ADVISORS INNER CIRCLE FUND, 497, 1998-03-09

ADVISORS INNER CIRCLE FUND
497, 1998-03-09

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<PAGE>

THE ADVISORS' INNER CIRCLE FUND

Investment Adviser:
HGK ASSET MANAGEMENT, INC.

The Advisors' Inner Circle Fund (the "Fund") provides a convenient and
economical means of investing in professionally managed portfolios of
securities. This Prospectus offers shares of the following mutual fund (the
"Portfolio"), which is a separate series of the Fund.

HGK FIXED INCOME FUND

This Prospectus sets forth concisely the information about the Fund and the
Portfolio 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 February 27, 1998 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. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund is maintained electronically with the
Securities and Exchange Commission at its internet web site
(http://www.sec.gov).

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.

FEBRUARY 27, 1998

HGK-F-001-06
<PAGE>

SUMMARY

The following provides basic information about the HGK Fixed Income Fund (the
"Portfolio"). The Portfolio is one of the mutual funds comprising The
Advisors' Inner Circle Fund (the "Fund"). This summary is qualified in its
entirety by reference to the more detailed information provided elsewhere in
this Prospectus and in the Statement of Additional Information.

WHAT IS THE INVESTMENT OBJECTIVE? The Portfolio seeks total return through
current income and capital appreciation consistent with the preservation of
capital.

WHAT ARE THE PERMITTED INVESTMENTS? The Portfolio intends to invest primarily
in U.S. dollar denominated fixed income securities. See "Investment Objective
and Policies" and "Description of Permitted Investments and Risk Factors."

WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE PORTFOLIO? An investment
in the Portfolio entails certain risks and considerations of which investors
should be aware. The Portfolio invests in securities that fluctuate in value,
and investors should expect the Portfolio'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 Portfolio, generally tend to
vary inversely with interest rates and may be affected by other market and
economic factors as well. The Portfolio may invest in securities that have
speculative characteristics. Investing in the securities of foreign issuers
involves special risks and considerations not typically associated with
investing in U.S. issuers. The purchase of asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities, including prepayment risk, which may vary depending on the type of
asset. See "Investment Objective and Policies" and "Description of Permitted
Investments and Risk Factors."

WHO IS THE ADVISER? HGK Asset Management, Inc. (the "Adviser") serves as the
investment adviser of the Portfolio. See "Expense Summary" and "The Adviser."

WHO IS THE ADMINISTRATOR? SEI Fund Resources (the "Administrator") serves as
the administrator and shareholder servicing agent of the Portfolio. 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 Fund. See "The
Transfer Agent."

WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the "Distributor")
acts as the distributor of the Portfolio's shares. See "The Distributor."

IS THERE A SALES LOAD? No, shares of the Portfolio are offered on a no-load
basis.

IS THERE A MINIMUM INVESTMENT? The Portfolio has a minimum initial investment
of $2,000, which the Distributor may waive at its discretion.

HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Transfer Agent on any day when the New York Stock Exchange is 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 by check or with readily available funds prior to the time
the Portfolio calculates its net asset value (normally, 4:00 p.m., Eastern
time). To open an account by wire, you must first call 1-800-808-4921.
Redemption orders placed with the Transfer Agent prior to the time the
Portfolio calculates its net asset value (normally, 4:00 p.m., Eastern time)
on any Business Day will be effective that day. The Fund has also authorized
certain broker-dealers and other financial intermediaries to accept purchase
orders and redemption requests up to the times

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mentioned above on behalf of the Portfolio. 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. See "Purchase and Redemption of Shares."

HOW ARE DISTRIBUTIONS PAID? The Portfolio distributes substantially all of its
net investment income (exclusive of capital gains) in the form of dividends
declared daily and paid monthly. Shares normally begin earning dividends
within two Business Days after the purchase order is effective. 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
"Dividends and Distributions."

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EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES

HGK FIXED INCOME FUND
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases.................................... None
Maximum Sales Load Imposed on Reinvested Dividends ........................ None
Deferred Sales Load........................................................ None
Redemption Fees (1) ....................................................... None
Exchange Fees ............................................................. None
</TABLE>
- -------------------------------------------------------------------------------
(1) A wire redemption charge, currently $10.00, is deducted from the amount
of a Federal Reserve wire redemption payment made at the request of a
shareholder.

ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)

HGK FIXED INCOME FUND
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Advisory Fees (after waivers)(2) ........................................ 0.00%
Other Expenses (after reimbursements) (2)................................ 1.00%
- -------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers and reimbursements) (2) ..... 1.00%
</TABLE>
- -------------------------------------------------------------------------------
(2) The Adviser has, voluntarily agreed to waive all or a portion of its
fees for, and reimburse expenses of, the Portfolio to the extent
necessary in order to limit total operating expenses to an annual rate
of not more than 1.00% of the Portfolio's average daily net assets.
Absent such waivers and reimbursements, Advisory Fees, Other Expenses
and Total Operating Expenses for the Portfolio would be .50%, 1.14% and
1.64%, respectively.

EXAMPLE

HGK FIXED INCOME FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor 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: $10 $32 $55 $122
</TABLE>
- -------------------------------------------------------------------------------

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense table 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 Portfolio. Additional information may be found under "The
Adviser" and "The Administrator."

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<PAGE>

FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND

The following information on the HGK Fixed Income Fund has been audited by
Arthur Andersen LLP, the Fund's independent public accountants, as indicated
in their report dated December 12, 1997 on the Fund's financial statements as
of October 31, 1997. This table should be read in conjunction with the Fund's
audited financial statements and notes thereto. The Portfolio's financial
statements and additional performance information are contained in the Annual
Report to Shareholders, which is available without charge by calling 1-800-
932-7781.

For a Share of the Portfolio Outstanding Throughout the Period:

<TABLE>
<CAPTION>
HGK FIXED
INCOME
FUND
- ------------------------------------------------------------------------------
11/01/96 11/01/95 11/03/94(1)
TO TO TO
10/31/97 10/31/96 10/31/95
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $ 10.29 $ 10.88 $ 10.00
- ------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income....................... 0.60 0.61 0.67
Realized and Unrealized Gains (or Losses) on
Securities................................. 0.24 (0.17) 0.88
- ------------------------------------------------------------------------------
Total From Investment Operations.......... 0.84 0.44 1.55
- ------------------------------------------------------------------------------
Less Distributions:
Distributions From Net Investment Income.... (0.60) (0.61) (0.67)
Distributions From Capital Gains............ -- (0.42) --
Total Distributions......................... (0.60) (1.03) (0.67)
- ------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD................ $ 10.53 $ 10.29 $ 10.88
- ------------------------------------------------------------------------------
TOTAL RETURN.................................. 8.47% 4.29% 16.07%*
- ------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End Of Period (000) .............. $13,371 $12,515 $10,420
Ratio Of Expenses To Average Net Assets ...... 1.00% 1.00% 1.00%*
Ratio Of Expenses To Average Net Assets
(Excluding Waivers and Reimbursements) ...... 1.64% 1.51% 2.37%*
Ratio Of Net Investment Income To Average Net
Assets....................................... 5.85% 5.92% 6.38%*
Ratio Of Net Investment Income to Average Net
Assets (Excluding Waivers and
Reimbursements............................... 5.21% 5.41% 5.01%*
Portfolio Turnover Rate....................... 256.52% 264.02% 300.48%
- ------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------

* Annualized
(1) The HGK Fixed Income Fund commenced operations on November 3, 1994.

5
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THE FUND AND THE PORTFOLIO

The Advisors' Inner Circle Fund (the "Fund") offers shares of a number of
separately-managed mutual funds, each of which is a separate series
("portfolio") of the Fund. Each share of each portfolio represents an
undivided, proportionate interest in that portfolio. This Prospectus offers
shares of the Fund's HGK Fixed Income Fund (the "Portfolio"), a diversified
portfolio. Information regarding the other portfolios in the Fund is contained
in separate prospectuses that may be obtained by calling 1-800-932-7781.

INVESTMENT OBJECTIVE AND POLICIES

The Portfolio seeks total return through current income and capital
appreciation consistent with the preservation of capital. There can be no
assurance that the Portfolio will be able to achieve this investment
objective.

