<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 SEPTEMBER 30, 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 September 30, 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.
SEPTEMBER 30, 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 to
an annual rate of not more than .90%. Absent any voluntary waivers, the
Management Fee for the Fund would be .55%, Other Expenses would be 1.52% and
Total Operating Expenses, based on estimates of Other Expenses, would be
2.07% 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 .55% 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.
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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
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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.
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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
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<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.................................... 10
</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
SEPTEMBER 30, 1997
