asset-backed investments
typically include both interest and partial payment of principal.
Principal may also be prepaid voluntarily, or as a result of
refinancing or foreclosure. The Fund may have to invest the proceeds
from prepaid investments in other investments with less attractive
terms and yields. As a result, these securities may have less
potential for capital appreciation during periods of declining
interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market value
during periods of rising interest rates. Because the prepayment rate
generally declines as interest rates rise, an increase in interest
rates will likely increase the duration, and thus the volatility, of
mortgage-backed and asset-backed securities. In addition to interest
rate risk (as described below under "Interest Rate Risk"), investments
in mortgage-backed securities composed of subprime mortgages may be
subject to a higher degree of liquidity risk, valuation and credit
risk (as described above under "Liquidity Risk" and below under
"Credit Risk" and "Valuation Risk"). Duration is a measure of the
expected life of a fixed income security that is used to determine the
sensitivity of the security's price to changes in interest rates.
Unlike the maturity of a fixed income security, which measures only
the time until final payment is due, duration takes into account the
time until all payments of interest and principal on a security are
expected to be made, including how these payments are affected by
prepayments and by changes in interest rates.

The ability of an issuer of asset-backed securities to enforce its
security interest in the underlying assets may be limited. Some
mortgage-backed and asset-backed investments receive only the interest
portion ("IOs") or the principal portion ("POs") of payments on the
underlying assets. The yields and values of these investments are
extremely sensitive to changes in interest rates and in the rate of
principal payments on the underlying assets. IOs tend to decrease in
value if interest rates decline and rates of repayment (including
prepayment) on the underlying mortgages or assets increase; it is
possible that the Fund may lose the entire amount of its investment in
an IO due to a decrease in interest rates. Conversely, POs tend to
decrease in value if interest rates rise and rates of repayment
decrease. Moreover, the market for IOs and POs may be volatile and
limited, which may make them difficult for the Fund to buy or sell.

The Fund may gain investment exposure to mortgage-backed and
asset-backed investments by entering into agreements with financial
institutions to buy the investments at a fixed price at a future date.
The Fund may or may not take delivery of the investments at the
termination date of such an agreement, but will nonetheless be exposed
to changes in value of the underlying investments during the term of
the agreement.

o COMMODITY RISK. The Fund's investments in commodity-linked derivative
instruments may subject the Fund to greater volatility than
investments in traditional securities. The value of commodity-linked
derivative instruments may be affected by changes in overall market
movements, commodity index volatility, changes in interest rates, or
factors affecting a particular industry or commodity, such as drought,
floods, weather, livestock disease, embargoes, tariffs, and
international economic, political and regulatory developments. In
order to qualify for the special tax treatment available to regulated
investment companies under the Code, the Fund must derive at least 90%
of its gross income each taxable year from certain specified types of
investments. It is currently unclear which types of commodities-linked
derivatives fall within these specified investment types. As a result,
if the Fund's investment in commodities-linked derivatives

were to exceed a certain threshold, the Fund could fail to qualify for
the special tax treatment available to regulated investment companies
under the Code.

o INTEREST RATE RISK. The values of bonds and other debt instruments
usually rise and fall in response to changes in interest rates.
Declining interest rates generally increase the values of existing
debt instruments, and rising interest rates generally reduce the value
of existing debt instruments. Interest rate risk is generally greater
for investments with longer durations or maturities. Some investments
give the issuer the option to call or redeem an investment before its
maturity date. If an issuer calls or redeems an investment during a
time of declining interest rates, the Fund might have to reinvest the
proceeds in an investment offering a lower yield, and therefore might
not benefit from any increase in value as a result of declining
interest rates.

o CREDIT RISK. The ability, or perceived ability, of the issuer of a
debt security to make timely payments of interest and principal on the
security will affect the value of the security. It is possible that
the ability of an issuer to meet its obligations will decline
substantially during the period when the Fund owns securities of that
issuer, or that the issuer will default on its obligations. An actual
or perceived deterioration in the ability of an issuer to meet its
obligations will likely have an adverse effect on the value of the
issuer's securities.

If a security has been rated by more than one nationally recognized
statistical rating organization the Fund's adviser or sub-adviser will
consider the highest rating for the purposes of determining whether
the security is of "investment grade." The Fund will not necessarily
dispose of a security held by it if its rating falls below investment
grade, although the Fund's adviser or sub-adviser will consider
whether the security continues to be an appropriate investment for the
Fund. The Fund considers whether a security is of "investment grade"
only at the time of purchase. The Fund may invest in securities which
will not be rated by a nationally recognized statistical rating
organization (such as Moody's Investor Service, Inc., Standard &
Poor's Rating Service, or Fitch Investors Service, Inc.), and their
credit quality will be determined by the adviser or sub-adviser.

Credit risk is generally greater for investments issued at less than
their face values and required to make interest payments only at
maturity rather than at intervals during the life of the investment.
Credit rating agencies base their ratings largely on the issuer's
historical financial condition and the rating agencies' investment
analysis at the time of rating. The rating assigned to any particular
investment does not necessarily reflect the issuer's current financial
condition, and does not reflect an assessment of an investment's
volatility or liquidity. Although investment grade investments
generally have lower credit risk than investments rated below
investment grade, they may share some of the risks of lower-rated
investments, including the possibility that the issuers may be unable
to make timely payments of interest and principal and thus default.

o INFLATION/DEFLATION RISK. Inflation risk is the risk that the Fund's
assets or income from the Fund's investments may be worth less in the
future as inflation decreases the value of money. As inflation
increases, the real value of the Fund's portfolio could decline.
Deflation risk is the risk that prices throughout the economy may
decline over time - the opposite of inflation. Deflation may have an
adverse effect on the creditworthiness of issuers and may make issuer
default more likely, which may result in a decline in the value of the
Fund's portfolio.

o U.S. GOVERNMENT SECURITIES RISK. U.S. Government securities include a
variety of securities that differ in their interest rates, maturities,
and dates of issue. While securities issued or guaranteed by some
agencies or instrumentalities of the U.S. Government (such as the
Government National Mortgage Association) are supported by the full
faith and credit of the United States, securities issued or guaranteed
by certain other agencies or instrumentalities of the U.S. Government
(such as Federal Home Loan Banks) are supported by the right of the

issuer to borrow from the U.S. Government, and securities issued or
guaranteed by certain other agencies and instrumentalities of the U.S.
Government (such as Fannie Mae and Freddie Mac) are supported only by
the credit of the issuer itself. Investments in these securities are
also subject to interest rate risk (as described above under "Interest
Rate Risk"), prepayment risk (as described above under "Mortgage and
Asset-Backed Securities Risk"), extension risk (as described above
under "Extension Risk"), and the risk that the value of the securities
will fluctuate in response to political, market, or economic
developments.

o HIGH-YIELD/JUNK BONDS RISK. The lower ratings of certain securities
held by the Fund 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. The inability (or perceived inability) of issuers to make
timely payment of interest and principal would likely make the values
of securities held by the Fund more volatile and could limit the
Fund's ability to sell its securities at prices approximating the
values the Fund has placed on such securities. In the absence of a
liquid trading market for securities held by them, the Fund at times
may be unable to establish the fair value of such securities. To the
extent the Fund invests in securities in the lower rating categories,
the achievement of the Fund's goals is more dependent on the Fund
adviser's or sub-adviser's investment analysis than would be the case
if the Fund was investing in securities in the higher rating
categories.

o INVESTMENTS IN POOLED VEHICLES RISK. The Fund may invest in other
investment companies or pooled vehicles, including closed-end funds,
trusts, and ETFs, that are advised by the Fund's adviser or
sub-adviser or its affiliates or by unaffiliated parties, to the
extent permitted by applicable law. When investing in a closed-end
investment company, the Fund may pay a premium above such investment
company's net asset value per share and when the shares are sold, the
price received by the Fund may be at a discount to net asset value. As
a shareholder in an investment company, the Fund, and indirectly that
Fund's shareholders, would bear its ratable share of the investment
company's expenses, including advisory and administrative fees, and
would at the same time continue to pay its own fees and expenses. ETFs
issue redeemable securities, but because these securities may only be
redeemed in kind in significant amounts investors generally buy and
sell shares in transactions on securities exchanges.

o ALLOCATION RISK. The Fund's investment performance may depend, at
least in part, on how its assets are allocated and reallocated between
the underlying funds in which it invests according to the Fund's asset
allocation targets and ranges. The Fund's adviser and sub-adviser
attempt to identify allocations that will provide consistent, quality
performance for the Fund, but there is no guarantee that such
allocation techniques will produce the desired results. It is possible
that the Fund's adviser or sub-adviser will focus on an underlying
fund that performs poorly or underperforms other underlying funds
under various market conditions. You could lose money on your
investment in the Fund as a result of these allocation decisions.

o UNDERLYING FUND RISK. The value of your investment in the Fund is
related to the investment performance of the underlying funds in which
it invests. Therefore, the principal risks of investing in the Fund
are closely related to the principal risks associated with these funds
and their investments. Because the Fund's allocation among different
underlying funds and investments directly in securities will vary,
your investment may be subject to any and all of these risks at
different times and to different degrees. There is no guarantee that
the underlying funds will achieve their investment objectives, and the
underlying funds' performance may be lower than the performance of the
asset class which they were selected to represent. The underlying
funds may change their investment objective or policies without the
approval of the Fund. If an underlying fund were to change its
investment objective or policies, the Fund may be forced to withdraw
its investment from the underlying fund at a disadvantageous time.

o AFFILIATED FUND RISK. In managing the Fund, the Fund's adviser or
sub-adviser will have authority to select and substitute underlying
funds. The Fund's adviser or sub-adviser may be subject to potential
conflicts of interest in selecting underlying funds because the fees
paid to it by some underlying funds are higher than the fees paid by
other underlying funds. However, the

Fund's adviser or sub-adviser is a fiduciary to the Fund and is
obligated to act in its best interest when selecting underlying funds.

o DEPOSITARY RECEIPTS RISK. The Fund may invest in American Depositary
Receipts ("ADRs"), as well as German Depositary Receipts ("GDRs"),
European Depositary Receipts ("EDRs") or other similar securities
representing ownership of foreign securities. Depositary Receipts
generally evidence an ownership interest in a corresponding foreign
security on deposit with a financial institution. Investments in
non-U.S. issuers through Depository Receipts and similar instruments
may involve certain risks not applicable to investing in U.S. issuers,
including changes in currency rates, application of local tax laws,
changes in governmental administration or economic or monetary policy
or changed circumstances in dealings between nations. Costs may be
incurred in connection with conversions between various currencies.
The Fund may invest in both sponsored and unsponsored Depositary
Receipts. Unsponsored Depositary Receipts are organized independently
and without the cooperation of the issuer of the underlying
securities. As a result, available information concerning the issuers
may not be as current for unsponsored Depositary Receipts and the
prices of unsponsored Depositary Receipts may be more volatile than if
such instruments were sponsored by the issuer.

o MANAGEMENT RISK. Because the Fund is actively managed, the Fund's
investment return depends on the ability of its adviser or sub-adviser
to manage its portfolio successfully. The Fund's adviser or
sub-adviser and its investment team will apply investment techniques
and risk analyses in making investment decisions for the Fund, but
there can be no guarantee that these will produce the desired results.
The Fund's ability to achieve its investment objective depends upon
the adviser's or sub-adviser's ability to select the best mix of
underlying funds and securities and strategic asset allocation. There
is a risk that the Fund's adviser or sub-adviser may be incorrect in
its analysis of economic trends, countries, industries, companies, and
the relative attractiveness of asset classes or other matters.

o FREQUENT TRADING / PORTFOLIO TURNOVER RISK. The length of time the
Fund has held a particular security is not generally a consideration
in investment decisions. The investment policies of the Fund may lead
to frequent changes in the Fund's investments, particularly in periods
of volatile market movements, in order to take advantage of what the
Fund's adviser or sub-adviser believes to be temporary disparities in
normal yield relationships between securities. A change in the
securities held by the Fund is known as "portfolio turnover."
Portfolio turnover generally involves some expense to the Fund,
including bid-asked spreads, dealer mark-ups and other transaction
costs on the sale of securities and reinvestments in other securities,
and may result in the realization of taxable capital gains (including
short-term gains, which are generally taxed to shareholders at
ordinary income rates). The trading costs and tax effects associated
with portfolio turnover may adversely affect the Fund's performance.
During periods when the Fund experiences high portfolio turnover
rates, these effects are likely to be more pronounced. Consult your
tax advisor regarding the effect the Fund's portfolio turnover rate
could have on your tax situation.

o VALUATION RISK. Due to the nature of some Fund investments and the
market environment, a portion of a Fund's assets may be valued by
Schroders at fair value pursuant to guidelines established by the
Board of Trustees. The Fund's assets may be valued using prices
provided by a pricing service or, alternatively, a broker-dealer or
other market intermediary (sometimes just one broker-dealer or other
market intermediary) when other reliable pricing sources may not be
available. There can be no assurance that such prices accurately
reflect the price the Fund would receive upon sale of a security, and
to the extent the Fund sells a security at a price lower than the
price it has been using to value the security, its net asset value
will be adversely affected.

o TAXABLE MUNICIPAL SECURITIES RISK. The Fund may invest in taxable
municipal securities. These would typically include securities issued
by states, public authorities, or political subdivisions but which
fail to meet the requirements of the federal tax code necessary for
interest payments made on the securities to be exempt from federal
income tax. These may include, for example, securities issued to
finance unfunded pension liabilities or issued to finance governmental
facilities where the nature or management of the facility is such that
the securities may not be

issued on a tax-exempt basis. The Fund may also hold a portion of
their assets in securities issued by the U.S. Treasury and they may
hold taxable money market securities or cash equivalents for liquidity
or pending investment in tax-exempt securities.

o VOLATILITY OF THE MUNICIPAL BOND MARKET RISK. The values of municipal
bonds may rise or fall in response to a number of factors affecting
their issuers specifically or the municipal bond market generally. For
example, political or fiscal events affecting the issuers of municipal
bonds, as well as uncertainties in the municipal bond market generally
related to taxation, legislative changes, or the enforceability of
rights of municipal bond holders, can significantly affect the values
of municipal bonds. Because many municipal bonds are issued to finance
similar projects, such as those relating to education, health care,
housing, transportation, and utilities, conditions in those sectors
can affect the overall municipal bond market.

o STATE AND ISSUER RISK. The Fund may invest without limitation in the
debt of issuers, including conduit issuers, located in the same state.
Investing in bonds issued by a state, state agencies, or political
subdivisions in the same state may make the Fund more vulnerable to
that state's economy and to issues affecting its municipal bond
issuers, such as possible restrictions on additional borrowings by
issuers in that state or economic or legal limitations on an issuer's
ability to meet payment obligations. The Fund may also invest in a
sector of the municipal bond market, including education, health care,
housing, transportation or utilities sectors. Geographic or sector
concentration may cause the value of the Fund's shares to change more
than the values of shares of funds that invest in a greater variety of
investments.

Municipal bonds backed by revenues from facilities in a particular
sector are subject to the risks of investment in that sector
generally. For example, investments in many of the sectors in which
the Fund may invest are subject to the risks of changes in government
regulation, fluctuations in revenues, including federal or state
assistance, competition, changes in labor relations and costs, and
difficulties in raising additional capital under a variety of
circumstances. Revenue bonds issued in the education sector can be
significantly affected also by levels of endowment, charitable giving,
costs of attendance, increases or decreases in governmental assistance
or other revenues, and, in the case of public schools, limits on the
ability of governmental entities to increase taxes or generate other
revenues, including fees, to pay for educational expenses. Investments
in a health care sector are subject to changes in patient income, the
availability of public or private insurance reimbursement for
procedures and drug costs, the timing of such payments, the quality of
management and the availability of qualified professional staff, and
demographics. The housing sector can be significantly affected by
changes in interest rates for single-family home buyers, governmental
regulations imposed on developers of low and moderate cost
multi-family units, as well as costs of land, construction and
maintenance costs, neighborhood opposition to mixed-income
developments, and the level of government incentives, including
subsidies and tax credits. Investments in a transportation sector can
be affected significantly by the cost of developing, maintaining,
updating and replacing infrastructure and other hard assets, levels of
federal and state assistance, quality of service, and the ability to
raise fees without losing ridership. Investments in a utilities sector
can be significantly affected by the ability to locate a reliable and
reasonable source of the resource to be provided, infrastructure
development and maintenance, the ability to pass on costs of services
and resources to customers, mandatory or voluntary natural resource
conservation efforts, alternatives by customers to the use of public
utilities, and the effects of deregulation by many states. The
foregoing factors are illustrative in nature. This discussion of the
risk of concentration in sectors is not, and is not intended to be,
comprehensive or exhaustive. The Fund may at times invest a
substantial portion of its assets in securities of a particular issue,
and to that extent, the Fund's investment performance and net asset
value will be adversely affected by decreases in the value of such
issue more than if the Fund invested in a larger range of securities.

NON-PRINCIPAL INVESTMENT STRATEGIES AND TECHNIQUES

In addition to the principal investment strategies described in the
Principal Investment Strategies section above, the Fund may at times, but is not
required to, use the strategies and techniques described below, which involve
certain special risks. This Prospectus does not attempt to disclose all of the
various investment techniques and types of securities that the Fund's adviser or
sub-adviser might use in managing the Fund. As in any mutual fund, investors
must rely on the professional investment judgment and skill of the Fund's
adviser or sub-adviser.

o SHORT SALES. The Fund may sell a security short when the Fund's
adviser or sub-adviser anticipates that the price of the security will
decline. The Fund may make a profit or incur a loss depending on
whether the market price of the security decreases or increases
between the date of the short sale and the date on which the Fund
"closes" the short position. A short position will result in a loss if
the market price of the security in question increases between the
date when the Fund enters into the short position and the date when
the Fund closes the short position. Such a loss could theoretically be
unlimited in a case where such Fund is unable, for whatever reason, to
close out its short position. In addition, short positions may result
in a loss if a portfolio strategy of which the short position is a
part is otherwise unsuccessful.

o WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS.
The Fund may purchase securities on a when-issued, delayed delivery,
or forward commitment basis. These transactions involve a commitment
by the Fund to purchase a security for a predetermined price or yield,
with payments and delivery taking place more than seven days in the
future, or after a period longer than the customary settlement period
for that type of security. These transactions may increase the overall
investment exposure for the Fund and involve a risk of loss if the
value of the securities declines prior to the settlement date.

o SECURITIES LOANS AND REPURCHASE AGREEMENTS. The Fund may lend
portfolio securities to broker-dealers, and may enter into repurchase
agreements. 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 enter into securities loans
and repurchase agreements as a non-principal investment strategy, as a
way to recognize additional current income on securities that it owns.

o TEMPORARY DEFENSIVE STRATEGIES. At times, the Fund's adviser or
sub-adviser may judge that conditions in the securities markets make
pursuing the Fund's investment strategy inconsistent with the best
interests of its shareholders. At such times, the Fund's adviser or
sub-adviser may, but is not required to, take temporary "defensive"
positions that are inconsistent with the Fund's principal investment
strategies in attempting to respond to adverse market, economic,
political, or other conditions. In implementing these defensive
strategies, the Fund would invest in investment grade fixed income
securities, cash or money market instruments to any extent the Fund's
adviser or sub-adviser considers consistent with such defensive
strategies. It is impossible to predict when, or for how long, the
Fund would use these alternate strategies. One risk of taking such
temporary defensive positions is that the Fund may not achieve its
investment objective.

o PRICING. At times market conditions might make it hard to value some
investments. If the Fund has valued securities it holds too high, you
may end up paying too much for the Fund's shares when you buy into the
Fund. If the Fund underestimates the price of its portfolio
securities, you may not receive the full market value for your Fund
shares when you sell. To the extent the Fund relies on a pricing
service to value some or all of its portfolio securities, it is
possible that the pricing information provided by the service will not
reflect the actual price the Fund would receive upon a sale of the
security.

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

o PERCENTAGE INVESTMENT LIMITATIONS. Unless otherwise noted, all
percentage limitations on Fund investments will apply at the time of
investment, An investment by the Fund would not be considered to
violate these limitations unless an excess or deficiency were to occur
or exist immediately after and as a result of an investment.

MANAGEMENT OF THE FUND

The Trust is governed by a Board of Trustees. The Board of Trustees of the Trust
has retained Schroders to serve as the Fund's adviser. Subject to the control of
the applicable Board of Trustees, Schroders also manages the Fund's other
affairs and business.

SIMNA Ltd., an affiliate of Schroders, serves as sub-adviser responsible for
portfolio management of the Fund, including the allocation of the Fund's
investments among asset classes.