The Portfolio will normally invest at least 65% of its total assets in the
following U.S. dollar denominated fixed income securities: (i) U.S. Treasury
obligations, including Separately Traded Registered Interest and Principal
Securities ("STRIPS"); (ii) obligations issued or guaranteed as to principal
and interest by the U.S. government, its agencies or instrumentalities; (iii)
corporate bonds and debentures issued by U.S. and foreign issuers and, at the
time of purchase, rated in one of the four highest rating categories assigned
by a nationally recognized statistical rating organization (an "NRSRO") such
as Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P"), Duff & Phelps, Inc. ("Duff") or Fitch Investors Service, Inc.
("Fitch"), or, if not rated, determined to be of comparable quality by the
Adviser; (iv) securities of the government of Canada and its provincial and
local governments; and (v) securities of foreign governments.

The Portfolio may also invest up to 35% of its total assets in collateralized
mortgage obligations ("CMOs"), real estate mortgage investment conduits
("REMICs") and asset-backed securities meeting the rating quality criteria
described above. Under normal conditions, the Portfolio may also hold up to
20% of its total assets in cash or invest in repurchase agreements or money
market instruments, described below under "In General," in order to maintain
liquidity, or in the event that the Adviser determines that securities meeting
the Portfolio's investment objective and policies are not otherwise readily
available for purchase. The Portfolio may also invest up to 5% of its net
assets in stripped mortgage-backed securities, including securities that
receive interest-only payments and other securities that receive principal-
only payments.

The Portfolio may purchase zero coupon obligations and securities that pay
interest on a variable or floating rate basis. The Portfolio may invest up to
15% of its net assets in restricted securities.

The Adviser may purchase securities with any stated remaining maturity.
However, under normal circumstances, the Portfolio expects to maintain an
average duration of approximately 5 years. In determining the maturity of
mortgage-backed securities, the Portfolio will use the expected life of such
securities, which is based upon the anticipated prepayment patterns of the
underlying mortgages.

IN GENERAL

For temporary defensive purposes during periods when the Adviser determines
that conditions warrant, the Portfolio may invest up to 100% of its assets in
cash and money market instruments, consisting of securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities;
certificates of deposit, time deposits, and bankers' acceptances issued by
banks or savings and loans associations having net assets of at least $500
million as of the end of their most recent fiscal year; commercial paper rated
at the time of purchase at least A-1 by S&P or P-1 by Moody's, or unrated
commercial paper determined by the Adviser to be of comparable quality;
repurchase agreements involving any of the foregoing; and, to the extent
permitted by applicable law, shares of other investment companies.

The Adviser seeks to achieve the Portfolio's investment objective by
outperforming the Lehman Government Corporate Bond Index while taking less
risk and protecting the Portfolio's principal. The Adviser attempts to
maintain a relatively duration-neutral posture versus the Lehman Government
Corporate Bond Index (that is,

6
<PAGE>

maintaining a maximum 10% over- or under-weighting relative to the duration of
such Index), while adding value through the overweighting of particular
sectors or areas of the yield curve. The Adviser believes that by not
including large interest rate bets or sizable duration shifts in its strategy,
it can reduce the volatility of returns and limit the loss of principal.

Debt rated BBB or Baa is regarded as having an adequate capacity to pay
interest and repay principal. (Whereas such debt normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories. Such
bonds lack outstanding investment characteristics and in fact have speculative
characteristics as well.)

In the event any security held by the Portfolio is downgraded below the rating
categories set forth above, the Adviser will review the security and determine
whether to retain or dispose of that security.

The Portfolio's historical turnover rates are set forth under "Financial
Highlights." A portfolio turnover rate in excess of 100% may result from the
Adviser's investment strategy of finding market pricing inefficiencies rather
than forecasting interest rates. The Adviser may sell securities held for a
short time in order to take advantage of what the Adviser believes to be
temporary disparities in normal yield relationships between securities. A
Portfolio turnover rate in excess of 100% may result in higher transaction
costs to the Portfolio and may increase the amount of taxes payable by the
Portfolio's shareholders.

For a further discussion of the Portfolio's permitted investments, see
"Description of Permitted Investments and Risk Factors" below and "Description
of Permitted Investments" in the Statement of Additional Information.

INVESTMENT LIMITATIONS

The investment objective and the investment limitations set forth here and in
the Statement of Additional Information are fundamental policies of the
Portfolio. Fundamental policies cannot be changed without the consent of the
holders of a majority of the Portfolio's outstanding shares.

The Portfolio may not:

1. Purchase securities of any issuer (except securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and repurchase
agreements involving such securities) if as a result more than 5% of the total
assets of the Portfolio would be invested in the securities of such issuer.
This restriction applies to 75% of the Portfolio's total assets.

2. Purchase any securities which would cause 25% or more of the total assets
of the Portfolio 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 not apply to investments in the 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 classified according to their
services, for example, gas, 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.

3. Make loans, except that the Portfolio may purchase or hold debt instruments
in accordance with its investment objective and policies.

4. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 33 1/3% of the value of its total assets.

The foregoing percentages will apply at the time of the purchase of a
security, except for the percentage limitations specified in paragraph 4
above, which will apply at all times.

7
<PAGE>

THE ADVISER

HGK Asset Management, Inc. (the "Adviser") was incorporated in 1983. Jeffrey
T. Harris and Joseph E. Kutzel each own a controlling interest in the Adviser.
The Adviser has provided equity, fixed income and balanced fund management of
individually structured portfolios since its inception. As of December 31,
1997, total assets under management were approximately $1.8 billion. The
principal business address of the Adviser is 17 State Street, 15th Floor, New
York, New York 10004.

The Adviser serves as the Portfolio's investment adviser and makes the
investment decisions for the assets of the Portfolio and continuously reviews,
supervises and administers the Portfolio's investment program, subject to the
supervision of, and policies established by, the Trustees of the Fund.

Gregory W. Lobo, Vice President, Senior Portfolio Manager of Fixed Income
Securities, Anthony Santoliquido, Portfolio Manager of Fixed Income Securities
and Patricia Bernabeo, Portfolio Manager of Fixed Income Securities have
managed the Portfolio since its inception. Mr. Lobo has been with the Adviser
since 1990, Mr. Santoliquido has been with the Adviser since 1993 and Ms.
Bernabeo has been with the Adviser since 1992.

The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .50% of the average daily net assets of the Portfolio.
The Adviser has voluntarily agreed to waive all or a portion of its fees for,
and reimburse expenses of, the Portfolio to the extent necessary in order to
limit total operating expenses to an annual rate of not more than 1.00% of the
Portfolio's average daily net assets. The Adviser may, from its own resources,
compensate broker-dealers whose clients purchase shares of the Portfolio. For
the fiscal year ended October 31, 1997, the Adviser received an advisory fee
of .00% of the Portfolio's average daily net assets, and the Adviser
reimbursed expenses equal to .14% of the Portfolio's average daily net assets.

THE ADMINISTRATOR

The Administrator also serves as shareholder servicing agent for the
Portfolio.

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent
for the Fund.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania
19456, a wholly-owned subsidiary of SEI Investments Company, serves as the
Fund's distributor. No compensation is paid to the Distributor for
distribution services for the shares of the Portfolio.

PURCHASE AND REDEMPTION OF SHARES

Investors may purchase and redeem shares of the Portfolio directly through the
Transfer Agent at: The Advisors' Inner Circle Fund, P.O. Box 419009, Kansas
City, Missouri 64141-6009 by mail or wire transfer. All shareholders may place
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
Portfolio may be made on any day on which the New York Stock

8
<PAGE>

Exchange is open for business (a "Business Day"). Shares of the Portfolio are
offered only to residents of states in which such shares are eligible for
purchase. In addition, the Fund has authorized certain broker-dealers and
other financial intermediaries (collectively "Authorized Broker-Dealers") to
act as the Portfolio's agent for the purposes of accepting purchase orders and
redemption requests. The Portfolio will be deemed to have received a purchase
order or redemption request upon receipt of the order or request by an
Authorized Broker-Dealer.

The minimum initial investment in the Portfolio is $2,000 and subsequent
purchases must be at least $1,000. The Distributor may waive these minimums at
its discretion. No minimum applies to subsequent purchases effected by
dividend reinvestment.

