<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1997
FILE NO. 33-42484
FILE NO. 811-6400
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 31 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 32 /X/
------------------------
THE ADVISORS' INNER CIRCLE FUND
(Exact Name of Registrant as Specified in Charter)
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, Including Area Code (800) 932-7781
DAVID G. LEE
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)
COPIES TO:
<TABLE>
<S> <C>
Richard W. Grant, Esquire John H. Grady, Jr., Esquire
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
2000 One Logan Square 1800 M Street, N.W.
Philadelphia, Pennsylvania 19103 Washington, D.C. 20036
</TABLE>
------------------------
It is proposed that this filing become effective (check appropriate box)
<TABLE>
<C> <S>
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / 75 days after filing pursuant to paragraph (a)
/X/ on September 15, 1997 pursuant to paragraph (a) of Rule 485.
</TABLE>
Registrant has elected to maintain registration of an indefinite number of
shares pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant filed its 24f-2 Notice for the fiscal year ended October 31, 1996 on
December 30, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- -------------------------------------------------
<S> <C> <C>
PART A--SAGE CORPORATE BOND FUND
Item 1. Cover Page....................................... Cover Page
Item 2. Synopsis......................................... Summary; Expense Summary
Item 3. Condensed Financial Information.................. Financial Highlights
Item 4. General Description of Registrant................ The Fund and the Portfolio; Investment Objective
and Policies; Investment Limitations; General
Information--The Fund
Item 5. Management of the Fund........................... General Information--Trustees of the Fund; The
Adviser; The Administrator; The Transfer Agent
Item 5A. Management's Discussion of Fund Performance...... **
Item 6. Capital Stock and Other Securities............... General Information--Voting Rights; General
Information--Shareholder Inquiries; General
Information-- Dividends and Distributions;
Taxes
Item 7. Purchase of Securities Being Offered............. Purchase and Redemption of Shares
Item 8. Redemption or Repurchase......................... Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings........................ *
PART B--SAGE CORPORATE BOND FUND
Item 10. Cover Page....................................... Cover Page
Item 11. Table of Contents................................ Table of Contents
Item 12. General Information and History.................. The Fund
Item 13. Investment Objectives and Policies............... Investment Objective and Policies (Prospectus);
Investment Limitations
Item 14. Management of the Registrant..................... General Information--Trustees of the Fund
(Prospectus); Trustees and Officers of the
Fund; The Adviser; The Administrator
Item 15. Control Persons and Principal Holders of
Securities..................................... Trustees and Officers of the Fund
Item 16. Investment Advisory and Other Services........... The Adviser (Prospectus and Statement of
Additional Information); The Administrator
(Prospectus and Statement of Additional
Information); The Distributor (Prospectus and
Statement of Additional Information); The
Transfer Agent (Prospectus); General
Information--Counsel and Independent Public
Accountants (Prospectus); General
Information--Custodian (Prospectus)
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- -------------------------------------------------
<S> <C> <C>
Item 17. Brokerage Allocation............................. Portfolio Transactions
Item 18. Capital Stock and Other Securities............... Description of Shares
Item 19. Purchase, Redemption, and Pricing of Securities
Being Offered.................................. Purchase and Redemption of Shares (Prospectus and
Statement of Additional Information);
Determination of Net Asset Value
Item 20. Tax Status....................................... Taxes (Prospectus); Taxes
Item 21. Underwriters..................................... The Distributor
Item 22. Calculation of Performance Data.................. Computation of Total Return
Item 23. Financial Statements............................. *
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
- ------------------------
* Not Applicable
** Information required under Item 5A is or will be (as applicable) contained
in the Fund's Annual Reports to Shareholders.
(ii)
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A POST-
EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE.
<PAGE>
PROSPECTUS DATED , 1997
SUBJECT TO COMPLETION
THE ADVISORS' INNER CIRCLE FUND
Investment Adviser:
SAGE GLOBAL FUNDS, LLC
THE ADVISORS' INNER CIRCLE FUND (the "Trust") provides a convenient and
economical means of investing in professionally managed portfolios of
securities. This Prospectus offers shares of the following mutual fund (the
"Fund"), which is a separate series of the Trust.
- SAGE CORPORATE BOND FUND
This Prospectus sets forth concisely the information about the Trust and the
Fund that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated , 1997 has been filed with the
Securities and Exchange Commission and is available without charge by calling
1-800-932-7781. The Statement of Additional Information is incorporated into
this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
, 1997
SAG-F-001-01
<PAGE>
2
SUMMARY
THE FOLLOWING PROVIDES BASIC INFORMATION ABOUT THE SAGE CORPORATE BOND FUND
(THE "FUND"). THE FUND IS ONE OF THE MUTUAL FUNDS COMPRISING THE ADVISORS'
INNER CIRCLE FUND (THE "TRUST").
WHAT IS THE INVESTMENT OBJECTIVE? The Fund seeks total return consistent
with preservation of capital.
WHAT ARE THE PERMITTED INVESTMENTS? The Fund seeks to achieve its objective
by investing at least 80% of its total assets under normal conditions in
investment grade corporate bonds. See "Investment Objectives and Policies"
and "Description of Permitted Investments and Risk Factors."
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? The Fund
invests in securities that fluctuate in value, and investors should expect
the Fund's net asset value per share to fluctuate. Values of fixed income
securities and, correspondingly, of mutual funds invested in such
securities, such as the Fund, generally tend to vary inversely with interest
rates and may be affected by other market and economic factors as well. See
"Investment Objectives and Policies" and "Description of Permitted
Investments and Risk Factors."
WHO ARE THE ADVISER AND SUB-ADVISER? SAGE Global Funds, LLC (the "Adviser")
serves as the investment adviser of the Fund. Standard Asset Group, Inc.
(the "Sub-Adviser") serves as the investment sub-adviser of the Fund. See
"Expense Summary," "The Adviser" and "The Sub-Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources (the "Administrator") serves
as the administrator and shareholder servicing agent of the Fund. See "The
Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. (the "Transfer Agent") serves
as the transfer agent and dividend disbursing agent for the Trust. See "The
Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the
"Distributor") acts as the distributor of the Fund's shares. See "The
Distributor."
IS THERE A SALES LOAD? No, shares of the Fund are offered on a no-load
basis.
IS THERE A MINIMUM INVESTMENT? Yes, the minimum initial investment in the
Fund is $2,000 for investment in Investment Retirement Accounts ("IRAs") and
$10,000 for all other accounts ("Non-IRA Accounts"). Subsequent investments
for the Fund must be at least $500. The Trust reserves the right to accept
smaller purchases at its sole discretion.
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Transfer Agent on any day when the Federal Reserve Banks are
open for business (a "Business Day"). A purchase order will be effective as
of the Business Day received by the Transfer Agent if the Transfer Agent
receives an order and payment with readily available funds prior to 4:00
p.m., Eastern time. To purchase shares by wire, you must first call
1-800-808-4921. Redemption orders placed with the Transfer Agent prior to
4:00 p.m., Eastern time on any Business Day will be effective that day. The
purchase and redemption price for shares is the net asset value per share
determined as of the end of the day the order is effective. The Fund
reserves the right, upon 30 days' written notice, to redeem a Non-IRA
Account if the net asset value of the shares in that account falls below
$10,000. See "Purchase and Redemption of Shares."
HOW ARE DISTRIBUTIONS PAID? The Fund distributes substantially all of its
net investment income (exclusive of capital gains) in the form of dividends,
which are declared and paid quarterly. Any capital gain is distributed at
least annually. Distributions are paid in additional shares unless the
shareholder elects to take the payment in cash. See "General
Information--Dividends and Distributions."
<PAGE>
3
EXPENSE SUMMARY
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- -----------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases.............. None
Maximum Sales Load Imposed on Reinvested Dividends... None
Deferred Sales Charges............................... None
Redemption Fees*..................................... None
Exchange Fees........................................ None
- -----------------------------------------------------------------
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- -----------------------------------------------------------------
<S> <C>
Management Fees (after fee waivers)(1)............... .00%
Other Expenses (after fee waivers)(1)................ .90%
- -----------------------------------------------------------------
Total Operating Expenses (after fee waivers)(1)...... .90%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
(1) The Adviser has voluntarily agreed to waive a portion or all of its advisory
fees and to reimburse expenses in order to limit Total Operating Expenses at
to an annual rate of not more than .90%. Absent any voluntary waivers, the
Management Fee for the Fund would be .60%, Other Expenses would be 1.52% and
Total Operating Expenses, based on estimates of Other Expenses, would be
2.12% of the Fund's average daily net assets. Total Operating Expenses are
expected to remain at .90% of the Fund's average daily net assets for the
current fiscal year.
* Shareholders are charged a fee, currently $10.00, for redemptions by wire.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
EXAMPLE 1 YR. 3 YRS.
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period:
SAGE Corporate Bond Fund........................................................................... $ 9 $ 29
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUND IS NEW AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. The purpose of the expense summary and example is to assist the investor
in understanding the various costs and expenses that may be directly or
indirectly borne by shareholders of the Fund. Additional information may be
found under "The Adviser" and "The Administrator."
<PAGE>
4
THE TRUST AND THE FUND
The Advisors' Inner Circle Fund (the "Trust") offers shares in a number of
mutual funds, each of which is a separate series ("portfolio") of the Trust.
Each share of each portfolio represents an undivided, proportionate interest in
that portfolio. This Prospectus offers shares of the Trust's SAGE Corporate Bond
Fund (the "Fund"), a diversified investment portfolio. Information regarding the
other portfolios in the Trust is contained in separate prospectuses that may be
obtained by calling 1-800-932-7781.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks a high level of current income consistent with preservation of
capital by investing in a portfolio of investment grade corporate bonds that, in
the Adviser's or Sub-Adviser's opinion, will maintain an already established
credit rating or will benefit from an improvement in the issuer's credit rating.
There can be no assurance that the Fund will be able to achieve its investment
objective.
Under normal conditions the Fund will invest at least 80% of its total assets in
corporate bonds rated BBB or higher ("investment grade") by a nationally
recognized statistical rating organization (an "NRSRO") or of comparable quality
as determined by the Sub-Adviser. Additional securities in which the Fund may
invest consist of: (i) U.S. Government securities; (ii) mortgage-backed
securities, including collateralized mortgage obligations and real estate
mortgage investment conduits; (iii) floating or variable rate securities; (iv)
U.S. dollar denominated fixed income securities issued by U.S. or foreign
corporations or issued or guaranteed by foreign governments, their political
subdivisions, agencies or instrumentalities; (v) U.S. dollar denominated
obligations of supranational entities; (vi) short term bank obligations; (vii)
commercial paper; (viii) asset backed securities; (ix) loan participations; (x)
preferred stock that is rated investment grade quality by an NRSRO or determined
to be of comparable quality by the Sub-Adviser; and (xi) repurchase agreements.
The Fund may invest in foreign securities in the form of depositary receipts.
The Fund may engage in reverse repurchase agreements with banks and dealers in
amounts up to 33 1/3% of the Fund's total assets at the time the Fund enters
into the agreements, and may purchase securities on a when-issued basis.
The Sub-Adviser seeks to identify investment grade corporate bonds where a
credit rating improvement is likely. The Sub-Adviser's research is company
specific and similar in nature to the traditional fundamental research used to
make common stock selections. Companies chosen as rating upgrade candidates are
placed on the Sub-Adviser's "upgrade list" and purchases are made when
intermediate maturity issues become available at an advantageous price.
Individual decisions are made on a "buy to hold" basis. A credit downgrade will
trigger a sell decision automatically. Securities rated in the lowest category
of investment grade securities have speculative characteristics.
Normally, the Fund will maintain a dollar-weighted average portfolio maturity of
between four and six years. There are no restrictions on the maturity of any
single instrument. For temporary defensive purposes when the Sub-Adviser
determines that market conditions warrant, the Fund may also invest up to 100%
of its assets in money market securities or hold cash.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate is not expected to exceed 40%.
INVESTMENT LIMITATIONS
The investment objective of the Fund and the investment limitations set forth
below and in the Statement of Additional Information are fundamental policies of
the Fund. Fundamental policies cannot be changed without the consent of the
holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed
by the United States, its agencies or instrumentalities and repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of the Fund would be invested in the securities of such issuer. This
restriction applies to 75% of the Fund's total assets.
2. Purchase any securities which would cause 25% or more of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does
<PAGE>
5
not apply to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements
involving such securities. For purposes of this limitation, (i) utility
companies will be divided according to their services, for example, gas
distribution, gas transmission, electric and telephone will each be considered
a separate industry, and (ii) financial service companies will be classified
according to the end users of their services, for example, automobile finance,
bank finance and diversified finance will each be considered a separate
industry.
The foregoing percentages will apply at the time of the purchase of a security.
Additionally, it is a non-fundamental policy of the Fund to: (i) limit
borrowings to no more than 5% of its total assets (fully collateralized reverse
repurchase agreements are not considered borrowings for purposes of the
foregoing limitation); and (ii) to refrain from investing in the following
derivative instruments: options, futures, swaps, structured notes or residuals.
THE ADVISER
SAGE Global Funds, LLC (the "Adviser" or "SAGE") is a professional investment
management firm organized as a Massachusetts limited liability company that was
founded in July, 1997. SAGE is majority-owned by Standard Asset Group, Inc., the
Fund's sub-adviser. The Adviser's principal business address is 55 William
Street, Wellesley, Massachusetts 02181.
The Adviser has been retained under an investment advisory agreement with the
Trust (the "Advisory Agreement") to act as the investment adviser for the Fund.
Under the Advisory Agreement, the Adviser makes the investment decisions for the
assets of the Fund and continuously reviews, supervises and administers the
Fund's investment program, subject to the supervision of, and policies
established by, the Trustees of the Trust.
