<PAGE>
REPORT TO SHAREHOLDERS
Dear Valued Shareholder,
I am pleased to present you with the White Oak Growth Stock Fund and Pin Oak
Aggressive Stock Fund annual report for the fiscal year ended October 31, 1997.
Enclosed you will find information on the holdings of each of the portfolios,
along with Management's Discussion and Analysis, Financial Highlights and the
Statement of Changes in Net Assets.
The past year has been a very successful time for our portfolios. Our style of
concentrated investing, low portfolio turnover, and low fund expense ratios,
along with strong performance returns, have led to favorable press coverage in
financial publications such as Money, Kiplinger's, Individual Investor, and
Barron's.
Although we consider ourselves investment professionals first and foremost, we
continue to look for service enhancements that will make investing an easy and
convenient experience for you. We have a new, dedicated toll-free number at
1-888-4OAK-FUND (888-462-5386) which we will soon be expanding to include
automated prices and account information, accessible 24 hours a day. Also,
please visit our newly launched web site at www.oakassociates.com for
performance updates and market commentary. We appreciate any feedback you may
have on these two new features or any of our other service areas.
We welcome the many new shareholders in our mutual funds and thank you, along
with investors who have joined us over the past five years, for the confidence
you have placed in our firm. We will continue to work hard to provide you with
the finest investment results and to assist you in achieving your long-term
financial goals.
Kindest regards,
/s/ James D. Oelschlager
- ------------------------
James D. Oelschlager
Portfolio Manager
1
<PAGE>
MANAGER'S DISCUSSION OF FUND PERFORMANCE
OCTOBER 31, 1997
GENERAL ECONOMIC OUTLOOK
It has been another outstanding year for the stock market. In spite of a few
rough spots, this year proved to be very positive, surpassing even our own
bullish expectations. The Standard & Poor's 500 Index gained 32% for the twelve
month period ending October 31st, 1997, the third-straight twelve month period
in which both the Dow Jones Industrial Average and the Standard & Poor's 500
Index surged more than twenty-four percent. While the strong economic
environment does warrant positive stock market returns, such remarkable, back to
back years are highly unusual. We continue to caution our shareholders and
clients that such returns should not be expected on a regular basis.
This year, the markets driving forces, earnings and interest rates, continued in
the right direction. Interest rates drifted lower and now rest at just slightly
above six percent. Corporate earnings were healthy, but perhaps a little more
volatile than in years past due to currency-related issues and temporary
inventory corrections, particularly within the technology sector.
Looking forward to 1998, we do not foresee anything that will likely alter the
long-term downward trend in interest rates, and as long as this remains the
case, the markets should do well. In spite of strong employment levels and high
operating rates among manufacturing companies, inflation continues to subside
with many companies expressing a complete and unprecedented inability to raise
prices or pass on cost increases to customers. The global economy has opened new
avenues for competition, fueling a healthier, more productive environment. We
believe that the United States is once again the economic envy of the world, a
remarkable turnaround from the Japan-led eighties.
Clearly the situation in Southeast Asia needs to be monitored. But in many
respects, good news for consumers may ensue as these economic difficulties in
the rest of the world increase competitive pressures and bring about even lower
prices. In most cases, the companies we own manufacture far more products within
Southeast Asia than they sell to the region, a factor which may benefit costs
more than sales. Surely these economies, Malaysia, Thailand, and China, for
instance, represent tremendous growth opportunities for U.S. goods, but they
account for a small fraction of overall sales today. If anything, the risk of
deflation, rather than inflation, would seem more likely.
With respect to earnings, we wouldn't be surprised to see some slowing this
year, but we are not forecasting a major recession. In this type of environment,
one of slowing but growing earnings, valuation becomes increasingly important.
We are paying particularly close attention to what we pay for new positions in
the funds.