PURCHASES BY MAIL

An account may be opened by mailing a check or other negotiable bank draft
(payable to HGK Fixed Income Fund) for $2,000 or more, together with a
completed Account Application to the Transfer Agent at: The Advisors' Inner
Circle Fund, P.O. Box 419009, Kansas City, Missouri 64141-6009. Third-party
checks, credit cards, credit card checks and cash will not be accepted.
Subsequent investments may also be mailed directly to the Transfer Agent.

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, 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 Portfolio by requesting
their bank to transmit funds by wire to: United Missouri Bank; ABA #10-10-
00695; for Account Number 98-7060-014-5; Further Credit: HGK Fixed Income
Fund. The shareholder'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 a shareholder's name
and account number. The investor's bank may impose a fee for investments by
wire.

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 the
Portfolio calculates its net asset value (normally, 4:00 p.m., Eastern time).
Payment may be made by check or readily available funds. The purchase price of
shares of the Portfolio is the net asset value per share next determined after
a purchase order is effective. Purchases will be made in full and fractional
shares of the Portfolio calculated to three decimal places. The Fund will not
issue certificates representing shares of the Portfolio.

If a check received for the purchase of shares does not clear, the purchase
will be canceled, and the investor could be liable for any losses or fees
incurred. The Fund reserves the right to reject a purchase order when the Fund
determines that it is not in the best interest of the Fund or its shareholders
to accept such order.

SYSTEMATIC INVESTMENT PLAN

A shareholder may also arrange for periodic additional investments in the
Portfolio through automatic deductions by Automated Clearing House ("ACH")
transactions from a checking or savings account by completing the appropriate
section of the Account Application form. This Systematic Investment Plan is
subject to account

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minimum initial purchase amounts and a minimum pre-authorized investment
amount of $25 per month. An Account Application form may be obtained by
calling 1-800-932-7781.

TAX DEFERRED INVESTMENT

The Portfolio is eligible for investment by tax-deferred retirement programs
such as 401(k) plans, Simplified Employee Pension Plans ("SEP accounts") and
IRAs. The minimum initial investment amount for an account established under
such programs is $2,000. All accounts established in the Portfolio under such
programs must elect to have all dividends reinvested in the Portfolio.

REDEMPTIONS

Redemption orders received by the Transfer Agent prior to the time the
Portfolio calculates its net asset value (normally, 4:00 p.m., Eastern time)
on any Business Day will be effective that day. The redemption price of shares
is the net asset value per share of the Portfolio 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, provided, however, that the investment being
redeemed has been in the shareholder's account for a minimum of 15 days.
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. The custodian will deduct a wire charge,
currently $10.00, from the amount of a Federal Reserve wire redemption payment
made at the request of a shareholder. Shareholders cannot redeem shares of the
Portfolio by Federal Reserve wire on federal holidays restricting 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.

SYSTEMATIC WITHDRAWAL PLAN

The Portfolio offers a Systematic Withdrawal Plan ("SWP") for shareholders who
wish to receive regular distributions from their account. Upon commencement of
the SWP, the account must have a current value of $50,000 or more.
Shareholders may elect to receive automatic payments via ACH wire transfers of
$100 or more on a monthly, quarterly, semi-annual or annual basis. An
application form for SWP may be obtained by calling 1-800-932-7781.

Shareholders should realize that if withdrawals exceed income dividends, their
invested principal in the account will be depleted. Thus, depending on the
frequency and amounts of the withdrawal payments and/or fluctuations in the
net asset value per share, their original investment could be exhausted
entirely. To participate in the SWP, shareholders must have their dividends
automatically reinvested. Shareholder may change or cancel the SWP at any
time, upon written notice to the Transfer Agent.

ADDITIONAL REDEMPTION INFORMATION

Neither the Fund 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 Fund 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. Such procedures may include taping of telephone conversations.

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.

CALCULATION OF NET ASSET VALUE

The net asset value per share of the Portfolio is determined by dividing the
total market value of the Portfolio's investments and other assets, less any
liabilities, by the total outstanding shares of the Portfolio. Net asset value

10
<PAGE>

per share is determined daily as of the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally 4:00 p.m., Eastern time) on
any Business Day. Purchase or redemption orders received by the Portfolio
after its net asset value has been calculated will be priced at the next
Business Day's net asset value. The Portfolio will use a pricing service to
provide market quotations. The pricing service may use a matrix system of
valuation 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 Portfolio may advertise its yield and total return.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made regarding actual
future yields or returns. The yield of the Portfolio refers to the annualized
income generated by an investment in the Portfolio 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 a Portfolio 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 Portfolio 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 Portfolio 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 and unmanaged indices. The performance of
unmanaged indices may assume investment of dividends but generally do not
reflect deductions for administrative and management costs, or other
investment alternatives. The Portfolio may quote Morningstar, Inc., a service
that ranks mutual funds on the basis of risk-adjusted performance. The
Portfolio may quote Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the United States. The Portfolio
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 Portfolio may also
quote financial and business publications and periodicals as they relate to
fund management, investment philosophy and investment techniques.

The Portfolio 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.

TAXES

The following summary of certain 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 Portfolio 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 PORTFOLIO

The Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Fund's other portfolios. The Portfolio intends to
continue 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 (the "Code"). So long as the Portfolio 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.

11
<PAGE>

TAX STATUS OF DISTRIBUTIONS

Any net capital gain will be distributed annually and will be taxed to
shareholders as gain from the sale of a capital asset held for more than one
year, regardless of how long the shareholder has held shares. The Portfolio
will make annual reports to shareholders of the federal income tax status of
all distributions. Certain securities purchased by the Portfolio (such as
STRIPS, defined in "Description of Permitted Investments and Risk Factors"
below) are sold with original issue discount and thus generally do not make
periodic cash interest payments. The Portfolio will be required to include as
part of its current income the accrued discount on such obligations even
though the Portfolio has not received any interest payments on such
obligations during that period. Because the Portfolio distributes all of its
net investment income to its shareholders, the Portfolio may have to sell
portfolio securities to distribute such accrued income, which may occur at a
time when the Adviser would not have chosen to sell such securities and which
may result in a taxable gain or loss.

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 Portfolio provided certain state-
specific conditions are satisfied. The Portfolio will inform shareholders
annually of the percentage of income and distributions derived from direct
U.S. obligations. Shareholders should consult their tax advisers to determine
whether any portion of the income dividends received from the Portfolio is
considered tax exempt in their particular state.

Dividends declared by the Portfolio 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 Portfolio and received by the
shareholders on December 31 of that year, if paid by the Portfolio at any time
during the following January.

The Portfolio intends to make sufficient distributions prior to the end of
each calendar year to avoid liability for federal excise tax.

A sale, exchange or redemption of the Portfolio's shares is a taxable event to
the shareholder.

Income derived by the Portfolio from securities of foreign issuers may be
subject to foreign withholding taxes. The Portfolio will not be able to elect
to treat shareholders as having paid their proportionate share of such foreign
taxes.

GENERAL INFORMATION

THE FUND

The Fund, 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 Fund to offer separate series
("portfolios") of shares. All consideration received by the Fund for shares of
any portfolio and all assets of such portfolio belong to that portfolio and
are subject to liabilities related thereto. The Fund reserves the right to
create and issue shares of additional portfolios.

The Portfolio 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 Fund's other

12
<PAGE>

expenses, including audit and legal expenses. Expenses not attributable to a
specific portfolio are allocated across all of the portfolios on the basis of
relative net assets.

TRUSTEES OF THE FUND

The management and affairs of the Fund 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 Fund.

VOTING RIGHTS

Each share held entitles the shareholder of record to one vote. The Portfolio
will vote separately on matters relating solely to it. As a Massachusetts
business trust, the Fund is not required, and does not intend, to hold annual
meetings of shareholders. Shareholder approval will be sought, however, for
certain changes in the operation of the Fund 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
Fund. In the event that such a meeting is requested, the Fund will provide
appropriate assistance and information to the shareholders requesting the
meeting.

REPORTING

The Fund issues unaudited financial information semiannually and audited
financial statements annually for the Portfolio. The Fund 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 Portfolio declares dividends of substantially all of its net investment
income (exclusive of capital gains) daily and distributes such dividends on
the first Business Day of each month. 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
effective. 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 by Federal Reserve or ACH wire transfer.