The Adviser has not previously served as an investment adviser to a registered
investment company, and, as such, does not have extensive experience advising a
highly regulated entity such as an investment company. This may present
additional risks for the Fund.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of .60% of the average daily net assets of
the Fund. The Adviser has voluntarily agreed to waive a portion of its advisory
fees in order to limit total operating expenses of the Fund to not more than
.90% of average daily net assets. The Adviser reserves the right, in its sole
discretion, to terminate its fee waiver at any time. Additionally, the Adviser
has contractually agreed to waive its entire advisory fee for any calendar year
which follows a calendar year in which the Fund's net asset value per share
declines, adjusted for dividends and distributions paid during such year. The
Adviser may, from its own resources, compensate broker-dealers whose clients
purchase shares of the Funds.
THE SUB-ADVISER
Standard Asset Group, Inc. (the "Sub-Adviser") is a professional investment
management firm organized as Massachusetts corporation that was founded in 1987.
Gordon J. Rollert controls a majority of the Sub-Adviser's outstanding voting
stock. As of July, 1997, the Sub-Adviser had approximately $200 million of
assets under management. The Sub-Adviser currently serves as the investment
adviser or sub-adviser to institutional clients including SAGE Advisory
Services, LLC, which, in turn, provides advisory services to individuals. The
Sub-Adviser's principal business address is 55 William Street, Wellesley,
Massachusetts 02181.
The Sub-Adviser has been retained under an investment sub-advisory agreement
with the Adviser (the "Sub-Advisory Agreement") to act as the investment
sub-adviser for the Fund. Under the Sub-Advisory Agreement, the Sub-Adviser
manages the investments of the Fund, selects investments, and places all orders
for purchases and sales of the Fund's securities, subject to the general
supervision of the Trustees of the Trust and the Adviser.
For the services provided and expenses incurred pursuant to the Sub-Advisory
Agreement, the Sub-Adviser is entitled to receive a fee, which is calculated
daily and paid monthly at an annual rate of .20% of the average daily net assets
of the Fund. The Sub-Advisor has voluntarily agreed to waive its sub-advisory
fees in the same proportion as the Adviser waives its advisory fees from the
Fund. In addition, the Sub-Adviser will not be entitled to receive sub-advisory
fees during any calendar year
<PAGE>
6
in which the Adviser is not entitled to receive any advisory fees.
Gordon J. Rollert has had primary responsibility for managing the Fund since it
commenced operations. Mr. Rollert has served as President of the Sub-Adviser
since 1987. He has managed institutional portfolios since 1965, initially as a
portfolio manager with Eaton Vance and later as a portfolio manager and
executive officer of the following investment advisory firms: Alliance Capital,
Rollert & Sullivan, Trust Management Bank, the Nova Fund and SAGE Advisory
Services LLC. He is a Chartered Financial Analyst and member of the Boston
Security Analysts Society and the New York Society of Security Analysts. He
holds a BA in Economics and History from DePauw University and a MBA from the
University of Michigan. He is a trustee of DePauw University, chairing the
Finance and Investment Committees.
THE ADMINISTRATOR
SEI Fund Resources (the "Administrator"), provides the Fund with administrative
services, including regulatory reporting and all necessary office space,
equipment, personnel and facilities.
For these administrative services, the Administrator is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of: 0.15% on the first
$100 million of the Fund's average daily net assets; 0.125% on the next $100
million of average daily net assets; and 0.10% on the average daily net assets
over $200 million. However, the Fund pays a minimum annual administration fee of
$75,000, which would be increased by $15,000 per additional class. The fee the
Fund pays will decline to reflect the tiered structure described above at net
asset levels of $50 million and above.
The Administrator also serves as shareholder servicing agent for the Fund.
THE TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, 2nd Floor, Kansas City, Missouri 64105
(the "Transfer Agent") serves as the transfer agent and dividend disbursing
agent for the Trust.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania, 19456,
a wholly-owned subsidiary of SEI Investments Company, serves as the Trust's
distributor. No compensation is paid to the Distributor for distribution
services for the shares of the Fund.
PURCHASE AND REDEMPTION OF SHARES
Investors may purchase and redeem shares of the Fund directly through the
Transfer Agent at: The Advisors' Inner Circle Fund, P.O. Box 419009, Kansas
City, Missouri 64141-6009, by mail, wire transfer or through an Automated
Clearing House ("ACH") transfer. Shareholders may place purchase and redemption
orders by telephone; when market conditions are extremely busy, it is possible
that investors may experience difficulties placing orders by telephone and may
wish to place orders by mail. Purchases and redemptions of shares of the Fund
may be made on any day on which the Federal Reserve Banks are open for business
(a "Business Day"). Shares of the Fund are offered only to residents of states
in which such shares are eligible for purchase.
MINIMUM INVESTMENTS
The minimum initial investment in the Fund is $2,000 for IRAs and $10,000 for
Non-IRA Accounts. Subsequent investments must be at least $500. The Fund
reserves the right to accept smaller purchases at its sole discretion.
MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTIONS OF SHARES
If the value of the Fund in a Non-IRA Account falls below $10,000 because of
shareholder redemption(s), the Trust will notify the shareholder, and if the
account value remains below $10,000 for a continuous 60-day period, the shares
in such account are subject to redemption by the Trust and, if redeemed, the
daily net asset value of such shares will be promptly paid to the shareholder.
The Trust, however, will not redeem shares based solely upon changes in the
market that reduce the net asset value of shares.
The Trust reserves the right to modify or terminate the involuntary redemption
features of the shares as
<PAGE>
7
stated above at any time upon 60 days' notice to shareholders.
PURCHASES BY MAIL
An account may be opened by mailing a check or other negotiable bank draft
(payable to the name of the Fund) for $2,000 or more for IRAs and $10,000 or
more for Non-IRA Accounts together with a completed Account Application to The
Advisors' Inner Circle Fund, P.O. Box 419009, Kansas City, Missouri 64141-6009.
Subsequent investments may also be mailed directly to the Transfer Agent. All
purchases made by check should be in U.S. dollars and made payable to SAGE
Corporate Bond Fund. Third party checks, credit cards, credit card checks and
cash will not be accepted. When purchases are made by check, redemption proceeds
will be forwarded only upon collection of payment for such shares, which may
take up to 15 business days.
PURCHASES BY WIRE TRANSFER
INITIAL PURCHASES: Before making an initial investment by wire, an investor must
first telephone 1-800-808-4921 to be assigned an account number. The investor's
name, Fund's name, account number, taxpayer identification number or Social
Security number and address must be specified in the wire. In addition, an
Account Application should be promptly forwarded to the Transfer Agent at: The
Advisors' Inner Circle Fund, P.O. Box 419009, Kansas City, Missouri 64141-6009.
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to: United Missouri Bank; ABA #10-10-00695 for Account
Number 98-7052-396-5; Further Credit: SAGE Corporate Bond Fund. The
shareholder's name, the Fund's name and account number must be specified in the
wire.
SUBSEQUENT PURCHASES: Additional investments may be made at any time through the
wire procedures described above, which must include the shareholder's name, the
Fund's name and account number. The investor's bank may impose a fee for
investments by wire.
PURCHASE BY AUTOMATED CLEARING HOUSE ("ACH")
This service allows the purchase of additional shares through an electronic
transfer of money from a checking or savings account. When an additional
purchase is made by telephone, the Transfer Agent will automatically debit the
pre-designated bank account for the desired amount. Shareholders may call
1-800-808-4921 to request an ACH transaction.
GENERAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Transfer Agent
if the Transfer Agent receives the order and payment before 4:00 p.m., Eastern
time. Payment may be made by check or readily available funds. The purchase
price of shares of the Fund is the daily net asset value per share next
determined after a purchase order is received. Purchases will be made in full
and fractional shares of the Fund calculated to three decimal places. The Fund
will not issue certificates representing shares of the Fund.
The Fund reserves the right to reject a purchase order when the Distributor or
the Transfer Agent determines that it is not in the best interest of the Trust,
the Fund and/or its shareholders to accept such offer.
REDEMPTIONS
Redemption orders received by the Transfer Agent prior to 4:00 p.m., Eastern
time on any Business Day will be effective that day. The redemption price of
shares of the Fund is the net asset value per share of that Fund next determined
after a valid redemption order, in good form, is received. Payment on redemption
will be made as promptly as possible and, in any event, within seven days after
the redemption order is received. Shareholders may not close their accounts by
telephone.
Shareholders may receive redemption payments in the form of a check or by
Federal Reserve or ACH wire transfer. There is no charge for having a check for
redemption proceeds mailed. A wire charge, currently $10.00, will be deducted
from the amount of a Federal Reserve wire redemption payment made at the request
of a shareholder, except that certain institutions may be exempt from this
charge. Shareholders cannot redeem shares of the Fund by Federal Reserve wire on
federal holidays restricting
<PAGE>
8
wire transfers. The Fund does not charge for ACH wire transactions; however,
such transactions will not be posted to a shareholder's bank account until the
second Business Day following the transaction.
Shareholders are granted telephone redemption privileges automatically. Neither
the Trust nor the Transfer Agent will be responsible for the authenticity of the
redemption instructions received by telephone if it reasonably believes those
instructions are genuine. The Trust and the Transfer Agent will each employ
reasonable procedures to confirm that telephone instructions are genuine, and
may be liable for losses resulting from unauthorized or fraudulent telephone
transactions if it does not employ those procedures.
The right of redemption may be suspended or the date of payment of redemption
proceeds postponed during certain periods as set forth more fully in the
Statement of Additional Information.
NET ASSET VALUE
The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments and other assets, less any liabilities,
by the total outstanding shares of the Fund. Net asset value per share is
determined daily as of 4:00 p.m., Eastern time on any Business Day. The Fund
will use a pricing service to provide market quotations. The pricing service may
use a matrix system of valuation for fixed income securities which considers
factors such as securities prices, yield features, call features, ratings and
developments related to a specific security.
PERFORMANCE
From time to time, the Fund may advertise its yield and total return. These
figures will be based on historical results and are not intended to indicate
future performance. No representation can be made regarding actual future yields
or returns. The yield of the Fund refers to the annualized income generated by
an investment in the Fund over a specified 30-day period. The yield is
calculated by assuming that the same amount of income generated by the
investment during that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.
The total return of the Fund refers to the average compounded rate of return on
a hypothetical investment, for designated time periods (including but not
limited to the period from which the Fund commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period and assuming the reinvestment of all dividend and capital gain
distributions.
The Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services,
Inc.), financial and business publications and periodicals, broad groups of
comparable mutual funds, unmanaged indices, including indices produced by Lehman
Brothers, which may assume investment of dividends but generally do not reflect
deductions for administrative and management costs, or other investment
alternatives. The Fund may quote Morningstar, Inc., a service that ranks mutual
funds on the basis of risk-adjusted performance. The Fund may quote Ibbotson
Associates of Chicago, Illinois, which provides historical returns of the
capital markets in the U.S. The Fund may use long-term performance of these
capital markets to demonstrate general long-term risk versus reward scenarios
and could include the value of a hypothetical investment in any of the capital
markets. The Fund may also quote financial and business publications and
periodicals as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
<PAGE>
9
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action.
No attempt has been made to present a detailed explanation of the federal, state
or local income tax treatment of the Fund or its shareholders. Accordingly,
shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state and local income taxes.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other portfolios. The Fund intends to qualify for
the special tax treatment afforded regulated investment companies as defined
under Subchapter M of the Internal Revenue Code of 1986, as amended. So long as
the Fund qualifies for this special tax treatment, it will be relieved of
federal income tax on that part of its net investment income and net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
which it distributes to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Distributions from net investment
income will qualify for the dividends-received deduction for corporate
shareholders only to the extent such distributions are derived from dividends
paid by domestic corporations; dividends of the Fund are not expected to qualify
for this deduction. Any net capital gain will be distributed annually and will
be taxed to shareholders as long-term capital gain, regardless of how long the
shareholder has held shares. The Fund will make annual reports to shareholders
of the federal income tax status of all distributions.
Income received on direct U.S. obligations is exempt from income tax at the
state level when received directly and may be exempt, depending on the state,
when received by a shareholder from the Fund provided certain state-specific
conditions are satisfied. The Fund will inform shareholders annually of the
percentage of income and distributions, if any, derived from direct U.S.
obligations. Shareholders should consult their tax advisers to determine whether
any portion of the income dividends received from the Fund is considered tax
exempt in their particular state.
Dividends declared by the Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year, if paid by the Fund at any time during the following
January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
Sale, exchange or redemption of the Fund's shares is a taxable event to the
shareholder.
GENERAL INFORMATION
THE TRUST
The Trust, an open-end management investment company, was organized under
Massachusetts law as a business trust under a Declaration of Trust dated July
18, 1991. The Declaration of Trust permits the Trust to offer separate series
("portfolios") of shares. All consideration received by the Trust for shares of
any portfolio and all assets of such portfolio belong to that portfolio and are
subject to liabilities related thereto. The Trust reserves the right to create
and issue shares of additional portfolios.
The Fund pays its (i) operating expenses, including fees of its service
providers, expenses of preparing prospectuses, proxy solicitation material and
reports to shareholders, costs of custodial services and registering its shares
under federal and state securities laws, pricing and insurance expenses and pays
additional expenses, brokerage costs, interest charges, taxes and organization
expenses and (ii) pro rata share of the Trust's other expenses, including audit
and legal expenses. The Fund's expense ratios are disclosed under "Expense
Summary."
<PAGE>
10
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management
services to the Trust.
VOTING RIGHTS
Each shareholder of record is entitled to one vote or fraction thereof for each
share or fractional share held. The Fund will vote separately on matters
relating solely to it. As a Massachusetts business trust, the Trust is not
required to hold annual meetings of shareholders but shareholders' approval will
be sought for certain changes in the operation of the Trust and for the election
of Trustees under certain circumstances. In addition, a Trustee may be removed
by the remaining Trustees or by shareholders at a special meeting called upon
written request of shareholders owning at least 10% of the outstanding shares of
the Trust. In the event that such a meeting is requested, the Trust will provide
appropriate assistance and information to the shareholders requesting the
meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually for the Fund. The Trust also furnishes periodic
reports and, as necessary, proxy statements to shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to The Advisors' Inner Circle Fund,
P.O. Box 419009, Kansas City, Missouri 64141-6009 or by calling 1-800-932-7781.