Our conclusion remains the same; 1998 should be a good fundamental year, but
market performance, at least the likes of the past few years should not be taken
for granted. We continue to believe that the health care, technology and
financial services sectors offer the average investor the best opportunity for
growth and do not anticipate any radical changes to our outlook for those
sectors or our investments within them during the coming year. The last few
weeks have been rocky, but over the long term, should prove to be nothing more
than a minor blip, a small price to pay for a nice return several years down the
road.
INVESTMENT PHILOSOPHY
In the current environment of low and declining interest rates, we continue to
focus on companies that are able to generate consistently superior earnings
growth over a multiple-year time frame. If we can identify strong macroeconomic
trends and trace them to industries with long term potential, both trading costs
and taxes can be
2
<PAGE>
MANAGER'S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
October 31, 1997
minimized through low portfolio turnover. By paying attention to valuation at
the time of purchase, we can hope to maximize potential returns. As has been the
case for nearly a decade, health care, technology and financial services remain
our favorite industries.
HISTORICAL PERFORMANCE RESULTS
<TABLE>
<CAPTION>
S&P 500
PERIOD WHITE OAK* PIN OAK* INDEX
- ------ ---------- -------- -------
<S> <C> <C> <C>
1 Year 34.5% 13.9% 32.1%
3 Years 35.4% 18.8% 27.5%
5 Years 23.6% 13.6% 19.8%
Inception to date
Annualized 23.2% 13.5% 18.7%
Cumulative 198.4% 94.6% 145.2%
</TABLE>
All results, unless noted, are annualized periods ending October 31st, 1997.
*Inception date: August 3, 1992.
THE WHITE OAK GROWTH STOCK FUND
The White Oak Growth Stock Fund's performance was solid once again in 1997,
gaining 34.5% for the twelve months ending October 31, 1997. On an annualized
basis since the inception date of August 3, 1992, the fund has risen 23.2% per
year compared to an 18.7% annualized gain for the Standard & Poor's 500 Index.
The White Oak Growth Stock Fund has consistently ranked among the top growth
funds for the three and five year periods and our successful concentrated
investment approach has been the subject of numerous articles in financial
magazines. As a result, new shareholders into the fund have increased
tremendously. While representing significant growth, we continue to find
attractive opportunities for investing the daily fund flows.
Performance during the last twelve months was broad-based, with many names
gaining significant ground. Top performers included Bankers Trust and MBNA in
banking and financial services, Cisco Systems in networking, Pfizer among drug
stocks, Microsoft in software, Linear Technology in semiconductors, Compaq in
computer hardware, and Morgan Stanley Dean Witter among securities firms. A few
holdings, 3com, First Data, and Parametric, were a drag on the portfolio's
performance. In most cases, we are holding onto or adding to these positions
since we believe their long term opportunities remain sound.
While valuations in the health care area, particularly pharmaceutical stocks,
look a bit on the rich side, many technology and financial issues appear
inexpensive given the recent market correction. We are adding to positions on an
opportunistic basis as fund flows permit and are selling infrequently, often
only when valuations appear excessive. Last year, portfolio turnover was a low
8% and the capital gain distribution, only the second such distribution in the
fund's history, should amount to less than seven cents per share.
3
<PAGE>
MANAGER'S DISCUSSION OF FUND PERFORMANCE (CONTINUED)
October 31, 1997
In selecting stocks for the White Oak Growth Stock Fund, we stay focused on
large, established companies in attractive growth industries. The companies we
select often have a strong global presence and typically generate over fifty
percent of revenues and earnings from overseas markets. The fund's twenty-four
holdings have a median forward price earnings multiple of 23x and a median
market capitalization of $42.5 billion.
[Printed Version, a Graph Depicts the Following Information]
Comparison of Changes in the Value of a $25,000 Investment in the White Oak
Growth Stock Fund, versus the S&P 500 Composite Index
White Oak Growth Stock Fund S&P 500 Composite Index
Aug 92 $25,000 $25,000
Oct 92 $27,055 $25,381
Oct 93 $28,026 $29,158
Oct 94 $31,456 $30,283
Oct 95 $47,835 $38,281
Oct 96 $58,039 $47,499
Oct 97 $78,039 $62,751
Total Return(1)
- ----------------------------------------------------------
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception
Return Return Return to Date
- ----------------------------------------------------------
34.46% 35.37% 23.60% 23.18%
- ----------------------------------------------------------
(1) These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an investment
will fluctuate, so an investor's shares, when redeemed, may be worth more or
less than their original cost.