Dividends and other distributions of the Portfolio 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 Fund. Arthur Andersen LLP
serves as the independent public accountants of the Fund.

13
<PAGE>

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
Portfolio, and the associated risk factors:

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.

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 mortgage-backed securities. In addition, credit card receivables are
unsecured obligations of the card holder.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for 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.

FIXED INCOME SECURITIES--Fixed income securities are debt obligations issued
by corporations, municipalities and other borrowers. The market value of fixed
income investments 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 will also affect the value
of these investments. Changes in the value of portfolio securities will not
affect cash income derived from these securities but will affect the
Portfolio's net asset value.

14
<PAGE>

demand instrument with a demand notice period exceeding seven days, where
there is no secondary market for such security, and repurchase agreements with
a remaining term to maturity in excess of seven days.

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 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 or FHLMC
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 of the U.S. Treasury.

RISK FACTORS: 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

15
<PAGE>

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.

REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which the
Portfolio 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 Portfolio bears a risk of loss in
the event the other party defaults on its obligations and the Portfolio is
delayed or prevented from exercising its right to dispose of the collateral or
if the Portfolio realizes a loss on the sale of the collateral. The Portfolio
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.

RESTRICTED SECURITIES--Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933
or an exemption from registration.

SECURITIES OF FOREIGN GOVERNMENTS--The Portfolio 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 of
foreign branches of U.S. Banks and of foreign banks, including Yankee
Certificates of Deposit. In addition, the Portfolio may invest in American
Depositary Receipts. These instruments may subject the Portfolio 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 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 Portfolio's investments denominated in foreign currencies will
depend on the relative strengths of those currencies and the U.S. dollar, and
the Portfolio 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 Portfolio.

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.

16
<PAGE>

U.S. GOVERNMENT AGENCIES--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, the 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 Portfolio's shares.

U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through
the federal book-entry system known as STRIPS.

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 AND DELAYED DELIVERY 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 Portfolio will maintain with the Custodian a separate account
with liquid assets 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 Portfolio 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. Although the Portfolio generally purchases securities on a when-
issued or forward commitment basis with the intention of actually acquiring
securities for its portfolio, the Portfolio may dispose of a when-issued
security or forward commitment prior to settlement if it deems appropriate.

ZERO COUPON OBLIGATIONS--Zero coupon obligations are debt securities that do
not bear any interest, but instead are issued at a deep discount from par. The
value of a zero coupon obligation increases over time to reflect the interest
accreted. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at par and pay interest periodically.

17
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
SUMMARY............................................................... 2
EXPENSE SUMMARY....................................................... 4
FINANCIAL HIGHLIGHTS ................................................. 5
THE FUND AND THE PORTFOLIO ........................................... 6
INVESTMENT OBJECTIVE AND POLICIES..................................... 6
INVESTMENT LIMITATIONS ............................................... 7
THE ADVISER........................................................... 8
THE ADMINISTRATOR..................................................... 8
THE TRANSFER AGENT ................................................... 8
THE DISTRIBUTOR....................................................... 8
PURCHASE AND REDEMPTION OF SHARES..................................... 8
PERFORMANCE........................................................... 11
TAXES................................................................. 11
GENERAL INFORMATION................................................... 12
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS................. 14
</TABLE>
<PAGE>

FUND:
THE ADVISORS' INNER CIRCLE FUND

PORTFOLIO:
HGK FIXED INCOME FUND

ADVISER:
HGK ASSET MANAGEMENT, INC.

DISTRIBUTOR:
SEI INVESTMENTS DISTRIBUTION CO.

ADMINISTRATOR:
SEI FUND RESOURCES

LEGAL COUNSEL:
MORGAN, LEWIS & BOCKIUS LLP

INDEPENDENT PUBLIC ACCOUNTANTS:
ARTHUR ANDERSEN LLP

FEBRUARY 27, 1998

<PAGE>

FUND:
THE ADVISORS' INNER CIRCLE FUND

PORTFOLIO:
HGK FIXED INCOME FUND

INVESTMENT ADVISER:
HGK ASSET MANAGEMENT, INC.

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and relates only to
the HGK Fixed Income Fund (the "Portfolio"). It is intended to provide
additional information regarding the activities and operations of The Advisors'
Inner Circle Fund (the "Fund") and the Portfolio and should be read in
conjunction with the Portfolio's Prospectus dated February 27, 1998. The
Prospectus for the Portfolio may be obtained by calling 1-800-932-7781.

<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . . . .S - 2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 3
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 4
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 5
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 6
TRUSTEES AND OFFICERS OF THE FUND. . . . . . . . . . . . . . . . . . . . . . . .S - 6
COMPUTATION OF YIELD AND TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . S - 10

PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . S - 10

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . S - 11
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 11
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 13

DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 16

SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 17
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . . . . S - 17

5% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 17

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 18

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 18

</TABLE>

February 27, 1998

HGK-F-002-04

<PAGE>

THE FUND

This Statement of Additional Information relates only to the HGK Fixed Income
Fund (the "Portfolio"). The Portfolio is a separate series of the Advisors'
Inner Circle Fund (the "Fund"), 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
Fund 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 Portfolio.

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.

FLOATING RATE INSTRUMENTS have a rate of interest that is set as a specific
percentage of a designated base rate (such as the prime rate) at a major
commercial bank. The Portfolio can demand payment of the obligation at all
times or at stipulated dates on short notice (not to exceed 30 days) at par plus
accrued interest. The Portfolio may use the longer of the period required
before the Portfolio is entitled to prepayment under such obligations or the
period remaining until the next interest rate adjustment date for purposes of
determining the maturity of the instrument. Such obligations are frequently
secured by letters of credit or other credit support arrangements provided by
banks. The quality of the underlying credit or of the bank, as the case may be,
must, in the Adviser's opinion be equivalent to the long-term bond or commercial
paper ratings stated in the Prospectus. The Adviser will monitor the earning
power, cash flow and liquidity ratios of the issuers of such instruments and the
ability of an issuer of a demand instrument to pay principal and interest on
demand.

RESTRICTED SECURITIES are securities that may not be sold to the public without
registration under the Securities Act of 1933 (the "1933 Act") absent an
exemption from registration. Certain of the permitted investments of the
Portfolio may be restricted securities and the Adviser may invest up to 15% of
the net assets of the Portfolio in restricted securities provided it determines
that at the time of investment such securities are not illiquid (generally, an
illiquid security cannot be disposed of within seven days in the ordinary course
of business at its full value), based on guidelines which are the responsibility
of and are periodically reviewed by the Board of Trustees. Under these
guidelines, the Adviser will consider the frequency of trades and quotes for the
security, the number of dealers in,

S-2
<PAGE>

and potential purchasers for, the securities, dealer undertakings to make a
market in the security, and the nature of the security and of the marketplace
trades. In purchasing such restricted securities, the Adviser intends to
purchase securities that are exempt from registration under Rule 144A
promulgated under the 1933 Act. Investing in Rule 144A securities could have
the effect of increasing the level of Portfolio illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
these securities. Rule 144A securities are not subject to the foregoing limit
on restricted securities.

Certain U.S. GOVERNMENT AGENCIES have been established as instrumentalities of
the U.S. Government to supervise and finance certain types of activities.
Issues of these agencies, while not direct obligations of the U.S. Government,
are either backed by the full faith and credit of the United States or supported
by the issuing agency's right to borrow from the Treasury. The issues of other
agencies are supported only by the credit of the instrumentality.

INVESTMENT LIMITATIONS

The Portfolio 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. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 33 1/3% of the value of total assets. Any borrowing
will be done from a bank and to the extent that such borrowing exceeds 5%
of the value of the Portfolio's assets, asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time fall
below 300%, the Portfolio shall, within three days thereafter or such
longer period as the Securities and Exchange Commission ("SEC") may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. This borrowing provision is included for temporary liquidity or
emergency purposes. All borrowings will be repaid before making
investments and any interest paid on such borrowings will reduce income.

4. Make loans, except that the Portfolio may purchase or hold debt instruments
in accordance with its investment objective and policies and may enter into
repurchase agreements.

5. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (3) above in aggregate amounts not to exceed 10% of
total assets taken at current value at the time of the incurrence of such
loan.