Purchase and redemption transactions should be made through the Transfer Agent
by calling 1-800-808-4921.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares dividends of substantially all of its net investment income
(exclusive of capital gains) quarterly and pays such dividends on the first
Business Day of each quarter. Shares purchased begin earning dividends on the
Business Day following receipt of funds by the Transfer Agent. Normally, this
will occur within two Business Days after an order is received. If any capital
gain is realized, substantially all of it will be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares, unless the shareholder has elected to take
such payment in cash. Shareholders may change their election by providing
written notice to the Transfer Agent at least 15 days prior to the distribution.
Shareholders may receive payments for cash distributions in the form of a check
or ACH.
Dividends and other distributions of the Fund are paid on a per-share basis. The
value of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a distribution of capital gains, a
shareholder will pay the full price for the shares and receive some portion of
the price back as a taxable distribution or dividend.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101 acts as custodian (the "Custodian") of the Fund. The
Custodian holds cash, securities and other assets of the Fund as required by the
Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of some permitted investments for the Fund, and
the associated risk factors:
AMERICAN DEPOSITARY RECEIPTS ("ADRs")-- ADRs are securities, typically issued by
a U.S.
<PAGE>
11
financial institution (a "depositary"), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer and deposited with
the depositary. ADRs may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary, whereas, an unsponsored
facility may be established by a depositary without participation by the issuer
of the underlying security. Holders of unsponsored depositary receipts generally
bear all the costs of the unsponsored facility. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities.
ASSET-BACKED SECURITIES--Asset-backed securities are secured by non-mortgage
assets such as company receivables, truck and auto loans, leases and credit card
receivables. Such securities are generally issued as pass-through certificates,
which represent undivided fractional ownership interests in the underlying pools
of assets. Such securities also may be debt instruments which are also known as
collateralized obligations and are generally issued as the debt of a special
purpose entity, such as a trust, organized solely for the purpose of owning such
assets and issuing such debt.
CORPORATE BONDS--A corporate bond is a debt instrument issued by a private
domestic or foreign corporation, as distinct from one issued by a governmental
agency or municipality. Corporate bonds generally have the following features:
(1) they are taxable; (2) they have a par value of $1,000 (domestic bonds); and
(3) they have a term maturity. They are sometimes traded on major exchanges.
FIXED INCOME SECURITIES--The market value of the fixed income investments in
which the Fund invests will change in response to interest rate changes and
other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher yields,
the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized
agencies in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal also affect the value of these
investments. Changes in the value of these securities will not necessarily
affect cash income derived from these securities but will affect the Fund's net
asset value.
INVESTMENT COMPANY SECURITIES--The Fund may invest up to 10% of its total assets
in the securities of other open-end investment companies that invest exclusively
in those securities which the Fund may invest directly. The Fund's purchase of
investment company securities will cause shareholders to bear not only their
proportionate share of the expenses of the Fund (including operating expenses
and the fees of the Adviser), but also similar expenses of the underlying
investment companies.
LOAN PARTICIPATIONS--Loan Participations are interests in loans to U.S.
corporations which are administered by the lending bank or agent for a syndicate
of lending banks, and sold by the lending bank or syndicate member
("intermediary bank"). In a loan participation, the borrower corporation will be
deemed to be the issuer of the participation interest except to the extent the
Fund derives its rights from the intermediary bank. Because the intermediary
bank does not guarantee a loan participation in any way, a loan participation is
subject to the credit risks generally associated with the underlying corporate
borrower. In the event of the bankruptcy or insolvency of the corporate
borrower, a loan participation may be subject to certain defenses that can be
asserted by such borrower as a result of improper conduct by the intermediary
bank. In addition, in the event the underlying corporate borrower fails to pay
principal and interest when due, the Fund may be subject to delays, expenses and
risks that are greater than those that would have been involved if the Fund had
purchased a direct obligation of such borrower. Under the terms of a loan
participation, the Fund may be regarded as a creditor of the intermediary bank
(rather than of the underlying corporate borrower), so that the Fund may also be
subject to the risk that the intermediary bank may become insolvent. The
secondary market, if any, for these loan participations is limited.
MONEY MARKET INSTRUMENTS--Money market instruments include short-term U.S.
Government Securities; custodial receipts evidencing separately
<PAGE>
12
traded interest and principal components of securities issued by the U.S.
Treasury; commercial paper rated in the highest short-term rating category by an
NRSRO or determined by the Adviser to be of comparable quality at the time of
purchase; short-term bank obligations (certificates of deposit, time deposits
and bankers' acceptances) of U.S. commercial banks with assets of at least $1
billion as of the end of their most recent fiscal year; and repurchase
agreements involving such securities.
BANKERS' ACCEPTANCES: Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers' acceptances are used by
corporations to finance the shipment and storage of goods. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT: Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER: Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entities. Maturities on these issues vary from a few to 270 days.
TIME DEPOSITS: Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or that
mature in more than seven days are considered to be illiquid securities.
MORTGAGE-BACKED SECURITIES--Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional thirty-year fixed rate mortgages, graduated payment
mortgages and adjustable rate mortgages. During periods of declining interest
rates, prepayment of mortgages underlying mortgage-backed securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield of a particular issue.
GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), Fannie Mae
and the Federal Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC
obligations are not backed by the full faith and credit of the U.S. Government
as GNMA certificates are, but Fannie Mae and FHLMC securities are supported by
the instrumentalities' right to borrow from the U.S. Treasury. GNMA, Fannie Mae
and FHLMC each guarantees timely distributions of interest to certificate
holders. GNMA and Fannie Mae also each guarantees timely distributions of
scheduled principal. FHLMC has in the past guaranteed only the ultimate
collection of principal of the underlying mortgage loan; however, FHLMC now
issues mortgage-backed securities (FHLMC Gold PCS) which also guarantee timely
payment of monthly principal reductions. Government and private guarantees do
not extend to the securities' value, which is likely to vary inversely with
fluctuations in interest rates.
PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities issued by
a non-governmental entity, such as a trust. These securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs") that are rated in one of the top four rating categories.
While they are generally structured with one or more types of credit
enhancement, private pass-through securities typically lack a guarantee by an
entity having the credit status of a governmental agency or instrumentality.
CMOS: CMOs are debt obligations or multiclass pass-through certificates issued
by agencies or instrumentalities of the U.S. Government or by private
originators or investors in mortgage loans. In a CMO, series of bonds or
certificates are usually issued in multiple classes. Principal and interest paid
on the underlying mortgage assets may be allocated among the several classes of
a series of a
<PAGE>
13
CMO in a variety of ways. Each class of a CMO, often referred to as a "tranche,"
is issued with a specific fixed or floating coupon rate and has a stated
maturity or final distribution date. Principal payments on the underlying
mortgage assets may cause CMOs to be retired substantially earlier then their
stated maturities or final distribution dates, resulting in a loss of all or
part of any premium paid.
REMICS: A REMIC is a CMO that qualifies for special tax treatment under the
Code and invests in certain mortgages principally secured by interests in real
property. Investors may purchase beneficial interests in REMICs, which are known
as "regular" interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by Fannie Mae, FHLMC or GNMA
represent beneficial ownership interests in a REMIC trust consisting principally
of mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed mortgage pass-through
certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely payment
of interest, and also guarantees the payment of principal as payments are
required to be made on the underlying mortgage participation certificates.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. GNMA REMIC Certificates
are supported by the full faith and credit of the U.S. Treasury.
ADJUSTABLE RATE MORTGAGE SECURITIES ("ARMS"): ARMS are a form of pass-through
security representing interests in pools of mortgage loans whose interest rates
are adjusted from time to time. The adjustments usually are determined in
accordance with a predetermined interest rate index and may be subject to
certain limits. While the value of ARMS, like other debt securities, generally
vary inversely with changes in market interest rates (increasing in value during
periods of declining interest rates and decreasing in value during periods of
increasing interest rates), the values of ARMS should generally be more
resistant to price swings than other debt securities because the interest rates
of ARMS move with market interest rates. The adjustable rate feature of ARMS
will not, however, eliminate fluctuations in the prices of ARMS, particularly
during periods of extreme fluctuations in interest rates. Also, since many
adjustable rate mortgages only reset on an annual basis, it can be expected that
the prices of ARMS will fluctuate to the extent that changes in prevailing
interests rates are not immediately reflected in the interest rates payable on
the underlying adjustable rate mortgages.
STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments and is thus termed an interest-only class ("IO"), while
the other class may receive all of the principal payments and is thus termed the
principal-only class ("PO"). The value of IOs tends to increase as rates rise
and decrease as rates fall; the opposite is true of POs. SMBs are extremely
sensitive to changes in interest rates because of the impact thereon of
prepayment of principal on the underlying mortgage securities. During times when
interest rates are experiencing fluctuations, such securities can be difficult
to price on a consistent basis. The market for SMBs is not as fully developed as
other markets; SMBs therefore may be illiquid.
ESTIMATED AVERAGE LIFE: Due to the possibility of prepayments of the underlying
mortgage instruments, mortgage-backed securities generally do not have a known
maturity. In the absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate is a function of an
assumption regarding anticipated prepayment patterns, based upon current
interest rates, current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus different market
participants can produce different average life estimates with regard to the
same security. There can be no assurance that estimated average life will be a
security's actual average life.
<PAGE>
14
OBLIGATIONS OF SUPRANATIONAL ENTITIES-- Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, Inter-American Development Bank, International Bank
for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and Nordic Investment
Bank. The governmental members, or "stockholders," usually make initial capital
contributions to the supranational entity and in many cases are committed to
make additional capital contributions if the supranational entity is unable to
repay its borrowings.
PREFERRED STOCK--Preferred stock is a class of equity security that pays
dividends at a specified rate and that has preference over common stock in the
payment of dividends and the liquidation of assets. Investment in preferred
stocks are subject to market risks that may cause their prices to fluctuate over
time. Changes in the value of preferred stock will not necessarily affect cash
income derived from these securities but will affect the Fund's net asset value.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The Custodian will hold the security as collateral
for the repurchase agreement. The Fund bears a risk of loss in the event the
other party defaults on its obligations and the Fund is delayed or prevented
from exercising its right to dispose of the collateral or if the Fund realizes a
loss on the sale of the collateral. The Fund will enter into repurchase
agreements only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on established guidelines.
Repurchase agreements are considered loans under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS--Reverse repurchase agreements are agreements by
which the Fund sells securities to financial institutions and simultaneously
agrees to repurchase those securities at a mutually agreed-upon date and price.
At the time the Fund enters into a reverse repurchase agreement, the Fund will
place liquid assets having a value equal to the repurchase price in a segregated
custodial account and monitor this account to ensure equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of securities sold by the Fund may decline below the price at which the Fund is
obligated to repurchase the securities. Reverse repurchase agreements may be
considered to be borrowings by the Fund under the 1940 Act.
SECURITIES OF FOREIGN GOVERNMENTS--The Fund may invest in U.S. dollar
denominated obligations or securities of the Government of Canada and its
provincial and local governments and U.S. dollar denominated securities issued
or guaranteed by foreign governments, their political subdivisions, agencies or
instrumentalities. Permissible investments may consist of obligations or foreign
branches of U.S. banks and of foreign banks, including Yankee Certificates of
Deposit. In addition, the Fund may invest in American Depositary Receipts. These
instruments may subject the Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source, or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on such obligations. Such investments may
also entail higher custodial fees and sales commissions than domestic
investments. Foreign issuers of securities or obligations are often subject to
accounting treatment and engage in business practices different from those
respecting domestic issuers of similar securities or obligations. Foreign
branches of U.S. banks and foreign banks may be subject to less stringent
reserve requirements than those applicable to domestic branches of U.S. banks.
SECURITIES OF FOREIGN ISSUERS--There are certain risks connected with investing
in foreign securities. These include risks of adverse political and economic
developments (including possible governmental seizure or nationalization of
assets), the possible imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting requirements, the
<PAGE>
15
possibility that there will be less information on such securities and their
issuers available to the public, the difficulty of obtaining or enforcing court
judgments abroad, restrictions on foreign investments in other jurisdictions,
difficulties in effecting repatriation of capital invested abroad, and
difficulties in transaction settlements and the effect of delay on shareholder
equity. Foreign securities may be subject to foreign taxes, and may be less
marketable than comparable U.S. securities. The value of the Fund's investments
denominated in foreign currencies will depend on the relative strengths of those
currencies and the U.S. dollar, and the Fund may be affected favorably or
unfavorably by changes in the exchange rates or exchange control regulations
between foreign currencies and the U.S. dollar. Changes in foreign currency
exchange rates also may affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to shareholders by the Fund.
U.S. GOVERNMENT SECURITIES--U.S. Government securities consist of bills, notes
and bonds issued by the U.S. Treasury, separately traded interest and principal
component parts of such obligations that are transferable through the federal
book-entry system known as Separately Traded Registered Interest and Principal
Securities ("STRIPS"), and obligations issued or guaranteed by agencies of the
U.S. Government, including, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the U.S. Government,
including, among others, FHLMC, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full faith and credit of
the U.S. Treasury, others are supported by the right of the issuer to borrow
from the Treasury, while still others are supported only by the credit of the
instrumentality. Guarantees of principal by agencies or instrumentalities of the
U.S. Government may be a guarantee of payment at the maturity of the obligation
so that in the event of a default prior to maturity there might not be a market
and thus no means of realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not extend to the value or
yield of these securities nor to the value of the Fund's shares.