Schroders (itself and its predecessors) has been an investment manager since
1962, and serves as investment adviser to the Fund and as investment adviser to
other mutual funds and a broad range of institutional investors. Schroders plc,
Schroders' ultimate parent, is a global asset management company with
approximately $259.5 billion under management as of March 31, 2007. Schroders
and its affiliates have clients that are major financial institutions including
banks and insurance companies, public and private pension funds, endowments and
foundations, high net worth individuals, financial intermediaries and retail
investors. Schroders plc has one of the largest networks of offices of any
dedicated asset management company and over 300 portfolio managers and analysts
covering the world's investment markets.

o MANAGEMENT FEES. The Fund expects to pay management fees for
investment management services to Schroders at the annual rate (based
on the Fund's average daily net assets) of [_]%. As compensation for
SIMNA Ltd.'s services as sub-adviser, Schroders pays to SIMNA Ltd.
[fifty] percent of the investment advisory fees Schroders receives
from the Fund.

o EXPENSE LIMITATIONS AND WAIVERS. In order to limit the expenses of the
Fund, Schroders has contractually agreed to reduce its compensation
(and, if necessary, to pay other Fund expenses) until July [______],
2008 to the extent that the Total Annual Fund Operating Expenses of
the Fund (other than Acquired Fund Fees and Expenses, interest, taxes,
and extraordinary expenses, which may include typically non-recurring
expenses such as, for example, organizational expenses, litigation
expenses, and shareholder meeting expenses) allocable to each share
class of the Fund exceed the following annual rates (based on the
average daily net assets attributable to each of the Fund's share
classes taken separately): A Shares: [_]%; Investor Shares [_]%; and R
Shares: [_]%.

o PORTFOLIO MANAGEMENT. The following portfolio managers at Schroders
and SIMNA Ltd. have primary responsibility for making investment
decisions for the Fund. All investment decisions are made by a team of
investment professionals at SIMNA Ltd. with the portfolio managers
listed in the table below having primary responsibility for making
investment decisions for the Fund. Each portfolio manager's recent
professional experience is also shown. The Fund's SAI provides
additional information about each portfolio manager's compensation,
other accounts managed by the portfolio managers, and each portfolio
manager's ownership of securities in the Fund.

NAME TITLE SINCE RECENT PROFESSIONAL EXPERIENCE
-------------------- ------------------- --------- -----------------------------------------------

Curt Custard, CFA Head of Multi-Asset Inception Mr. Custard is Head of Multi-Asset Solutions of
Solutions Schroders. He has been an employee of Schroders
since 2004. Formerly, Director/CIO of Multi
Asset Products at Dresdner RCM Global Investors
from 2001 to 2004.

Andreas Koester, CFA Head of Multi-Asset Inception Mr. Koester is Head of Multi-Asset Solutions,
Solutions, Europe Europe of Schroders. He has been an employee of
Schroders since 2005. Formerly, Head of Asset
Allocation and Balanced Funds and Senior
Portfolio Manager of AXA Investment Managers
from 2001 to 2005.

HOW THE FUND'S SHARES ARE PRICED

The Fund calculates the net asset value of each of its classes of shares by
dividing the total value of the assets attributable to that class, less its
liabilities attributable to that class, by the number of shares of that class
that are outstanding. The Fund values its shares as of the close of trading on
the New York Stock Exchange (the "Exchange") (normally 4:00 p.m., Eastern Time)
each day the Exchange is open. The Trust expects that days, other than weekend
days, when the Exchange will not be open are New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.

Securities for which market quotations are readily available are valued at
prices which, in the opinion of Schroders, most nearly represent the market
values of such securities. Securities for which market values are not readily
available, or for which the Fund's adviser or sub-adviser believes the market
value is unreliable (including, for example, certain foreign securities, thinly
traded securities, initial public offerings, or when there is a particular event
that may affect the value of a security), are valued by Schroders at their fair
values pursuant to guidelines established by the Board of Trustees, and under
the ultimate supervision of the Board of Trustees. For instance, a pricing
service may recommend a fair value based generally on prices of comparable
securities. Other securities, such as various types of options (as described
further below), are valued at fair value on the basis of valuations furnished by
broker-dealers or other market intermediaries. It is possible that fair value
prices will be used by the Fund to a significant extent. The value determined
for an investment using the Fund's fair value guidelines may differ from recent
market prices for the investment.

If the Fund's assets are invested in one or more open-end investment management
companies that are registered under the 1940 Act, the Fund's net asset value is
calculated based upon the value of the securities held directly by the Fund and
the net asset values of the registered open-end investment management companies
in which the Fund invests, and the prospectuses for these companies explain the
circumstances under which these companies will use fair value pricing.

Unlisted securities for which market quotations are readily available generally
are valued at the most recently reported sale prices on any day or, in the
absence of a reported sale price, at mid-market prices. Options and futures
contracts traded on a securities exchange or board of trade generally are valued
at the last reported sales price or, in the absence of a sale, at the closing
mid-market price on the principal exchange where they are traded. Options and
futures not traded on a securities exchange or board of trade for which
over-the-counter market quotations are readily available are generally valued at
the most recently reported mid-market price. Credit default and interest rate
swaps are valued at the estimate of the mid-market price, together with other
supporting information. Options on indices or exchange-traded fund (ETF) shares
are valued at the closing mid-market price. If such prices are not available,
unlisted securities and derivatives are valued by Schroders at their fair values
based on quotations from dealers, and if such quotations are not available,
based on factors in the markets where such securities and derivatives trade,
such as security and bond prices, interest rates, and currency exchange rates.

The Fund may invest in foreign securities that are primarily listed on foreign
exchanges that trade on weekends and other days when the Fund does not price its
shares. As a result, the value of the Fund's portfolio securities may change on
days when the price of the Fund's shares is not calculated. The price of the
Fund's shares will reflect any such changes when the price of the Fund's shares
is next calculated, which is the next day the Exchange is open. The Fund may use
fair value pricing more frequently for securities primarily traded in non-U.S.
markets because, among other things, most foreign markets close well before the
Fund values its securities. The earlier close of these foreign markets gives
rise to the possibility that significant events, including broad market moves,
may have occurred in the interim. The

Fund's investments may be priced based on fair values provided by a third party
fair valuation vendor, based on certain factors and methodologies applied by
such vendor, in the event that there is movement in the U.S. market that exceeds
a specific threshold established by the Schroders' Fair Value Committee in
consultation with the Trustees. Short-term investments that will mature within
60 days are valued by Schroders using amortized cost pursuant to procedures
adopted by the Board of Trustees. The net asset value of each of the Fund's
classes of shares may differ from each other due to differences in the expenses
of each of the share classes.

TYPES OF SHARES AVAILABLE

A Shares, Investor Shares and R Shares are offered in this Prospectus. For each
class, expenses and sales loads vary. There are two types of expenses related to
mutual funds: expenses you pay directly (sales load) and expenses that are
deducted from Fund assets.

Expenses you pay directly. There is a one-time charge that you may pay upon
either purchase or sale of A Shares of the Fund. At purchase, it is called an
"initial sales load;" at sale, a "deferred sales load." These charges provide
compensation to Schroder Fund Advisors Inc. ("SFA"), the Trust's distributor, in
connection with the sale of the Fund's shares to you. They do not cover any fee
your broker or agent may change you for helping you buy shares in the Fund.

Expenses you pay through the Fund. The costs of managing and administering the
Fund are spread among shareholders of each class of shares. These operating
costs cover such things as investment management, distribution (Rule 12b-1 fees)
and shareholder servicing, custody, auditing, administrative and transfer agency
expenses, and fees and expenses of Trustees.

Distribution Arrangements and Rule 12b-1 fees. To compensate SFA for the
services it provides and for the expenses it bears in connection with the
distribution of Fund shares, the A Shares and R Shares of the Fund make payments
to SFA under a distribution plan (the "Distribution Plan") adopted pursuant to
12b-1 under the 1940 Act. The Distribution Plan is a compensation plan that
provides for payments at annual rates (based on average daily net assets) of
[_]% on A Shares and [_] % on R Shares. Because Rule 12b-1 fees are paid out of
the assets of the Fund's A Shares and R Shares on an ongoing basis, they will
increase the cost of your investment and may cost you more than paying other
types of sales loads. For example, the higher Rule 12b-1 fees for R Shares may
cost you more over time than paying the initial sales load for A Shares. All
shareholders of A Shares and R Shares share in the expense of Rule 12b-1 fees
paid by the Fund; however, because these shareholders hold their shares through
varying arrangements (for example, directly or through financial
intermediaries), they may not share equally in the benefits of the Distribution
Plan.

Choosing a Share Class. You may choose from up to three share classes when you
purchase the Fund: A Shares, Investor Shares, or R Shares, although R Shares are
available only to certain institutional investors or employee benefit plans or
employer-sponsored retirement plans, such as 401(k) plans. The different share
classes have different expense structures and eligibility requirements. You
should choose the cost structure that best meets your needs for which you are
eligible. Some factors to consider are the amount you plan to invest, the time
period before you expect to sell your shares, and whether you might invest more
money in the Fund in the future.

When you buy A Shares, the initial sales load is deducted from the amount you
invest, unless you qualify for an initial sales load waiver (which could make
you subject to a contingent deferred sales load in some cases). This means that
less money will be invested in the Fund immediately. Investor Shares and R
Shares do not have initial sales loads, but R Shares have higher ongoing
operating expenses than do A Shares.

The chart below summarizes the features of the different share classes. This
chart is only a general summary, and you should read the description of the
Fund's expenses in the "Fees and Expenses" section of this Prospectus. You
should also consider the effects of any available sales load waivers.

MAXIMUM
MINIMUM MAXIMUM MAXIMUM INITIAL CONTINGENT ANNUAL
INITIAL/SUBSEQUENT PURCHASE SALES CHARGE DEFERRED SALES 12b-1
PURCHASE AMOUNT AMOUNT (LOAD) LOAD(1) FEE
------------------ -------- --------------- -------------- ------

A SHARES [_] [None] [_] (2) [None](3) [_]%
INVESTOR SHARES $250,000/$1,000(4) None None None None
R SHARES [_] [None] None None [_]%

(1) The contingent deferred sales load is imposed on the original purchase
price of the shares or the current value of the shares you are selling,
whichever is less. Reinvested dividends and capital gains, and amounts
attributable to capital appreciation of your shares, are not subject to the
contingent deferred sales load.

(2) As discussed below, the initial sales load with respect to A Shares may be
waived in certain circumstances.

(3) A contingent deferred sales load of [1.00%] applies if A Share purchases of
$1 million or more are sold within [18 months] of purchase, subject to
waivers described in the SAI. Certain distributions will not be subject to
the contingent deferred sales load, such as the return of excess
contributions, loans, and required minimum distributions under the Code.
Please see the SAI for details.

(4) A $100 minimum subsequent purchase amount applies for automatic investment
plans.

The Trust may, in its sole discretion, waive the minimum initial or subsequent
investment amounts for share purchases by specific investors or types of
investors, including, without limitation: employee benefit plans,
employer-sponsored retirement plans, an employee of Schroders, any of its
affiliates or a financial intermediary authorized to sell shares of the Fund, or
such employee's spouse or life partner, or children or step-children age 21 or
younger; investment advisory clients of Schroders; and current or former
Trustees. For share purchases made through certain fund networks or other
financial intermediaries, the investment minimums associated with the policies
and programs of the fund network or financial intermediary will apply.

The Trust may suspend the offering of Fund shares for any period of time. The
Trust may change or waive any investment minimum from time to time.

A SHARES. When you buy A Shares, you pay an initial sales load at the time of
your investment, which is included in the offering price. This fee is deducted
from the amount you invest, and the remainder of your purchase price is used to
buy shares in the Fund. The initial sales load varies depending upon the size of
your purchase, as set forth below. For investors investing through a financial
intermediary, it is the responsibility of the financial intermediary to ensure
that the investor obtains the proper "breakpoint" discount. You may be eligible
to have the initial sales load waived under certain circumstances. You may be
subject to a contingent deferred sales load if you redeem your A Shares within
[18 months] of purchase. Please see the table below and "Information about
contingent deferred sales loads" below for details. In addition, A Shares are
subject to a 12b-1 fee. The 12b-1 fee associated with A Shares is lower than the
12b-1 fees associated with R Shares.

SALES LOAD AS A % OF SALES LOAD AS A % OF NET
AMOUNT OF PURCHASE PAYMENT OFFERING PRICE AMOUNT INVESTED
-------------------------- -------------------- ------------------------
Less than $50,000 [ ]% [ ]%
$50,000 to $99,999 [ ]% [ ]%
$100,000 to $249,999 [ ]% [ ]%
$250,000 to $499,999 [ ]% [ ]%
$500,000 to $749,999 [ ]% [ ]%
$750,000 to $999,999 [ ]% [ ]%
$1,000,000 or more(1) [ ]% [ ]%

(1) If you purchase $1 million worth of shares or more, you will pay no initial
sales load. However, in this case, if you were to sell your shares within
[18] months of purchase, you would pay a contingent deferred sales load of
[1.00]% of the value of the A Shares sold or the total cost of such shares,
whichever is less, subject to waivers described in the SAI.

A Shares may be purchased without initial or contingent deferred sales loads by:
[(i) investment advisory clients of Schroders; (ii) current or former Trustees;
(iii) trustees or custodians of any employee benefit plan or employer-sponsored
retirement plan, IRA, Keogh plan, or trust established for the benefit of an
employee or officer of Schroders and any of its affiliates; (iv) any trust
company or bank trust department exercising discretionary investment authority
and holding unallocated accounts in a fiduciary, agency, custodial, or similar
capacity; and (v) certain financial intermediaries such as broker-dealers,
financial institutions, and registered investment advisers who offer fee-based
"wrap account" programs and employee benefit plans.]

In addition, [an employee benefit plan or employer-sponsored retirement plan is
eligible to purchase A Shares without a sales load if its plan administrator or
dealer of record has entered into an agreement with Schroders or SFA or it
invests at least $1 million in A shares of the Fund]. However, a contingent
deferred sales load will apply for these purchases over $1 million that are
redeemed within [18 months] of purchase. You may also qualify for a reduced
initial sales load through the Rights of Accumulation program and through
investment by a letter of intent.

Rights of accumulation. To reduce your initial sales load on A Shares, you may
combine subsequent A Share purchases with your current A Share holdings. You may
also include shares held by your spouse and minor children. However, you may not
include A Shares that are not subject to a sales load. Specifically, if the
sales loads on A Shares have been waived or the shares were purchased through
the reinvestment of dividends and distributions, these shares may not be
included. Simply notify us, Boston Financial Data Services, the Fund's transfer
agent ("BFDS"), or the registered representative through whom you purchase your
shares that your purchase will qualify for a reduction in the initial sales load
and provide the names and account numbers of the family members whose holdings
are to be included.

In some cases, a financial intermediary may hold its clients' Fund shares in
nominee or street name. If your shares are held through a financial intermediary
and you wish to qualify for this sales load reduction, please contact your
financial intermediary.

Investment by Letter of Intent. An investor who intends to invest over a
13-month period the minimum amount required to reduce the initial sales load on
each intended purchase of A Shares of the Fund may do so by completing the
letter of intent information on the application. The initial sales load for each
purchase will be at the reduced rate that would apply if the full investment
were made at one time. You can include purchases by your spouse and minor
children in order to obtain the sales load discount. However, you cannot include
shares that are not subject to a sales load, such as shares purchased through
the reinvestment of dividends and distributions. A letter of intent is not
available for SIMPLE IRAs or qualified retirement plans administered by [State
Street Bank and Trust Company or ExpertPlan, Inc.] [Shares purchased or held
through an employee benefit plan or employer-sponsored retirement plan do not
count for purposes of determining whether an investor has qualified for a
reduced initial sales load through the use of a letter of intent.]

In order to obtain the sales load discount, you should inform your financial
advisor at the time you purchase shares of the existence of other accounts or
purchases that are eligible to be linked for purposes of calculating the initial
sales charge. The Fund or your financial advisor may ask you for records or
other information about other shares held in your accounts and linked accounts,
including accounts opened with a different financial advisor. Restrictions may
apply to certain accounts and transactions.

If you complete a letter of intent within [90 days] of a prior purchase of the
Fund, that purchase may be included under the letter of intent. In this case, an
appropriate adjustment, if any, will be made for any initial sales load you paid
in connection with the prior purchase, based on the current net asset value.

Completion of a letter of intent does not bind a shareholder to buy the entire
intended investment amount. However, BFDS will escrow shares valued at [5]% of
the intended investment amount to ensure payment

of additional initial sales loads if the intended purchases are not made and the
shareholder fails to pay the additional initial sales loads within [20 days]
after BFDS requests payment.

Information about contingent deferred sales loads. In some instances, as
described above, when you place an order to sell A Shares, a contingent deferred
sales load will be deducted from the proceeds of the sale or you are deemed to
have authorized us to redeem enough additional shares to cover the contingent
deferred sales load. The contingent deferred sales load is imposed on the
original purchase price of the shares or the current value of the shares you are
selling, whichever is less. Reinvested dividends and capital gains and amounts
attributable to capital appreciation of your shares are not subject to a sales
load. Please see the SAI for more information.

Further details about sales loads are available at www.schroderfunds.com and in
the SAI.

INVESTOR SHARES. The Trust, through SFA, sells Investor Shares at their net
asset value without any sales charges or loads, so that the full amount of your
purchase payment is invested in the Fund. Investor Shares of the Fund are
intended for purchase by investors making a minimum initial investment of
$250,000 and purchasing shares directly from the Fund. Unlike A Shares and R
Shares, Investor Shares are not subject to a 12b-1 fee.

R SHARES. R Shares are offered only through employee benefit plans or
employer-sponsored retirement plans (except a SIMPLE IRA, SEP or SARSEP plan).
An "employee benefit plan" or "employer-sponsored retirement plan" means any
plan or arrangement, whether or not it is "qualified" under the Internal Revenue
Code, under which R Shares are purchased by a fiduciary or administrator for the
account of participants who are employees of a single employer or of affiliated
employers. These may include, for example, medical savings accounts, payroll
deduction plans, or similar plans. The Fund accounts must be registered in the
name of the fiduciary or administrator purchasing the shares for the benefit of
participants in the plan.

The procedures for buying, selling, exchanging and transferring other classes of
shares and the special account features available to purchasers or those other
classes of shares described elsewhere in this Prospectus do not apply to R
Shares.

R Shares are subject to a 12b-1 fee ([_] %), which is greater than the 12b-1 fee
associated with A Shares. This means you could pay more in 12b-1 fees over time
than the initial or contingent deferred sales loads you would have paid if you
had purchased A Shares.

HOW TO BUY SHARES

o A SHARES: You may purchase A Shares of the Fund directly from the
Trust through SFA, BFDS or a service organization such as a bank,
trust company, broker-dealer, or other financial organization (a
"Service Organization") having an arrangement with SFA. If you do not
have a service organization, SFA can provide you with a list of
available firms. Your Service Organization is responsible for
forwarding all of the necessary documentation to the Trust, and may
charge you separately for its services.

The purchase, redemption and exchange policies and fees charged by
such Service Organizations may be different than those of the Fund.
For instance, banks, brokers, retirement plans and financial advisers
may charge transaction fees in addition to any fees charged by the
Fund, and may set different minimums or limitations on buying,
exchanging, or redeeming A Shares. Please consult a representative of
your Service Organization for further information.

If the A Shares you purchase will be held in your own name (rather
than the name of your Service Organization), your payment for the
shares must be accompanied by a completed Account Application and
payment by check or wire as described above. Account Applications for
A Shares may be obtained from BFDS, at the address provided above
under "Purchases by Check," from your Service Organization, or by
calling the Schroder Mutual Funds at (800) 464-3108 (from outside the
United States, please call (617) 483-5000 and ask to speak with a
Schroder Mutual Funds representative). Acceptance of your order will
be delayed pending receipt of additional documentation, such as copies
of corporate resolutions and instruments of authority, from
corporations, administrators, executors, personal representatives,
directors, or custodians.

o INVESTOR SHARES: You may purchase Investor Shares of the Fund by
completing the Account Application that accompanies this Prospectus,
and sending payment by check or wire as described below. Acceptance of
your order will be delayed pending receipt of additional
documentation, such as copies of corporate resolutions and instruments
of authority from corporations, administrators, executors, personal
representatives, directors, or custodians. You may also buy and
exchange Investor Shares of the Fund through an authorized broker or
other financial institution that has an agreement with Schroders or
SFA. The purchase and exchange policies and fees charged by such
brokers and other institutions may be different than those of the
Fund. For instance, banks, brokers, retirement plans and financial
advisers may charge transaction fees and may set different investment
minimums or limitations on buying or exchanging Investor Shares.
Please consult a representative of your financial institution for
further information.

o R SHARES: In addition to A Shares and Investor Shares, employee
benefit plans and employer-sponsored retirement plans may purchase R
Shares. Although R Shares may be purchased by a plan administrator
directly from the Trust, specified benefit plans that purchase R
Shares directly from SFA must hold their shares in an omnibus account
at the benefit plan level. Plan participants may not directly purchase
R Shares from SFA. For information on how to buy shares of the Fund
through your employer's retirement plan, including any restrictions
and charges that the plan may impose, please consult your employer.