S-3
<PAGE>

6. Purchase or sell real estate, real estate limited partnership interests,
futures contracts, commodities or commodities contracts and interests in a
pool of securities that are secured by interests in real estate. However,
subject to the permitted investments of the Portfolio, it may invest in
municipal securities or other marketable obligations secured by real estate
or interests therein.

7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Portfolio may obtain short-term
credits as necessary for the clearance of security transactions.

8. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling the Portfolio security.

9. 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.

10. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.

11. Purchase or retain securities of an issuer if, to the knowledge of the
Fund, an officer, trustee, partner or director of the Fund or any
investment adviser of the Fund owns beneficially more than 0.5% of the
shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 0.5% of such shares or securities
together own more than 5% of such shares or securities.

12. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.

13. Write or purchase puts, calls, options or combinations thereof or invest in
warrants.

The foregoing percentages will apply at the time of the purchase of a security.

THE ADVISER

The Fund and HGK Asset Management Inc. (the "Adviser") have entered into an
advisory agreement dated August 15, 1994 (the "Advisory Agreement"). The
Advisory Agreement provides that the Adviser shall not be protected against any
liability to the Fund 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.

S-4
<PAGE>

For the fiscal period ended October 31, 1995 and fiscal years ended October 31,
1996 and October 31, 1997, the Adviser was paid $0, $0, and $0 respectively,
waived fees of $39,390, $58,143 and $65,793, respectively, and reimbursed
expenses of $68,886, $1,464, and $18.783, respectively.

To the extent the Portfolio purchases securities of open end investment
companies, the Adviser will waive its advisory fee on that portion of the
Portfolio's assets invested in such securities.

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 Portfolio, 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 Fund or, with respect to the Portfolio, by a majority of the outstanding
shares of the Portfolio, 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 Fund.

THE ADMINISTRATOR

The Fund and SEI Fund Resources (the "Administrator") have entered into an
administration agreement (the "Administration Agreement"). The Administration
Agreement provides that 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, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations thereunder. The Administration Agreement shall
remain in effect with respect to the Portfolio until August 15, 1999 and shall
continue in effect for successive periods of two years unless terminated by
either party on not less than 90 days' written notice to the other party. For
the fiscal period ended October 31, 1995 and the fiscal years ended October 31,
1996 and October 31, 1997, the Administrator received fees of $74,589 and
$75,034 and $74,964, respectively, from the Portfolio.

The Fund and the Administrator have also entered into a shareholder servicing
agreement pursuant to which the Administrator provides certain shareholder
services in addition to those set forth in the Administration Agreement.

S-5
<PAGE>

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 or sub-administrator to the
following other mutual funds: The Achievement Funds Trust, 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 Funds-Registered Trademark-,
Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, 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, TIP Funds and TIP Institutional Funds.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI, and the Fund are parties to a distribution agreement dated November 14,
1991 ("Distribution Agreement"). The Distributor will not receive compensation
for the distribution of shares of any Portfolio.

TRUSTEES AND OFFICERS OF THE FUND

The management and affairs of the Fund are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Fund pays the fees for
unaffiliated Trustees.

S-6
<PAGE>

Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, 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, TIP Funds and TIP Institutional
Funds, open-end management investment companies which are managed by SEI Fund
Resources or its affiliates and, except for Profit Funds Investment Trust 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* --
Currently performs various services on behalf of SEI Investments for which Mr.
Nesher is compensated. Executive Vice President of SEI Investments, 1986-1994.
Director and Executive Vice President of the Administrator and the Distributor,
1981-1994. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, Boston
1784 Funds-Registered Trademark-, The Expedition Funds, Marquis Funds-Registered
Trademark-, Pillar Funds, Rembrandt 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 and SEI Tax Exempt Trust.

JOHN T. COONEY (DOB 01/20/27) -- Trustee** -- Retired since 1992. Formerly Vice
Chairman of Ameritrust Texas N.A., 1989-1992, and MTrust Corp., 1985-1989.
Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition
Funds and Marquis Funds-Registered Trademark-.

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 Investments. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund,
The Expedition Funds, Marquis 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 and SEI Tax Exempt Trust.

FRANK E. MORRIS (DOB 12/30/23) -- Trustee** -- Retired since 1990. Peter
Drucker Professor of Management, Boston College, 1989-1990. President, Federal
Reserve Bank of Boston, 1968-1988. Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis 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 and SEI Tax Exempt Trust.

S-7
<PAGE>

Corp.; Member and Treasurer, Board of Trustees of Grove City College. Trustee
of The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition Funds, and
Marquis Funds-Registered Trademark-.

EUGENE B. PETERS (DOB 06/03/29) -- Trustee** -- Private investor from 1987 to
present. Vice President and Chief Financial Officer, Western Company of North
America (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 Advisors' Inner
Circle Fund, The Arbor Fund, The Expedition Funds and Marquis Funds-Registered
Trademark-.

JAMES M. STOREY (DOB 04/12/31) -- Trustee** -- Partner, Dechert Price & Rhoads,
from September 1987 - December 1993; Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis 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 and SEI Tax Exempt 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
Investments, Senior Vice President, General Counsel and Secretary of the
Administrator and Distributor since 1994. Vice President and Assistant
Secretary of SEI Investments, 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 Investments, Vice President and Assistant
Secretary of the Administrator and Distributor since 1994. Associate, Morgan,
Lewis & Bockius LLP (law firm), 1989-1994.

S-8
<PAGE>

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 Investments, the Administrator and
the Distributor since 1995. Associate, Dewey Ballantine (law firm) (1994-1995).
Associate, Winston & Strawn (law firm) (1991-1994).

JOSEPH M. O'DONNELL (DOB 11/13/54) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and Distributor
since 1998. Vice President and General Counsel, FPS Services, Inc., 1993-1997.
Staff Counsel and Secretary, Provident Mutual Family of Funds, 1990-1993 .

- ---------------------------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Fund 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 Fund.

The Trustees and officers of the Fund own less than 1% of the outstanding
shares of the Fund. The Fund pays the fees for unaffiliated Trustees.

The following table exhibits Trustee compensation for the fiscal period ended
October 31, 1997.

<TABLE>
<CAPTION>
Total Compensation From
Registrant and Fund
Complex* Paid to
Aggregate Compensation From Pension or Retirement Estimated Annual Trustees for the Fiscal
Registrant for the Fiscal Benefits Accrued as Part Benefits Upon Year Ended October 31,
Name of Person, Position Year Ended October 31, 1997 of Fund Expenses Retirement 1997
------------------------ --------------------------- ------------------------ ---------------- -----------------------
<S> <C> <C> <C> <C>
John T. Cooney $8,154 N/A N/A $8,154 for
services on 1 board

Frank E. Morris $8,154 N/A N/A $8,154 for
services on 1 board

Robert Patterson $8,154 N/A N/A $8,154 for
services on 1 board

Eugene B. Peters $8,154 N/A N/A $8,154 for
services on 1 board

James M. Storey, Esq. $8,154 N/A N/A $8,154 for
services on 1 board

S-9
<PAGE>

William M. Doran, Esq. $0 N/A N/A $0 for
services on 1 board

Robert A. Nesher $0 N/A N/A $0 for
services on 1 board
</TABLE>

*For the purposes of this table, the Fund is the only investment company in the
"Fund Complex."

COMPUTATION OF YIELD AND TOTAL RETURN

From time to time, the Fund may advertise yield and total return of the
Portfolios. 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 Portfolio refers
to the annualized income generated by an investment in that Portfolio 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:

6
Yield = 2[((a-b)/cd+1) -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.

For the 30-day period ended October 31, 1997, the Portfolio's yield was 5.88%.

The total return of the Portfolio 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 Portfolio 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
n
according to the following formula: P (1 + T) = 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.

For the fiscal year ended October 31, 1997 and for the period from November 3,
1994 (commencement of operations) through October 31, 1997, the total return was
8.47% and 9.48%, respectively.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Distributor on a day on which
the New York Stock Exchange is open for business. Shares of the Portfolio are
offered on a continuous basis. Currently, the Fund is closed for business when
the following holidays

S-10
<PAGE>

are observed: New Year's Day, Martin Luther King Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.