VARIABLE AND FLOATING RATE INSTRUMENTS-- Certain obligations may carry variable
or floating rates of interest, and may involve a conditional or unconditional
demand feature. Such instruments bear interest at rates which are not fixed, but
which vary with changes in specified market rates or indices. The interest rates
on these securities may be reset daily, weekly, quarterly or some other reset
period, and may have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such security.
WHEN-ISSUED SECURITIES--When-issued or delayed delivery basis transactions
involve the purchase of an instrument with payment and delivery taking place in
the future. Delivery of and payment for these securities may occur a month or
more after the date of the purchase commitment. The Fund will maintain with the
Custodian a separate account with liquid securities or cash in an amount at
least equal to these commitments. The interest rate realized on these securities
is fixed as of the purchase date and no interest accrues to the Fund before
settlement. These securities are subject to market fluctuation due to changes in
market interest rates and it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the general level
of interest rates has changed.
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary...................................... 2
Expense Summary.............................. 3
The Trust and The Fund....................... 4
Investment Objective and Policies............ 4
Portfolio Turnover........................... 4
Investment Limitations....................... 4
The Adviser.................................. 5
The Sub-Adviser.............................. 5
The Administrator............................ 6
The Transfer Agent........................... 6
The Distributor.............................. 6
Purchase and Redemption of Shares............ 6
Performance.................................. 8
Taxes........................................ 9
General Information.......................... 9
Description of Permitted Investments and Risk
Factors.................................... 11
</TABLE>
<PAGE>
Trust:
THE ADVISORS' INNER CIRCLE FUND
Fund:
SAGE CORPORATE BOND FUND
Adviser:
SAGE GLOBAL FUNDS, LLC
Sub-Adviser:
STANDARD ASSET GROUP, INC.
Distributor:
SEI INVESTMENTS DISTRIBUTION CO.
Administrator:
SEI FUND RESOURCES
Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP
Independent Public Accountants:
ARTHUR ANDERSEN LLP
, 1997
<PAGE>
TRUST:
THE ADVISORS' INNER CIRCLE FUND
FUND:
SAGE CORPORATE BOND FUND
INVESTMENT ADVISER:
SAGE GLOBAL FUNDS, LLC
This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and relates only to
the SAGE Corporate Bond Fund (the "Fund"). It is intended to provide additional
information regarding the activities and operations of The Advisors' Inner
Circle Fund (the "Trust") and the Fund and should be read in conjunction with
the Fund's Prospectus dated , 1997. The Prospectus for the Fund may
be obtained by calling 1-800-932-7781.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE TRUST............................................................................. S-2
DESCRIPTION OF PERMITTED INVESTMENTS.................................................. S-2
INVESTMENT LIMITATIONS................................................................ S-5
THE ADVISER........................................................................... S-6
THE SUB-ADVISER....................................................................... S-6
THE ADMINISTRATOR..................................................................... S-6
THE DISTRIBUTOR....................................................................... S-7
TRUSTEES AND OFFICERS OF THE TRUST.................................................... S-8
PERFORMANCE INFORMATION............................................................... S-10
PURCHASE AND REDEMPTION OF SHARES..................................................... S-10
DETERMINATION OF NET ASSET VALUE...................................................... S-11
TAXES................................................................................. S-11
PORTFOLIO TRANSACTIONS................................................................ S-12
DESCRIPTION OF SHARES................................................................. S-13
SHAREHOLDER LIABILITY................................................................. S-13
LIMITATION OF TRUSTEES' LIABILITY..................................................... S-13
EXPERTS............................................................................... S-13
</TABLE>
, 1997
SAG-F-002-01
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the SAGE Corporate Bond
Fund (the "Fund"). The Fund is a separate series of The Advisors' Inner Circle
Fund (the "Trust"), an open-end investment management company established under
Massachusetts law as a Massachusetts business trust under a Declaration of Trust
dated July 18, 1991. The Declaration of Trust permits the Trust to offer
separate series ("portfolios") of shares of beneficial interest ("shares"). Each
portfolio is a separate mutual fund, and each share of each portfolio represents
an equal proportionate interest in that portfolio. See "Description of Shares."
No investment in shares of a portfolio should be made without first reading that
portfolio's prospectus. Capitalized terms not defined herein are defined in the
Prospectus offering shares of the Fund.
DESCRIPTION OF PERMITTED INVESTMENTS
The following sets forth certain information as a supplement to the "Investment
Objective and Policies" and "Description of Permitted Investments and Risk
Factors" sections of the Prospectus.
AMERICAN DEPOSITARY RECEIPTS
The Fund may invest in American Depositary Receipts. These instruments may
subject the Fund to investment risks that differ in some respects from those
related to investments in obligations of U.S. domestic issuers. Such risks
include future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible seizure,
nationalization, or expropriation of foreign deposits, the possible
establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.
ASSET-BACKED SECURITIES
The Fund may invest in asset-backed securities secured by assets including
company receivables, truck and auto loans, leases and credit card receivables.
The Fund may invest in other asset-backed securities that may be created in the
future if the Adviser or Sub-Adviser determines they are suitable. These issues
may be traded over-the-counter and typically have a short-intermediate maturity
structure depending on the paydown characteristics of the underlying financial
assets which are passed through to the security holder.
Asset-backed securities are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and for a certain
period by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities. The
purchase of asset-backed securities raises risk considerations peculiar to the
financing of the instruments underlying such securities. For example, there is a
risk that another party could acquire an interest in the obligations superior to
that of the holders of the asset-backed securities. There also is the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on those securities. Asset-backed securities
entail prepayment risk, which may vary depending on the type of asset, but is
generally less than the prepayment risk associated with collateralized mortgage
obligations ("CMOs"). In addition, credit card receivables are unsecured
obligations of the card holder. There may be a limited secondary market for
asset-backed securities.
S-2
<PAGE>
INVESTMENT COMPANY SHARES
The Fund may invest up to 10% of its total assets in shares of other investment
companies that invest exclusively in those securities in which the Fund may
invest directly. These investment companies typically incur fees that are
separate from those fees incurred directly by the Fund. The Fund's purchase of
such investment company securities results in the layering of expenses, such
that shareholders would indirectly bear a proportionate share of the operating
expenses of such investment companies, including advisory fees, in addition to
paying Fund expenses. Under applicable regulations, the Fund is prohibited from
acquiring the securities of another investment company if, as a result of such
acquisition: (1) the Fund owns more than 3% of the total voting stock of the
other company; (2) securities issued by any one investment company represent
more than 5% of the Fund's total assets; or (3) securities (other than treasury
stock) issued by all investment companies represent more than 10% of the total
assets of the Fund.
MORTGAGE-BACKED SECURITIES
The Fund may invest in mortgage-backed securities, principally collateralized
mortgage obligations ("CMOs") and real estate mortgage investment conduits
("REMICs"). CMOs are securities collateralized by mortgages, mortgage
pass-throughs, mortgage pay-through bonds (bonds representing an interest in a
pool of mortgages where the cash flow generated from the mortgage collateral
pool is dedicated to bond repayment), and mortgage-backed bonds (general
obligations of the issuers payable out of the issuers' general funds and
additionally secured by a first lien on a pool of single-family detached
properties).
Many CMOs are issued with a number of classes or series that have different
maturities and are retired in sequence. Investors purchasing such CMOs in the
shortest maturities receive or are credited with their pro rata portion of the
scheduled payments of interest and principal on the underlying mortgages plus
all unscheduled prepayments of principal up to a predetermined portion of the
total CMO obligation. Until that portion of such CMO obligation is repaid,
investors in the longer maturities receive interest only. Accordingly, the CMOs
in the longer maturity series are less likely than other mortgage pass-throughs
to be prepaid prior to their stated maturity. Although some of the mortgages
underlying CMOs may be supported by various types of insurance, and some CMOs
may be backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by U.S. Government agencies or instrumentalities, the CMOs themselves
generally are not guaranteed.
REMICs, which were authorized under the Internal Revenue Code of 1986, as
amended (the "Code"), are private entities formed for the purpose of holding a
fixed pool of mortgages secured by an interest in real property. REMICs are a
form of CMO, and issue multiple classes of securities.
OBLIGATIONS OF SUPRANATIONAL AGENCIES
The Fund may purchase obligations of supranational agencies. Currently, the Fund
only intends to invest in obligations issued or guaranteed by the Asian
Development Bank, Inter-American Development Bank, International Bank for
Reconstruction and Development (World Bank), African Development Bank, European
Coal and Steel Community, European Economic Community, European Investment Bank
and Nordic Investment Bank.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with primary securities dealers
recognized by the Federal Reserve Bank of New York or with national member banks
as defined in Section 3(d)(1) of the Federal Deposit Insurance Act, as amended.
A repurchase agreement will have an agreed-upon price (including principal and
interest) and an agreed-upon repurchase date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed-upon market rate of interest which is unrelated to
the coupon rate or maturity of the underlying security. A
S-3
<PAGE>
repurchase agreement involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value of the underlying
security.
The repurchase agreements entered into by the Fund will provide that the
underlying security at all times shall have a value at least equal to 102% of
the resale price stated in the agreement; the Adviser monitors compliance with
this requirement. Under all repurchase agreements entered into by the Fund, the
Custodian or its agent must take possession of the underlying collateral.
However, 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, even though the Federal Bankruptcy Code
provides protection for 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 security to the seller's estate.
UNITED STATES GOVERNMENT AGENCIES
Certain United States Government agencies have been established as
instrumentalities of the United States Government to supervise and finance
certain types of activities. Agencies of the United States Government which
issue such obligations consist of, among others, the Export Import Bank of the
United States, Farmers Home Administration, Federal Farm Credit Bank, Federal
Housing Administration, Government National Mortgage Association ("GNMA"),
Maritime Administration, Small Business Administration, and the Tennessee Valley
Authority. Obligations of instrumentalities of the United States Government
include securities issued by, among others, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks, Fannie Mae and the United States Postal Service. Some of these securities
are supported by the full faith and credit of the United States Treasury. Others
are supported by the right of the issuer to borrow from the Treasury and still
others are supported only by the credit of the instrumentality. Guarantees of
principal by agencies or instrumentalities of the United States Government may
be a guarantee of payment at the maturity of the obligation so that in the event
of a default prior to maturity there might not be a market and thus no means of
realizing the value of the obligation prior to maturity.
VARIABLE OR FLOATING RATE INSTRUMENTS
The Fund may invest in variable or floating rate instruments which may involve a
demand feature and may include variable amount master demand notes which may or
may not be backed by bank letters of credit. The holder of an instrument with a
demand feature may tender the instrument back to the issuer at par prior to
maturity. A variable amount master demand note is issued pursuant to a written
agreement between the issuer and the holder, its amount may be increased by the
holder or decreased by the holder or issuer, it is payable on demand, and the
rate of interest varies based upon an agreed formula. The quality of the
underlying credit must, in the opinion of the Adviser, be equivalent to the
long-term bond or commercial paper ratings applicable to permitted investments
for the Fund. The Adviser or Sub-Adviser will monitor on an ongoing basis the
earnings power, cash flow and liquidity ratios of the issuers of such
instruments and will similarly monitor the ability of an issuer of a demand
instrument to pay principal and interest on demand.
WHEN-ISSUED SECURITIES
The Fund may purchase debt obligations on a when-issued basis, in which case
delivery and payment normally take place on a future date. The Fund will make
commitments to purchase obligations on a when-issued basis only with the
intention of actually acquiring the securities, but may sell them before the
settlement date. During the period prior to the settlement date, the securities
are subject to market fluctuation, and no interest accrues on the securities to
the purchaser. The payment obligation and the interest rate that will be
received on the securities at settlement are each fixed at the time the
purchaser
S-4
<PAGE>
enters into the commitment. Purchasing obligations on a when-issued basis may be
used as a form of leveraging because the purchaser may accept the market risk
prior to payment for the securities. The Fund, however, will not use such
purchases for leveraging; instead, as disclosed in the Prospectus, the Fund will
set aside assets to cover its commitments. If the value of these assets
declines, the Fund will place additional liquid assets aside on a daily basis so
that the value of the assets set aside is equal to the amount of the commitment.
INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations are fundamental policies of the Fund that
cannot be changed without the consent of the holders of a majority of the Fund's
outstanding shares. The phrase "majority of the outstanding shares" means the
vote of (i) 67% or more of the Fund's shares present at a meeting, if more than
50% of the outstanding shares of the Fund are present or represented by proxy,
or (ii) more than 50% of the Fund's outstanding shares, whichever is less.
The Fund may not:
1. Acquire more than 10% of the voting securities of any one issuer.
2. Invest in companies for the purpose of exercising control.
3. Issue any class of senior security or sell any senior security of which it
is the issuer, except that the Fund may borrow from any bank, provided that
immediately after any such borrowing there is asset coverage of at least
300% for all borrowings of the Fund, and further provided that, to the
extent that such borrowings exceed 5% of the Fund's total assets, all
borrowings shall be repaid before the Fund makes additional investments. The
term "senior security" shall not include any temporary borrowings that do
not exceed 5% of the value of the Fund's total assets at the time the Fund
makes such temporary borrowing. In addition, investment strategies that
either obligate the Fund to purchase securities or require the Fund to
segregate assets will not be considered borrowings or senior securities.
This investment limitation shall not preclude the Fund from issuing multiple
classes of shares in reliance on SEC rules or orders.
4. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that the Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii)
enter into repurchase agreements; and (iii) lend its securities.
5. Purchase or sell real estate, real estate limited partnership interests,
physical commodities or commodities contracts except that the Fund may
purchase commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.
6. Make short sales of securities, maintain a short position or purchase
securities on margin, except that a Fund may obtain short-term credits as
necessary for the clearance of security transactions and sell securities
short "against the box."
7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling the Fund security.
8. Purchase securities of other investment companies except as permitted by the
Investment Company Act of 1940, as amended (the "1940 Act") and the rules
and regulations thereunder.