THE PIN OAK AGGRESSIVE STOCK FUND
The Pin Oak Aggressive Stock Fund gained 13.9% during the twelve-month period
ending October 31st, 1997, an improvement over last year's return. Nevertheless,
the fund has lagged the performance of its peers and the Standard & Poor's 500
Index since inception. While a 13.5% annualized, inception-to-date return is a
healthy absolute number, we recognize that we're not keeping relative pace with
our competitors or the various benchmarks. A difficult environment for smaller
company stocks and a few poor picks have kept the fund from doing better,
something we're working hard to reverse.
Many of the top holdings in the fund performed well, but most were the bigger
companies in the fund like Cisco, Compaq and Applied Materials. These larger
stocks were purchased when they were considerably smaller entities than they are
today and we have not sold them because we view their fundamentals as strong and
their future return potential as high. Aspect Telecommunications, Xylan and
International Network Services are three issues
4
<PAGE>
MANAGER'S DISCUSSION OF FUND PERFORMANCE (CONCLUDED)
October 31, 1997
whose valuations fell considerably when growth rates proved to be overly
optimistic. Nevertheless we continue to hold these stocks, believing that
revised growth estimates are both achievable and compelling from a valuation
perspective.
In selecting stocks for the fund we focus on small to medium sized companies
positioned within emerging growth industries. Companies in this category
typically have less than a billion dollars in annual sales. While a few of the
Pin Oak Aggressive Stock Fund's top holdings are larger companies also owned by
the White Oak Growth Stock Fund, the majority of the names are considerably
smaller. For comparison purposes, the fund has a median market capitalization of
$4.8 billion and a median forward price earnings ratio of 24x. The Pin Oak
Aggressive Stock Fund owns eighteen securities, down from last year due to the
mergers of several companies within the portfolio. Turnover for the last twelve
months was 17%.
[Printed Version, a Graph Depicts the Following Information]
Comparison of Change in the Value of a $25,000 Investment in the Pin Oak
Aggressive Stock Fund, versus the S&P 500 Composite Index
Pin Oak Aggressive Stock Fund S&P 500 Composite Index
Aug 92 $25,000 $25,000
Oct 92 $27,343 $25,381
Oct 93 $33,566 $29,158
Oct 94 $30,854 $30,283
Oct 95 $46,068 $38,281
Oct 96 $45,427 $47,499
Oct 97 $51,755 $62,751
Total Return(1)
- ----------------------------------------------------------
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception
Return Return Return to Date
- ----------------------------------------------------------
13.93% 18.82% 13.61% 13.54%
- ----------------------------------------------------------
(1) These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an investment
will fluctuate, so an investor's shares, when redeemed, may be worth more or
less than their original cost.