It is currently the Fund's policy to pay all redemptions in cash. The Fund
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 the Portfolio
in lieu of cash. Shareholders may incur brokerage charges on the sale of any
such securities so received in payment of redemptions. The Fund has obtained an
exemptive order from the SEC that permits the Fund to make in-kind redemptions
to those shareholders of the Fund that are affiliated with the Fund solely by
their ownership of a certain percentage of the Fund's investment portfolios.

The Fund 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 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 Portfolio's securities is not reasonably
practicable, or for such other periods as the SEC has by order permitted. The
Fund also reserves the right to suspend sales of shares of any Portfolio 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 Portfolio 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, 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 Fund
under the general supervision of the Trustees.

TAXES

The following is only a summary of certain federal income tax considerations
generally affecting the Portfolio and its shareholders, and is not intended as a
substitute for careful tax planning. Shareholders are urged to consult their
tax advisors with specific reference to their own tax situations, including
their state and local tax liabilities.

S-11
<PAGE>

FEDERAL INCOME TAX

The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986 (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 Portfolio intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, the
Portfolio 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 Portfolio must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Portfolio'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) at the
close of each quarter of the Portfolio'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 Portfolio's assets and that does not represent
more than 10% of the outstanding voting securities of such issuer; and (iii) at
the close of each quarter of the Portfolio'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 Portfolio controls or which are engaged in the
same, similar or related trades or business.

Notwithstanding the Distribution Requirement described above, which requires
only that the Portfolio 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
Portfolio 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 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.

S-12
<PAGE>

Any gain or loss recognized on a sale or redemption of shares of a Portfolio 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 eighteen months, will be treated as a mid-term capital gain if the
shares have been held for more than twelve, but not more than eighteen, months
and otherwise generally will be treated as a short-term capital gain or loss.
If shares of the Portfolio 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 Portfolio 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 Portfolio that such shareholder is not subject to backup withholding.

If the Portfolio fails to qualify as a RIC for any taxable year, it will be
taxable at regular corporate rates. In such an event, all distributions
(including capital gains distributions) will be taxable as ordinary dividends to
the extent of the Portfolio's current and accumulated earnings and profits and
such distributions will generally be eligible for the corporate
dividends-received deduction.

STATE TAXES

The Portfolio is not liable for any income or franchise tax in Massachusetts if
it qualifies as a RIC for federal income tax purposes. Distributions by the
Portfolio to shareholders and the ownership of shares may be subject to state
and local taxes.

PORTFOLIO TRANSACTIONS

The Portfolio 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 Fund, the Adviser is
responsible for placing the orders to execute transactions for the Portfolio.
In placing orders, it is the policy of the Fund 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 the Adviser generally seeks
reasonably competitive spreads or commissions, the Portfolio will not
necessarily be paying the lowest spread or commission available.

S-13
<PAGE>

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 Portfolio will primarily consist of dealer spreads and
underwriting commissions.

The Adviser may, consistent with the interests of the Portfolio, select brokers
on the basis of the research services they provide to the Adviser. Such
services may include analyses of the business or prospects of a company,
industry or economic sector, or statistical and pricing services. Information
so received by the Adviser will be in addition to and not in lieu of the
services required to be performed by the Adviser under the Advisory Agreement.
If, in the judgment of the Adviser, the Portfolio or other accounts managed by
the Adviser will be benefitted by supplemental research services, the Adviser is
authorized to pay brokerage commissions to a broker furnishing such services
which are in excess of commissions which another broker may have charged for
effecting the same transaction. These research services include advice, either
directly or through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software used in security analyses; and providing
portfolio performance evaluation and technical market analyses. The expenses of
the Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information, such services may not be used exclusively, or at all,
with respect to the Portfolio or account generating the brokerage, and there can
be no guarantee that the Adviser will find all of such services of value in
advising the Portfolio. For the fiscal year ended October 31, 1997, the
Portfolio directed [no transactions] to broker-dealers for research services.

It is expected that the Portfolio 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 Portfolio on an exchange if a written contract is in effect
between the Distributor and the Fund expressly permitting the Distributor to
receive and retain such compensation. These rules further require that
commissions paid to the Distributor by the Portfolio 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 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

S-14
<PAGE>

persons" of the Fund, have adopted procedures for evaluating the reasonableness
of commissions paid to the Distributor and will review these procedures
periodically.

For the fiscal year ended October 31, 1997, the following commissions were
paid on brokerage transactions, pursuant to an agreement or understanding, to
brokers because of research services provided by the brokers:

<TABLE>
<CAPTION>
Total Dollar Amount of Total Dollar Amount of
Brokerage Commissions for Transactions Involving
Research Services Directed Brokerage
Commissions for Research
Services

For the fiscal years ended October 31, 1995, 1996 and 1997, the Portfolio paid
the following brokerage commissions:
<TABLE>
<CAPTION>
Total Brokerage Amount Paid to SEI
Commissions Investments(1)
<S> <C> <C> <C> <C> <C>
1995 1996 1997 1995 1996 1997
$0 $0 $0 $139 $190 $113
</TABLE>
* An asterisk indicates that the Portfolio had not commenced operations for the
period indicated.

(1) The amounts paid to SEI Investments reflect fees paid in connection with
repurchase agreement transactions.

For the fiscal years indicated, the Portfolio paid the following brokerage
commissions:

<TABLE>
<CAPTION>
% of Total % of Total
Total $ Amount of Total $ Amount of Brokerage Brokerage
Brokerage Brokerage Commissions Transactions
Commissions Paid Commissions Paid Paid to the Effected
to Affiliated Brokers Affiliated Through
Brokers Affiliated
Brokers
<S> <C> <C> <C> <C> <C> <C> <C>
1995 1996 1997 1995 1996 1997 1997 1997
$0 $0 $0 $0 $0 $0 $0 $0
</TABLE>

* An asterisk indicates that the Portfolio had not commenced operations as of
the period indicated.

S-15
<PAGE>

Since the Fund does not market its shares through intermediary brokers or
dealers, it is not the Fund'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 may place portfolio orders with qualified
broker-dealers who recommend the Portfolio' 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 Portfolio is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the 1940 Act, which the Portfolio has
acquired during its most recent fiscal year. As of October 31, 1997, the
Portfolio held $561,256 of Lehman Brothers' corporate bonds and repurchase
agreements , $186,594 of Paine Webber's corporate bonds, and $251,875 of J. P.
Morgan's corporate bonds.

For the fiscal years ended October 31, 1996 and 1997, the portfolio turnover
rate for the Portfolio was 264.02% and 256.52%, respectively.

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 Fund may create additional series of shares.
All consideration received by the Fund 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.

S-16
<PAGE>

SHAREHOLDER LIABILITY

The Fund 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 Fund were held to be a partnership, the
possibility of the shareholders incurring financial loss for that reason appears
remote because the Fund's Declaration of Trust contains an express disclaimer of
shareholder liability for obligations of the Fund 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 Fund or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Fund property for
any shareholder held personally liable for the obligations of the Fund.

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 Fund 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 Fund 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 Fund. 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.

5% SHAREHOLDERS

As of February 1, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Fund, beneficial owners) of 5% or more
of the shares of the Portfolios.

HGK FIXED INCOME FUND

<TABLE>
<CAPTION>
Shareholder Number of Shares %
- ----------- ---------------- -
<S> <C> <C>
Sam Agatittee 151,324.9580 11.42%

Laborers Local #322
General Fund
P.O. Box 361
Massena, NY 13662

S-17
<PAGE>

West Chester Heavy Construction 126,510.2000 9.55%
Local 60 General Fund
c/o Mr. Joseph Dominick
140 Broadway
Hawthorne, NY 10532

Mechanical Contractors Association 78,053.4660 5.89%
of Eastern Pennsylvania, Inc.
Industry Fund
1601 Market Street
Philadelphia, PA 19103
</TABLE>

The Fund believes that most of the shares referred to above were held by the
persons indicated in accounts for their fiduciary, agency or custodial
customers.

EXPERTS

The financial statements of the Trust have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference hereto in reliance upon the authority
of said firm as experts in giving said report.

FINANCIAL STATEMENTS

The financial statements for the fiscal year ended October 31, 1997, including
notes thereto and the report of Arthur Andersen LLP thereon, are herein
incorporated by reference. A copy of the 1997 Annual Report to Shareholders
must accompany the delivery of this Statement of Additional Information.