NON-FUNDAMENTAL POLICIES
The following investment limitation of the Fund is non-fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval:
S-5
<PAGE>
1. The Fund may not invest in illiquid securities in an amount exceeding, in
the aggregate, 15% of the Fund's net assets.
Except with respect to the Fund's policy concerning borrowing and illiquid
securities, if a percentage restriction is adhered to at the time of an
investment, a later increase or decrease in percentage resulting from changes in
values or assets will not constitute a violation of such restriction.
THE ADVISER
SAGE Global Funds, LLC (the "Adviser" or "SAGE") and the Trust have entered into
an advisory agreement dated _________, 1997 (the "Advisory Agreement"). The
Advisory Agreement provides that the Adviser shall not be protected against any
liability to the Trust or its shareholders by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties thereunder.
The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees or by a
vote of the shareholders of the Fund, and (ii) by the vote of a majority of the
Trustees who are not parties to the Agreement or "interested persons" of any
party thereto, cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement will terminate automatically in the event
of its assignment, and is terminable at any time without penalty by the Trustees
of the Trust or, with respect to the Fund, by a majority of the outstanding
shares of that Fund, on not less than 30 days' nor more than 60 days' written
notice to the Adviser, or by the Adviser on 90 days' written notice to the
Trust.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of .60% of the average daily net assets of
the Fund. The Adviser has voluntarily agreed to waive a portion of its advisory
fees in order to limit total operating expenses of the Fund to not more than
.90% of average daily net assets. The Adviser reserves the right, in its sole
discretion, to terminate its fee waiver at any time. Additionally, the Adviser
has contractually agreed to waive its entire advisory fee for any calendar year
which follows a calendar year in which the Fund's net asset value per share
declines, adjusted for dividends and distributions paid during such year.
For the fiscal year ended October 31, 1996, the Fund had not commenced
operations and therefore did not pay advisory fees.
THE SUB-ADVISER
Standard Asset Group, Inc. serves as investment sub-adviser to the Fund pursuant
to a sub-advisory agreement by and between Standard Asset Group, Inc. and the
Adviser (the "Sub-Advisory Agreement"). Pursuant to the Sub-Advisory Agreement,
Standard Asset Group, Inc. is entitled to receive a sub-advisory fee, which is
calculated daily and paid monthly at an annual rate of .20% of the average daily
net assets of the Fund. The Sub-Advisor has voluntarily agreed to waive its
sub-advisory fees in the same proportion as the Adviser waives its advisory fees
from the Fund. In addition, the Sub-Adviser will not be entitled to receive
sub-advisory fees during any calendar year in which the Adviser is not entitled
to receive any advisory fees.
For the fiscal year ended October 31, 1996, the Fund had not commenced
operations and therefore did not pay sub-advisory fees.
THE ADMINISTRATOR
The Administration Agreement provides that SEI Fund Resources (the
"Administrator") shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which the
Administration Agreement relates, except a loss resulting from willful
misfeasance,
S-6
<PAGE>
bad faith or gross negligence on the part of the Administrator in the
performance of its duties or from reckless disregard of its duties and
obligations thereunder.
The Administration Agreement shall remain effective for the initial term of the
Agreement and each renewal term thereof unless earlier terminated (a) by the
mutual written agreement of the parties; (b) by either party of the
Administration Agreement on 90 days' written notice, as of the end of the
initial term or the end of any renewal term; (c) by either party of the
Administration Agreement on such date as is specified in written notice given by
the terminating party, in the event of a material breach of the Administration
Agreement by the other party, provided the terminating party has notified the
other party of such breach at least 45 days' prior to the specified date of
termination and the breaching party has not remedied such breach by the
specified date; (d) effective upon the liquidation of the Administrator; or (e)
as to the Fund or the Trust, effective upon the liquidation of the Fund or the
Trust, as the case may be.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Administrator. SEI Investments and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors, and
money managers. The Administrator and its affiliates also serve as administrator
to the following other mutual funds: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CoreFunds, Inc., CrestFunds, Inc., CUFUND, The
Expedition Funds, FMB Funds, Inc., First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., HighMark Funds,
Marquis-Registered Trademark- Funds, Monitor Funds, Morgan Grenfell Investment
Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds,
Profit Funds Investment Trust, Rembrandt Funds-Registered Trademark-, Santa
Barbara Group of Mutual Funds, Inc., SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI International Trust, SEI Liquid Asset Trust,
SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable Trust, and TIP
Funds.
The Administrator will not be required to bear expenses of the Fund to an extent
which would result in the Fund's inability to qualify as a regulated investment
company under provisions of the Code. The term "expenses" is defined in such
laws or regulations, and generally excludes brokerage commissions, distribution
expenses, taxes, interest and extraordinary expenses.
For the fiscal year ended October 31, 1996, the Fund had not commenced
operations and therefore did not pay administration fees.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement"). The Distributor will not receive compensation for
distribution of shares of the Fund.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Trustees who are not interested persons and have no financial interest in
the Distribution Agreement or by a majority vote of the outstanding securities
of the Trust upon not more than 60 days' written notice by either party or upon
assignment by the Distributor.
For the fiscal year ended October 31, 1996, the Fund had not commenced
operations and therefore did not pay distribution fees.
S-7
<PAGE>
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Bishop Street Funds, CoreFunds, Inc., CrestFunds, Inc., CUFUND, The
Expedition Funds, FMB Funds, Inc., First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc, HighMark Funds,
Marquis Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell Investment
Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds,
Profit Funds Investment Trust, Rembrandt Funds-Registered Trademark-, Santa
Barbara Group of Mutual Funds, Inc., Boston 1784 Funds-Registered Trademark-,
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic
Funds, STI Classic Variable Trust and TIP Funds, each of which is an open-end
management investment company managed by SEI Fund Resources or its affiliates
and, except for Profit Funds Investment Trust, Rembrandt
Funds-Registered Trademark-, and Santa Barbara Group of Mutual Funds, Inc., are
distributed by SEI Investments Distribution Co..
ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of Trustees*--Retired
since 1994. Executive Vice President of SEI, 1986-1994. Director and Executive
Vice President of the Administrator and the Distributor, 1981-1994. Trustee of
The Arbor Fund, The Expedition Funds, Marquis-Registered Trademark- Funds, The
Advisors' Inner Circle Fund, SEI Asset Allocation Trust, SEI Daily Income Trust,
SEI Index Funds, SEI Institutional Managed Trust, SEI International Trust, SEI
Institutional Investments Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
Insurance Investment Products Trust, Boston 1784 Funds-Registered Trademark-,
Pillar Funds and Rembrandt Funds.
JOHN T. COONEY (DOB 01/20/27)--Trustee**--569 N. Post Oak Lane, Houston, TX
77024. Retired since 1992. Formerly Vice Chairman of Ameritrust Texas N.A.,
1989-1992, and MTrust Corp., 1985-1989. Trustee of The Arbor Fund, The
Expedition Funds, Marquis-Registered Trademark- Funds, and The Advisors' Inner
Circle Fund.
WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--2000 One Logan Square, Philadelphia,
PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to the Trust,
Administrator and Distributor, Director and Secretary of SEI. Trustee of The
Arbor Fund, The Expedition Funds, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
International Trust, SEI Asset Allocation Trust, SEI Institutional Investments
Trust, Insurance Investment Products Trust, The Advisors' Inner Circle Fund, and
Marquis-Registered Trademark- Funds.
FRANK E. MORRIS (DOB 12/30/23)--Trustee**--105 Walpole Street, Dover, MA 02030.
Retired since 1990. Peter Drucker Professor of Management, Boston College,
1989-1990. President, Federal Reserve Bank of Boston, 1968-1988. Trustee of The
Arbor Fund, The Expedition Funds, Marquis-Registered Trademark- Funds, The
Advisors'Inner Circle Fund, SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI
Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
International Trust, Insurance Investment Products Trust, SEI Asset Allocation
Trust and SEI Institutional Investments Trust.
ROBERT A. PATTERSON (DOB 11/05/27)--Trustee**--208 Old Main, University Park, PA
16802. Pennsylvania State University, Senior Vice President, Treasurer
(Emeritus). Financial and Investment Consultant, Professor of Transportation
(1984-present). Vice President-Investments, Treasurer, Senior Vice President
(Emeritus) (1982-1984). Director, Pennsylvania Research Corp.; Member and
Treasurer, Board of Trustees of Grove City College. Trustee of The Arbor Fund,
The Expedition Funds, Marquis-Registered Trademark- Funds, and The Advisors'
Inner Circle Fund.
GENE PETERS (DOB 06/03/29)--Trustee**--943 Oblong Road, Williamstown, MA 01267.
Private investor from 1987 to present. Vice President and Chief Financial
Officer, Western Company of North America
S-8
<PAGE>
(petroleum service company) (1980-1986). President of Gene Peters and Associates
(import company) (1978-1980). President and Chief Executive Officer of Jos.
Schlitz Brewing Company before 1978. Trustee of The Arbor Fund, The Expedition
Funds, Marquis-Registered Trademark- Funds and The Advisors'Inner Circle Fund.
JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads, from
September 1987 - December 1993; Trustee of The Arbor Fund, The Expedition Funds,
Marquis-Registered Trademark- Funds, The Advisors'Inner Circle Fund, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Managed Trust, SEI International Trust, Insurance Investment
Products Trust, SEI Asset Allocation Trust, and SEI Institutional Investments
Trust.
DAVID G. LEE (DOB 04/16/52)--President and Chief Executive Officer--Senior Vice
President of the Administrator and Distributor since 1993. Vice President of the
Administrator and Distributor, 1991-1993. President, GW Sierra Trust Funds
before 1991.
SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant Secretary--Senior
Vice President, General Counsel and Assistant Secretary of SEI, Senior Vice
President, General Counsel and Secretary of the Administrator and Distributor
since 1994. Vice President and Assistant Secretary of SEI, the Administrator and
Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1988-1992.
RICHARD W. GRANT (DOB 10/25/45)--Secretary--2000 One Logan Square, Philadelphia,
PA 19103, Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to the Trust,
Administrator and Distributor.
KATHRYN L. STANTON (DOB 11/19/58)--Vice President and Assistant
Secretary--Deputy General Counsel of SEI, Vice President and Assistant Secretary
of the Administrator and Distributor since 1994. Associate, Morgan, Lewis &
Bockius LLP (law firm), 1989-1994.
JOSEPH P. LYDON (DOB 09/27/59)--Vice President and Assistant
Secretary--Director, Business Administration of Fund Resources, April 1995. Vice
President, Fund Group, Dremen Value Management, LP, President Dremen Financial
Services, Inc. prior to 1995.
MARK NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration of SEI Fund Resources since
November 1996. Vice President of Fund Accounting, BISYS Fund Services, September
1995 to November 1996. Senior Vice President and Site Manager, Fidelity
Investments, 1981 to September 1995.
TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI, the Administrator and the Distributor
since 1995. Associate, Dewey Ballantine (law firm) (1994-1995). Associate,
Winston & Strawn (law firm) (1991-1994).
BARBARA A. NUGENT (DOB 06/18/56)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate, Drinker Biddle & Reath (law firm) (1994-1996). Assistant
Vice President/Administration, Delaware Service Company, Inc. (1992-1993);
Assistant Vice President--Operations of Delaware Service Company, Inc.
(1988-1992).
MARC H. CAHN (DOB 06/19/57)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate General Counsel, Barclays Bank PLC (1995-1996). ERISA
counsel, First Fidelity Bancorporation (1994-1995), Associate, Morgan, Lewis &
Bockius LLP (1989-1994).
- ------------------------
* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Trust as that term is defined in the 1940 Act.
** Messrs. Cooney, Morris, Patterson, Peters and Storey serve as members of the
Audit Committee of the Trust.
S-9
<PAGE>
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
The following table exhibits Trustee compensation for the fiscal year ended
October 31, 1996.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM REGISTRANT PENSION OR RETIREMENT BENEFITS
FOR THE FISCAL YEAR ENDED OCTOBER 31, ACCRUED AS PART OF TRUST
NAME OF PERSON, POSITION 1996 EXPENSES
- -------------------------------------------- --------------------------------------- -------------------------------
<S> <C> <C>
John T. Cooney, Trustee..................... $ 9,859 N/A
Frank E. Morris, Trustee.................... $ 10,006 N/A
Robert Patterson, Trustee................... $ 10,006 N/A
Eugene B. Peters, Trustee................... $ 10,006 N/A
James M. Storey, Esq., Trustee.............. $ 10,006 N/A
William M. Doran, Esq., Trustee............. $ 0 N/A
Robert A. Nesher, Chairman of the Board..... $ 0 N/A
</TABLE>
PERFORMANCE INFORMATION
From time to time, the Trust may advertise yield and total return of the Fund.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of the Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2[((a - b)/cd+1)(6) - 1], where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
average daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.
The total return of the Fund refers to the average compounded rate of return to
a hypothetical investment for designated time periods (including, but not
limited to, the period from which that Fund commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period. In particular, total return will be calculated according to the
following formula: P (1 + T)(n) = ERV, where P = a hypothetical initial payment
of $1,000; T = average annual total return; n = number of years; and ERV =
ending redeemable value, as of the end of the designated time period, of a
hypothetical $1,000 payment made at the beginning of the designated time period.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Distributor on a day on which
the Federal Reserve Banks are open for business. Shares of the Fund are offered
on a continuous basis. Currently, the holidays observed by the Federal Reserve
Banks are as follows: New Year's Day, Presidents' Day, Martin Luther King Jr.
Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving and Christmas.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Fund in lieu
of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions. The Trust has received
exemptive relief from the Securities and Exchange Commission (the "SEC"), which
permits the Trust to make in-kind redemptions to those shareholders that are
affiliated with the Fund solely by their ownership of a certain percentage of
the Fund.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during
S-10
<PAGE>
the existence of an emergency (as determined by the SEC by rule or regulation)
as a result of which the disposal or valuation of the Fund's securities is not
reasonably practicable, or for such other periods as the SEC has by order
permitted. The Trust also reserves the right to suspend sales of shares of any
Fund for any period during which the New York Stock Exchange, the Adviser, the
Administrator, the Transfer Agent and/or the custodian are not open for
business.