5
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
October 31, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of
Pin Oak Aggressive Stock Fund and
White Oak Growth Stock Fund of
The Advisors' Inner Circle Fund:
We have audited the accompanying statements of net assets of Pin Oak Aggressive
Stock Fund and White Oak Growth Stock Fund (the "Funds"), two of the funds
constituting The Advisors' Inner Circle Fund, as of October 31, 1997, and the
related statements of operations, changes in net assets and financial highlights
for the periods presented. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Pin
Oak Aggressive Stock Fund and White Oak Growth Stock Fund of The Advisors' Inner
Circle Fund as of October 31, 1997, the results of their operations, changes in
their net assets, and financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 3, 1997
6
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1997
<TABLE>
<CAPTION>
Market
PIN OAK AGGRESSIVE Value
STOCK FUND Shares (000)
- ----------------------------------------------------
<S> <C> <C>
COMMON STOCK (97.7%)
COMPUTER COMMUNICATIONS EQUIPMENT (21.7%)
3Com* 60,375 $ 2,502
Cisco Systems* 42,400 3,478
Xylan* 55,300 885
--------
6,865
--------
COMPUTER-AIDED DESIGN SOFTWARE (12.1%)
Parametric Technology* 32,000 1,412
Synopsys* 62,029 2,411
--------
3,823
--------
COMPUTERS & SERVICES (4.5%)
International Network
Services* 65,700 1,445
--------
COMPUTERS - HARDWARE (12.0%)
Compaq Computer* 34,250 2,183
Sun Microsystems* 47,300 1,620
--------
3,803
--------
INSURANCE (3.2%)
Mutual Risk Management
Limited 39,732 1,031
--------
MANAGED HEALTH CARE SERVICES (7.1%)
Express Scripts* 40,000 2,255
--------
SEMI-CONDUCTORS/ELECTRONICS (20.0%)
Atmel* 53,400 1,382
Linear Technology 30,500 1,918
Maxim Integrated Products* 29,700 1,968
Xilinx* 30,900 1,054
--------
6,322
--------
SEMI-CONDUCTORS CAPITAL
EQUIPMENT MANUFACTURING (6.4%)
Applied Materials* 61,000 2,036
--------
TELECOMMUNICATIONS EQUIPMENT (10.7%)
Ascend Communications* 48,900 1,320
Aspect Telecommunications* 75,300 1,807
West Teleservices* 18,000 257
--------
3,384
--------
<CAPTION>
Market
PIN OAK AGGRESSIVE Par Value
STOCK FUND (000) (000)
- ----------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCK
(Cost $20,824) $ 30,964
--------
REPURCHASE AGREEMENT (2.4%)
Lehman Brothers 5.27%, dated
10/31/97, matures
11/03/97, repurchase price
$757,217 (collateralized
by U.S. Treasury Bond, par
value $623,983, 8.00%,
11/15/21: market value:
$781,411) 757 757
--------
TOTAL REPURCHASE AGREEMENT
(Cost $757) 757 757
--------
TOTAL INVESTMENTS (100.1%)
(Cost $21,581) 31,721
--------
OTHER ASSETS AND LIABILITIES, NET
(-0.1%) (40)
--------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 1,628,336 outstanding
shares of beneficial interest 22,919
Accumulated net realized loss on
investments (1,378)
Net unrealized appreciation on
investments 10,140
--------
TOTAL NET ASSETS (100.0%) $ 31,681
========
Net Asset Value, Offering &
Redemption Price Per Share $ 19.46
========
</TABLE>
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1997
<TABLE>
<CAPTION>
Market
WHITE OAK GROWTH Value
STOCK FUND Shares (000)
- ----------------------------------------------------
<S> <C> <C>
COMMON STOCK (94.4%)
BANKS (14.2%)
Banker's Trust New York 66,500 $ 7,847
Citicorp 134,650 16,839
MBNA 339,750 8,940
NationsBank 297,200 17,795
--------
51,421
--------
COMPUTER COMMUNICATIONS EQUIPMENT (12.3%)
3Com* 387,900 16,074
Bay Networks* 91,000 2,878
Cisco Systems* 313,300 25,700
--------
44,652
--------
COMPUTER-AIDED DESIGN SOFTWARE (4.5%)
Parametric Technology* 371,100 16,375
--------
COMPUTER HARDWARE (11.7%)
Compaq Computer 256,500 16,352
Hewlett Packard 171,800 10,598
Sun Microsystems* 450,200 15,419
--------
42,369
--------
FINANCIAL SERVICES (1.9%)
First Data 235,100 6,833
--------
INSURANCE (4.8%)
American International
Group 170,863 17,439
--------
MEDICAL INSTRUMENTS (4.7%)
Medtronic 389,600 16,948
--------
PHARMACEUTICALS (10.1%)
Merck 183,100 16,341
Pfizer 284,900 20,157
--------
36,498
--------
PREPACKAGED SOFTWARE (5.9%)
Microsoft* 18,600 2,418
Oracle* 527,750 18,884
--------
21,302
--------
