Abstract: The present invention is concerned with a hydrocurable composition suitable for use as coatings, adhesives or grouts. The composition contains oxazolidine compounds and free isocyanate group containing prepolymers. The prepolymers are obtained by the reaction of polyisocyanates with special types of dispersions wherein the dispersed phase is synthesized in situ in a dispersing media of polyhydroxyl compounds. The dispersed phase may be a free radical addition polymer, an aminoplast polycondensate or a polyisocyanate addition product. In the last case, the non-isocyanate reactants used to form the dispersed phase are substantially more reactive with isocyanates than the dispersing media. An especially preferred composition is based on urethane oxazolidines and prepolymers of aliphatic or cycloaliphatic isocyanates with dispersions of isocyanate hydrazine or hydrazine hydrate condensates in polyhydroxy-polyethers having molecular weights of 200 to 16,000.