DETERMINATION OF NET ASSET VALUE
The securities of the Fund are valued by the Administrator. The Administrator
will use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as trader quotations. However, the service may also use a matrix system to
determine valuations of fixed income securities, which system considers such
factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisers with
specific reference to their own tax situations, including their state and local
tax liabilities.
FEDERAL INCOME TAX
The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this Statement
of Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
The Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, the Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.
In order to qualify for treatment as a RIC under the Code, the Fund generally
must distribute annually to its shareholders at least 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) (the "Distribution Requirement") and also must meet several
additional requirements. Among these requirements are the following: (i) at
least 90% of the Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, or certain other income;
(ii) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of stocks or securities held for less than
three months; (iii) at the close of each quarter of the Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. Government securities, securities of other RICs and other
securities, with such other securities limited, in respect to any one issuer, to
an amount that does not exceed 5% of the value of the Fund's assets and that
does not represent more than 10% of the outstanding voting securities of such
issuer; and (iv) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its assets may be invested in securities (other
than U.S. Government securities or the securities of other RICs) of any one
issuer or of two or more issuers which the Fund controls and which are engaged
in the same, similar or related trades or businesses. Notwithstanding the
Distribution Requirement described above, which requires only that a Fund
distribute at least 90% of its annual investment company taxable income and does
not require any minimum distribution of net capital gain (the excess of net
long-term capital gain over net short-term capital loss), the Fund will be
subject to a nondeductible 4% federal excise tax to the extent it fails to
distribute by the end of any calendar year 98% of its ordinary income for that
year and 98% of its capital
S-11
<PAGE>
gain net income (the excess of short- and long-term capital gains over
short- and long-term capital losses) for the one-year period ending on October
31 of that year, plus certain other amounts. The Fund intends to make sufficient
distributions of its ordinary income and capital gain net income prior to the
end of each calendar year to avoid liability for excise tax.
Any gain or loss recognized on a sale or redemption of shares of the Fund by a
non-exempt shareholder who is not a dealer in securities generally will be
treated as a long-term capital gain or loss if the shares have been held for
more than twelve months and otherwise generally will be treated as a short-term
capital gain or loss. If shares of a Fund on which a net capital gain
distribution has been received are subsequently sold or redeemed and such shares
have been held for six months or less, any loss recognized will be treated as a
long-term capital loss to the extent of the long-term capital gain distribution.
In certain cases, the Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
the Fund that such shareholder is not subject to backup withholding.
If the Fund fails to qualify as a RIC for any taxable year, it will be subject
to tax on its taxable income at regular corporate rates. In such an event, all
distributions from that Fund generally would be eligible for the corporate
dividend received deduction.
STATE TAXES
The Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Fund shareholders should
consult with their tax advisers regarding the state and local tax consequences
of investments in the Fund.
PORTFOLIO TRANSACTIONS
The Fund has no obligation to deal with any broker-dealer or group of
broker-dealers in the execution of transactions in portfolio securities. Subject
to policies established by the Trustees of the Trust, the Adviser and
Sub-Adviser are responsible for placing the orders to execute transactions for
the Fund. In placing orders, it is the policy of the Trust to seek to obtain the
best net results taking into account such factors as price (including the
applicable dealer spread), the size, type and difficulty of the transaction
involved, the firm's general execution and operational facilities and the firm's
risk in positioning the securities involved. While each of the Adviser and
Sub-Adviser generally seeks reasonably competitive spreads or commissions, the
Fund will not necessarily be paying the lowest spread or commission available.
The money market instruments in which the Fund invests are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
and Sub-Adviser will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Money market instruments are generally traded on a net basis and do
not normally involve either brokerage commissions or transfer taxes. The cost of
executing portfolio securities transactions of the Fund will primarily consist
of dealer spreads and underwriting commissions.
It is expected that the Fund may execute brokerage or other agency transactions
through the Distributor, which is a registered broker-dealer, for a commission
in conformity with the 1940 Act, the Securities Exchange Act of 1934 and rules
promulgated by the SEC. Under these provisions, the Distributor is permitted to
receive and retain compensation for effecting portfolio transactions for the
Fund on an exchange if a written contract is in effect between the Distributor
and the Trust expressly permitting the Distributor to receive and retain such
compensation. These rules further require that commissions paid to the
Distributor by the Fund for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
S-12
<PAGE>
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." The Trustees, including those who are not "interested persons" of the
Trust, have adopted procedures for evaluating the reasonableness of commissions
paid to the Distributor and will review these procedures periodically.
Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Adviser and Sub-Adviser may place portfolio orders with
qualified broker-dealers who recommend the Fund's shares to clients, and may,
when a number of brokers and dealers can provide best net results on a
particular transaction, consider such recommendations by a broker or dealer in
selecting among broker-dealers.
The Fund is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the 1940 Act, which the Fund has acquired
during its most recent fiscal year. For the fiscal year ended October 31, 1996,
the Fund had not commenced operations.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio, each of which represents an equal
proportionate interest in the portfolio with each other share. Shares are
entitled upon liquidation to a pro rata share in the net assets of the
portfolio. Shareholders have no preemptive rights. The Declaration of Trust
provides that the Trustees of the Trust may create additional series of shares.
All consideration received by the Trust for shares of any additional series and
all assets in which such consideration is invested would belong to that series
and would be subject to the liabilities related thereto. Share certificates
representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders incurring financial loss for that reason appears
remote because the Trust's Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholder held personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his or
her own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
EXPERTS
Arthur Andersen LLP serves as independent public accountants to the Trust.
S-13
<PAGE>
PART C: OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements
Part--A Not Applicable
Part--B Not Applicable
(b) Additional Exhibits
<TABLE>
<S> <C>
(1)(a) Registrant's Agreement and Declaration of Trust dated June 29, 1993 is
incorporated herein by reference to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on August 29, 1991.
(1)(b) Registrant's Amendment to the Agreement and Declaration of Trust dated
December 2, 1996, is incorporated herein by reference to Post-Effective
Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on
December 13, 1996.
(1)(c) Registrant's Amendment to the Agreement and Declaration of Trust dated
February 18, 1997, is incorporated herein by reference to Post-Effective
Amendment No. 28 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on
February 27, 1997.
(2)(a) Registrant's By-Laws are incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on August 29, 1991.
(2)(b) Registrant's Amended and Restated By-Laws are incorporated herein by
reference to Post-Effective Amendment No. 27 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on December 12, 1996.
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Investment Advisory Agreement between Registrant and Oak Associates with
respect to White Oak Growth Stock Fund and Pin Oak Aggressive Stock Fund
dated July 20, 1992 as originally filed with Post-Effective Amendment No.
3 to Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on May 22, 1992 is
incorporated herein by reference to Post-Effective Amendment No. 24 filed
on February 28, 1996.
(5)(b) Investment Advisory Agreement between Registrant and HGK Asset Management,
Inc. with respect to HGK Fixed Income Fund dated August 15, 1994 as
originally filed with Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on June 15, 1994 is incorporated herein
by reference to Post-Effective Amendment No. 24 filed on February 28,
1996.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(5)(c) Investment Advisory Agreement between Registrant and AIG Capital Management
Corp. with respect to AIG Money Market Fund originally filed with
Post-Effective Amendment No. 17 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on September 19, 1994 is incorporated herein by reference to
Post-Effective Amendment No. 28 filed February 27, 1997.
(5)(d) Investment Advisory Agreement between Registrant and First Manhattan Co.
with respect to FMC Select Fund dated May 3, 1995 as originally filed with
Post-Effective Amendment No. 19 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484) filed with the Securities and Exchange
Commission on February 1, 1995 is incorporated herein by reference to
Post-Effective Amendment No. 24 filed on February 28, 1996.
(5)(e) Investment Advisory Agreement between Registrant and CRA Real Estate
Securities L.P. dated December 31, 1996 with respect to the CRA Realty
Shares Portfolio is incorporated herein by reference to Post-Effective
Amendment No. 29 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484) filed with the Securities and Exchange Commission on May 22,
1997.
(5)(f) Form of Investment Advisory Agreement between Registrant and MDL Capital
Management, Inc. with respect to the MDL Broad Market Fixed Income
Portfolio and the MDL Large Cap Growth Equity Portfolio is incorporated
herein by reference to Post-Effective Amendment No. 29 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on May 22, 1997.
(5)(g) Form of Investment Advisory Agreement between Registrant and SAGE Global
Funds, LLC with respect to the SAGE Corporate Bond Fund is filed herewith.
(5)(h) Form of Investment Sub-Advisory Agreement between SAGE Global Funds, LLC and
Standard Asset Group, Inc. with respect to the SAGE Corporate Bond Fund is
filed herewith.
(6)(a) Amended and Restated Distribution Agreement between Registrant and SEI
Financial Services Company dated August 8, 1994 as originally filed with
Post-Effective Amendment No. 17 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484) filed with the Securities and Exchange
Commission on September 19, 1994 is incorporated herein by reference to
Post-Effective Amendment No. 24 filed on February 28, 1996.
(6)(b) Distribution Agreement between Registrant and CCM Securities, Inc. dated
February 28, 1997 is incorporated herein by reference to Post-Effective
Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on June
30, 1997.
(7) Not Applicable.
(8) Custodian Agreement between Registrant and CoreStates Bank N.A. originally
filed Pre-Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on October 28, 1991 is incorporated herein by reference to
Post-Effective Amendment No. 28 filed on February 27, 1997.
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
(9)(a) Amended and Restated Administration Agreement between Registrant and SEI
Financial Management Corporation, including schedules relating to Clover
Capital Equity Value Fund, Clover Capital Fixed Income Fund, White Oak
Growth Stock Fund, Pin Oak Aggressive Stock Fund, Roulston Midwest Growth
Fund, Roulston Growth and Income Fund, Roulston Government Securities
Fund, A+P Large-Cap Fund, Turner Fixed Income Fund, Turner Small Cap Fund,
Turner Growth Equity Fund, Morgan Grenfell Fixed Income Fund, Morgan
Grenfell Municipal Bond Fund and HGK Fixed Income Fund dated May 17, 1994
as originally filed with Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on June 15, 1994 is incorporated herein
by reference to Post-Effective Amendment No. 24 filed on February 28,
1996.
(9)(b) Schedule dated November 11, 1996 to Administration Agreement dated November
14, 1991 as Amended and Restated May 17, 1994 adding the CRA Realty Shares
Portfolio is incorporated herein by reference to Post-Effective Amendment
No. 29 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on May 22,
1997.
(9)(c) Shareholder Service Plan and Agreement for the Class A Shares of the CRA
Realty Shares Portfolio is incorporated herein by reference to
Post-Effective Amendment No. 30 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on June 30, 1997.
(9)(d) Schedule to Amended and Restated Administration Agreement dated May 8, 1995
to the Administration Agreement dated November 14, 1991 as Amended and
Restated May 17, 1994 with respect to the FMC Select Fund is incorporated
herein by reference to Post-Effective Amendment No. 28 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on February 27, 1997.
(9)(e) Consent to Assignment and Assumption of Administration Agreement dated June
1, 1996 is incorporated herein by reference to Post-Effective Amendment
No. 28 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on February
27, 1997.
(9)(f) Form of Schedule to the Amended and Restated Administration Agreement adding
the MDL Broad Market Fixed Income Portfolio and the MDL Large Cap Growth
Equity Portfolio is incorporated herein by reference to Post-Effective
Amendment No. 29 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on May
22, 1997.
(9)(g) Form of Schedule to the Amended and Restated Administration Agreement adding
the SAGE Corporate Bond Fund is filed herewith.
(10) Opinion and Consent of Counsel is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on October 28, 1991.
(11) Consent of Independent Public Accountants is filed herewith.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
</TABLE>
C-3
<PAGE>
<TABLE>
<S> <C>
(15) Distribution Plan for The Advisors' Inner Circle Fund as originally filed
with Post-Effective Amendment No. 17 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on September 19, 1994 is incorporated herein by
reference to Post-Effective Amendment No. 24 filed on February 28, 1996.
(16) Performance Quotation Computation is incorporated herein by reference to
Post-Effective Amendment No. 13 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on February 25, 1994.
(17) Not Applicable.
(18) Rule 18f-3 Plan is incorporated herein to exhibit (15)(a) which is
incorporated herein by reference to exhibit (15)(a) to Post-Effective
Amendment No. 21 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on June
1, 1995.
(24) Powers of Attorney for David G. Lee, John T. Cooney, William M. Doran, Frank
E. Morris, Robert A. Nesher, Gene Peters, Robert A. Patterson and James M.
Storey are incorporated herein by reference to Post-Effective Amendment
No. 28 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on February
27, 1997.
</TABLE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
See the Prospectuses and the Statements of Additional Information regarding
the control relationships of The Advisors' Inner Circle Fund (the "Fund"). SEI
Investments Management Corporation a wholly-owned subsidiary of SEI Investments
Company ("SEI"), is the owner of all beneficial interest in SEI Fund Resources
("the Administrator"). SEI and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers.
Item 26. NUMBER OF HOLDERS OF SECURITIES AS OF AUGUST 5, 1997:
<TABLE>
<CAPTION>
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
- ---------------------------------------------------------------------------------- -----------
<S> <C>
Units of beneficial interest, without par value--
White Oak Growth Stock Fund....................................................... 6,177
Pin Oak Aggressive Stock Fund..................................................... 1,018
HGK Fixed Income Fund............................................................. 138
AIG Money Market Fund Class A..................................................... 203
AIG Money Market Fund Class B..................................................... 81
FMC Select Fund................................................................... 13
CRA Realty Shares Portfolio--Institutional Shares................................. 50
CRA Realty Shares Portfolio--Class A Shares....................................... N/A
MDL Broad Market Fixed Income Portfolio........................................... N/A
MDL Large Cap Growth Portfolio.................................................... N/A
</TABLE>
Item 27. INDEMNIFICATION:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the
C-4
<PAGE>
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by trustees,
directors, officers or controlling persons of the Registrant in connection with
the successful defense of any act, suit or proceeding) is asserted by such
trustees, directors, officers or controlling persons in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issues.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR:
Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of the Advisor is or has been, at
any time during the last two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee are as follows:
OAK ASSOCIATES
Oak Associates is the investment adviser for the White Oak Growth Stock Fund
and the Pin Oak Aggressive Stock Fund. The principal address of Oak Associates
is 3875 Embassy Parkway, Suite 250, Akron, OH 44333.