SECURITIES BROKER (4.1%)
Morgan Stanley, Dean
Witter, Discover 302,775 14,836
--------
SEMI-CONDUCTOR CAPITAL
EQUIPMENT MANUFACTURING (4.8%)
Applied Materials* 527,200 17,595
--------
<CAPTION>
Shares/ Market
WHITE OAK GROWTH Par Value
STOCK FUND (000) (000)
- ----------------------------------------------------
<S> <C> <C>
SEMI-CONDUCTORS/ELECTRONICS (8.2%)
Intel 217,200 $ 16,724
Linear Technology 206,300 12,971
--------
29,695
TELECOMMUNICATIONS EQUIPMENT (7.2%)
Ascend Communications* 560,133 15,133
Tellabs* 200,000 10,800
--------
25,933
--------
TOTAL COMMON STOCK
(Cost $319,165) 341,896
--------
REPURCHASE AGREEMENT (6.3%)
Lehman Brothers
5.65%, dated 10/31/97,
matures 11/03/97,
repurchase price
$22,994,003
(collateralized by U.S.
Treasury Note, par value
$23,275,000, 5.75%,
09/30/99: market value:
$23,443,534) 22,983 22,983
--------
TOTAL REPURCHASE AGREEMENT
(Cost $22,983) 22,983 22,983
--------
TOTAL INVESTMENTS (100.7%)
(Cost $342,148) 364,879
--------
OTHER ASSETS AND LIABILITIES, NET
(-0.7%) (2,475)
--------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 12,371,448 outstanding
shares of beneficial interest 338,827
Accumulated net realized gain on
investments 846
Net unrealized appreciation on
investments 22,731
TOTAL NET ASSETS (100.0%) $362,404
========
Net Asset Value, Offering &
Redemption Price Per Share $ 29.29
========
</TABLE>
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE STOCK GROWTH STOCK
FUND FUND
---------------- ------------
11/01/96 11/01/96
TO 10/31/97 TO 10/31/97
(000) (000)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividends................................................. $ 14 $ 1,050
Interest.................................................. 58 612
- ---------------------------------------------------------------------------------------------
Total Investment Income................................. 72 1,662
- ---------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees.................................. 221 1,172
Investment Advisory Fee Waiver............................ (73) (242)
Administrator Fees........................................ 56 275
Custodian Fees............................................ 4 4
Transfer Agent Fees....................................... 37 160
Professional Fees......................................... 12 26
Trustee Fees.............................................. 5 12
Registration Fees......................................... 23 144
Printing.................................................. 8 19
Insurance and Other Fees.................................. 3 4
- ---------------------------------------------------------------------------------------------
Total Expenses.......................................... 296 1,574
- ---------------------------------------------------------------------------------------------
Net Investment Income (Loss).......................... (224) 88
- ---------------------------------------------------------------------------------------------
Net Realized Gain (Loss) on Securities Sold............... (74) 898
Net Unrealized Appreciation of Investment Securities...... 3,097 15,492
- ---------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments......... 3,023 16,390
- ---------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations...... $2,799 $16,478
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE STOCK GROWTH STOCK
FUND FUND
------------------------- -------------------------
11/01/96 11/01/95 11/01/96 11/01/95
TO 10/31/97 TO 10/31/96 TO 10/31/97 TO 10/31/96
(000) (000) (000) (000)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss)............................ $ (224) $ (120) $ 88 $ 37
Net Realized Gain (Loss) on Securities Sold............. (74) (492) 898 272
Net Unrealized Appreciation of Investment Securities.... 3,097 546 15,492 3,054
- -----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From
Operations.......................................... 2,799 (66) 16,478 3,363
- -----------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income................................... -- -- (137) (41)
Realized Capital Gains.................................. -- -- (108) --