S-18
<PAGE>

AIG MONEY MARKET FUND
CLASS A SHARES

Investment Adviser:
AIG CAPITAL MANAGEMENT CORP.

AIG Money Market Fund (the "Portfolio") is a diversified money market fund that
offers investors a convenient and economical way to invest in a professionally
managed diversified portfolio of short-term, high quality securities.

This Prospectus offers Class A shares of the Portfolio. Class A shares are
offered to institutional investors acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity, and to AIG Persons (as defined
herein). Eligibility to invest in Class A shares is contingent upon an investor
maintaining a minimum aggregate investment of $10,000,000 in the Portfolio,
subject to certain limited exceptions as described on page 8.

AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE UNITED
STATES GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth concisely information about The Advisors' Inner
Circle Fund (the "Fund") and the Portfolio that a prospective investor should
know before investing. The Portfolio is a separate series of the Fund. Investors
are advised to read this Prospectus and retain it for future reference.

A Statement of Additional Information dated February 27, 1998, as amended or
supplemented from time to time, has been filed with the Securities and Exchange
Commission and is available without charge by calling 1-800-249-7445. The
Statement of Additional Information is incorporated into this Prospectus by
reference. The Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund is
maintained electronically with the Securities and Exchange Commission at its
internet web site (http://www.sec.gov).

THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK. THE FUND'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.

FEBRUARY 27, 1998

<PAGE>

SUMMARY

The following provides basic information about the Class A shares of the AIG
Money Market Fund (the "Portfolio"). The Portfolio is one of the mutual funds
comprising The Advisors' Inner Circle Fund (the "Fund"). The Fund also offers
Class B Shares of the Portfolio in a separate prospectus. The Class B shares of
the Portfolio have a distribution plan pursuant to Rule 12b-1 and are subject to
an annual distribution fee. This summary is qualified in its entirety by
reference to the more detailed information provided elsewhere in this Prospectus
and in the Statement of Additional Information.

WHAT IS THE INVESTMENT OBJECTIVE? The Portfolio seeks to preserve principal
value and maintain a high degree of liquidity while providing current income.
There can be no assurance that the Portfolio will achieve its investment
objective or be able to maintain a net asset value of $1.00 per share on a
continuous basis. See "Investment Objective and Policies."

WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE PORTFOLIO? The Portfolio
will attempt to maintain a constant net asset value of $1.00 per share but there
is no assurance that it can do so on a continuous basis. See "Description of
Permitted Investments and Risk Factors."

WHAT ARE THE PERMITTED INVESTMENTS? The Portfolio will invest in a broad range
of short-term, high quality U.S. dollar denominated money market instruments,
which satisfy certain quality, maturity and diversification criteria, including
criteria set by applicable laws and regulations. The Portfolio may invest in
obligations of the U.S. Treasury and agencies and instrumentalities of the U.S.
Government; obligations of domestic banks and U.S. dollar denominated
obligations of foreign banks; short-term obligations of domestic and foreign
corporate issuers; obligations of supranational entities; obligations of foreign
governments; and repurchase agreements involving any of such obligations. See
"Investment Objective and Policies" and "Description of Permitted Investments
and Risk Factors."

WHO IS THE ADVISER? AIG Capital Management Corp. (the "Adviser") serves as the
investment adviser of the Portfolio. See "Expense Summary" and "The 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 Fund. See "The Transfer
Agent."

WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the "Distributor")
serves as the distributor of the Portfolio's shares. See "The Distributor."

IS THERE A SALES LOAD? No, Class A shares of the Portfolio are offered on a
no-load basis. See "The Distributor."

IS THERE A MINIMUM INVESTMENT? There is a minimum investment requirement of
$10,000,000 for Class A shares, with limited exceptions as described in
"Purchase and Redemption of Shares." Class B Shares, which are offered through a
separate prospectus, have a $25,000 minimum investment requirement. See
"Purchase and Redemption of Shares."

<PAGE>

HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Transfer Agent on any day when the New York Stock Exchange and
Federal Reserve Bank 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 prior to 1:00 p.m. Eastern time and receives
payment with readily available funds prior to 3:00 p.m. Eastern time. To
purchase shares by wire, you must FIRST call 1-800-845-3885. Redemption orders
placed with the Transfer Agent prior to 1:00 p.m. Eastern time on any Business
Day will be effective that Business Day. The purchase and redemption price for
shares is the net asset value per share next determined after a purchase or
redemption order has been received by the Transfer Agent and becomes effective.
The net asset value per share is determined as of the earlier of 2:00 p.m.
Eastern time or the regularly-scheduled close of normal trading on the New York
Stork Exchange on each Business Day. The Fund has also authorized certain
broker-dealers and other financial intermediaries to accept purchase orders and
redemption requests up to the times mentioned above on behalf of the Portfolio.
Shares redeemed on any Business Day will not receive dividends for that day. See
"Purchase and Redemption of Shares."

HOW ARE DIVIDENDS PAID? The Portfolio distributes substantially all of its net
investment income (exclusive of capital gains) in the form of dividends declared
daily and paid monthly. Shares normally begin earning dividends on the Business
Day on which a purchase order is effective. 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 "Purchase and Redemption of
Shares" and "Dividends and Distributions."

<PAGE>
EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES AIG MONEY MARKET FUND

<TABLE>
<CAPTION>
CLASS A
<S> <C>
- -----------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases..................... None
Maximum Sales Load Imposed on Reinvested Dividends.......... None
Deferred Sales Load......................................... None
Redemption Fees(1).......................................... None
Exchange Fees............................................... None
- -----------------------------------------------------------------------------------------
</TABLE>

(1) A wire redemption charge, currently $10.00, is 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 wire
charge.

ANNUAL OPERATING EXPENSES AIG MONEY MARKET FUND
(as a percentage of average net assets
for the most recent fiscal year)

<TABLE>
<CAPTION>
CLASS A
<S> <C>
- -----------------------------------------------------------------------------------------
Advisory Fees (after fee waivers)(2)........................ .15%
Other Expenses.............................................. .12%
- -----------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)(2)............. .27%
- -----------------------------------------------------------------------------------------
</TABLE>

(2) The Adviser has, on a voluntary basis, agreed to waive 10 basis points
(.10%) of its fee and to waive additional fees and/or reimburse certain
expenses of the Portfolio so that the total expense ratio does not exceed
.40%. The Adviser reserves the right to terminate its waiver or any
reimbursements at any time upon sixty days' notice to the Portfolio in its
sole discretion. Absent such waivers or any reimbursements, advisory fees
for the Class A shares of the Portfolio would be .25% and total operating
expenses, which include advisory fees, would be .39% of the average daily
net assets of the Portfolio on an annualized basis.

EXAMPLE
<TABLE>
<CAPTION>
AIG MONEY MARKET FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------

<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
An investor 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:
CLASS A..................................................... $3 $ 9 $15 $34
- ---------------------------------------------------------------------------------------------------
</TABLE>

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense table 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 Portfolio. The information set forth in the foregoing table
and example relates only to the Class A shares. Additional information may be
found under "The Adviser" and "The Administrator."

<PAGE>

FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND

The following information on Class A shares of the AIG Money Market Fund has
been audited by Arthur Andersen LLP, the Fund's independent public accountants,
as indicated in their report dated December 12, 1997 on the Fund's financial
statements as of October 31, 1997. This table should be read in conjunction with
the Fund's audited financial statements and notes thereto. The Portfolio's
financial statements are contained in the Annual Report to Shareholders, which
is available without charge by calling 1-800-249-7445.