The Fund sells its shares at their net asset value next determined after the
Fund, BFDS, or an authorized broker or financial institution (as described
below) receives your request in good order (meaning that the request meets the
requirements set out below and in the Account Application that accompanies this
Prospectus, and otherwise meets the requirements implemented from time to time
by the Fund's transfer agent or the Fund). In order for you to receive the
Fund's next determined net asset value, the Fund, BFDS or the authorized broker
or financial institution must receive your order before the close of trading on
the Exchange (normally 4:00 p.m., Eastern Time). The Trust reserves the right to
reject any order to purchase shares of the Fund. The Trust generally expects to
inform any persons that their purchase has been rejected within 24 hours.

Certain brokers or other financial institutions may accept purchase orders for A
Shares, Investor Shares, or R Shares on behalf of the Fund. Such brokers or
financial institutions may designate other intermediaries to accept purchase
orders on behalf of the Fund. For purposes of pricing, the Fund will be deemed
to have received a purchase order when an authorized broker or financial
institution or, if applicable, a broker or financial institution's authorized
designee, receives the order. Agreements between such brokers or financial
institutions and SFA provide that these orders will be priced at the Fund's net
asset value next determined after they are received by the broker or financial
institution or authorized designee. Orders received in good order prior to the
close of the Exchange on any day the Exchange is open for trading will receive
the net asset value next determined as of the end of that day. Orders received
after that time will receive the next day's net asset value. Brokers or other
agents may charge investors a fee for effecting transactions in shares of the
Fund, in addition to any fees the Fund charges.

The Fund does not issue share certificates.

Purchases by check. You may purchase A Shares or Investor Shares by mailing a
check (in U.S. dollars) payable to the Fund. Schroder Mutual Funds will not
accept third-party checks or starter checks. You should direct your check and
your completed Account Application as follows:

REGULAR MAIL OVERNIGHT OR EXPRESS MAIL
Schroder Mutual Funds Boston Financial Data Services, Inc.
P.O. Box 8507 Attn: Schroder Mutual Funds
Boston, MA 02266 66 Brooks Drive
Braintree, MA 02184

For initial purchases, a completed Account Application must accompany your
check.

Purchases by bank wire. If you make your initial investment by wire, a completed
Account Application must precede your order. Upon receipt of the Application,
BFDS will assign you an account number. BFDS will process wire orders received
prior to the close of trading on the Exchange (normally 4:00 p.m., Eastern Time)
on each day the Exchange is open for trading at the net asset value next
determined as of the end of that day. BFDS will process wire orders received
after that time at the net asset value next determined thereafter.

Please call BFDS at (800) 464-3108 to give notice that you will send funds by
wire, and obtain a wire reference number. (From outside the United States,
please call (617) 483-5000 and ask to speak with a Schroder Mutual Funds
representative.) Please be sure to obtain a wire reference number. Instruct your
bank to wire funds with the assigned reference number as follows:

State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
ABA No.: 011000028
Attn: Schroder Mutual Funds
DDA No.: 9904-650-0
FBO: Account Registration
A/C: Mutual Fund Account Number
Name of Fund

BFDS will not process your purchase until it receives the wired funds.

Automatic purchases. You can make regular investments of $100 or more per month
or quarter in A Shares or Investor Shares of the Fund through automatic
deductions from your bank account. Please complete the appropriate section of
the Account Application if you would like to utilize this option. For more
information, please call (800) 464-3108. If you purchase A Shares through a
Service Organization, your firm may also provide automatic purchase options.
Please contact your Service Organization for details.

Purchases in kind. Investors may purchase A Shares or Investor Shares of the
Fund for cash or in exchange for securities, subject to the determination by
Schroders in its discretion that the securities are acceptable. (For purposes of
determining whether securities will be acceptable, Schroders will consider,
among other things, whether they are liquid securities of a type consistent with
the investment objective and policies of the Fund and have a readily
ascertainable value.) If the Fund receives securities from an investor in
exchange for A Shares or Investor Shares of the Fund, the Fund will under some
circumstances have the same tax basis in the securities as the investor had
prior to the exchange (and the Fund's gain for tax purposes would be calculated
with regard to the investor's tax basis), and in such cases the Fund's holding
period in those securities would include the investor's holding period. Any gain
on the sale of securities received in exchange for A Shares or Investor Shares
of the Fund would be subject to distribution as capital gain to all of the
Fund's shareholders. (In some circumstances, receipt of securities from an
investor in exchange for A Shares or Investor Shares of the Fund may be a
taxable

transaction to the investor, in which case the Fund's tax basis in the
securities would reflect the fair market value of the securities on the date of
the exchange, and its holding period in the securities would begin on that
date.) The Fund values securities accepted by Schroders in the same manner as
are the Fund's portfolio securities as of the time of the next determination of
the Fund's net asset value. Although the Fund seeks to determine the fair value
of securities contributed to the Fund, any valuation that does not reflect fair
value may dilute the interests of the purchasing shareholder or the other
shareholders of the Fund. All rights reflected in the market price of accepted
securities at the time of valuation become the property of the Fund and must be
delivered to the Fund upon receipt by the investor. Investors may realize a
taxable gain or loss upon the exchange. Investors interested in purchases
through exchange should telephone Schroders at (800) 464-3108, their Schroders
client representative, or other financial intermediary.

Certain payments by Schroders or its affiliates. SFA, Schroders, or their
affiliates may, at their own expense and out of their own assets, provide
compensation to financial intermediaries in connection with sales of Fund shares
or shareholder servicing. In some instances, they may make this compensation
available only to certain intermediaries who have sold or are expected to sell
significant amounts of shares of the Fund. If you purchase or sell shares
through an intermediary, the intermediary may charge a separate fee for its
services. Consult your intermediary for information.

If correspondence to the shareholder's address of record is returned, then,
unless BFDS determines the shareholder's new address, BFDS will reinvest
dividends and other distributions returned to it in the Fund, and if the
correspondence included checks, the checks will be canceled and re-deposited to
the shareholder's account at then-current net asset value.

HOW TO SELL SHARES

When you may redeem.

o A SHARES: You may sell your A Shares back to the Fund on any day the
Exchange is open either through your Service Organization or directly
to the Fund. If your shares are held in the name of a Service
Organization, you may only sell the shares through that Service
Organization. The Service Organization may charge you a fee for its
services. If you choose to sell your shares directly to the Fund, you
may do so by sending a letter of instruction or stock power form to
Schroder Mutual Funds, or by calling BFDS at (800) 464-3108.
Redemption requests received in good order by Schroder Mutual Funds,
BFDS, your Service Organization or another authorized broker or
financial institution (as described below) prior to the close of the
Exchange on any day the Exchange is open for trading will be priced at
the net asset value next determined as of the end of that day. Orders
received after that time will receive the next day's net asset value.
A redemption request is in good order if it includes the exact name in
which the shares are registered, the investor's account number, and
the number of shares or the dollar amount of shares to be redeemed,
and, for written requests, if it is signed in accordance with the
account registration. A bank, broker-dealer, or certain other
financial institutions must guarantee the signature(s) of all account
holders for any redemption request in excess of $50,000, or for any
amount being sent to an address or bank account that is not registered
on the account. The Stamp 2000 Medallion Guarantee is the only
acceptable form of guarantee. An investor can obtain this signature
guarantee from a commercial bank, savings bank, credit union, or
broker-dealer that participates in one of the Medallion signature
guarantee programs. You may redeem your shares by telephone only if
you elected the telephone redemption privilege option on your Account
Application or otherwise in writing. Telephone redemption proceeds
will be sent only to you at an address on record with the Fund for at
least 30 days. Unless otherwise agreed, you may only exercise the
telephone redemption privilege to redeem shares worth not more than
$50,000. The Trust may require additional documentation from
shareholders that are corporations, partnerships, agents, fiduciaries,
surviving joint owners, those acting through powers of attorney, or
similar delegation.

If you redeem shares through your Service Organization, your Service
Organization is responsible for ensuring that BFDS receives your
redemption request in proper form. If your Service Organization
receives Federal Reserve wires, you may instruct that your redemption
proceeds be forwarded by wire to your account with your Service
Organization; you may also instruct that your redemption proceeds be
forwarded to you by a wire transfer. Please indicate your Service
Organization's or your own complete wiring instructions. Your Service
Organization may charge you separately for this service.

Any contingent deferred sales load will be deducted from the proceeds
of the sale or you are deemed to have authorized the sale of
additional shares to cover the charge.

o INVESTOR SHARES: You may sell your Investor Shares back to the Fund on
any day the Exchange is open by sending a letter of instruction or
stock power form to Schroder Mutual Funds, or by calling BFDS at
(800) 464-3108. Redemption requests received in good order by Schroder
Mutual Funds, BFDS, or an authorized broker or financial institution
(as described below) prior to the close of the Exchange on any day the
Exchange is open for trading will be priced at the net asset value
next determined as of the end of that day. Orders received after that
time will receive the next day's net asset value. A redemption request
is in good order if it includes the exact name in which the shares are
registered, the investor's account number, and the number of shares or
the dollar amount of shares to be redeemed, and, for written requests,
if it is signed in accordance with the account registration. A bank,
broker-dealer, or certain other financial institutions must guarantee
the signature(s) of all account holders for any redemption request in
excess of $50,000, or for any amount being sent to an address or bank
account that is not registered on the account. The Stamp 2000
Medallion Guarantee is the only acceptable form of guarantee. An
investor can obtain this signature guarantee from a commercial bank,
savings bank, credit union, or broker-dealer that participates in one
of the Medallion signature guarantee programs. You may redeem your
shares by telephone only if you elected the telephone redemption
privilege option on your Account Application or otherwise in writing.
Telephone redemption proceeds will be sent only to you at an address
on record with the Fund for at least 30 days. Unless otherwise agreed,
you may only exercise the telephone redemption privilege to redeem
shares worth not more than $50,000. The Trust may require additional
documentation from shareholders that are corporations, partnerships,
agents, fiduciaries, surviving joint owners, those acting through
powers of attorney, or similar delegation.

The Trust will pay you for your redemptions as promptly as possible
and in any event within seven days after the request for redemption is
received in good order. The Trust generally sends payment for shares
on the business day after a request is received. In case of
emergencies, the Trust may suspend redemptions or postpone payment for
more than seven days, as permitted by law. If you paid for your
Investor Shares by check, the Trust will not send you your redemption
proceeds until the check you used to pay for the shares has cleared,
which may take up to 15 calendar days from the purchase date.

You may also redeem and exchange Investor Shares of the Fund through
an authorized broker or other financial institution that has an
agreement with Schroders or SFA. The redemption and exchange policies
and fees charged by such brokers and other institutions may be
different than those of the Fund. For instance, banks, brokers,
retirement plans and financial advisers may charge transaction fees
and may set different investment minimums or limitations on exchanging
or redeeming Investor Shares. Please consult a representative of your
financial institution for further information.

o R SHARES. For information on how to sell R Shares that were purchased
through your employee benefit plan or employer-sponsored retirement
plan, including any restrictions and charges that the plan may impose,
please consult your employer.

Certain brokers or other financial institutions may accept redemption orders for
A Shares or Investor Shares on behalf of the Fund. Such brokers or financial
institutions may designate other intermediaries to accept redemption orders on
behalf of the Fund. For purposes of pricing, the Fund will be deemed to have
received a redemption order when an authorized broker or financial institution
or, if applicable, a

broker or financial institution's authorized designee, receives the order.
Agreements between such brokers or financial institutions and SFA, provide that
these orders will be priced at the Fund's net asset value next determined after
they are received by the broker or financial institution or authorized designee.
Orders received in good order prior to the close of the Exchange on any day the
Exchange is open for trading will receive the net asset value next determined as
of the end of that day. Orders received after that time will receive the next
day's net asset value.

Brokers or other agents may charge investors a fee for effecting transactions in
shares of the Fund, in addition to any fees the Fund charges.

Involuntary redemptions. If, because of your redemptions, your account balance
for the Fund falls below a minimum amount set by the Trustees (presently
$2,000), a Trust may choose to redeem your A Shares or Investor Shares in the
Fund and pay you for them. You will receive at least 30 days' written notice
before the Trust redeems your shares, and you may purchase additional shares of
your share class at any time to avoid a redemption. The Trust may also redeem
shares if you own shares of the Fund above a maximum amount set by the Trustees.
There is currently no maximum, but the Trustees may establish one at any time,
which could apply to both present and future shareholders.

Suspension. The Trust may suspend the right of redemption of the Fund or
postpone payment by the Fund during any period when: (1) trading on the Exchange
is restricted, as determined by the SEC, or the 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.

Redemptions in kind. The Trust does not expect to redeem shares in kind under
normal circumstances. If a Trust redeems your shares in kind, you should expect
to incur brokerage expenses and other transaction costs upon the disposition of
the securities you receive from the Fund. In addition, the price of those
securities may change between the time when you receive the securities and the
time when you are able to dispose of them. The Trust may pay redemption proceeds
in any amount with respect to the Fund in whole or in part by a distribution in
kind of securities held by the Fund in lieu of cash.

General. If you request that your redemption proceeds be sent to you at an
address other than your address of record, or to another party, you must include
a signature guarantee for each signature, by an eligible signature guarantor,
such as a member firm of a national securities exchange or a commercial bank or
trust company located in the United States. If you are a resident of a foreign
country, another type of certification may be required. For more details, please
contact BFDS at (800) 464-3108, your Schroders client representative or your
financial intermediary. The Trust may require corporations, fiduciaries, and
other types of shareholders to supply additional documents which support their
authority to effect a redemption. In an effort to prevent unauthorized or
fraudulent redemption requests by telephone, BFDS will follow reasonable
procedures to confirm that telephone instructions are genuine. BFDS and the
Trust generally will not be liable for any losses due to unauthorized or
fraudulent purchase or redemption requests, but the applicable party or parties
may be liable if they do not follow these procedures.

[Redemption fee. The Fund imposes a 2.00% redemption fee on shares redeemed
(including in connection with an exchange) two months or less from their date of
purchase. The fee is not a sales charge (load); it is paid directly to the Fund.
The purpose of the redemption fee is principally to discourage market timing,
and also to help defray costs incurred by the Fund in connection with short-term
trading by investors in its shares.

To the extent that the redemption fee applies, the price you will receive when
you redeem your shares of the Fund is the net asset value next determined after
receipt of your redemption request in good order, minus the redemption fee. The
Fund permits exceptions to the redemption fee policy for the following
transactions:

o to the extent the exception is requested by a financial
intermediary and the intermediary agrees to administer the
exception uniformly among similarly-affected clients, redemptions
or exchanges by discretionary asset allocation or wrap programs
("wrap programs") that are initiated by the sponsor of the
program as part of a periodic rebalancing, provided that such
rebalancing occurs no more frequently than quarterly, or, if more
frequent, was the result of an extraordinary change in the
management or operation of the wrap program leading to a revised
investment model that is applied across all applicable accounts
in the wrap program;

o to the extent the exception is requested by a financial
intermediary and the intermediary agrees to administer the
exception uniformly among similarly-affected clients, redemptions
or exchanges by a wrap program that are made as a result of a
full withdrawal from the wrap program or as part of a systematic
withdrawal plan;

o to the extent the exception is requested by a financial
intermediary and the intermediary agrees to administer the
exception uniformly among similarly-affected clients, the
following transactions in participant-directed retirement plans:

o where the shares being redeemed were purchased with new
contributions to the plan (e.g., payroll contributions,
employer contributions, and loan repayments);

o redemptions made in connection with taking out a loan
from the plan;

o redemptions in connection with death, disability,
hardship withdrawals, or Qualified Domestic Relations
Orders;

o redemptions made as part of a systematic withdrawal
plan;

o redemptions made by a defined contribution plan in
connection with a termination or restructuring of the
plan;

o redemptions made in connection with a participant's
termination of employment; and

o redemptions made as part of a periodic rebalancing
under an asset allocation model.

o involuntary redemptions, such as those resulting from a
shareholder's failure to maintain a minimum investment in the
Fund;

o redemptions of shares acquired through the reinvestment of
dividends or distributions paid by the Fund;

o redemptions and exchanges effected by other mutual funds (e.g.,
funds of funds) that are sponsored by Schroders or its
affiliates; and

o otherwise as the officers of Schroders or the applicable Trust
may determine is appropriate after consideration of the purpose
of the transaction and the potential impact to the Fund.

The application of the redemption fee and exceptions may vary among
intermediaries, and certain intermediaries may not apply the exceptions listed
above. If you purchase or sell fund shares through an intermediary, you should
contact your intermediary for more information on whether the redemption fee
will be applied to redemptions of your shares.

For purposes of computing the redemption fee, redemptions by a shareholder to
which the fee applies will be deemed to have been made on a first-purchased,
first-redeemed basis.]

EXCHANGES

You can exchange your Investor Shares of the Fund for Investor Shares of other
funds in the Schroder family of funds at any time at their respective net asset
values, provided the fund is accepting additional investments. [You may also
exchange your A Shares of the Fund for Advisor Shares of other funds in the
Schroder family of funds at any time at their respective net asset values,
provided the fund is accepting additional investments.] [An exchange of shares
of the Fund may be subject to a redemption fee of 2.00% as described above under
"Redemption Fee" (such that the exchange would be made at net asset value minus
any redemption fee).] The Trust would treat the exchange as a sale of your
shares, and any gain on the exchange will generally be subject to tax. For a
listing of the Schroder funds available for

exchange and to exchange shares, please call (800) 464-3108. (From outside the
United States, please call (617) 483-5000 and ask to speak with a representative
of the Schroder Mutual Funds.) For information regarding the exchange of R
Shares, please consult your employer. In order to exchange shares by telephone,
you must complete the appropriate section of the Account Application. The Trust
and Schroders reserve the right to change or suspend the exchange privilege at
any time. Schroders would notify shareholders of any such change or suspension.

DIVIDENDS AND DISTRIBUTIONS

The Fund declares dividends from net investment income and distributes these
dividends annually. The Fund distributes any net investment income and any net
realized capital gain at least annually. The Fund makes distributions from net
capital gain after applying any available capital loss carryovers.

Shares begin to earn dividends on the first business day following the day of
purchase. Shares earn dividends through the date of redemption.

YOU CAN CHOOSE FROM FOUR DISTRIBUTION OPTIONS:

o Reinvest all distributions in additional shares of your share class of
the Fund;

o Receive distributions from net investment income in cash while
reinvesting capital gains distributions in additional shares of your
share class of the Fund;

o Receive distributions from net investment income in additional shares
of your share class of the Fund while receiving capital gain
distributions in cash; or

o Receive all distributions in cash.

You can change your distribution option by notifying BFDS in writing. If you do
not select an option when you open your account, all distributions by the Fund
will be reinvested in additional shares of your share class of the Fund. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the period in which the reinvestment occurs.

FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES

Excessive trading can hurt Fund performance, operations, and shareholders. The
Board of Trustees of the Fund has adopted policies and procedures with respect
to frequent purchases and redemptions of Fund shares by Fund shareholders. The
Fund discourages, and does not accommodate, frequent purchases and redemption of
the Fund's shares to the extent Schroders believes that such trading is harmful
to the Fund's shareholders, although the Fund will not necessarily prevent all
frequent trading in its shares. The Fund reserves the right, in its discretion,
to reject any purchase, in whole or in part (including, without limitation,
purchases by persons whose trading activity Schroders believes could be harmful
to the Fund). The Trust or Schroders may also limit the amount or number of
exchanges or reject any purchase by exchange if the Trust or Schroders believes
that the investor in question is engaged in "market timing activities" or
similar activities that may be harmful to the Fund or its shareholders, although
the Trust and Schroders have not established any maximum amount or number of
such exchanges that may occur in any period. The Trust generally expects to
inform any persons that their purchase has been rejected within 24 hours. [In
addition, the Boards of Trustees of the Fund have established a 2.00% redemption
fee for shares of the Fund held for two months or less from their date of
purchase. See "How to Sell Shares - Redemption Fee" for further information.]
The ability of Schroders to monitor trades that are placed through omnibus or
other nominee accounts is limited in those instances in which the broker,
retirement plan administrator, or fee-based program sponsor does not provide
complete information to Schroders regarding underlying beneficial owners of Fund
shares. The Trust or its distributor enters into written agreements with
financial intermediaries who hold omnibus accounts that require the
intermediaries to provide certain information to the Trust regarding
shareholders who hold shares through

such accounts and to restrict or prohibit trading in Fund shares by shareholders
identified by the Trust as having engaged in trades that violate the Trust's
"market timing" policies. The Trust or Schroders may take any steps they
consider appropriate in respect of frequent trading in omnibus accounts,
including seeking additional information from the holder of the omnibus account
or potentially closing the omnibus account (although there can be no assurance
that the Trust or Schroders would do so). Please see the SAI for additional
information on frequent purchases and redemptions of Fund shares. There can be
no assurance that the Fund or Schroders will identify all harmful purchase or
redemption activity, or market timing or similar activities, affecting the Fund,
or that the Fund or Schroders will be successful in limiting or eliminating such
activities.