- -----------------------------------------------------------------------------------------------------------------
Total Distributions................................... -- -- (245) (41)
- -----------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued........................................... 19,483 11,945 374,802 13,907
Shares Issued in Lieu of Cash Distributions............. -- -- 238 40
Shares Redeemed......................................... (14,339) (3,793) (54,978) (1,655)
- -----------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Capital Share
Transactions........................................ 5,144 8,152 320,062 12,292
- -----------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets..................... 7,943 8,086 336,295 15,614
- -----------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period................................... 23,738 15,652 26,109 10,495
- -----------------------------------------------------------------------------------------------------------------
End of Period......................................... $31,681 $ 23,738 $362,404 $26,109
- -----------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued.................................................. 1,002 707 13,049 697
Issued in Lieu of Cash Distributions.................... -- -- 10 2
Redeemed................................................ (763) (220) (1,881) (86)
- -----------------------------------------------------------------------------------------------------------------
Net Increase in Share Transactions...................... 239 487 11,178 613
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For a Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Net Realized and Net
Asset Net Unrealized Distributions Distributions Asset Net Assets Ratio of
Value Investment Gains or from Net from Value End of Expenses to
Beginning Income (Losses) on Investment Capital End of Total Period Average
of Period (Loss) Securities Income Gains Period Return (000) Net Assets
--------- ---------- ------------ ------------- ------------- ------ ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------
PIN OAK AGGRESSIVE STOCK FUND
- -----------------------------
1997 $17.08 (0.11) 2.49 -- -- $19.46 13.93 % $ 31,681 0.99%
1996 $17.32 (0.09) (0.15) -- -- $17.08 (1.39)% $ 23,738 0.96%
1995 $11.60 (0.08) 5.80 -- -- $17.32 49.31 % $ 15,652 0.98%
1994 $12.62 (0.06) (0.96) -- -- $11.60 (8.08)% $ 9,624 0.96%
1993 $10.28 (0.05) 2.39 -- -- $12.62 22.76 % $ 9,079 0.98%
1992(1) $10.00 -- 0.28 -- -- $10.28 11.57 % $ 4,127 1.00%*
- ---------------------------
WHITE OAK GROWTH STOCK FUND
- ---------------------------
1997 $21.88 0.03 7.49 (0.04) (0.07) $29.29 34.46 % $362,404 0.98%
1996 $18.08 0.05 3.80 (0.05) -- $21.88 21.33 % $ 26,109 0.95%
1995 $11.92 0.04 6.15 (0.03) -- $18.08 52.07 % $ 10,495 0.97%
1994 $10.64 0.02 1.28 (0.02) -- $11.92 12.24 % $ 5,942 0.97%
1993 $10.33 0.05 0.32 (0.06) -- $10.64 3.59 % $ 5,539 0.97%
1992(1) $10.00 0.02 0.33 (0.02) -- $10.33 14.30 % $ 3,195 1.00%*
<CAPTION>
Ratio of
Net Ratio of Ratio of Net
Income Expenses to Income (Loss)
(Loss) Average Net to Average Net
to Assets Assets
Average (Excluding (Excluding Portfolio Average
Net Waivers and Waivers and Turnover Commission
Assets Reimbursements) Reimbursements) Rate Rate (2)
-------- --------------- --------------- --------- ----------
<S> <C> <C> <C> <C> <C>
- -----------------------------
PIN OAK AGGRESSIVE STOCK FUND
- -----------------------------
1997 (0.75)% 1.23% (0.99)% 17.30% $0.0560
1996 (0.62)% 1.47% (1.13)% 31.65% $0.0617
1995 (0.70)% 1.65% (1.37)% 49.28% --
1994 (0.62)% 1.74% (1.40)% 48.88% --
1993 (0.48)% 2.07% (1.57)% 68.32% --
1992(1) 0.03 %* 4.06%* (3.03)%* 4.00% --
- ---------------------------
WHITE OAK GROWTH STOCK FUND
- ---------------------------
1997 0.06 % 1.14% (0.10)% 7.90% $0.0598
1996 0.23 % 1.50% (0.32)% 8.07% $0.0599
1995 0.29 % 2.06% (0.80)% 22.43% --
1994 0.19 % 2.24% (1.08)% 37.42% --
1993 0.54 % 2.71% (1.20)% 27.48% --
1992(1) 0.74 %* 4.78%* (3.04)%* -- --
</TABLE>
* Annualized
(1) The Pin Oak Aggressive Stock Fund and the White Oak Growth Stock Fund
commenced operations on August 3, 1992.