The list required by this Item 28 of general partners of Oak Associates,
together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by Oak Associates under the Advisers Act of 1940 (SEC File No. 801-23632).
HGK ASSET MANAGEMENT, INC.
HGK Asset Management, Inc. is the investment adviser for the HGK Fixed
Income Fund. The principal address of HGK Asset Management, Inc. is Newport
Tower, 525 Washington Blvd., Jersey City, NJ 07310.
The list required by this Item 28 of general partners of HGK Asset Management,
Inc., together with information as to any other business profession, vocation,
or employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by HGK Asset Management, Inc. under the Advisers Act of 1940 (SEC File No.
801-19314).
AIG CAPITAL MANAGEMENT CORP.
AIG Capital Management Corp. is the investment adviser for the AIG Money
Market Fund. The principal address of AIG Capital Management Corp. is 70 Pine
Street, New York, NY 10270.
The list required by this Item 28 of directors and officers of AIG Capital
Management Corp., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such directors and
officers during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by AIG Capital Management Corp. under the Advisers Act
of 1940 (SEC File No. 801-47192).
FIRST MANHATTAN CO.
First Manhattan Co. is the investment adviser for the FMC Select Fund. The
principal address of First Manhattan Co. is 437 Madison Avenue, New York, NY
10022.
C-5
<PAGE>
The list required by this Item 28 of general partners of First Manhattan Co.,
together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by First Manhattan Co. under the Advisers Act of 1940 (SEC File No.
801-12411).
CRA REAL ESTATE SECURITIES L.P.
CRA Real Estate Securities L.P. is the investment adviser for the CRA Realty
Shares Portfolio. The principal address of CRA Real Estate Securities L.P. is
Suite 205, 259 Radnor-Chester Road, Radnor, PA 19087.
The list required by this Item 28 of general partners of CRA Real Estate
Securities L.P., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such general
partners during the past two years is incorporated by reference to Schedules B
and D of Form ADV filed by CRA Real Estate Securities L.P. under the Advisers
Act of 1940 (SEC File No. 801-49083).
MDL CAPITAL MANAGEMENT, INC.
MDL Capital Management, Inc. is the investment adviser for the MDL Broad
Market Fixed Income Portfolio and the MDL Large Cap Growth Equity Portfolio. The
principal address of MDL Capital Management, Inc. is 650 Smithfield Street,
Suite 730, Pittsburgh, PA 15222.
The list required by this Item 28 of general partners of MDL Capital Management,
Inc., together with information as to any other business profession, vocation,
or employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by MDL Capital Management, Inc. under the Advisers Act of 1940 (SEC File
No. 801-43419).
SAGE GLOBAL FUNDS, LLC
SAGE Global Funds, LLC is the investment adviser for the SAGE Corporate Bond
Fund. The principal address of SAGE Global Funds, LLC is 55 William Street,
Suite G-40, Wellesley, MA 02181.
The list required by this Item 28 of general partners of SAGE Global Funds, LLC,
together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by SAGE Global Funds, LLC under the Advisers Act of 1940 (SEC File No.
801-54753).
STANDARD ASSET GROUP, INC.
Standard Asset Group, Inc. Is the investment sub-adviser for the SAGE
Corporate Bond Fund. The principal address of Standard Asset Group, Inc. is 55
William Street, Suite G-40, Wellesley, MA 02181.
The list required by this Item 28 of general partners of Standard Asset Group,
Inc., together with information as to any other business profession, vocation,
or employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by Standard Asset Group, Inc. under the Advisers Act of 1940 (SEC File No.
801-29883).
C-6
<PAGE>
Item 29. PRINCIPAL UNDERWRITERS:
(a) Furnish the name of each investment company (other than the
Registrant) for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment advisor.
<TABLE>
<S> <C>
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16,1993
Marquis Funds-Registered Trademark- August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
Expedition Funds June 9, 1997
</TABLE>
The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").
Furnish the information required by the following table with respect to each
director, officer or partner of each principal underwriter named in the answer
to Item 21 of Part B. Unless otherwise noted, the principal business address of
each director or officer is Oaks, PA 19456.
C-7
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------- ------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & President-- --
Investment Advisory Group
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President--Investment --
Services Division
Dennis J. McGonigle Executive Vice President --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
David G. Lee Senior Vice President President & Chief
Executive Officer
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Secretary Vice President,
Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary Vice President,
Assistant Secretary
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President,
Assistant Secretary
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President & Treasurer --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------- ------------------------
<S> <C> <C>
Joanne Nelson Vice President --
Barbara A. Nugent Vice President & Assistant Secretary Vice President,
Assistant Secretary
Sandra K. Orlow Vice President & Assistant Secretary Vice President,
Assistant Secretary
Donald Pepin Vice President & Managing Director --
Kim Rainey Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President,
Assistant Secretary
Wayne M. Withrow Vice President & Managing Director --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-I (d), the required books and records are maintained
at the offices of Registrant's Custodian:
CoreStates Bank, N.A.
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101
(b)/(c) With respect to Rules 31a-1(a); 31a-1 (b)(1),(4);
(2)(C) and (D); (4); (5);
(6); (8); (9); (10); (11); and 31a-1(f), the required books and records are
maintained at the offices of Registrant's Administrator:
SEI Fund Resources
Oaks, PA 19456
(c) With respect to Rules 31a-1 (b)(5), (6), (9) and (10) and 31a-1 (f),
the required books and records are maintained at the offices of the
Registrant's Advisors:
Oak Associates
3875 Embassy Parkway
Suite 250
Akron, OH 44333-8334
HGK Asset Management, Inc.
Newport Tower
525 Washington Blvd.
Jersey City, NJ 07310
AIG Capital Management Corp.
70 Pine Street
C-9
<PAGE>
20th Floor
New York, NY 10270
First Manhattan Co.
437 Madison Avenue
New York, NY 10022-7022
CRA Real Estate Securities L.P.
Suite 205
259 Radnor-Chester Road
Radnor, PA 19087
MDL Capital Management, Inc.
650 Smithfield Street, Suite 730
Pittsburgh, PA 15222
SAGE Global Funds, LLC
55 William Street, Suite G-40
Wellesley, MA 02181
Standard Asset Group, Inc.
55 William Street
Wellesley, MA 02181
Item 31. MANAGEMENT SERVICES:
None.
Item 32. UNDERTAKINGS:
Registrant hereby undertakes to file a post-effective amendment, using
financial statements with respect to the SAGE Corporate Bond Fund which need not
be certified, within four to six months from the effective date of
Post-Effective Amendment No. 31.
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with shareholders of the Fund,
the Trustees will inform such shareholders as to the approximate number of
shareholders of record and the approximate costs of mailing or afford said
shareholders access to a list of shareholders.
Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to assist in communications with
other shareholders as required by the provisions of Section 16(c) of the
Investment Company Act of 1940.
Registrant hereby undertakes to furnish each prospective person to whom a
prospectus for any series of the Registrant is delivered with a copy of the
Registrant's latest annual report to shareholders for such series, when such
annual report is issued containing information called for by Item 5A of Form
N-1A, upon request and without charge.
NOTICE
A copy of the Agreement and Declaration of Trust for The Advisors' Inner
Circle Fund is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Fund by an officer of the Fund as an officer and
by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers, or shareholders individually but are binding only upon the
assets and property of the Fund.
C-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 31 to the Registration Statement No. 33-42484 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wayne, Commonwealth of Pennsylvania on the 7th day of August, 1997.
THE ADVISORS' INNER CIRCLE FUND
By: /s/ David G. Lee
-----------------------------------------
David G. Lee,
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity and on the dates indicated.
*
- ------------------------------ Trustee August 7, 1997
John T. Cooney
*
- ------------------------------ Trustee August 7, 1997
William M. Doran
*
- ------------------------------ Trustee August 7, 1997
Frank E. Morris
*
- ------------------------------ Trustee August 7, 1997
Robert A. Nesher
*
- ------------------------------ Trustee August 7, 1997
Robert A. Patterson
*
- ------------------------------ Trustee August 7, 1997
Eugene Peters
*
- ------------------------------ Trustee August 7, 1997
James M. Storey
/s/ David G. Lee
- ------------------------------ President & Chief August 7, 1997
David G. Lee Executive Officer
/s/ Mark E. Nagle
- ------------------------------ Controller & August 7, 1997
Mark E. Nagle Chief Financial Officer
*By: /s/ David G. Lee
-------------------------
David G. Lee
Attorney-in-Fact
C-11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. AND
DESCRIPTION
- --------------------
<S> <C>
EX-99.B1(a) Registrant's Agreement and Declaration of Trust dated June 29, 1993 is incorporated
herein by reference to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on August 29, 1991.
EX-99.B1(b) Registrant's Amendment to the Agreement and Declaration of Trust dated December 2,
1996 is incorporated herein by reference to Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with
the Securities and Exchange Commission on December 13, 1996.
EX-99.B1(c) Registrant's Amendment to the Agreement and Declaration of Trust dated February 18,
1997, is incorporated herein by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with
the Securities and Exchange Commission on February 27, 1997.
EX-99.B2(a) Registrant's By-Laws are incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on August 29, 1991.
EX-99.B2(b) Registrant's Amended and Restated By-Laws are incorporated herein by reference to
Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form
N-1A (File No. 33-42484), filed with the Securities and Exchange Commission on
December 12, 1996.
EX-99.B3 Not Applicable.
EX-99.B4 Not Applicable.
EX-99.B5(a) Investment Advisory Agreement between Registrant and Oak Associates with respect to
White Oak Growth Stock Fund and Pin Oak Aggressive Stock Fund dated July 20, 1992
as originally filed with Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on May 22, 1992 is incorporated herein by
reference to Post-Effective Amendment No. 24 filed on February 28, 1996.
EX-99.B5(b) Investment Advisory Agreement between Registrant and HGK Asset Management, Inc.
with respect to HGK Fixed Income Fund dated August 15, 1994 as originally filed
with Post-Effective Amendment No. 15 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange Commission
on June 15, 1994 is incorporated herein by reference to Post-Effective Amendment
No. 24 filed on February 28, 1996.
EX-99.B5(c) Investment Advisory Agreement between Registrant and AIG Capital Management Corp.
with respect to AIG Money Market Fund is incorporated herein by reference to
Post-Effective Amendment No. 17 to Registrant's Registration Statement on Form
N-1A (File No. 33-42484), filed with the Securities and Exchange Commission on
September 19, 1994 is incorporated herein by reference to Post-Effective
Amendment No. 28 filed February 27, 1997.
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. AND
DESCRIPTION
- --------------------
<S> <C>
EX-99.B5(d) Investment Advisory Agreement Between Registrant and First Manhattan Co. with
respect to FMC Select Fund dated May 3, 1995 as originally filed with
Post-Effective Amendment No. 19 to Registrant's Registration Statement on Form
N-1A (File No.33-42484), filed with the Securities and Exchange Commis-sion on
February 1, 1995 is incorporated herein by reference to Post-Effective Amendment
No. 24 filed on February 28, 1996.
EX-99.B5(e) Investment Advisory Agreement between Registrant and CRA Real Estate Securities
L.P. dated December 31, 1996 with respect to the CRA Realty Shares Portfolio is
incorporated herein by reference to Post-Effective Amendment No. 29 to
Registrant's Registration Statement on From N-1A (File No. 33-42484) filed with
the Securities and Exchange Commission on May 22, 1997.
EX-99.B5(f) Form of Investment Advisory Agreement between Registrant and MDL Capital
Management, Inc. with respect to the MDL Broad Market Fixed Income Portfolio and
the MDL Large Cap Growth Equity Portfolio is incorporated herein by reference to
Post-Effective Amendment No. 29 to Registrant's Registration Statement on Form
N-1A (File No. 33-42484) filed with the Securities and Exchange Commission on May
22, 1997.
EX-99.B5(g) Form of Investment Advisory Agreement between Registrant and SAGE Global Funds, LLC
with respect to the SAGE Corporate Bond Fund is filed herewith.
EX-99.B5(h) Form of Investment Sub-Advisory Agreement between SAGE Global Funds, LLC and
Standard Asset Group, Inc. with respect to the SAGE Corporate Bond Fund is filed
herewith.
EX-99.B6(a) Amended and Restated Distribution Agreement between Registrant and SEI Financial
Services Company dated August 8, 1994 as originally filed with Post-Effective
Amendment No. 17 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on September 19,
1994 is incorporated herein by reference to Post-Effective Amendment No. 24 filed
on February 28, 1996.
EX-99.B6(b) Distribution Agreement between Registrant and CCM Securities, Inc. dated February
28, 1997 is incorporated herein by reference to Post-Effective Amendment No. 30
to Registrant's Registration Statement on From N-1A (File No. 33-42484), filed
with the Securities and Exchange Commission on June 30, 1997.
EX-99.B7 Not Applicable.
EX-99.B8 Custodian Agreement between Registrant and CoreStates Bank N.A. is incorporated
herein by reference to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on October 28, 1991 is incorporated herein by reference to
Post-Effective Amendment No. 28 filed on February 27, 1997.