PAYMENTS TO FINANCIAL INTERMEDIARIES

SFA, Schroders or any of their affiliates, may, from time to time, make payments
to financial intermediaries for sub-administration, sub-transfer agency, or
other shareholder services or distribution, out of their own resources and
without additional cost to a Fund or its shareholders. For A Shares and R
Shares, these payments may be in addition to payments made with 12b-1 fees.
Financial intermediaries are firms that, for compensation, sell shares of mutual
funds, including the Fund, and/or provide certain administrative and account
maintenance services to mutual fund shareholders. These financial intermediaries
may include, among others, brokers, financial planners or advisers, banks, and
insurance companies.

In some cases, a financial intermediary may hold its client's shares of the Fund
in nominee or street name. Financial intermediaries may also provide shareholder
services, which may include, among other things: processing and mailing trade
confirmations, periodic statements, prospectuses, annual and semiannual reports,
shareholder notices, and other SEC-required communications; processing tax data;
issuing and mailing dividend checks to shareholders who have selected cash
distributions; preparing record date shareholder lists for proxy solicitations;
collecting and posting distributions to shareholder accounts; and establishing
and maintaining systematic withdrawals and automated investment plans and
shareholder account registrations.

The compensation paid by SFA, Schroders, or their affiliates to an intermediary
is typically paid continually over time, during the period when the
intermediary's clients hold investments in the Fund. The amount of continuing
compensation paid by SFA, Schroders, or their affiliates to different financial
intermediaries for distribution and/or shareholder services varies. In most
cases, the compensation is paid at an annual rate ranging up to [_]% (0.00% to
[_]%) of the value of the financial intermediary's clients' investments in the
Fund.

SFA or its affiliates, at their own expense and out of their own assets, also
may provide other compensation to financial intermediaries in connection with
conferences, sales, or training programs for their employees, seminars for the
public, advertising or sales campaigns, or other financial
intermediary-sponsored special events. In some instances, the compensation may
be made available only to certain financial intermediaries whose representatives
have sold or are expected to sell significant amounts of shares. Intermediaries
that are registered broker-dealers may not use sales of Fund shares to qualify
for this compensation to the extent prohibited by the laws or rules of any state
or any self-regulatory agency, such as the NASD.

If payments to financial intermediaries by the distributor or adviser for a
particular mutual fund complex exceed payments by other mutual fund complexes,
your financial adviser and the financial intermediary employing him or her may
have an incentive to recommend that fund complex over others. Please speak with
your financial adviser to learn more about the total amounts paid to your
financial adviser and his or her firm by SFA and its affiliates, and by sponsors
of other mutual funds he or she may recommend to you. You should also consult
disclosures made by your financial intermediary at the time of purchase.

TAXES

TAXES ON DIVIDENDS AND DISTRIBUTIONS. For federal income tax purposes,
distributions of investment income (including from municipal bonds, unless the
Fund meets requirements applicable to holdings therein, that it does not expect
to meet) are taxed as ordinary income. Taxes on distributions of capital gains
are determined by how long the Fund owned the investments that generated the
gains, rather than how long you have owned your shares. Distributions of net
capital gains from the sale of investments that the Fund has held for more than
one year and that are properly designated by the Fund as capital gain dividends
will be taxable as long-term capital gains. Distributions of gains from the sale
of investments that the Fund owned for one year or less and gains on the sale of
bonds characterized as a market discount sale will be taxable as ordinary
income. For taxable years beginning before January 1, 2011, distributions of
investment income designated by the Fund as derived from "qualified dividend
income" will be taxed in the hands of individuals at rates applicable to
long-term capital gains, provided holding period and other requirements are met
at both the shareholder and Fund level.

Distributions are taxable to shareholders even if they are paid from income or
gains earned by the Fund before a shareholder's investment (and thus were
included in the price the shareholder paid). Distributions are taxable whether
shareholders receive them in cash or reinvest them in additional shares.

Distributions by the Fund to retirement plans that qualify for tax-exempt
treatment under federal income tax laws will not be taxable. Special tax rules
apply to investments through such plans. You should consult your tax advisor to
determine the suitability of the Fund as an investment through such a plan and
the tax treatment of distributions (including distributions of amounts
attributable to an investment in the Fund) from such a plan.

The Fund's investment in certain debt obligations may cause the Fund to
recognize taxable income in excess of the cash generated by such obligations.
Thus, the Fund could be required at times to liquidate other investments in
order to satisfy its distribution requirements.

In general, dividends (other than capital gain dividends) paid to a shareholder
that is not a "U.S. person" within the meaning of the Internal Revenue Code (a
"foreign person"), are subject to withholding of U.S. federal income tax at a
rate of 30% (or lower applicable treaty rate). However, for taxable years of the
Fund beginning before January 1, 2008, the Fund generally will not be required
to withhold any amounts with respect to distributions of (i) U.S. source
interest income that would not be subject to U.S. federal income tax if earned
directly by an individual foreign person, and (ii) net short-term capital gains
in excess of net long-term capital losses, in each case to the extent such
distributions are properly designated by the Fund.

Long-term capital gain rates applicable to individuals have been temporarily
reduced - in general, to 15% with lower rates applying to taxpayers in the 10%
and 15% rate brackets - for taxable years beginning before January 1, 2011.

TAXES WHEN YOU SELL, REDEEM OR EXCHANGE YOUR SHARES. Any gain resulting from a
redemption, sale or exchange (including an exchange for shares of another fund)
of your shares in the Fund will also generally be subject to federal income tax
at either short-term or long-term capital gain rates depending on how long you
have owned your shares.

FOREIGN TAXES. The Fund's investments in foreign securities may be subject to
foreign withholding or other taxes. In that case, the Fund's return on those
securities would be decreased. Shareholders of the Fund generally will not be
entitled to claim a credit or deduction with respect to foreign taxes. In
addition, investments in foreign securities may increase or accelerate the
Fund's recognition of ordinary income and may affect the timing or amount of the
Fund's distributions.

DERIVATIVES. The Fund's use of derivatives may affect the amount, timing, and
character of distributions to shareholders and, therefore, may increase the
amount of taxes payable by shareholders.

CONSULT YOUR TAX ADVISOR ABOUT OTHER POSSIBLE TAX CONSEQUENCES. This is a
summary of certain U.S. federal income tax consequences of investing in the
Fund. You should consult your tax advisor for more information on your own tax
situation, including possible other federal, state, local and foreign tax
consequences of investing in the Fund.

DISCLOSURES OF FUND PORTFOLIO INFORMATION

Please see the Fund's SAI for a description of the Fund's policies and
procedures regarding the persons to whom the Fund or Schroders may disclose the
Fund's portfolio securities positions, and under which circumstances.

USA PATRIOT ACT

To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account. What
this means to you: When you open an account directly with the Fund, you will be
asked your name, address, date of birth, and other information that will allow
you to be identified. You may also be asked for other identifying documentation.
If the Trust is unable to verify the information shortly after your account is
opened, your account may be closed and your shares redeemed at their net asset
values at the time of the redemption.

INVESTMENT MANAGER
Schroder Investment Management North America Inc.
875 Third Avenue
New York, New York 10022

INVESTMENT SUB-ADVISER
Schroder Investment Management North America Limited
31 Gresham Street
London EC2V 7QA

SUB-ADMINISTRATOR
SEI Investments Global Funds Services
1 Freedom Valley Drive
Oaks, Pennsylvania 19456

CUSTODIAN
J.P. Morgan Chase Bank
270 Park Avenue
New York, New York 10017

DISTRIBUTOR
Schroder Fund Advisors Inc.
875 Third Avenue
New York, New York 10022

TRANSFER AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc.
Two Heritage Drive
North Quincy, Massachusetts 02171

COUNSEL
Ropes & Gray LLP
One International Place
Boston, Massachusetts 02110

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Two Commerce Square
Suite 1700
2001 Market Street
Philadelphia, Pennsylvania 19103

SCHRODER SERIES TRUST
Schroder All Asset Fund

The Fund has an SAI which includes additional information about the Fund. The
SAI is incorporated by reference into this Prospectus, which means it is part of
this Prospectus for legal purposes. You may get free copies of the SAI, request
other information about the Fund, or make shareholder inquiries by calling (800)
464-3108. From outside the United States, please call (617) 483-5000 and ask to
speak with a representative of the Schroder Mutual Funds. The Fund's SAI is also
available on the following website: www.schroderfunds.com.

You may review and copy information about the Fund, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the SEC at 1-800-SEC-0330 for information about the operation of
the public reference room. You may also access reports and other information
about the Fund on the SEC Internet site at www.sec.gov. You may get copies of
this information, with payment of a duplication fee, by electronic request to
the following e-mail address: publicinfo@sec.gov or by writing the Public
Reference Section of the Commission, Washington, D.C. 20549-0102. You may need
to refer to the Trust's file number under the Investment Company Act, which is:
Schroder Series Trust: 811-7840.

SCHRODER SERIES TRUST
875 Third Avenue
New York, New York 10022
(800) 464-3108

File No. 811-7840 - Schroder Series Trust

THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. THE FUND MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 16, 2007

SCHRODER SERIES TRUST

Schroder All Asset Fund

FORM N-1A
PART B

STATEMENT OF ADDITIONAL INFORMATION

July [_], 2007

This Statement of Additional Information ("SAI") is not a prospectus and is only
authorized for distribution when accompanied or preceded by a Prospectus for the
Fund, as amended or supplemented from time to time. This SAI relates to the
Fund's A Shares, Investor Shares and R Shares. A Shares, Investor Shares and R
Shares are offered through a Prospectus, dated July [_], 2007 (the
"Prospectus"), as amended or supplemented from time to time. This SAI contains
information which may be useful to investors but which is not included in the
Prospectus. Investors may obtain free copies of the Prospectus by calling the
Fund at (800) 464-3108. From outside the United States, please call
(617) 483-5000 and ask to speak with a Schroder Mutual Funds representative.

Certain disclosure has been incorporated by reference into this SAI from the
Trust's most recent annual report. For a free copy of the annual report, please
call (800) 464-3108.

TABLE OF CONTENTS

TRUST HISTORY............................................................. 1
FUND CLASSIFICATION....................................................... 1
CAPITALIZATION AND SHARE CLASSES.......................................... 1
ADDITIONAL INFORMATION CONCERNING THE FUND'S PRINCIPAL INVESTMENT
STRATEGIES............................................................. 2
NON-PRINCIPAL INVESTMENTS, INVESTMENT PRACTICES AND RISKS................. 26
INVESTMENT RESTRICTIONS................................................... 28
DISCLOSURE OF PORTFOLIO HOLDINGS.......................................... 29
MANAGEMENT OF THE TRUST................................................... 31
SCHRODERS AND ITS AFFILIATES.............................................. 38
PORTFOLIO MANAGERS........................................................ 38
MANAGEMENT CONTRACT....................................................... 40
DISTRIBUTOR; DISTRIBUTION PLAN............................................ 42
BROKERAGE ALLOCATION AND OTHER PRACTICES.................................. 43
DETERMINATION OF NET ASSET VALUE.......................................... 44
HOW TO BUY SHARES......................................................... 46
REDEMPTION OF SHARES...................................................... 48
ARRANGEMENTS PERMITTING FREQUENT PURCHASES AND REDEMPTIONS OF FUND
SHARES................................................................. 49
TAXES .................................................................... 49
PRINCIPAL HOLDERS OF SECURITIES........................................... 54
CUSTODIAN................................................................. 54
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT.............................. 54
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............................. 54
CODE OF ETHICS............................................................ 54
PROXY VOTING POLICIES AND PROCEDURES...................................... 54
LEGAL COUNSEL............................................................. 54
SHAREHOLDER LIABILITY..................................................... 54
FINANCIAL STATEMENTS...................................................... 55
APPENDIX A................................................................ A-1
APPENDIX B................................................................ B-1

STATEMENT OF ADDITIONAL INFORMATION

TRUST HISTORY

This Statement of Additional Information ("SAI") describes Schroder
All Asset Fund, a mutual fund (the "Fund") offered by Schroder Series Trust (the
"Trust").

The Trust is a Massachusetts business trust organized under the laws
of The Commonwealth of Massachusetts on May 6, 1993. The Trust's Agreement and
Declaration of Trust (as amended, the "Declaration of Trust"), which is governed
by Massachusetts law, is on file with the Secretary of State of The Commonwealth
of Massachusetts. The Trust currently comprises eight other publicly offered
series, Schroder Emerging Market Equity Fund, Schroder International Diversified
Value Fund, Schroder U.S. Small and Mid Cap Opportunities Fund, Schroder
Enhanced Income Fund, Schroder Strategic Bond Fund, Schroder Total Return Fixed
Income Fund, Schroder Municipal Bond Fund, and Schroder Short-Term Municipal
Bond Fund.

Schroder Investment Management North America Inc. ("Schroders") serves
as investment manager to the Fund. Schroder Investment Management North America
Limited ("SIMNA Ltd.") serves as investment sub-adviser to the Fund.

FUND CLASSIFICATION

The Fund is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act" or
"1940 Act"). The Fund is a "diversified" investment company under the Investment
Company Act. This means that with respect to 75% of the Fund's total assets (i)
the Fund may not invest in securities of any issuer if, immediately after such
investment, more than 5% of the total assets of the Fund (taken at current
value) would be invested in the securities of that issuer (this limitation does
not apply to investments in U.S. Government securities or securities of other
investment companies) or (ii) the Fund may not invest in a security if, as a
result of such investment, it would hold more than 10% (taken at the time of
such investment) of the outstanding voting securities of any one issuer (this
limitation does not apply to investments in U.S. Government securities or
securities of other investment companies). No diversified fund is subject to
this limitation with respect to the remaining 25% of its total assets.

These policies may not be changed without the vote of a majority of
the outstanding voting securities of the Fund.

CAPITALIZATION AND SHARE CLASSES

The Trust has an unlimited number of shares of beneficial interest
that may, without shareholder approval, be divided into an unlimited number of
series of such shares, which, in turn, may be divided into an unlimited number
of classes of such shares. The shares of the Fund described in this SAI are
currently divided into three classes, A Shares, Investor Shares and R Shares.
Unlike Investor Shares, A Shares and R Shares are currently subject to
distribution fees, so that the performance of the Fund's Investor Shares will
normally be more favorable than that of the Fund's A Shares and R Shares over
the same time period. Similarly, because R Shares are subject to higher
distribution fees than are A Shares, the performance of the Fund's A Shares will
normally be more favorable than that of the Fund's R Shares over the same time
period. Generally, expenses and liabilities particular to a class of the Fund,
such as distribution fees applicable only to A Shares and R Shares, are
allocated only to that class. Expenses and liabilities not related to a
particular class are allocated in relation to the respective net asset value of
each class, or on such other basis as the Trustees may in their discretion
consider fair and equitable to each class. The Fund may suspend the sale of
shares at any time.

Shares of the Fund entitle their holders to one vote per share, with
fractional shares voting proportionally; however, a separate vote will be taken
by each Fund of the Trust or class of shares on matters affecting a particular

-1-

Fund or class, as determined by the Trustees. For example, a change in a
fundamental investment policy for a Fund would be voted upon only by
shareholders of that Fund and a change to a distribution plan relating to a
particular class and requiring shareholder approval would be voted upon only by
shareholders of that class. Shares have noncumulative voting rights. Although
the Trust is not required to hold annual meetings of their shareholders,
shareholders have the right to call a meeting to elect or remove Trustees or to
take other actions as provided in the Declaration of Trust. Shares have no
preemptive or subscription rights, and are transferable. Shares are entitled to
dividends as declared by the Trust as approved by the Trustees of the Trust, and
if a Fund were liquidated, each class of shares of that Fund would receive the
net assets of that Fund attributable to the class of shares. Because A Shares,
Investor Shares and R Shares are subject to different expenses, the Fund's
dividends and other distributions will normally differ among the three classes.

ADDITIONAL INFORMATION CONCERNING THE FUND'S PRINCIPAL INVESTMENT STRATEGIES

The following discussion provides additional information concerning
the Fund's principal investment strategies and the principal risks of the Fund
described in the Prospectus. The Fund may engage in any of the principal
investment strategies described below directly, through its investment in one or
more other investment companies, or through hybrid instruments, structured
investments, or other derivatives, described below.

EQUITY SECURITIES. The Fund may primarily invest in equity securities.
Equity securities are securities that represent an ownership interest (or the
right to acquire such an interest) in a company and include common and preferred
stocks. Common stocks represent an equity or ownership interest in an issuer.
Preferred stocks represent an equity or ownership interest in an issuer that
pays dividends at a specified rate and that has priority over common stock in
the payment of dividends. In the event an issuer is liquidated or declares
bankruptcy, the claims of owners of bonds take priority over holders of
preferred stock, whose claims take priority over the claims of those who own
common stock.

While offering greater potential for long-term growth, equity
securities generally are more volatile and riskier than some other forms of
investment, particularly debt securities. Therefore, the value of an investment
in the Fund may at times decrease instead of increase.

The Fund's investments may include securities traded
"over-the-counter" as well as those traded on a securities exchange. Some
securities, particularly over-the-counter securities, may be more difficult to
sell under some market conditions.

Smaller Company Equity Securities. The Fund may invest in equity
securities of companies with small market capitalizations. Such investments may
involve greater risk than is usually associated with larger, more established
companies. These companies often have sales and earnings growth rates that
exceed those of companies with larger market capitalization. Such growth rates
may in turn be reflected in more rapid share price appreciation. However,
companies with small market capitalizations often have limited product lines,
markets or financial resources and may be dependent upon a relatively small
management group. These securities may have limited marketability and may be
subject to more abrupt or erratic movements in price than securities of
companies with larger market capitalizations or market averages in general.
Therefore, to the extent the Fund invests in securities with small market
capitalizations, the net asset value of the Fund may fluctuate more widely than
market averages.

Preferred Stock. Preferred stock represents an equity interest in a
company that generally entitles the holder to receive, in preference to holders
of other stocks such as common stocks, dividends at a specified rate and a fixed
share of proceeds resulting from a liquidation of the company. Preferred stock,
unlike common stock, generally has a stated dividend rate payable from the
corporation's earnings. Preferred stock dividends may be "cumulative" or
"non-cumulative." "Cumulative" dividend provisions require all or a portion of
prior unpaid dividends to be paid to preferred stockholders before dividends can
be paid on the issuer's common stock. Preferred stock may be "participating"
stock, which means that it may be entitled to a dividend that exceeds the stated
dividend in certain cases.

-2-

If interest rates rise, the fixed dividend on preferred stocks may be
less attractive, causing the price of preferred stocks to decline.

A company's preferred stock generally pays a dividend only after the
company makes required payments to holders of its bonds and other debt. In
addition, the rights of preferred stock on distribution of a company's assets in
the event of a liquidation are generally subordinate to the rights of holders of
the company's bonds or other creditors. As a result, the value of preferred
stock will usually react more strongly than bonds and other debt to actual or
perceived changes in the company's financial condition or prospects. Preferred
stocks of small companies may be more vulnerable to adverse developments than
those of larger companies.

CERTAIN DERIVATIVE INSTRUMENTS. Derivative instruments are financial
instruments whose value depends upon, or is derived from, the value of an
underlying asset, such as a security, index or currency. As described below, to
the extent permitted under "Investment Restrictions" below and in the
Prospectus, the Fund may engage in a variety of transactions involving the use
of derivative instruments, including options and futures contracts on securities
and securities indices, options on futures contracts, forward transactions and
swap transactions. The Fund may engage in derivative transactions involving
foreign currencies. See "Foreign Currency Transactions." Use of derivatives
other than for hedging purposes may be considered speculative, and when the Fund
invests in a derivative instrument it could lose more than the principal amount
invested. The Fund's use of derivatives may cause the Fund to recognize higher
amounts of short-term capital gains, generally taxed to shareholders at ordinary
income tax rates. Investments in derivatives may be applied toward meeting a
requirement to invest in a particular kind of investment if the derivatives have
economic characteristics similar to that investment.