(2) Average commission rate paid per share for the security purchases and sales
made during the period.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1997
1. ORGANIZATION:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under an Amended and Restated Agreement and Declaration of Trust
dated February 18, 1997. The Trust is registered under the Investment Company
Act of 1940, as amended, as a diversified open-end management investment company
with nine portfolios, three of which have not commenced operations as of October
31, 1997. The financial statements included herein are those of the Pin Oak
Aggressive Stock Fund and the White Oak Growth Stock Fund (the "Funds"). The
financial statements of the remaining portfolios are presented separately. The
assets of each portfolio are segregated, and a shareholder's interest is limited
to the portfolio in which shares are held. The Funds' prospectus provides a
description of each Fund's investment objectives, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Funds.
Security Valuation -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price.
Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost, which approximates market value.
Federal Income Taxes -- It is each Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions
of the Internal Revenue Code of 1986, as amended. Accordingly, no
provisions for Federal income taxes are required.
Security Transactions and Related Income -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date, and interest income
is recognized on the accrual basis. Costs used in determining realized
gains and losses on the sales of investment securities are those of the
specific securities sold during the respective holding period.
Net Asset Value Per Share -- The net asset value per share of each Fund is
calculated on each business day by dividing the total value of each Fund's
assets, less liabilities, by the number of shares outstanding.
Expenses -- Expenses that are directly related to one of the Funds are
charged to that Fund. Other operating expenses of the Trust are prorated to
the Funds on the basis of relative daily net assets.
Distributions to Shareholders -- Distributions from net investment income
are declared and paid to Shareholders on a quarterly basis. Any net
realized capital gains on sales of securities are distributed to
Shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with U.S. Federal income tax regulations, which
may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. In accordance with Statement of Position 93-2, the Pin
Oak Aggressive Stock Fund reclassed $225,000 from Net
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE ADVISORS' INNER CIRCLE FUND
October 31, 1997
Investment Income to Paid In Capital in the Statement of Net Assets. This
reclassification, which has no impact on the net asset value of the Fund is
primarily attributable to net operating losses and differences in the
computation of distributable income under federal income tax rules versus
generally accepted accounting principles.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. TRANSACTIONS WITH AFFILIATES:
Certain officers of the Trust are also officers of SEI Fund Resources (the
"Administrator") and/or SEI Investments Distribution Co. (the "Distributor").
Such officers are paid no fees by the Trust for serving as officers of the
Trust.
4. ADMINISTRATION, SHAREHOLDER SERVICING AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator were parties to an Administration Agreement
dated November 14, 1991, as amended and restated on May 17, 1994, under which
the Administrator provided management and administrative services for an annual
fee of .20% of the average daily net assets of each of the Funds. There was a
minimum annual fee of $50,000 per Fund.
Effective August 12, 1997, the Trust and the Administrator are parties to an
agreement under which the Administrator provides management and administrative
services for an annual fee of 0.15% of the average daily net assets of each of
the Funds up to $250 million, 0.12% on the next $200 million, 0.10% on the next
$200 million, and 0.08% of such assets in excess of $650 million. There is a
minimum annual fee of $50,000 per fund.
DST Systems, Inc. (the "Transfer Agent") serves as the transfer agent and
dividend distributing agent for the Funds under a transfer agency agreement with
the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated
November 14, 1991, as amended and restated on August 8, 1994. The Distributor
receives no fees for its distribution services under this agreement.
5. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENTS:
The Trust and Oak Associates, Ltd. (the "Adviser") are parties to an Investment
Advisory Agreement dated July 20, 1992 under which the Adviser receives an
annual fee equal to .74% of the average daily net assets of each Fund. The
Adviser has voluntarily agreed to waive all or a portion of its fees (and to
reimburse the Funds' expenses) in order to limit operating expenses to not more
than 1.00% of the average daily net assets of each of the Funds. Fee waivers and
expense reimbursements are voluntary and may be terminated at any time.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) THE ADVISORS' INNER CIRCLE FUND
October 31, 1997
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Funds. Fees of
the Custodian are being paid on the basis of the net assets of the Funds. The
Custodian plays no role in determining the investment policies of the Funds or
which securities are to be purchased or sold by the Funds.
6. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the year ended October 31, 1997 are as follows:
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE GROWTH
STOCK FUND STOCK FUND
(000) (000)
---------- ----------
<S> <C> <C>
Purchases
Government............ $ -- $ --
Other................. 9,478 312,761
Sales
Government............ $ -- $ --
Other................. 4,946 11,782
</TABLE>
At October 31, 1997, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Funds
at October 31, 1997, are as follows:
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE GROWTH
STOCK FUND STOCK FUND
(000) (000)
---------- ----------
<S> <C> <C>
Aggregate gross
unrealized
appreciation.......... $13,696 $45,617
Aggregate gross
unrealized
depreciation.......... (3,556) (22,886)
------- -------
Net unrealized
appreciation.......... $10,140 $22,731
======= =======
</TABLE>
7. CAPITAL LOSS CARRYFORWARDS:
The capital loss carryforwards at October 31, 1997 for federal income tax
purposes are as follows:
Pin Oak Aggressive
Stock Fund $ 17,985 expiring in 2000
288,322 expiring in 2001
153,978 expiring in 2002
351,788 expiring in 2003
492,382 expiring in 2004
73,224 expiring in 2005
----------
$1,377,679
The capital loss carryforwards will be used to offset future net realized gains,
if any, and such gains so offset will not be distributed.
8. SUBSEQUENT EVENTS:
At the Trust's November 10, 1997 board meeting, the Board approved a
reorganization of the Funds, out of the Advisor's Inner Circle Fund into the Oak
Associates Funds. This transaction is expected to occur in the first quarter of
1998.
14
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(UNAUDITED)
For the shareholders that do not have an October 31, 1997 taxable year end, this
notice is for information purposes only. For shareholders with an October 31,
1997 taxable year end, please consult your tax adviser as to the pertinene of
this notice.
For the fiscal year ended October 31, 1997, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
White Oak Growth Stock Fund................................. 44% 56% 100%
Pin Oak Aggressive Stock Fund............................... 0% 0% 0%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN TAX
PORTFOLIO DIVIDENDS(1) INTEREST CREDIT
--------- ------------ -------- ------
<S> <C> <C> <C>
White Oak Growth Stock Fund................................. 100% 0% 0%
Pin Oak Aggressive Stock Fund............................... 0% 0% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
divdiends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income distributions
of the portfolio.
15
<PAGE>
The Advisors' Inner Circle Fund
P.O. Box 419009
Kansas City, MO 64141-6009
Portfolios:
Pin Oak Aggressive Stock Fund
White Oak Growth Stock Fund
Investment Advisor:
Oak Associates, Ltd.
Distributor:
SEI Investments Distribution Co.
Administrator:
SEI Fund Resources
Legal Counsel:
Morgan, Lewis & Bockius LLP
Independent Public Accountants:
Arthur Andersen LLP
To open an account, receive account information, make inquiries or request
literature:
TOLL-FREE
1-888-4OAK-FUND
(1-888-462-5386)
ANNUAL REPORT
OCTOBER 31, 1997
PIN OAK AGGRESSIVE
STOCK FUND
WHITE OAK GROWTH
STOCK FUND
Advised by OAK
ASSOCIATES, ltd.
OAK-F-020-07000