</TABLE>
C-13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. AND
DESCRIPTION
- --------------------
<S> <C>
EX-99.B9(a) Amended and Restated Administration Agreement between Registrant and SEI Financial
Management Corporation, including schedules relating to Clover Capital Equity
Value Fund, Clover Capital Fixed Income Fund, White Oak Growth Stock Fund, Pin
Oak Aggressive Stock Fund, Roulston Midwest Growth Fund, Roulston Growth and
Income Fund, Roulston Government Securities Fund, A+P Large-Cap Fund, Turner
Fixed Income Fund, Turner Small Cap Fund, Turner Growth Equity Fund, Morgan
Grenfell Fixed Income Fund, Morgan Grenfell Municipal Bond Fund and HGK Fixed
Income Fund dated May 17, 1994 as originally filed with Post-Effective Amendment
No. 15 to Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on June 15, 1994 is
incorporated herein by reference to Post-Effective Amendment No. 24 filed on
February 28, 1996.
EX-99.B9(b) Schedule dated November 11, 1996 to Administration Agreement dated November 14,
1991 as Amended and Restated May 17, 1994 adding the CRA Realty Shares Portfolio
is incorporated herein by reference to Post-Effective Amendment No. 29 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with
the Securities and Exchange Commission on May 22, 1997.
EX-99.B9(c) Shareholder Service Plan and Agreement for the Class A Shares of the CRA Realty
Shares Portfolio is incorporated herein by reference to Post-Effective Amendment
No. 30 to Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on June 30, 1997.
EX-99.B9(d) Schedule to Amended and Restated Administration Agreement dated May 8, 1995 to the
Administration Agreement dated November 14, 1991 as Amended and Restated May 17,
1994 with respect to the FMC Select Fund is incorporated herein by reference to
Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form
N-1A (File No. 33-42484), filed with the Securities and Exchange Commission on
February 27, 1997.
EX-99.B9(e) Consent to Assignment and Assumption of Administration Agreement dated June 1, 1996
is incorporated herein by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with
the Securities and Exchange Commission on February 27, 1997.
EX-99.B9(f) Form of Schedule to the Amended and Restated Administration Agreement adding the
MDL Broad Market Fixed Income Portfolio and the MDL Large Cap Growth Equity
Portfolio is incorporated herein by reference to Post-Effective Amendment No. 29
to Registrant's Registration Statement on Form N-1A (Filed No. 33-42484), filed
with the Securities and Exchange Commission on May 22, 1997.
EX-99.B9(g) Form of Schedule to the Amended and Restated Administration Agreement adding the
SAGE Corporate Bond fund is filed herewith
EX-99.B10 Opinion and Consent of Counsel is incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on October 28, 1991.
</TABLE>
C-14
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. AND
DESCRIPTION
- --------------------
<S> <C>
EX-99.B11 Consent of Independent Public Accountants is filed herewith.
EX-99.B12 Not Applicable.
EX-99.B13 Not Applicable.
EX-99.B14 Not Applicable.
EX-99.B15 Distribution Plan for The Advisors' Inner Circle Fund as originally filed with
Post-Effective Amendment No. 17 to Registrant's Registration Statement on Form
N-1A (File No. 33-42484), filed with the Securities and Exchange Commission on
September 19, 1994 is incorporated herein by reference to Post-Effective
Amendment No. 24 filed on February 28, 1996.
EX-99.B16 Performance Quotation Computation is incorporated herein by reference to
Post-Effective Amendment No. 13 to Registrant's Registration Statement on Form
N-1A (File No. 33-42484), filed with the Securities and Exchange Commission on
February 25, 1994.
EX-99.B18 Rule 18f-3 Plan is incorporated herein to exhibit (15)(a) which is incorporated
herein by reference to exhibit (15)(a) to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with
the Securities and Exchange Commission on June 1, 1995.
EX-99.B24 Powers of Attorney for David G. Lee, John T. Cooney, William M. Doran, Frank E.
Morris, Robert A. Nesher, Gene Peters, Robert A. Patterson and James M. Storey
are incorporated herein by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with
the Securities and Exchange Commission on February 27, 1997.
EX-99.B27 Not Applicable.
</TABLE>
C-15
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of _________, 1997, by and between The
Advisors' Inner Circle Fund, a Massachusetts business trust (the "Trust"), and
SAGE Global Funds, LLC (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act") consisting of several series of shares, each having its own
investment policies; and
WHEREAS, the Trust has retained SEI Fund Resources (the "Administrator") to
provide administration of the Trust's operations, subject to the control of the
Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its SAGE Corporate Bond Fund, and such other
portfolios as the Trust and the Adviser may agree upon (the "Portfolios"), and
the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's
Officers and Trustees concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Portfolio's prospectus and
statement of additional information as amended from time to time, and
applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios
<PAGE>
and is directed to use its best efforts to obtain the best net results
as described from time to time in the Portfolios' Prospectuses and
Statement of Additional Information. The Adviser will promptly
communicate to the Administrator and to the officers and the Trustees
of the Trust such information relating to portfolio transactions as
they may reasonably request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, by reason of its having directed a securities transaction
on behalf of the Trust to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or
as described from time to time by the Portfolios' Prospectuses and
Statement of Additional Information.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in the
schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached schedule(s), to
the assets. The fee shall be based on the average daily net assets
for the month involved.
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. OTHER EXPENSES. The Adviser shall pay all expenses of printing and
mailing reports, prospectuses, statements of additional information,
and sales literature relating to the solicitation of prospective
clients. The Trust shall pay all expenses relating to mailing to
existing shareholders prospectuses, statements of additional
information, proxy solicitation material and shareholder reports.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal
year (including fees and other amounts payable to the Adviser, but
excluding interest, taxes, brokerage costs, litigation, and other
extraordinary costs) as calculated every business day would exceed the
expense limitations imposed on investment companies by any applicable
statute or regulatory authority of any jurisdiction in which shares of
a Portfolio are qualified for offer and sale, the Adviser shall bear
such excess cost.
However, the Adviser will not bear expenses of any Portfolio which
would result in the Portfolio's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code.
Payment of expenses by the Adviser pursuant to this Section 5 shall be
settled on a monthly basis (subject to fiscal year end reconciliation)
by a reduction in the fee payable to the Adviser for such month
<PAGE>
pursuant to Section 3 and, if such reduction shall be insufficient to
offset such expenses, by reimbursing the Trust.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
7. STATUS OF THE ADVISER. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser shall be free to render
similar services to others so long as its services to the Trust are
not impaired thereby. The Adviser shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the 1940 Act which are prepared or maintained by the Adviser on
behalf of the Trust are the property of the Trust and will be
surrendered promptly to the Trust on request.
9. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser
shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against the Adviser
hereunder. The Adviser shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for
any act or omission in carrying out its duties hereunder, except a
loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law or Federal
securities law which cannot be waived or modified hereby. (As used in
this Paragraph 9, the term "Adviser" shall include directors,
officers, employees and other corporate agents of the Adviser as well
as that corporation itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the
Trust are or may be interested in the Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and shareholders of
the Adviser are or may be interested in the Trust as Trustees,
shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected through
affiliates of the Adviser if approved by the Board of Trustees,
subject to the rules and regulations of the Securities and Exchange
Commission.
<PAGE>
11. LICENSE OF THE ADVISER'S NAME. The Adviser hereby agrees to grant a
license to the Trust for use of its name in the names of the
Portfolios for the term of this Agreement and such license shall
terminate upon termination of this Agreement.
12. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the 1940
Act and rules and regulations thereunder. The foregoing requirement
that continuance of this Agreement be "specifically approved at least
annually" shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered, or
mailed postpaid, to the other party at any office of such party.
As used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder; subject to such
exemptions as may be granted by the Securities and Exchange Commission
under said Act.
14. CHANGE IN THE ADVISER'S MEMBERSHIP. The Adviser agrees that it shall
notify the Trust of any change in the membership of the Adviser within
a reasonable time after such change.
15. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at 1 Freedom Valley Road,
Oaks, PA 19456 and if to the Adviser, at 55 William Street, Suite
G-40, Wellesley Hills, MA 02181.
<PAGE>
16. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
17. GOVERNING LAW. This Agreement shall be governed by the internal laws
of the Commonwealth of Massachusetts, without regard to conflict of
law principles; provided, however, that nothing herein shall be
construed as being inconsistent with the 1940 Act.
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, and is not binding upon any of the Trustees, officers, or shareholders
of the Trust individually but binding only upon the assets and property of the
Trust.
No portfolio of the Trust shall be liable for the obligations of any other
portfolio of the Trust. Without limiting the generality of the foregoing, the
Adviser shall look only to the assets of the Portfolios for payment of fees for
services rendered to the Portfolios.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
THE ADVISORS' INNER CIRCLE FUND SAGE GLOBAL FUNDS, LLC
By: By:
------------------------------- ------------------------------------
Attest: Attest:
--------------------------- --------------------------------
<PAGE>
SCHEDULE
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE ADVISORS' INNER CIRCLE FUND
AND
SAGE GLOBAL FUNDS, LLC
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee
- -------------------------- ---------------
SAGE Corporate Bond Fund .60%
<PAGE>
[FORM]
THE ADVISORS' INNER CIRCLE FUND
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this ____ day of _________, 1997, between SAGE Global Funds,
LLC, (the "Adviser") and Standard Asset Group, Inc. (the "Sub-Adviser").
WHEREAS, The Advisors' Inner Circle Fund, a Massachusetts business trust
(the "Trust"), is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated __________, 1997 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the SAGE Corporate Bond Fund
(the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objective, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction of
the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Portfolio, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or
<PAGE>
dealers to carry out the policy with respect to brokerage set forth in the
Portfolio's Registration Statement (as defined herein) and Prospectus or as
the Board of Trustees or the Adviser may direct from time to time, in
conformity with federal securities laws. In executing Portfolio
transactions and selecting brokers or dealers, the Sub-Adviser will use its
best efforts to seek on behalf of the Portfolio the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In evaluating the
best overall terms available, and in selecting the broker-dealer to execute
a particular transaction, the Sub-Adviser may also consider the brokerage
and research services provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust, the Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a Portfolio transaction for
the Portfolio which is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer - - viewed in terms of that particular
transaction or terms of the overall responsibilities of the Sub-Adviser to
the Portfolio. In addition, the Sub-Adviser is authorized to allocate
purchase and sale orders for securities to brokers or dealers (including
brokers and dealers that are affiliated with the Adviser, Sub-Adviser or
the Trust's principal underwriter) to take into account the sale of shares
of the Trust if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will the Portfolio's
Assets be purchased from or sold to the Adviser, Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust,
Adviser, the Sub-Adviser or the principal underwriter, acting as principal
in the transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any
<PAGE>
exemptive or other relief that the Adviser or the Trust obtains from the
SEC. The Sub-Adviser agrees that all records that it maintains on behalf
of the Portfolio are property of the Portfolio and the Sub-Adviser will
surrender promptly to the Portfolio any of such records upon the
Portfolio's request; provided, however, that the Sub-Adviser may retain a
copy of such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any such records as are required to be maintained by it
pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if there
is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in
<PAGE>
effect on the date of this Agreement and as amended from time to time,
herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser's management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. This Agreement shall
continue in effect for a period of more than two years from the date hereof
only so long as continuance is specifically approved at least annually in
conformance with the 1940 Act; provided, however, that this Agreement may
be terminated with respect to the Portfolio (a) by the Portfolio at any
time, without the payment of any penalty, by the vote of a majority of
Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of the Portfolio, (b) by the Adviser at any time, without
the payment of any penalty, on not more than 60 days' nor less than 30
days' written notice to the Sub-Adviser, or (c) by the Sub-Adviser at any
time, without the payment of any penalty, on 90 days' written notice to the
Adviser. This Agreement shall terminate automatically and immediately in
the event of its assignment, or in the event of a termination of the
Adviser's agreement with the Trust. As used in this Section 6, the terms
"assignment" and "vote of a majority of the outstanding voting securities"
shall have the respective meanings set forth in the 1940 Act and the rules
and regulations thereunder, subject to such exceptions as may be granted by
the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the
<PAGE>
Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at:
To the Sub-Adviser at:
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
<PAGE>
SAGE GLOBAL FUNDS, LLC STANDARD ASSET GROUP, INC.
By: By:
---------------------------- ---------------------------------
Name: Name:
---------------------------- ---------------------------------
Title: Title:
---------------------------- ---------------------------------
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SAGE GLOBAL FUNDS, LLC
AND
STANDARD ASSET GROUP, INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Standard Asset Group, Inc. .20%
<PAGE>
SAGE CORPORATE BOND FUND
SCHEDULE DATED AUGUST __, 1997
TO THE ADMINISTRATION AGREEMENT
DATED NOVEMBER 14, 1991
AS AMENDED AND RESTATED MAY 17, 1994
BETWEEN
THE ADVISORS' INNER CIRCLE FUND
AND
SEI FUND RESOURCES
Fees: Pursuant to Article 4, Section A, the Trust shall pay the
Administrator compensation for services rendered to the SAGE
Corporate Bond Fund (the "Portfolio") at an annual rate equal to
15.0 basis points on the first $100 million of assets; 12.5 basis
points on the next $100 million of assets and 10.0 basis points
on all assets over $200 million. There is a minimum annual
administration fee of $75,000 per portfolio and $15,000 per
additional class.
Term: Pursuant to Article 7, the term of this Agreement shall commence
on August __, 1997 and shall remain in effect with respect to the
Portfolio for 3 years (the "Initial Term"). This Agreement shall
continue in effect for successive periods of 2 years after the
Initial Term, unless terminated by either party on not less than
90 days prior written notice to the other party. In the event of
a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing
of such breach and upon receipt of such notice, the breaching
party shall have 45 days to remedy the breach or the
non-breaching party may immediately terminate this Agreement.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our firm name
included in the Post-Effective Amendment No. 31 to the Registration Statement on
Form N-1A of The Advisors' Inner Circle (File No. 33-42484), and to all
references to our firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLF
Philadelphia, Pa.,
August 7, 1997