The counterparties to the Fund's derivatives transactions may not be
considered the issuers of securities for certain purposes of the 1940 Act and
the United States Internal Revenue Code of 1986, as amended (the "Code"). The
Fund's advisor will monitor the Fund's credit risk exposure to derivative
counterparties to prevent excess concentration to any one counterparty.

The Fund may use these "derivatives" strategies for hedging purposes
or, to the extent permitted by applicable law, to increase its current return.
The Fund may also use derivatives to gain exposure to securities or market
sectors as a substitute for cash investments (not for leverage) or pending the
sale of securities by the Fund and reinvestment of the proceeds. For example,
the Fund may seek to obtain market exposure to the securities in which it may
invest by entering into forward contracts or similar arrangements to purchase
those securities in the future. Any use of derivatives strategies entails the
risks of investing directly in the securities or instruments underlying the
derivatives strategies, as well as the risks of using derivatives generally,
described in the Prospectus and in this SAI.

OPTIONS. The Fund may purchase and sell put and call options on its
portfolio securities to protect against changes in market prices and for other
purposes.

Call options. The Fund may write call options on its portfolio
securities for various purposes, including without limitation to realize a
greater current return through the receipt of premiums than it would realize on
its securities alone. Such transactions may also be used as a limited form of
hedging against a decline in the price of securities owned by the Fund.

A call option gives the holder the right to purchase, and obligates
the writer to sell, a security at the exercise price at any time before the
expiration date. The Fund may write covered call options or uncovered call
options. A call option is "covered" if the writer, at all times while obligated
as a writer, either owns the underlying securities (or comparable securities
satisfying the cover requirements of the securities exchanges), or has the right
to acquire such securities through immediate conversion of securities. When the
Fund has written an uncovered call option, the Fund will not necessarily hold
securities offsetting the risk to the Fund. As a result, if the call option were
exercised, the Fund might be required to purchase the security that is the
subject of the call at the market price at the time of exercise. The Fund's
exposure on such an option is theoretically unlimited.

-3-

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

The Fund may terminate a call option that it has written before it
expires by entering into a closing purchase transaction. The Fund may enter into
closing purchase transactions in order to realize a profit on a previously
written call option or, in the case of a covered call option, to free itself to
sell the underlying security or to write another call on the security or protect
a security from being called in an unexpected market rise.

Any profits from a closing purchase transaction in the case of a
covered call option may be offset by a decline in the value of the underlying
security. Conversely, because increases in the market price of a call option
will generally reflect increases in the market price of the underlying security,
any loss resulting from a closing purchase transaction relating to a covered
call option is likely to be offset in whole or in part by unrealized
appreciation of the underlying security owned by the Fund.

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

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

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

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

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

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

-4-

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

Risks involved in the sale of options. Options transactions involve
certain risks, including the risks that Schroders will not forecast interest
rate or market movements correctly, that the Fund may be unable at times to
close out such positions, or that hedging transactions may not accomplish their
purpose because of imperfect market correlations. The successful use of these
strategies depends on the ability of Schroders to forecast market and interest
rate movements correctly.

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

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

As described below, the Fund generally expects that its options
transactions will be conducted on recognized exchanges. In certain instances,
however, the Fund may purchase and sell options in the over-the-counter markets.
Options which are not traded on national securities exchanges may be closed out
only with the other party to the option transaction. For that reason, it may be
more difficult to close out over-the-counter options than exchange-traded
options. Options in the over-the-counter market may also involve the risk that
securities dealers participating in such transactions would be unable to meet
their obligations to the Fund. Furthermore, over-the-counter options are not
subject to the protection afforded purchasers of exchange-traded options by The
Options Clearing Corporation. The Fund will, however, engage in over-the-counter
options transactions only when appropriate exchange-traded options transactions
are unavailable and when, in the opinion of Schroders, 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.

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

FUTURES CONTRACTS. To the extent permitted under "Investment
Restrictions" below and in the Prospectus and by applicable law, the Fund may
buy and sell futures contracts, options on futures contracts, and related
instruments in order to hedge against the effects of adverse market changes or
to increase current return. Depending upon the change in the value of the
underlying security or index when the Fund enters into or terminates a futures
contract, the Fund may realize a gain or loss.

-5-

The Fund is operated by a person who has claimed an exclusion from the
definition of the term "commodity pool operator" under the Commodity Exchange
Act (the "CEA") and, therefore, such person is not subject to registration or
regulation as a pool operator under the CEA.

Futures on Securities and Related Options. A futures contract on a
security is a binding contractual commitment which, if held to maturity, will
result in an obligation to make or accept delivery, during a particular month,
of securities having a standardized face value and rate of return. By purchasing
futures on securities -- assuming a "long" position -- the Fund will legally
obligate itself to accept the future delivery of the underlying security and pay
the agreed price. By selling futures on securities -- assuming a "short"
position -- it will legally obligate itself to make the future delivery of the
security against payment of the agreed price. Open futures positions on
securities will be valued at the most recent settlement price, unless that price
does not, in the judgment of the Fund's Valuation Committee, reflect the fair
value of the contract, in which case the positions will be fair valued by the
Trustees or the Valuation Committee.

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

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

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

The Fund may also use futures to adjust the duration of its fixed
income portfolio and otherwise to manage (increase or decrease) its exposure to
interest rate risk.

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

The Fund may purchase and write put and call options on certain
futures contracts, as they become available. Such options are similar to options
on securities except that options on futures contracts give the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an option of

-6-

the same series. There is no guarantee that such closing transactions can be
effected. The Fund will be required to deposit initial margin and maintenance
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements, and, in addition, net option premiums
received will be included as initial margin deposits. See "Margin Payments"
below. Compared to the purchase or sale of futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to the
Fund because the maximum amount at risk is the premium paid for the options plus
transactions costs. However, there may be circumstances when the purchase of
call or put options on a futures contract would result in a loss to the Fund
when the purchase or sale of the futures contracts would not, such as when there
is no movement in the prices of securities. The writing of a put or call option
on a futures contract involves risks similar to those risks relating to the
purchase or sale of futures contracts.

Index Futures Contracts and Options. The Fund may invest in debt index
futures contracts and stock index futures contracts, and in related options. A
debt index futures contract is a contract to buy or sell units of a specified
debt index at a specified future date at a price agreed upon when the contract
is made. A unit is the current value of the index. A stock index futures
contract is a contract to buy or sell units of a stock index at a specified
future date at a price agreed upon when the contract is made. A unit is the
current value of the stock index.

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

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

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

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

As an alternative to purchasing and selling call and put options on
index futures contracts, the Fund may purchase and sell call and put options on
the underlying indices themselves to the extent that such options are traded on
national securities exchanges. Index options are similar to options on
individual securities in that the purchaser of an index option acquires the
right to buy (in the case of a call) or sell (in the case of a put), and the
writer undertakes

-7-

the obligation to sell or buy (as the case may be), units of an index at a
stated exercise price during the term of the option. Instead of giving the right
to take or make actual delivery of securities, the holder of an index option has
the right to receive a cash "exercise settlement amount." This amount is equal
to the amount by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the
underlying index on the date of the exercise, multiplied by a fixed "index
multiplier."

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

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

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

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

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

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

SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS

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

In addition to the risks that apply to all options transactions, there
are several special risks relating to options on futures contracts. The ability
to establish and close out positions in such options will be subject to the
development

-8-

and maintenance of a liquid secondary market. It is not certain that such a
market will develop. Although the Fund generally will purchase only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options with the result that the Fund would have to exercise the options
in order to realize any profit.

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

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

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

Other Risks. The Fund will incur brokerage fees in connection with its
futures and options transactions. In addition, while futures contracts and
options on futures may be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while the Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is intended to be
protected, the desired protection may not be obtained and the Fund may be
exposed to risk of loss. The Fund may be required to segregate certain of its
assets on the books of its custodian in respect of derivative transactions
entered into by the Fund. As open-end investment companies, registered with the
U.S. Securities and Exchange Commission ("SEC"), the Trust is subject to federal
securities laws, including the Investment Company Act, related rules and various
SEC and SEC Staff positions. In accordance with these positions, with respect to
certain kinds of derivatives, the Trust must "set aside" (referred to sometimes
as "asset segregation") liquid assets, or engage in other SEC- or Staff-approved
measures while the derivatives contracts are open. For example, with respect to
forwards and futures contracts that are not contractually required to
"cash-settle," the Trust must cover its open positions by setting aside liquid
assets equal to the contracts' full, notional value. With respect to forwards
and futures that are contractually required to "cash-settle," however, the Trust
is permitted to set aside liquid assets in an amount equal to the Trust's daily
marked-to-

-9-

market (net) obligation (i.e. a Trust's daily net liability, if any) rather than
the notional value. By setting aside assets equal to only its net obligation
under cash-settled forward or futures the Trust will have the ability to employ
leverage to a greater extent than if the Trust were required to segregate assets
equal to the full notional value of such contracts. The use of leverage involves
certain risks. The Trust reserves the right to modify its asset segregation
policies in the future to comply with any changes in the positions articulated
from time to time by the SEC and its Staff.

FOREIGN SECURITIES. The Fund may invest in securities principally
traded in foreign markets. The Fund may also invest in Eurodollar certificates
of deposit and other certificates of deposit issued by United States branches of
foreign banks and foreign branches of United States banks.

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

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

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

EMERGING MARKETS SECURITIES. The Fund may invest in securities of
companies determined by Schroders to be "emerging market" issuers. The risks of
investing in foreign securities are particularly high when securities of issuers
based in developing or emerging market countries are involved. Investing in
emerging market countries involves certain risks not typically associated with
investing in U.S. securities, and imposes risks greater than, or in addition to,
risks of investing in foreign, developed countries. These risks include: greater
risks of nationalization or expropriation of assets or confiscatory taxation;
currency devaluations and other currency exchange rate fluctuations; greater
social, economic and political uncertainty and instability (including the risk
of war); more substantial government involvement in the economy; less government
supervision and regulation of the securities markets and participants in those
markets; controls on foreign investment and limitations on repatriation of
invested capital and on the Fund's ability to exchange local currencies for U.S.
dollars; unavailability of currency hedging techniques in certain emerging
market countries; the fact that companies in emerging market countries may be
smaller, less seasoned and newly organized companies; the difference in, or lack
of, auditing and financial reporting standards, which may result in
unavailability of material information about issuers; the risk that it may be
more difficult to obtain and/or enforce a judgment in a court outside the United
States; and greater price volatility, substantially less liquidity,

-10-

and significantly smaller market capitalization of securities markets. Also, any
change in the leadership or politics of emerging market countries, or the
countries that exercise a significant influence over those countries, may halt
the expansion of or reverse the liberalization of foreign investment policies
now occurring and adversely affect existing investment opportunities.

In addition, a number of emerging market countries restrict, to
various degrees, foreign investment in securities. Furthermore, high rates of
inflation and rapid fluctuations in inflation rates have had, and may continue
to have, negative effects on the economies and securities markets of certain
emerging market countries.

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

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

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

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

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

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

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

-11-

made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security or securities
of the Fund if the market value of such security or securities exceeds the
amount of foreign currency the Fund is obligated to deliver.

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

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency. Also, suitable foreign currency hedging transactions may not be
available in all circumstances and there can be no assurance that the Fund will
utilize hedging transactions at any time or from time to time.

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

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

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

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

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

-12-

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

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

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

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

CONVERTIBLE SECURITIES. The Fund may invest in convertible securities.
Convertible securities include bonds, debentures, notes, preferred stocks and
other securities that may be converted into or exchanged for, at a specific
price or formula within a particular period of time, a prescribed amount of
common stock or other equity securities of the same or a different issuer.
Convertible securities entitle the holder to receive interest paid or accrued on
debt or dividends paid or accrued on preferred stock until the security matures
or is redeemed, converted or exchanged. Convertible securities provide for
streams of income with yields that are generally higher than those of common
stocks.

The market value of a convertible security is a function of its
"investment value" and its "conversion value." A security's "investment value"
represents the value of the security without its conversion feature (i.e., a
nonconvertible fixed income security). The investment value may be determined by
reference to its credit quality and the current value of its yield to maturity
or probable call date. At any given time, investment value is dependent upon
such factors as the general level of interest rates, the yield of similar
nonconvertible securities, the financial strength of the issuer and the
seniority of the security in the issuer's capital structure. A security's
"conversion value" is determined by multiplying the number of shares the holder
is entitled to receive upon conversion or exchange by the current price of the
underlying security.

If the conversion value of a convertible security is significantly
below its investment value, the convertible security will trade like
nonconvertible debt or preferred stock and its market value will not be
influenced greatly by fluctuations in the market price of the underlying
security. Conversely, if the conversion value of a convertible security is near
or above its investment value, the market value of the convertible security will
be more heavily influenced by fluctuations in the market price of the underlying
security.

The Fund's investments in convertible securities may at times include
securities that have a mandatory conversion feature, pursuant to which the
securities convert automatically into common stock or other equity

-13-

securities at a specified date and a specified conversion ratio, or that are
convertible at the option of the issuer. Because conversion of the security is
not at the option of the holder, the Fund may be required to convert the
security into the underlying common stock even at times when the value of the
underlying common stock or other equity security has declined substantially.

The Fund's investments in convertible securities, particularly
securities that are convertible into securities of an issuer other than the
issuer of the convertible security, may be illiquid. The Fund may not be able to
dispose of such securities in a timely fashion or for a fair price, which could
result in losses to the Fund.

WARRANTS TO PURCHASE SECURITIES. The Fund may invest in warrants to
purchase securities. Bonds issued with warrants attached to purchase equity
securities have many characteristics of convertible bonds and their prices may,
to some degree, reflect the performance of the underlying stock. Bonds also may
be issued with warrants attached to purchase additional fixed income securities
at the same coupon rate. A decline in interest rates would permit the Fund to
buy additional bonds at the favorable rate or to sell the warrants at a profit.
If interest rates rise, the warrants would generally expire with no value.

The Fund may also invest in equity-linked warrants. The Fund purchases
the equity-linked warrants from a broker, who in turn is expected to purchase
shares in the local market and issue a call warrant hedged on the underlying
holding. If the Fund exercises its call and closes its position, the shares are
expected to be sold and the warrant redeemed with the proceeds. Each warrant
represents one share of the underlying stock. Therefore, the price, performance
and liquidity of the warrant are all directly linked to the underlying stock,
less transaction costs. Equity-linked warrants are valued at the closing price
of the underlying security, then adjusted for stock dividends declared by the
underlying security. In addition to the market risk related to the underlying
holdings, the Fund bears additional counterparty risk with respect to the
issuing broker. Moreover, there is currently no active trading market for
equity-linked warrants.

REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in real estate
investment trusts ("REITs"). Equity REITs invest directly in real property while
mortgage REITs invest in mortgages on real property. REITs may be subject to
certain risks associated with the direct ownership of real estate, including
declines in the value of real estate, risks related to general and local
economic conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, and variations in rental income.
Generally, increases in interest rates will decrease the value of high yielding
securities and increase the costs of obtaining financing, which could decrease
the value of a REIT's investments. In addition, equity REITs may be affected by
changes in the value of the underlying property owned by the REITs, while
mortgage REITs may be affected by the quality of credit extended. Equity and
mortgage REITs are dependent upon management skill, are not diversified and are
subject to the risks of financing projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for tax-free pass-through of income under the Code, and to
maintain exemption from registration under the 1940 Act.

INVESTMENTS IN POOLED VEHICLES. The Fund may invest in shares of both
open- and closed-end investment companies (including single country funds and
exchange-traded funds ("ETFs")), and trusts. The Fund also may invest in other
private investment funds, vehicles, or structures. Investing in another pooled
vehicle exposes the Fund to all the risks of that pooled vehicle, and, in
general, subjects it to a pro rata portion of the other pooled vehicle's fees
and expenses. ETFs are hybrid investment companies that are registered as
open-end investment companies or unit investment trusts ("UITs") but possess
some of the characteristics of closed-end funds. ETFs typically hold a portfolio
of securities that is intended to track the price and dividend performance of a
particular index. Common examples of ETFs include S&P Depositary Receipts
("SPDRs") and iShares, which may be purchased from the UIT or investment company
issuing the securities or purchased in the secondary market (SPDRs are listed on
the American Stock Exchange and iShares are listed on the New York Stock
Exchange). The market price for ETF shares may be higher or lower than the ETF's
net asset value. The sale and redemption prices of ETF shares purchased from the
issuer are based on the issuer's net asset value.

-14-

DEPOSITARY RECEIPTS. The Fund may invest in American Depositary
Receipts ("ADRs"), Global Depository Receipts ("GDRs"), European Depository
Receipts ("EDRs") or other similar securities representing ownership of foreign
securities (collectively, "Depositary Receipts") if issues of these Depositary
Receipts are available that are consistent with the Fund's investment objective.
Depositary Receipts generally evidence an ownership interest in a corresponding
foreign security on deposit with a financial institution. Transactions in
Depositary Receipts usually do not settle in the same currency in which the
underlying securities are denominated or traded. Generally, ADRs, in registered
form, are designed for use in the U.S. securities markets and EDRs, in bearer
form, are designed for use in European securities markets. GDRs may be traded in
any public or private securities markets and may represent securities held by
institutions located anywhere in the world.

Investments in non-U.S. issuers through Depositary Receipts and
similar instruments may involve certain risks not applicable to investing in
U.S. issuers, including changes in currency rates, application of local tax
laws, changes in governmental administration or economic or monetary policy or
changed circumstances in dealings between nations. Costs may be incurred in
connection with conversions between various currencies. The Fund may enter into
forward currency contracts and purchase currencies on a spot basis to reduce
currency risk; however, currency hedging involves costs and may not be effective
in all cases.

SWAP AGREEMENTS. The Fund may enter into swap agreements and other
types of over-the-counter transactions with broker-dealers or other financial
institutions. Depending on their structures, swap agreements may increase or
decrease the Fund's exposure to long-or short-term interest rates (in the United
States or abroad), foreign currency values, mortgage securities, corporate
borrowing rates, or other factors such as security prices or inflation rates.
The value of the Fund's swap positions would increase or decrease depending on
the changes in value of the underlying rates, currency values, or other indices
or measures.

The Fund may also enter into "credit default" swap transactions. In a
credit default swap, one party pays what is, in effect, an insurance premium
through a stream of payments to another party in exchange for the right to
receive a specified return in an event of default (or similar events) by a third
party on its obligations. Therefore, in a credit default swap, the Fund may pay
a premium and, in return, have the right to put certain bonds or loans to the
counterparty upon default by the issuer of such bonds or loans (or similar
events) and to receive in return the par value of such bonds or loans (or
another agreed upon amount). The Fund would generally enter into this type of
transaction to limit or reduce risk with respect to bonds or loans that it owns
in its portfolios or otherwise in connection with transactions intended to
reduce one or more risks in the Fund's portfolio, or otherwise to increase the
Fund's investment return. In addition, the Fund could also receive the premium
referenced above, and be obligated to pay a counterparty the par value of
certain bonds or loans upon a default (or similar event) by the issuer. The Fund
would generally enter into this type of transaction as a substitute for
investment in the securities of the issuer, or otherwise to increase the Fund's
investment return.

The Fund's ability to realize a profit from such transactions will
depend on the ability of the financial institutions with which they enter into
the transactions to meet their obligations to the Fund. Under certain
circumstances, suitable transactions may not be available to the Fund, or the
Fund may be unable to close out its position under such transactions at the same
time, or at the same price, as if it had purchased comparable publicly traded
securities. The Fund's ability to engage in certain swap transactions may be
limited by tax considerations.

HYBRID INSTRUMENTS. These instruments are generally considered
derivatives and include indexed or structured securities, and combine the
elements of futures contracts or options with those of debt, preferred equity or
a depository instrument. A hybrid instrument may be a debt security, preferred
stock, warrant, convertible security, certificate of depositor other evidence of
indebtedness on which a portion of or all interest payments, and/or the
principal or stated amount payable at maturity, redemption or retirement, is
determined by reference to prices, changes in prices, or differences between
prices, of securities, currencies, intangibles, goods, articles or commodities
(collectively, "underlying assets"), or by another objective index, economic
factor or other measure, including interest rates, currency exchange rates, or
commodities or securities indices (collectively, "benchmarks"). Hybrid
instruments may take a number of forms, including, but not limited to, debt
instruments with interest or principal payments or

-15-

redemption terms determined by reference to the value of an index at a future
time, preferred stock with dividend rates determined by reference to the value
of a currency, or convertible securities with the conversion terms related to a
particular commodity.

The risks of investing in hybrid instruments reflect a combination of
the risks of investing in securities, options, futures and currencies. An
investment in a hybrid instrument may entail significant risks that are not
associated with a similar investment in a traditional debt instrument that has a
fixed principal amount, is denominated in U.S. dollars or bears interest either
at a fixed rate or a floating rate determined by reference to a common,
nationally published benchmark. The risks of a particular hybrid instrument will
depend upon the terms of the instrument, but may include the possibility of
significant changes in the benchmark(s) or the prices of the underlying assets
to which the instrument is linked. Such risks generally depend upon factors
unrelated to the operations or credit quality of the issuer of the hybrid
instrument, which may not be foreseen by the purchaser, such as economic and
political events, the supply and demand of the underlying assets and interest
rate movements. Hybrid instruments may be highly volatile and their use by the
Fund may not be successful.

Hybrid instruments may bear interest or pay preferred dividends at
below market (or even relatively nominal) rates. Alternatively, hybrid
instruments may bear interest at above market rates but bear an increased risk
of principal loss (or gain). The latter scenario may result if "leverage" is
used to structure the hybrid instrument. Leverage risk occurs when the hybrid
instrument is structured so that a given change in a benchmark or underlying
asset is multiplied to produce a greater value change in the hybrid instrument,
thereby magnifying the risk of loss as well as the potential for gain.

Hybrid instruments can be an efficient means of creating exposure to a
particular market, or segment of a market, with the objective of enhancing total
return. For example, the Fund may wish to take advantage of expected declines in
interest rates in several European countries, but avoid the transaction costs
associated with buying and currency-hedging the foreign bond positions. One
solution would be to purchase a U.S. dollar-denominated hybrid instrument whose
redemption price is linked to the average three year interest rate in a
designated group of countries. The redemption price formula would provide for
payoffs of less than par if rates were above the specified level. Furthermore,
the Fund could limit the downside risk of the security by establishing a minimum
redemption price so that the principal paid at maturity could not be below a
predetermined minimum level if interest rates were to rise significantly. The
purpose of this arrangement, known as a structured security with an embedded put
option, would be to give the Fund the desired European bond exposure while
avoiding currency risk, limiting downside market risk, and lowering transaction
costs. Of course, there is no guarantee that the strategy will be successful and
the Fund could lose money if, for example, interest rates do not move as
anticipated or credit problems develop with the issuer of the hybrid instrument.

Hybrid instruments are potentially more volatile and carry greater
market risks than traditional debt instruments. Depending on the structure of
the particular hybrid instrument, changes in a benchmark may be magnified by the
terms of the hybrid instrument and have an even more dramatic and substantial
effect upon the value of the hybrid instrument. Also, the prices of the hybrid
instrument and the benchmark or underlying asset may not move in the same
direction or at the same time.

Hybrid instruments may also carry liquidity risk since the instruments
are often "customized" to meet the portfolio needs of a particular investor, and
therefore, the number of investors that are willing and able to buy such
instruments in the secondary market may be smaller than that for more
traditional debt securities. Under certain conditions, the redemption value of
such an investment could be zero. In addition, because the purchase and sale of
hybrid investments would likely take place in an over-the-counter market without
the guarantee of a central clearing organization, or in a transaction between
the Fund and the issuer of the hybrid instrument, the creditworthiness of the
counterparty of the issuer of the hybrid instrument would be an additional risk
factor the Fund would have to consider and monitor. Hybrid instruments also may
not be subject to regulation by the CFTC, which generally regulates the trading
of commodity futures by U.S. persons, the SEC, which regulates the offer and
sale of securities by and to U.S. persons, or any other governmental regulatory
authority.

-16-

STRUCTURED INVESTMENTS. A structured investment is a security having a
return tied to an underlying index or other security or asset class. Structured
investments generally are individually negotiated agreements and may be traded
over-the-counter. Structured investments are organized and operated to
restructure the investment characteristics of the underlying security. This
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, or specified instruments (such as commercial bank loans)
and the issuance by that entity or one or more classes of securities
("structured securities") backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued structured securities to create securities
with different investment characteristics, such as varying maturities, payment
priorities and interest rate provisions, and the extent of such payments made
with respect to structured securities is dependent on the extent of the cash
flow on the underlying instruments. Because structured securities typically
involve no credit enhancement, their credit risk generally will be equivalent to
that of the underlying instruments. Investments in structured securities are
generally of a class of structured securities that is either subordinated or
unsubordinated to the right of payment of another class. Subordinated structured
securities typically have higher yields and present greater risks than
unsubordinated structured securities. Structured securities are typically sold
in private placement transactions, and there currently is no active trading
market for structured securities. Investments in government and
government-related and restructured debt instruments are subject to special
risks, including the inability or unwillingness to repay principal and interest,
requests to reschedule or restructure outstanding debt and requests to extend
additional loan amounts.

PRIVATE PLACEMENTS AND RESTRICTED SECURITIES. The Fund may invest in
securities that are purchased in private placements. While such private
placements may often offer attractive opportunities for investment not otherwise
available on the open market, the securities so purchased are often "restricted
securities," i.e., securities which cannot be sold to the public without
registration under the Securities Act of 1933 or the availability of an
exemption from registration (such as Rules 144 or 144A), or which are "not
readily marketable" because they are subject to other legal or contractual
delays in or restrictions on resale. Because there may be relatively few
potential purchasers for such investments, especially under adverse market or
economic conditions or in the event of adverse changes in the financial
condition of the issuer, the Fund could find it more difficult to sell such
securities when Schroders believes it advisable to do so or may be able to sell
such securities only at prices lower than if such securities were more widely
held. At times, it may also be more difficult to determine the fair value of
such securities for purposes of computing the Fund's net asset value.

The absence of a trading market can make it difficult to ascertain a
market value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be difficult
or impossible for the Fund to sell them promptly at an acceptable price. The
Fund may have to bear the extra expense of registering such securities for
resale and the risk of substantial delay in effecting such registration. Also,
market quotations are less readily available. The judgment of Schroders may at
times play a greater role in valuing these securities than in the case of
publicly traded securities.

Generally speaking, restricted securities may be sold only to
qualified institutional buyers, or in a privately negotiated transaction to a
limited number of purchasers, or in limited quantities after they have been held
for a specified period of time and other conditions are met pursuant to an
exemption from registration, or in a public offering for which a registration
statement is in effect under the Securities Act of 1933. The Fund may be deemed
to be an "underwriter" for purposes of the Securities Act of 1933 when selling
restricted securities to the public, and in such event the Fund may be liable to
purchasers of such securities if the registration statement prepared by the
issuer, or the prospectus forming a part of it, is materially inaccurate or
misleading. The Staff of SEC currently takes the view that any delegation by the
Trustees of the authority to determine that a restricted security is readily
marketable (as described in the investment restrictions of the Funds) must be
pursuant to written procedures established by the Trustees and the Trustees have
delegated such authority to Schroders. If no qualified institutional buyers are
interested in purchasing the securities, then the Fund may not be able to sell
such securities. In the event that the Trustees, or persons designated by the
Trustees, determine that a security is "readily marketable" pursuant to these
procedures, and the Fund is not able to sell such security at the price that
such persons anticipate, then the Fund's net asset value will decrease.

-17-

INVERSE FLOATERS. Inverse floaters have variable interest rates that
typically move in the opposite direction from movements in prevailing short-term
interest rate levels--rising when prevailing short-term interest rate fall, and
vice versa. The prices of inverse floaters can be highly volatile and some
inverse floaters may be "leveraged," resulting in increased risk and potential
volatility. The Fund may use inverse floaters for hedging or investment
purposes. Use of inverse floaters other than for hedging purposes may be
considered speculative.

OVER-THE-COUNTER SECURITIES. The Fund's investments may include
securities traded "over-the-counter" as well as those traded on a securities
exchange. Some securities, particularly over-the-counter securities, may be more
difficult to sell under some market conditions. As described below under
"Determination of Net Asset Value," unlisted securities for which market
quotations are readily available generally are valued at the most recently
reported sale prices on any day or, in the absence of a reported sale price, at
mid-market prices. Market quotations may not be readily available for all
over-the-counter securities. If the Fund is not able to sell such securities at
a price at which the Fund has valued the securities for purposes of calculating
its net asset value, the Fund's net asset value will decrease. The Fund may
invest in over-the-counter securities as a non-principal investment strategy
when the Fund's sub-adviser believes that such securities offer potential for
long-term capital growth.

ZERO-COUPON SECURITIES. Zero-coupon securities in which the Fund may
invest are debt obligations which are generally issued at a discount and payable
in full at maturity, and which do not provide for current payments of interest
prior to maturity. Zero-coupon securities usually trade at a deep discount from
their face or par value and are subject to greater market value fluctuations
from changing interest rates than debt obligations of comparable maturities
which make current distributions of interest. As a result, the net asset value
of shares of the Fund investing in zero-coupon securities may fluctuate over a
greater range than shares of other mutual funds investing in securities making
current distributions of interest and having similar maturities. The Fund is
required to distribute the income of zero-coupon securities as the income
accrues, even though the Fund is not receiving the income in cash on a current
basis. Thus, the Fund may have to sell other investments, including when it may
not be advisable to do so, to make income distributions.

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

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

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

-18-

FIXED INCOME SECURITIES. In periods of declining interest rates, the
yield (income from portfolio investments) of the Fund may tend to be higher than
prevailing market rates, and in periods of rising interest rates, the yield of
the Fund may tend to be lower. In addition, when interest rates are falling, the
inflow of net new money to the Fund will likely be invested in portfolio
instruments producing lower yields than the balance of the Fund's portfolio,
thereby reducing the yield of the Fund. In periods of rising interest rates, the
opposite can be true. The net asset value of the Fund can generally be expected
to change as general levels of interest rates fluctuate. The values of fixed
income securities in the Fund's portfolio generally vary inversely with changes
in interest rates. Prices of fixed income securities with longer effective
maturities are more sensitive to interest rate changes than those with shorter
effective maturities. The Fund may purchase fixed income securities issued by
companies of any market capitalization, including small and micro cap companies.
Such investments may involve greater risk than is usually associated with
larger, more established companies.

LOWER-RATED SECURITIES. The Fund may invest up in lower-rated
fixed-income securities (commonly known as "junk bonds"). The Fund may invest in
securities that are in default, and which offer little or no prospect for the
payment of the full amount of unpaid principal and interest, although normally
the Fund will not invest in securities unless a nationally recognized
statistical rating organization (for example, Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Rating Service ("Standard & Poor's"), or Fitch
Investors Service, Inc. ("Fitch")) has rated the securities CC- (or the
equivalent) or better, or the Fund's adviser has determined the securities to be
of comparable quality. The lower ratings of certain securities held by the Fund
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. The inability (or perceived inability) of issuers to
make timely payment of interest and principal would likely make the values of
securities held by the Fund more volatile and could limit the Fund's ability to
sell its securities at prices approximating the values the Fund had placed on
such securities. In the absence of a liquid trading market for securities held
by it, the Fund at times may be unable to establish the fair value of such
securities.

Securities ratings are based largely on the issuer's historical
financial condition and the rating agencies' analysis at the time of rating.
Consequently, the rating assigned to any particular security is not necessarily
a reflection of the issuer's current financial condition, which may be better or
worse than the rating would indicate. In addition, the rating assigned to a
security by Moody's or Standard & Poor's (or by any other nationally recognized
securities rating agency) does not reflect an assessment of the volatility of
the security's market value or the liquidity of an investment in the security.

Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. A decrease in
interest rates will generally result in an increase in the value of the Fund's
assets. Conversely, during periods of rising interest rates, the value of the
Fund's assets will generally decline. The values of lower-rated securities may
often be affected to a greater extent by changes in general economic conditions
and business conditions affecting the issuers of such securities and their
industries. Negative publicity or investor perceptions may also adversely affect
the values of lower-rated securities. Changes by nationally recognized
securities rating agencies in their ratings of any fixed-income security and
changes in the ability of an issuer to make payments of interest and principal
may also affect the value of these investments. Changes in the value of
portfolio securities generally will not affect income derived from these
securities, but will affect the Fund's net asset value. The Fund will not
necessarily dispose of a security when its rating is reduced below its rating at
the time of purchase. However, Schroders will monitor the investment to
determine whether its retention will assist in meeting the Fund's investment
objective.

Issuers of lower-rated securities are often highly leveraged, so that
their ability to service their debt obligations during an economic downturn or
during sustained periods of rising interest rates may be impaired. Such issuers
may not have more traditional methods of financing available to them and may be
unable to repay outstanding obligations at maturity by refinancing. The risk of
loss due to default in payment of interest or repayment of principal by such
issuers is significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior indebtedness.

-19-

At times, a portion of the Fund's assets may be invested in an issue
of which the Fund, by itself or together with other funds and accounts managed
by Schroders or its affiliates, holds all or a major portion. Although Schroders
generally considers such securities to be liquid because of the availability of
an institutional market for such securities, it is possible that, under adverse
market or economic conditions or in the event of adverse changes in the
financial condition of the issuer, the Fund could find it more difficult to sell
these securities when Schroders believes it advisable to do so or may be able to
sell the securities only at prices lower than if they were more widely held.
Under these circumstances, it may also be more difficult to determine the fair
value of such securities for purposes of computing the Fund's net asset value.
In order to enforce its rights in the event of a default, the Fund may be
required to participate in various legal proceedings or take possession of and
manage assets securing the issuer's obligations on such securities. This could
increase the Fund's operating expenses and adversely affect the Fund's net asset
value. In the case of tax-exempt funds, any income derived from the Fund's
ownership or operation of such assets would not be tax-exempt. The ability of a
holder of a tax-exempt security to enforce the terms of that security in a
bankruptcy proceeding may be more limited than would be the case with respect to
securities of private issuers. In addition, the Fund's intention to qualify as a
RIC under the Code may limit the extent to which the Fund may exercise its
rights by taking possession of such assets.

Certain securities held by the Fund may permit the issuer at its
option to "call," or redeem, its securities. If an issuer were to redeem
securities held by the Fund during a time of declining interest rates, the Fund
may not be able to reinvest the proceeds in securities providing the same
investment return as the securities redeemed.

The Fund may invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
for their principal amount in lieu of paying interest periodically.
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. Because zero-coupon
bonds and payment-in-kind bonds do not pay current interest in cash, their value
is subject to greater fluctuation in response to changes in market interest
rates than bonds that pay interest currently. Both zero-coupon bonds and
payment-in-kind bonds allow an issuer to avoid the need to generate cash to meet
current interest payments. Accordingly, such bonds may involve greater credit
risks than bonds paying interest currently in cash. The Fund is required to
accrue interest income on such investments and to distribute such amounts at
least annually to shareholders even though such bonds do not pay current
interest in cash. Thus, it may be necessary at times for the Fund to liquidate
investments in order to satisfy its dividend requirements.

To the extent the Fund invests in securities in the lower rating
categories, the achievement of the Fund's goals is more dependent on Schroders'
investment analysis than would be the case if the Fund were investing in
securities in the higher rating categories. This also may be true with respect
to tax-exempt securities, as the amount of information about the financial
condition of an issuer of tax-exempt securities may not be as extensive as that
which is made available by corporations whose securities are publicly traded.

MORTGAGE RELATED AND ASSET-BACKED SECURITIES. Mortgage-backed
securities, including collateralized mortgage obligations ("CMOs") and certain
stripped mortgage-backed securities represent a participation in, or are secured
by, mortgage loans. Asset-backed securities are structured like mortgage-backed
securities, but instead of mortgage loans or interests in mortgage loans, the
underlying assets may include such items as motor vehicle installment sales or
installment loan contracts, leases of various types of real and personal
property and receivables from credit card agreements. The ability of an issuer
of asset-backed securities to enforce its security interest in the underlying
assets may be limited.

Mortgage-backed securities have yield and maturity characteristics
corresponding to the underlying assets. Unlike traditional debt securities,
which may pay a fixed rate of interest until maturity, when the entire principal
amount comes due, payments on certain mortgage-backed securities include both
interest and a partial repayment of principal. Besides the scheduled repayment
of principal, repayments of principal may result from the voluntary prepayment,
refinancing or foreclosure of the underlying mortgage loans. If property owners
make unscheduled prepayments of their mortgage loans, these prepayments will
result in early payment of the applicable mortgage-related securities. In that
event the Fund may be unable to invest the proceeds from the early payment of
the

-20-

mortgage-related securities in an investment that provides as high a yield
as the mortgage-related securities. Consequently, early payment associated with
mortgage-related securities may cause these securities to experience
significantly greater price and yield volatility than that experienced by
traditional fixed-income securities. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates, general economic
conditions, the location and age of the mortgage and other social and
demographic conditions. During periods of falling interest rates, the rate of
mortgage prepayments tends to increase, thereby tending to decrease the life of
mortgage-related securities. During periods of rising interest rates, the rate
of mortgage prepayments usually decreases, thereby tending to increase the life
of mortgage-related securities. If the life of a mortgage-related security is
inaccurately predicted, the Fund may not be able to realize the rate of return
its adviser expected.

Mortgage-backed and asset-backed securities are less effective than
other types of securities as a means of "locking in" attractive long-term
interest rates. One reason is the need to reinvest prepayments of principal;
another is the possibility of significant unscheduled prepayments resulting from
declines in interest rates. These prepayments would have to be reinvested at
lower rates. As a result, these securities may have less potential for capital
appreciation during periods of declining interest rates than other securities of
comparable maturities, although they may have a similar risk of decline in
market value during periods of rising interest rates. Prepayments may also
significantly shorten the effective maturities of these securities, especially
during periods of declining interest rates. Conversely, during periods of rising
interest rates, a reduction in prepayments may increase the effective maturities
of these securities, subjecting them to a greater risk of decline in market
value in response to rising interest rates than traditional debt securities,
and, therefore, potentially increasing the volatility of the Fund.

Prepayments may cause losses on securities purchased at a premium. At
times, some mortgage-backed and asset-backed securities will have higher than
market interest rates and therefore will be purchased at a premium above their
par value.

CMOs and CMO residuals may be issued by a U.S. Government agency or
instrumentality or by a private issuer. Although payment of the principal of,
and interest on, the underlying collateral securing privately issued CMOs and
CMO residuals may be guaranteed by the U.S. Government or its agencies or
instrumentalities, these CMOs and CMO residuals represent obligations solely of
the private issuer and are not insured or guaranteed by the U.S. Government, its
agencies or instrumentalities or any other person or entity.

Prepayments could cause early retirement of CMOs. CMOs are designed to
reduce the risk of prepayment for investors by issuing multiple classes of
securities, each having different maturities, interest rates and payment
schedules, and with the principal and interest on the underlying mortgages
allocated among the several classes in various ways. Payment of interest or
principal on some classes or series of CMOs may be subject to contingencies or
some classes or series may bear some or all of the risk of default on the
underlying mortgages. CMOs of different classes or series are generally retired
in sequence as the underlying mortgage loans in the mortgage pool are repaid. If
enough mortgages are repaid ahead of schedule, the classes or series of a CMO
with the earliest maturities generally will be retired prior to their
maturities. Thus, the early retirement of particular classes or series of a CMO
would have the same effect as the prepayment of mortgages underlying other
mortgage-backed securities. Conversely, slower than anticipated prepayments can
extend the effective maturities of CMOs, subjecting them to a greater risk of
decline in market value in response to rising interest rates than traditional
debt securities, and, therefore, potentially increasing their volatility.

In the case of CMO residuals, the cash flow generated by the mortgage
assets underlying a series of CMOs is applied first to make required payments of
principal and interest on the CMOs and second to pay the related administrative
expenses of the issuer. The residual in a CMO structure generally represents the
interest in any excess cash flow remaining after making the foregoing payments.
Each payment of such excess cash flow to a holder of the related CMO residual
represents income and/or a return of capital. The amount of residual cash flow
resulting from a CMO will depend on, among other things, the characteristics of
the mortgage assets, the coupon rate of each class of CMO, prevailing interest
rates, the amount of administrative expenses and the prepayment experience on
the mortgage assets. In particular, the yield to maturity on CMO residuals is
extremely sensitive to prepayments on the related

-21-

underlying mortgage assets, in the same manner as an IO class of stripped
mortgage-backed securities. See below with respect to stripped mortgage-backed
securities. In addition, if a series of a CMO includes a class that bears
interest at an adjustable rate, the yield to maturity on the related CMO
residual will also be extremely sensitive to changes in the level of the index
upon which interest rate adjustments are based. As described below with respect
to stripped mortgage-backed securities, in certain circumstances the Fund may
fail to recoup some or all of its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional
investors through several investment banking firms acting as brokers or dealers.
The CMO residual market has developed fairly recently and CMO residuals
currently may not have the liquidity of other more established securities
trading in other markets. Transactions in CMO residuals are generally completed
only after careful review of the characteristics of the securities in question.
In addition, CMO residuals may, or pursuant to an exemption therefrom, may not,
have been registered under the 1933 Act. CMO residuals, whether or not
registered under the 1933 Act, may be subject to certain restrictions on
transferability, and may be deemed illiquid.

Prepayments could result in losses on stripped mortgage-backed
securities. Stripped mortgage-backed securities are usually structured with two
classes that receive different portions of the interest and principal
distributions on a pool of mortgage loans. The yield to maturity on an interest
only or "IO" class of stripped mortgage-backed securities is extremely sensitive
not only to changes in prevailing interest rates but also to the rate of
principal payments (including prepayments) on the underlying assets. A rapid
rate of principal prepayments may have a measurable adverse effect on the Fund's
yield to maturity to the extent it invests in IOs. If the assets underlying the
IO experience greater than anticipated prepayments of principal, the Fund may
fail to recoup fully, or at all, its initial investment in these securities.
Conversely, principal only securities or "POs" tend to increase in value if
prepayments are greater than anticipated and decline if prepayments are slower
than anticipated.

The secondary market for mortgage-backed securities, particularly
stripped mortgage-backed securities, or those comprised of subprime mortgages
(mortgages rated below A, or its equivalent, by Standard & Poor's, Moody's or
Fitch) may be more volatile and less liquid than that for other mortgage-backed
securities, potentially limiting the Fund's ability to buy or sell those
securities at any particular time.

LOAN PARTICIPATIONS AND OTHER FLOATING RATE LOANS. The Fund may invest
in "loan participations." By purchasing a loan participation, the Fund acquires
some or all of the interest of a bank or other lending institution in a loan to
a particular borrower. Many such loans are secured, and most impose restrictive
covenants which must be met by the borrower. These loans are typically made by a
syndicate of banks, represented by an agent bank which has negotiated and
structured the loan and which is responsible generally for collecting interest,
principal, and other amounts from the borrower on its own behalf and on behalf
of the other lending institutions in the syndicate, and for enforcing its and
their other rights against the borrower. Each of the lending institutions,
including the agent bank, lends to the borrower a portion of the total amount of
the loan, and retains the corresponding interest in the loan.

The Fund's ability to receive payments of principal and interest and
other amounts in connection with loan participations held by it will depend
primarily on the financial condition of the borrower. The failure by the Fund to
receive scheduled interest or principal payments on a loan participation would
adversely affect the income of the Fund and would likely reduce the value of its
assets, which would be reflected in a reduction in the Fund's net asset value.
Banks and other lending institutions generally perform a credit analysis of the
borrower before originating a loan or participating in a lending syndicate. In
selecting the loan participations in which the Fund will invest, however,
Schroders will not rely solely on that credit analysis, but will perform its own
investment analysis of the borrowers. Schroders' analysis may include
consideration of the borrower's financial strength and managerial experience,
debt coverage, additional borrowing requirements or debt maturity schedules,
changing financial conditions, and responsiveness to changes in business
conditions and interest rates. Schroders will be unable to access non-public
information to which other investors in syndicated loans may have access.
Because loan participations in which the Fund may invest are not generally rated
by independent credit rating agencies, a decision by the Fund to invest in a
particular loan participation will depend almost exclusively on Schroders', and
the original lending institution's, credit

-22-

analysis of the borrower. Investments in loan participations may be of any
quality, including "distressed" loans, and will be subject to the Fund's credit
quality policy.

Loan participations may be structured in different forms, including
novations, assignments and participating interests. In a novation, the Fund
assumes all of the rights of a lending institution in a loan, including the
right to receive payments of principal and interest and other amounts directly
from the borrower and to enforce its rights as a lender directly against the
borrower. The Fund assumes the position of a co-lender with other syndicate
members. As an alternative, the Fund may purchase an assignment of a portion of
a lender's interest in a loan. In this case, the Fund may be required generally
to rely upon the assigning bank to demand payment and enforce its rights against
the borrower, but would otherwise be entitled to all of such bank's rights in
the loan. The Fund may also purchase a participating interest in a portion of
the rights of a lending institution in a loan. In such case, it will be entitled
to receive payments of principal, interest and premium, if any, but will not
generally be entitled to enforce its rights directly against the agent bank or
the borrower, and must rely for that purpose on the lending institution. The
Fund may also acquire a loan participation directly by acting as a member of the
original lending syndicate.

The Fund will in many cases be required to rely upon the lending
institution from which it purchases the loan participation to collect and pass
on to the Fund such payments and to enforce the Fund's rights under the loan. As
a result, an insolvency, bankruptcy or reorganization of the lending institution
may delay or prevent the Fund from receiving principal, interest and other
amounts with respect to the underlying loan. When the Fund is required to rely
upon a lending institution to pay to the Fund principal, interest and other
amounts received by it, Schroders will also evaluate the creditworthiness of the
lending institution.

The borrower of a loan in which the Fund holds a participation
interest may, either at its own election or pursuant to terms of the loan
documentation, prepay amounts of the loan from time to time. There is no
assurance that the Fund will be able to reinvest the proceeds of any loan
prepayment at the same interest rate or on the same terms as those of the
original loan participation.

Corporate loans in which the Fund may purchase a loan participation
are made generally to finance internal growth, mergers, acquisitions, stock
repurchases, leveraged buy-outs and other corporate activities. Under current
market conditions, most of the corporate loan participations purchased by the
Fund will represent interests in loans made to finance highly leveraged
corporate acquisitions, known as "leveraged buy-out" transactions. The highly
leveraged capital structure of the borrowers in such transactions may make such
loans especially vulnerable to adverse changes in economic or market conditions.
In addition, loan participations generally are subject to restrictions on
transfer, and only limited opportunities may exist to sell such participations
in secondary markets. As a result, the Fund may be unable to sell loan
participations at a time when it may otherwise be desirable to do so or may be
able to sell them only at a price that is less than their fair market value.

Certain of the loan participations acquired by the Fund may involve
revolving credit facilities under which a borrower may from time to time borrow
and repay amounts up to the maximum amount of the facility. In such cases, the
Fund would have an obligation to advance its portion of such additional
borrowings upon the terms specified in the loan participation. To the extent
that the Fund is committed to make additional loans under such a participation,
it will at all times hold and maintain in a segregated account liquid assets in
an amount sufficient to meet such commitments. Certain of the loan
participations acquired by the Fund may also involve loans made in foreign
currencies. The Fund's investment in such participations would involve the risks
of currency fluctuations described above with respect to investments in the
foreign securities.

Notwithstanding its intention generally not to receive material,
non-public information with respect to its management of investments in floating
rate loans, Schroders may from time to time come into possession of material,
non-public information about the issuers of loans that may be held in the Fund's
portfolio. Possession of such information may in some instances occur despite
Schroders' efforts to avoid such possession, but in other instances Schroders
may choose to receive such information (for example, in connection with
participation in a creditors' committee with respect to a financially distressed
issuer). As, and to the extent, required by applicable law, Schroders'

-23-

ability to trade in these loans for the account of the Fund could potentially be
limited by its possession of such information. Such limitations on Schroders'
ability to trade could have an adverse effect on the Fund by, for example,
preventing the Fund from selling a loan that is experiencing a material decline
in value. In some instances, these trading restrictions could continue in effect
for a substantial period of time.

In some instances, other accounts managed by Schroders may hold other
securities issued by borrowers whose floating rate loans may be held in the
Fund's portfolio. These other securities may include, for example, debt
securities that are subordinate to the floating rate loans held in the Fund's
portfolio, convertible debt or common or preferred equity securities. In certain
circumstances, such as if the credit quality of the issuer deteriorates, the
interests of holders of these other securities may conflict with the interests
of the holders of the issuer's floating rate loans. In such cases, Schroders may
owe conflicting fiduciary duties to the Fund and other client accounts.
Schroders will endeavor to carry out its obligations to all of its clients to
the fullest extent possible, recognizing that in some cases certain clients may
achieve a lower economic return, as a result of these conflicting client
interests, than if Schroders' client accounts collectively held only a single
category of the issuer's securities.

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

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

FLOATING RATE AND VARIABLE RATE DEMAND NOTES. Floating rate and
variable rate demand notes and bonds may have a stated maturity in excess of one
year, but may have features that permit a holder to demand payment of principal
plus accrued interest upon a specified number of days notice. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. The issuer has a corresponding right, after a
given period, to prepay in its discretion the outstanding principal of the
obligation plus accrued interest upon a specific number of days notice to the
holders. The interest rate of a floating rate instrument may be based on a known
lending rate, such as a bank's prime rate, and is reset whenever such rate is
adjusted. The interest rate on a variable rate demand note is reset at specified
intervals at a market rate.

MUNICIPAL BONDS. Municipal bonds are investments of any maturity
issued by states, public authorities or political subdivisions to raise money
for public purposes; they include, for example, general obligations of a state
or other government entity supported by its taxing powers to acquire and
construct public facilities, or to provide temporary financing in anticipation
of the receipt of taxes and other revenue. They also include obligations of
states, public authorities or political subdivisions to finance privately owned
or operated facilities or public facilities financed solely by enterprise
revenues. Changes in law or adverse determinations by the Internal Revenue
Service or a state tax authority could make the income from some of these
obligations taxable.

Short-term municipal bonds are generally issued by state and local
governments and public authorities as interim financing in anticipation of tax
collections, revenue receipts or bond sales to finance such public purposes.

Certain types of "private activity" bonds may be issued by public
authorities to finance projects such as privately operated housing facilities;
certain local facilities for supplying water, gas or electricity; sewage or
solid waste disposal facilities; student loans; or public or private
institutions for the construction of educational, hospital,

-24-

housing and other facilities. Such obligations are included within the term
municipal bonds if the interest paid thereon is, in the opinion of bond counsel,
exempt from federal income tax and state personal income tax (such interest may,
however, be subject to federal alternative minimum tax). Other types of private
activity bonds, the proceeds of which are used for the construction, repair or
improvement of, or to obtain equipment for, privately operated industrial or
commercial facilities, may also constitute municipal bonds, although current
federal tax laws place substantial limitations on the size of such issues.

Participation interests. The Fund may invest in municipal bonds either
by purchasing them directly or by purchasing certificates of accrual or similar
instruments evidencing direct ownership of interest payments or principal
payments, or both, on municipal bonds, provided that, in the opinion of counsel,
any discount accruing on a certificate or instrument that is purchased at a
yield not greater than the coupon rate of interest on the related municipal
bonds will be exempt from federal income tax to the same extent as interest on
the municipal bonds. The Fund may also invest in municipal bonds by purchasing
from banks participation interests in all or part of specific holdings of
municipal bonds. These participations may be backed in whole or in part by an
irrevocable letter of credit or guarantee of the selling bank. The selling bank
may receive a fee from the Fund in connection with the arrangement. The Fund
will not purchase such participation interests unless it receives an opinion of
counsel or a ruling of the Internal Revenue Service that interest earned by it
on municipal bonds in which it holds such participation interests is exempt from
federal income tax.

Stand-by commitments. When the Fund purchases municipal bonds, it has
the authority to acquire stand-by commitments from banks and broker-dealers with
respect to those municipal bonds. A stand-by commitment may be considered a
security independent of the municipal bond to which it relates. The amount
payable by a bank or dealer during the time a stand-by commitment is
exercisable, absent unusual circumstances, would be substantially the same as
the market value of the underlying municipal bond to a third party at any time.
It is expected that stand-by commitments generally will be available without the
payment of direct or indirect consideration. It is not expected that the Fund
will assign any value to stand-by commitments.

Yields. The yields on municipal bonds depend on a variety of factors,
including general money market conditions, effective marginal tax rates, the
financial condition of the issuer, general conditions of the municipal bond
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue. The ratings of nationally recognized securities rating
agencies represent their opinions as to the credit quality of the municipal
bonds which they undertake to rate. It should be emphasized, however, that
ratings are general and are not absolute standards of quality. Consequently,
municipal bonds with the same maturity and interest rate but with different
ratings may have the same yield. Yield disparities may occur for reasons not
directly related to the investment quality of particular issues or the general
movement of interest rates and may be due to such factors as changes in the
overall demand or supply of various types of municipal bonds or changes in the
investment objectives of investors. Subsequent to purchase by the Fund, an issue
of municipal bonds or other investments may cease to be rated, or its rating may
be reduced below the minimum rating required for purchase by the Fund. Neither
event will require the elimination of an investment from the Fund's portfolio,
but Schroders will consider such an event in its determination of whether the
Fund should continue to hold an investment in its portfolio.

"Moral obligation" bonds. The Fund does not currently intend to invest
in so-called "moral obligation" bonds, where repayment is backed by a moral
commitment of an entity other than the issuer, unless the credit of the issuer
itself, without regard to the "moral obligation," meets the investment criteria
established for investments by the Fund.

Municipal leases. The Fund may acquire participations in lease
obligations or installment purchase contract obligations (collectively, "lease
obligations") of municipal authorities or entities. Lease obligations do not
constitute general obligations of the municipality for which the municipality's
taxing power is pledged. Certain of these lease obligations contain
"non-appropriation" clauses, which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. In the case of a
"non-appropriation" lease, the Fund's ability to recover under the lease in the
event of non-appropriation

-25-

or default will be limited solely to the repossession of the leased property,
and in any event, foreclosure of that property might prove difficult.

Additional risks. Securities in which the Fund may invest, including
municipal bonds, are subject to the provisions of bankruptcy, insolvency and
other laws affecting the rights and remedies of creditors, such as the federal
Bankruptcy Code (including special provisions related to municipalities and
other public entities), and laws, if any, that may be enacted by Congress or
state legislatures extending the time for payment of principal or interest, or
both, or imposing other constraints upon enforcement of such obligations. There
is also the possibility that, as a result of litigation or other conditions, the
power, ability or willingness of issuers to meet their obligations for the
payment of interest and principal on their municipal bonds may be materially
affected.

From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on debt obligations issued by states and their political subdivisions.
Federal tax laws limit the types and amounts of tax-exempt bonds issuable for
certain purposes, especially industrial development bonds and private activity
bonds. Such limits may affect the future supply and yields of these types of
municipal bonds. Further proposals limiting the issuance of municipal bonds may
well be introduced in the future. If it appeared that the availability of
municipal bonds for investment by the Fund and the value of the Fund's portfolio
could be materially affected by such changes in law, the Trustees would
reevaluate its investment objective and policies and consider changes in the
structure of the Fund or its dissolution.

NON-PRINCIPAL INVESTMENTS, INVESTMENT PRACTICES AND RISKS

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

SHORT SALES. To the extent permitted under "Investment Restrictions"
below and in the Prospectus, the Fund may seek to hedge investments or realize
additional gains through short sales.

Short sales are transactions in which the Fund sells a security it
does not own, in anticipation of a decline in the market value of that security.
To complete such a transaction, the Fund must borrow the security to make
delivery to the buyer. The Fund then is obligated to replace the security
borrowed by purchasing it at the market price at or prior to the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by the Fund. Until the security is replaced, the Fund is
required to repay the lender any dividends or interest that accrue during the
period of the loan. To borrow the security, the Fund also may be required to pay
a premium, which would increase the cost of the security sold. The net proceeds
of the short sale will be retained by the broker (or by the Fund's custodian in
a special custody account), to the extent necessary to meet margin requirements,
until the short position is closed out. The Fund also will incur transaction
costs in effecting short sales.

The Fund will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and the date on
which the Fund replaces the borrowed security. The Fund may realize a gain if
the security declines in price between those dates. The amount of any gain will
be decreased, and the amount of any loss increased, by the amount of the
premium, dividends, interest or expenses the Fund may be required to pay in
connection with a short sale. The Fund's loss on a short sale could
theoretically be unlimited in a case where the Fund is unable, for whatever
reason, to close out its short position. There can be no assurance that the Fund
will be able to close out a short position at any particular time or at an
acceptable price. In addition, short positions may result in a loss if a
portfolio strategy of which the short position is a part is otherwise
unsuccessful.

At any time that the Fund has sold a security short, it will maintain
liquid securities, in a segregated account with its custodian, in an amount
that, when combined with the amount of collateral deposited with the broker in
connection with the short sale, equals the value at the time of securities sold
short.

-26-

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

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
without limit. A repurchase agreement is a contract under which the Fund
acquires a security for a relatively short period (usually not more than one
week) subject to the obligation of the seller to repurchase and the Fund to
resell such security at a fixed time and price (representing the Fund's cost
plus interest). It is the Trust's present intention to enter into repurchase
agreements only with member banks of the Federal Reserve System and securities
dealers meeting certain criteria as to creditworthiness and financial condition,
and only with respect to obligations of the U.S. Government or its agencies or
instrumentalities or other investment grade short-term debt obligations.
Repurchase agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. Schroders will monitor
such transactions to ensure that the value of the underlying securities will be
at least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale including accrued interest are less than the resale price provided in the
agreement including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, the Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if the Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.

To the extent that the Fund has invested a substantial portion of its
assets in repurchase agreements, the Fund's investment return on such assets,
and potentially the Fund's ability to achieve its investment objectives, will
depend on the counterparties' willingness and ability to perform their
obligations under the repurchase agreements.

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

-27-

TEMPORARY DEFENSIVE STRATEGIES. As described in the Prospectus,
Schroders may at times judge that conditions in the securities markets make
pursuing the Fund's basic investment strategies inconsistent with the best
interests of its shareholders and may temporarily use alternate investment
strategies primarily designed to reduce fluctuations in the value of the Fund's
assets. In implementing these "defensive" strategies, the Fund would invest in
investment grade debt securities, cash, or money market instruments to any
extent Schroders considers consistent with such defensive strategies. It is
impossible to predict when, or for how long, the Fund will use these alternate
strategies, and the Fund is not required to use alternate strategies in any
case. One risk of taking such temporary defensive positions is that the Fund may
not achieve its investment objective.

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may only be changed with
approval by the holders of a majority of the outstanding voting securities of
the Fund, the Fund may not:

1. issue any class of securities which is senior to the Fund's shares of
beneficial interest, except to the extent the Fund is permitted to borrow money
or otherwise to the extent consistent with applicable law from time to time.

Note: The Investment Company Act currently prohibits an open-end investment
company from issuing any senior securities, except to the extent it is permitted
to borrow money (see Note following restriction 2, below).

2. borrow money, except to the extent permitted by applicable law from time to
time;

Note: The Investment Company Act currently permits an open-end investment
company to borrow money from a bank so long as the ratio which the value of the
total assets of the investment company (including the amount of any such
borrowing), less the amount of all liabilities and indebtedness (other than such
borrowing) of the investment company, bears to the amount of such borrowing is
at least 300%. An open-end investment company may also borrow money from other
lenders in accordance with applicable law and positions of the SEC and its
staff.

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

4. as to 75% of its total assets, purchase any security (other than Government
securities, as such term is defined in the 1940 Act, and securities of other
investment companies), if as a result more than 5% of the Fund's total assets
(taken at current value) would then be invested in securities of a single issuer
or the Fund would hold more than 10% of the outstanding voting securities of
such issuer;

Note: Government securities are defined in the 1940 Act as any security issued
or guaranteed as to principal or interest by the United States, or by a person
controlled or supervised by and acting as an instrumentality of the Government
of the United States pursuant to authority granted by the Congress of the United
States, or any certificate of deposit for any of the foregoing.

5. purchase any security (other than Government securities, as such term is
defined in the 1940 Act) if as a result 25% or more of the Fund's total assets
(taken at current value) would be invested in a single industry; for clarity,
investments in other investment companies will not be considered to be
investments in securities of issuers in any one industry;

6. make loans, except by purchase of debt obligations or other financial
instruments, by entering into repurchase agreements, or through the lending of
its portfolio securities;

7. purchase or sell commodities or commodity contracts, except that the Fund may
purchase or sell financial futures contracts, options on financial futures
contracts, and futures contracts, forward contracts, and options with respect to
foreign currencies, and may enter into swap transactions or other financial
transactions, and except in connection with otherwise permissible options,
futures, and commodity activities as described elsewhere in the Prospectus or
this SAI from time to time; and,

-28-

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

Non-Fundamental Policy:

It is contrary to the current policy of the Fund, which policy may be
changed without shareholder approval, to invest more than 15% of its net assets
in securities which are not readily marketable, including securities restricted
as to resale (other than securities restricted as to resale but determined by
the Trustees, or persons designated by the Trustees to make such determinations,
to be readily marketable).

The Fund may, as a non-fundamental policy, pledge up to one-third of
its assets in connection with permissible borrowings by the Fund. In addition,
as a non-fundamental policy, the Fund will not invest in other companies for the
purpose of exercising control of those companies.

All percentage limitations on investments (except the limitation with
respect to securities that are not readily marketable set forth above) will
apply at the time of investment and shall not be considered violated unless an
excess or deficiency occurs or exists immediately after and as a result of such
investment; except that, if the Fund ceases to maintain the 300% asset coverage
ratio described above in the Note following restriction 2, it will take steps to
restore that asset coverage ratio within three days thereafter (excluding
Sundays and holidays) or such longer period as may be prescribed by applicable
regulations.

Except for the investment restrictions listed above as fundamental or
to the extent designated as such in the Prospectus, the other investment
policies described in this SAI or in the Prospectus are not fundamental and may
be changed by approval of the Trustees.

The 1940 Act provides that a "vote of a majority of the outstanding
voting securities" of the Fund means the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Fund, or (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.

DISCLOSURE OF PORTFOLIO HOLDINGS

Through filings made with the SEC on Form N-CSR and Form N-Q, the Fund
makes its full portfolio holdings publicly available to shareholders on a
quarterly basis. The Fund normally makes such filings on or shortly after the
sixtieth day following the end of a fiscal quarter. The Fund delivers its
complete portfolio schedules for the second and fourth fiscal quarters, required
to be filed on Form N-CSR, to shareholders in the Fund's semi-annual and annual
reports. The Fund does not deliver its complete portfolio schedules for the
first and third fiscal quarters, required to be filed on Form N-Q, to
shareholders, but these schedules are available on the SEC website at
www.sec.gov and on the Schroders website at www.schroderfunds.com.

POLICIES AND PROCEDURES. The Schroder Funds have adopted policies and
procedures with respect to disclosure of Fund portfolio holdings. These
procedures apply both to arrangements, expected to be in place over a period of
time, to make available information about the securities in the Fund's portfolio
and with respect to disclosure on a one-time, irregular basis. These procedures
provide that neither Schroders nor SIMNA Ltd., as applicable, nor the Funds
receive any compensation in return for the disclosure of information about the
Fund's portfolio securities or for any ongoing arrangements to make available
information about the Fund's portfolio securities. Portfolio holdings may be
disclosed to certain third parties in advance of quarterly filings by the Fund
with the SEC. In each instance of such advance disclosure, a determination will
have been made by Schroders or SIMNA Ltd., as applicable, that such disclosure
is supported by a legitimate business purpose of the Fund and that the

-29-

recipients, except as described below, are subject to an independent duty not to
disclose (whether contractually or as a matter of law) or trade on the nonpublic
information. The Fund currently discloses nonpublic portfolio holdings
information only to recipients who have agreed in writing with Schroders, or
SIMNA Ltd., as applicable, to keep such information confidential. In some cases
these recipients are subject to a contractual obligation to keep portfolio
holdings information confidential, and in other cases they are subject to a
contractual obligation to keep information disclosed to them by the Fund
confidential. Recipients of nonpublic portfolio holdings information are also
subject to legal requirements prohibiting them from trading on material
nonpublic information. In the future, where Schroders or SIMNA Ltd., as
applicable, does not believe that the risk of disclosure is material, the Fund
may disclose information to recipients who do not have an independent duty not
to disclose the nonpublic information and are not party to a confidentiality
agreement. Any inappropriate use of such information by the recipient could be
harmful to the Fund and its shareholders. The Fund has no ongoing arrangements
to make available nonpublic portfolio holdings information, except as described
in the procedures below. Nonpublic portfolio holdings information is disclosed
by the Fund's portfolio management team, except in cases where the information
is disclosed by other personnel or agents of the Fund, as described below. The
following list describes the circumstances in which the Fund discloses its
portfolio holdings to select third parties:

Portfolio Managers. Portfolio managers shall have full daily access to
portfolio holdings for the Fund for which they have direct management
responsibility. Under Schroders' code of ethics, portfolio managers are
prohibited from disclosing nonpublic information to third parties. Portfolio
managers may release and discuss specific portfolio holdings with various
broker-dealers, on an as-needed basis, for purposes of analyzing the impact of
existing and future market changes on the prices, availability or demand, and
liquidity of such securities, as well as for the purpose of assisting portfolio
managers in the trading of such securities.

Schroders. In its capacity as adviser to the Fund, certain Schroders
personnel and personnel of its affiliates, SIMNA Ltd., Schroder Investment
Management Limited and Schroder Fund Advisors Inc. ("SFA") that deal directly
with the processing, settlement, review, control, auditing, reporting, or
valuation of portfolio trades will have full daily access to Fund portfolio
holdings. Employees of SIMNA Ltd., Schroder Investment Management Limited and
SFA. with access to portfolio holdings information are provided with training on
the Trust's policies and procedures regarding disclosure of portfolio holdings
information. Training is provided by the Schroders compliance department in the
applicable jurisdiction, after consultation with Schroders plc's global
compliance department located in London. The Trust's Chief Compliance Officer
reports to the Trustees regarding compliance by such affiliates.

External Servicing Agents. Appropriate personnel employed by entities
that assist in the review and/or processing of Fund portfolio transactions,
which include fund accounting agents, pricing services, and the custodian have
daily access to all Fund portfolio holdings. Portfolio holdings information is
provided on an ongoing basis to the Fund's administrator or sub-administrator,
as applicable. The administrator or sub-administrator, of the Fund is SEI
Investments Global Funds Services ("SEI"). PricewaterhouseCoopers LLP, the
Fund's independent registered public accounting firm, receives portfolio
holdings information yearly in connection with the Fund's audit. Schroders
utilizes the services of Institutional Shareholder Services ("ISS") to assist
with proxy voting. ISS receives full Fund portfolio holdings on a monthly basis
for the funds for which it provides services.

Ranking/Rating Agencies. Morningstar, Lipper, Thomson and Bloomberg
receive the Fund's full portfolio holdings no earlier than 60 calendar days
following the end of each calendar quarter.

Certain approved recipients of portfolio holdings information are
listed in the policies and procedures with respect to the disclosure of the
Fund's portfolio holdings approved by the Board of Trustees the Trust. Any
addition to the list of approved recipients of portfolio holdings information
included in such procedures (whether on an ongoing or a one-time basis) requires
approval by the President and Chief Compliance Officer of the Fund based on a
review of: (i) the type of Fund involved; (ii) the purpose for receiving the
holdings information; (iii) the intended use of the information; (iv) the
frequency of the information to be provided; (v) the length of the period, if
any, between the date of the information and the date on which the information
will be disclosed; (vi) the proposed recipient's relationship to the Fund; (vii)
the ability of Schroders to monitor that such information will be used by the
proposed recipient in

-30-

accordance with the stated purpose for the disclosure; (viii) whether a
confidentiality agreement will be in place with such proposed recipient; and
(ix) whether any potential conflicts exist regarding such disclosure between the
interests of the Fund's shareholders, on the one hand, and those of the Fund's
investment adviser, principal underwriter, or any affiliated person of the Fund.

In general, the Schroder Funds' policies and procedures provide that
disclosure by Schroders of information about the holdings of client accounts
other than the Fund's accounts is governed by the policies relating to
protection of client information pursuant to Regulation S-P. Details about the
holdings of any portfolio other than the Fund, however, may provide holdings
information that is substantially identical to holdings of the Fund that have
not yet been publicly released. To the extent that disclosure of non-Fund
portfolios to persons other than those enumerated in the Schroder Funds policies
and procedures would provide information substantially identical to the Fund's
portfolios, that disclosure is subject to the Schroder Funds policies and
procedures.

Nothing in the Schroder Funds' policies and procedures prohibits any
investment group from providing to a research service provider a coverage list
that identifies securities that the investment group follows for research
purposes provided that: (i) the list of securities does not consist exclusively
of the current portfolio holdings of the Fund; and (ii) no information about
actual holdings by any account is included.

The Board of Trustees of the Trust reviews and reapproves the policies
and procedures related to portfolio disclosure, including the list of approved
recipients, as often as deemed appropriate, but not less than annually, and may
make any changes it deems appropriate.

MANAGEMENT OF THE TRUST

The Trustees of the Trust are responsible for the general oversight of
each of the Trust's business. Subject to such policies as the Trustees may
determine, Schroders furnishes a continuing investment program for the Fund and
makes investment decisions on its behalf except that SIMNA Ltd., an affiliate of
Schroders, serves as sub-adviser responsible for portfolio management of the
Fund. Subject to the control of the Trustees, Schroders also manages the Funds'
other affairs and business.

The names, addresses and ages of the Trustees and executive officers
of the Trust, together with information as to their principal business
occupations during the past five years, are set forth in the following tables.
Unless otherwise indicated, each Trustee and executive officer shall hold the
indicated positions until his or her resignation or removal.

-31-

DISINTERESTED TRUSTEES

The following table sets forth certain information concerning Trustees
of the Trust who are not "interested persons" (as defined in the Investment
Company Act) of the Trusts (each, a "Disinterested Trustee").

NUMBER OF
TERM OF PRINCIPAL PORTFOLIOS IN
POSITION(S) OFFICE AND OCCUPATION(S) FUND COMPLEX OTHER DIRECTORSHIPS
NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF DURING PAST 5 OVERSEEN BY OUTSIDE OF SCHRODERS
DISINTERESTED TRUSTEE TRUST TIME SERVED YEARS TRUSTEE FUND COMPLEX
-------------------------- ----------- ----------- ----------------------- ------------- -----------------------

Peter E. Guernsey, 86 Trustee Indefinite Trustee of the Trust, 12 None
875 Third Avenue, 22nd Fl. since 1993 Schroder Capital Funds
New York, NY 10022 (Delaware), and
Schroder Global Series
Trust. Retired.
Formerly, Senior Vice
President, Marsh &
McLennan, Inc.
(insurance services).

Peter S. Knight, 56 Trustee Indefinite Trustee of the Trust, 12 Medicis; PAR
875 Third Avenue, 22nd Fl. since 1993 Schroder Capital Funds Pharmaceuticals;
New York, NY 10022 (Delaware), and Entremed and
Schroder Global Series Generation Investment
Trust; Director, Management Global
Schroder Japanese Equity Fund LLP.
Long/Short Fund;
Director, Schroder
Credit Renaissance
Fund, LP; Director,
Schroder Alternative
Strategies Fund;
President, Generation
Investment Management
U.S. Formerly, Managing
Director, MetWest
Financial (financial
services); President,
Sage Venture Partners
(investing); and
Partner, Wunder,
Knight, Forcsey &
DeVierno (law firm).

William L. Means, 71 Trustee Indefinite Trustee of the Trust, 12 None
875 Third Avenue, 22nd Fl. since 1997 Schroder Capital Funds
New York, NY 10022 (Delaware), and
Schroder Global Series
Trust. Retired.

James D. Vaughn, 62 Trustee Indefinite Trustee and Chairman of 12 AMG National Trust Bank
875 Third Avenue, 22nd Fl. since 2003 the Audit Committee of
New York, New York 10022 the Trust, Schroder
Capital Funds
(Delaware), and
Schroder Global Series
Trust. Retired.
Formerly, Managing
Partner, Deloitte &
Touche USA, LLP-Denver.

-32-

INTERESTED TRUSTEE

The following table sets forth certain information concerning a
Trustee who is an "interested person" (as defined in the Investment Company Act)
of the Trust (an "Interested Trustee").

NUMBER OF
TERM OF PORTFOLIOS IN
POSITION(S) OFFICE AND PRINCIPAL FUND COMPLEX OTHER DIRECTORSHIPS
NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF OCCUPATION(S) OVERSEEN BY OUTSIDE OF SCHRODERS
INTERESTED TRUSTEE TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE FUND COMPLEX
-------------------------- ----------- ----------- ----------------------- ------------- ----------------------

Catherine A. Mazza, 47* Trustee and Indefinite Trustee and Chairman of 12 None
875 Third Avenue, 22nd Fl. Chairman since 2006 the Trust, Schroder
New York, NY 10022 Capital Funds
(Delaware), and
Schroder Global Series
Trust; Senior Vice
President, Schroders;
President and Director,
Schroder Fund Advisors
Inc. Formerly,
President and Chief
Executive Officer,
Schroder Capital Funds
(Delaware) and Schroder
Series Trust.

* Ms. Mazza is an "interested person" (as defined in the 1940 Act) of the
Trust. She is an "interested person" due to her status as an officer and
employee of Schroders and its affiliates.

OFFICERS

The following table sets forth certain information concerning the
Trust's officers. The officers of the Trust are employees of the Trust's advisor
and certain of its affiliates.

NAME, AGE AND ADDRESS POSITION(S) HELD WITH TERM OF OFFICE PRINCIPAL OCCUPATION(S)
OF OFFICER TRUSTS AND LENGTH OF TIME SERVED DURING PAST 5 YEARS
-------------------------- --------------------- -------------------------- ----------------------------------

Catherine A. Mazza, 47 Trustee and Chairman Indefinite since 2006 Trustee and Chairman of the Trust,
875 Third Avenue, 22nd Fl. Schroder Capital Funds (Delaware),
New York, NY 10022 and Schroder Global Series Trust;
Head of Product Development -
Americas, Schroders; Director and
President, SFA. Formerly,
President and Chief Executive
Officer, the Trust and Schroder
Capital Funds (Delaware).

Mark A. Hemenetz, 51 President and Indefinite since May 2004 Chief Operating Officer -
875 Third Avenue, 22nd Fl. Principal Executive Americas, Schroders; Director and
New York, NY 10022 Officer Chairman, SFA; President and
Principal Executive Officer, the
Trust, Schroder Capital Funds
(Delaware), Schroder Global Series
Trust. Formerly, Executive Vice
President and Director of Investment
Management, Bank of New York.

-33-

Alan M. Mandel, 49 Treasurer & Principal Indefinite since 1998 Head of Fund Administration,
875 Third Avenue, 22nd Fl. Financial and Schroders; Director, SFA;
New York, NY 10022 Accounting Officer Treasurer & Principal Financial
and Accounting Officer, the Trust,
Schroder Capital Funds (Delaware),
and Schroder Global Series Trust.

Carin F. Muhlbaum, 45 Vice President and Indefinite Vice President General Counsel and Chief
875 Third Avenue, 22nd Fl. Secretary since 1998; Secretary Administrative Officer, Schroders;
New York, NY 10022 since 2001 Director and Secretary, SFA; Vice
President and Secretary, the
Trust, Schroder Capital Funds
(Delaware), and Schroder Global
Series Trust.

Stephen M. DeTore, 56 Chief Compliance Indefinite since 2005 Chief Compliance Officer,
875 Third Avenue, 22nd Fl. Officer Schroders; Director and Chief
New York, NY 10022 Compliance Officer, SFA; Chief
Compliance Officer, the Trust,
Schroder Capital Funds (Delaware),
and Schroder Global Series Trust.
Formerly, Deputy General Counsel,
Gabelli Asset Management Inc.;
Associate General Counsel, Gabelli
Asset Management, Inc.; Assistant
Director, Office of Examination
Support, U.S. Securities and
Exchange Commission.

Abby L. Ingber, 44 Chief Legal Officer Indefinite since 2006 Deputy General Counsel, Schroders;
875 Third Avenue, 22nd Fl. Chief Legal Officer, the Trust,
New York, NY 10022 Schroder Capital Funds (Delaware),
and Schroder Global Series Trust.
Formerly, Senior Counsel,
TIAA-CREF.

Angel Lanier, 46 Assistant Secretary Indefinite since 2005 Legal Assistant, Schroders;
875 Third Avenue, 22nd Fl. Assistant Secretary, SFA;
New York, NY 10022 Assistant Secretary of the Trust,
Schroder Capital Funds (Delaware),
and Schroder Global Series Trust.
Formerly, Associate, Schroders.

CERTAIN AFFILIATIONS

The following table lists the positions held by the Trust's officers
and any Interested Trustees with affiliated persons or principal underwriters of
the Trust:

POSITIONS HELD WITH
AFFILIATED PERSONS OR
PRINCIPAL UNDERWRITERS
NAME OF THE TRUST
------------------ -----------------------------------------------------------
Catherine A. Mazza Trustee and Chairman of the Trust, Schroder Capital Funds
(Delaware), and Schroder Global Series Trust; Head of
Product Development - Americas, Schroders; Director and
President, SFA.

Mark A. Hemenetz President and Principal Executive Officer of the Trust,
Schroder Capital Funds (Delaware), and Schroder Global
Series Trust; Chief Operating Officer - Americas,
Schroders; Director and Chairman, SFA.

Alan M. Mandel Head of Fund Administration, Schroders; Director, SFA;
Treasurer & Principal Financial and Accounting Officer, the
Trust, Schroder Capital Funds (Delaware), and Schroder
Global Series Trust.

-34-

Carin F. Muhlbaum General Counsel and Chief Administrative Officer,
Schroders; Director and Secretary, SFA; Vice President and
Secretary, the Trust, Schroder Capital Funds (Delaware),
and Schroder Global Series Trust.

Stephen M. DeTore Chief Compliance Officer, Schroders; Director and Chief
Compliance Officer, SFA; Chief Compliance Officer, the
Trust, Schroder Capital Funds (Delaware), and Schroder
Global Series Trust.

Abby L. Ingber Deputy General Counsel, Schroders; Chief Legal Officer, the
Trust, Schroder Capital Funds (Delaware), and Schroder
Global Series Trust.

Angel Lanier Legal Assistant, Schroders; Assistant Secretary, SFA;
Assistant Secretary, the Trust, Schroder Capital Funds
(Delaware), and Schroder Global Series Trust.

COMMITTEES OF THE BOARD OF TRUSTEES

Audit Committee. The Board of Trustees has a separately-designated
standing Audit Committee composed of all of the Disinterested Trustees of the
Trust (Messrs. Guernsey, Knight, Means and Vaughn). For the fiscal year ended
October 31, 2006, the Audit Committee was composed of all of the Disinterested
Trustees (Messrs. David N. Dinkins, Peter E. Guernsey, James I. Howell, Peter S.
Knight, William L. Means, Clarence F. Michalis, Hermann C. Schwab and James D.
Vaughn); effective November 1, 2006, Messrs. Dinkins, Howell, Michalis and
Schwab resigned as Trustees of the Trust and became Trustees Emeritus. The Audit
Committee provides oversight with respect to the internal and external
accounting and auditing procedures of the Fund and, among other things,
considers the selection of the independent registered public accounting firms
for the Fund and the scope of the audit, approves all audit and permitted
non-audit services proposed to be performed by those accountants on behalf of
the Fund, and considers other services provided by those accountants to the Fund
and Schroders and their affiliates and the possible effect of those services on
the independence of those accountants. The Audit Committee met three times
during the fiscal year ended October 31, 2006.

Nominating Committee. All of the Disinterested Trustees (Messrs.
Guernsey, Knight, Means and Vaughn) of the Trust serve as a Nominating Committee
responsible for reviewing and recommending qualified candidates to the Board in
the event that a position is vacated or created. For the fiscal year ended
October 31, 2006, the Nominating Committee was composed of all of the
Disinterested Trustees (Messrs. Dinkins, Guernsey, Howell, Knight, Means,
Michalis, Schwab and Vaughn); effective November 1, 2006, Messrs. Dinkins,
Howell, Michalis and Schwab resigned as Trustees and became Trustees Emeritus.
The Nominating Committee will consider nominees recommended by shareholders if
the Committee is considering other nominees at the time of the nomination and
the nominee meets the Committee's criteria. Nominee recommendations may be
submitted to the Secretary of the Trust at the Trust's principal business
address. The Nominating Committee met once during the fiscal year ended October
31, 2006.

SECURITIES OWNERSHIP

For each Trustee, the following table discloses the dollar range of
equity securities beneficially owned by the Trustee in the Fund, on an aggregate
basis, in any registered investment companies overseen by the Trustee within the
Schroder family of investment companies, as of December 31, 2006.

-35-

AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN
ALL REGISTERED
INVESTMENT COMPANIES
DOLLAR RANGE OF OVERSEEN BY TRUSTEE IN
EQUITY SECURITIES IN FAMILY OF INVESTMENT
NAME OF TRUSTEE FUND THE FUND COMPANIES*
---------------------- ----------------------- -------------------- -----------------------

Ranges: Ranges:
None None
$1-$10,000 $1-$10,000
$10,001-$50,000 $10,001-$50,000
$50,001-$100,000 $50,001-$100,000
Over $100,000 Over $100,000

DISINTERESTED TRUSTEES

PETER E. GUERNSEY None