For a Class A share of the Portfolio Outstanding Throughout the Period:
<TABLE>
<CAPTION>
AIG MONEY MARKET FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------

<CAPTION>
11/1/96 11/1/95 12/1/94(1)
TO TO TO
10/31/97 10/31/96 10/31/95
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD.................... $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income................................. 0.05 0.05 0.05
- ----------------------------------------------------------------------------------------------------
Total From Investment Operations........................ 0.05 0.05 0.05
- ----------------------------------------------------------------------------------------------------
Less Distributions:
Distributions From Net Investment Income................ (0.05) (0.05) (0.05)
Total Distributions................................... (0.05) (0.05) (0.05)
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.......................... $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN............................................ 5.41% 5.26% 5.75%*
- ----------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End Of Period (000)......................... $329,125 $253,865 $313,657
Ratio Of Expenses To Average Net Assets................. 0.27% 0.39% 0.40%*
Ratio Of Expenses To Average Net Assets
(Excluding Fee Waivers)............................... 0.39% 0.41% 0.47%*
Ratio Of Net Investment Income To Average
Net Assets............................................ 5.30% 5.15% 5.60%*
Ratio Of Net Investment Income to
Average Net Assets (Excluding Fee Waivers)............ 5.18% 5.13% 5.53%*
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>

* Annualized
(1) The Class A shares of the AIG Money Market Fund commenced operations on
December 1, 1994.

5
<PAGE>

THE FUND AND THE PORTFOLIO

The Advisors' Inner Circle Fund (the "Fund") offers shares in a number of
separately-managed mutual funds, each of which is a separate series
("portfolio") of the Fund. Each share of each portfolio represents an undivided,
proportionate interest in that portfolio. This Prospectus offers Class A shares
of the Fund's AIG Money Market Fund (the "Portfolio"), a diversified portfolio.
The Portfolio offers two classes of shares (Class A and Class B) which provide
for variations in distribution costs, voting rights and dividends. Except for
these differences, each share of the Portfolio represents an undivided
proportionate interest in the Portfolio. Information regarding the Class B
shares of the Portfolio and the other portfolios in the Fund is contained in
separate prospectuses that may be obtained by calling 1-800-249-7445.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Portfolio is to preserve principal value and
maintain a high degree of liquidity while providing current income. It is also a
fundamental policy of the Portfolio to use its best efforts to maintain a
constant net asset value of $1.00 per share. There is no assurance that the
Portfolio will achieve its investment objective or that it will be able to
maintain a constant net asset value of $1.00 per share on a continuous basis.

The Portfolio intends to comply with regulations of the Securities and Exchange
Commission (the "SEC") applicable to money market funds using the amortized cost
method for calculating net asset value. These regulations impose certain
quality, maturity and diversification restraints on Portfolio investments. Under
these regulations, the Portfolio will invest in only U.S. dollar denominated
securities, will maintain an average maturity on a dollar-weighted basis of 90
days or less, and will acquire only "eligible securities" that both present
minimal credit risks and have a maturity of 397 days or less. For a further
discussion of these rules, see "Description of Permitted Investments and Risk
Factors -- Restraints on Investments by Money Market Funds."

In seeking its investment objective, the Portfolio will invest exclusively in
(i) bills, notes and bonds issued by the United States Treasury ("U.S. Treasury
Obligations") and separately traded interest and principal component parts of
such obligations ("Stripped Government Securities"); (ii) obligations issued or
guaranteed as to principal and interest by the agencies or instrumentalities of
the United States Government; (iii) U.S. dollar denominated short-term
obligations of issuers rated at the time of investment in the highest rating
category for short-term debt obligations (within which there may be
sub-categories or gradations indicating relative standing) by two or more
nationally recognized statistical rating organizations ("NRSROs"), or only one
NRSRO if only one NRSRO has rated the security, or, if not rated, as determined
by the Adviser to be of comparable quality, consisting of obligations of U.S.
and foreign corporations, domestic banks, foreign banks, and U.S. and foreign
savings and loan institutions; (iv) repurchase agreements with respect to the
foregoing; (v) obligations of supranational entities satisfying the credit
standards described above or, if not rated, determined by the Adviser to be of
comparable quality; and (vi) obligations of foreign governments, agencies and
instrumentalities satisfying the credit standards described above or, if not
rated, determined by the Adviser to be of comparable quality.

The Portfolio reserves the right to invest more than 25% of its total assets in
obligations issued by domestic branches of U.S. banks or U.S. branches of
foreign banks subject to similar regulations as U.S. banks. To the extent that
the Portfolio invests more than 25% of its net assets in bank obligations, it
will be exposed to the risks associated with that industry as a whole. The
Portfolio may purchase asset-backed securities rated in the highest NRSRO rating
category at the time of investment. The Portfolio may invest in securities which
pay interest on a variable or floating rate basis. In addition, the Portfolio
may acquire securities on a when-issued basis and may buy securities which are
subject to puts or standby commitments. The Portfolio will not invest more than
10% of its net assets in illiquid securities. The Portfolio reserves the right
to enter into reverse repurchase agreements and engage in securities lending.

The Portfolio will use NRSROs such as Standard & Poor's Corporation and Moody's
Investors Service, Inc. when determining security credit ratings.

For a description of the above ratings and additional information regarding the
Portfolio's permitted investments see "Description of Permitted Investments and
Risk Factors" in this Prospectus and "Description of

6
<PAGE>

Permitted Investments" in the Statement of Additional Information.

INVESTMENT LIMITATIONS

The Portfolio may not:

1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States Government, its agencies or instrumentalities and repurchase
agreements involving such securities) if, as a result, more than 5% of the total
assets of the Portfolio would be invested in the securities of such issuer;
provided, however, that the Portfolio may invest up to 25% of its total assets
without regard to this restriction as permitted by applicable law.

2. Purchase any securities which would cause 25% or more of the total assets of
the Portfolio 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 not apply to investments in the obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities, repurchase
agreements involving such securities and obligations issued by domestic branches
of U.S. banks or U.S. branches of foreign banks subject to the same regulations
as U.S. banks. For purposes of this limitation, (i) utility companies will be
classified according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (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; (iii) supranational
entities will be considered a separate industry; and (iv) asset-backed
securities will be classified according to the underlying assets securing such
securities.

3. Make loans, except that the Portfolio may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) engage in securities lending as described
in this Prospectus and in the Statement of Additional Information.

4. Borrow money, except that the Portfolio may (i) enter into reverse repurchase
agreements and (ii) borrow money for temporary or emergency purposes and then
only in an amount not exceeding 33 1/3% of the value of its total assets. Any
borrowing will be done from a bank and asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time fall below
300%, the Portfolio shall, within three days thereafter or such longer period as
the SEC may prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such borrowings shall be
at least 300%. This borrowing provision is included for temporary liquidity or
emergency purposes. All borrowings will be repaid before making investments and
any interest paid on such borrowings will reduce income.

The foregoing percentages will apply at the time of the purchase of a security,
except for the percentage limitations specified in paragraph 4 above, which will
apply at all times.

THE ADVISER

AIG Capital Management Corp. (the "Adviser") is an indirect wholly-owned
subsidiary of American International Group, Inc. ("AIG"). AIG is a holding
company which through its subsidiaries is primarily engaged in a broad range of
insurance and insurance-related and financial services activities in the United
States and abroad. The Adviser was formed in June 1994. Its officers and
employees include individuals with investment management experience, including
experience with short-term investments. The principal business address of the
Adviser is 70 Pine Street, New York, New York 10270.

7
<PAGE>

the average daily net assets of the Class A shares of the Portfolio. The Adviser
reserves the right to terminate its waiver or any reimbursements at any time
upon sixty days' notice to the Portfolio in its sole discretion. For the fiscal
year ended October 31, 1997, the Adviser received (after fee waivers) a fee
equal to 0.15% of the Portfolio's average daily net assets.

THE ADMINISTRATOR

SEI Fund Resources (the "Administrator") serves as the Administrator of the
Fund. The Administrator provides the Fund with administrative services,
including regulatory reporting and all necessary office space, equipment,
personnel and facilities. The Fund shall pay the Administrator compensation for
services rendered at an annual rate equal to the sum of (i) .10% of average
daily net assets up to $50 million; (ii) .08% of average daily net assets from
$50 million up to $250 million; (iii) .06% of average daily net assets from $250
million up to $450 million; and (iv) .05% of average daily net assets in excess
of $450 million for the first year of the contract. In the second and third
years of the Agreement, compensation shall be paid at an annual rate equal to
the sum of (i) .10% of average daily net assets up to $50 million; (ii) .08% of
average daily net assets from $50 million up to $250 million; and (iii) .05% of
average daily net assets in excess of $250 million. There is a minimum annual
fee of $75,000 per portfolio plus $15,000 for each additional class.

The Administrator also serves as shareholder servicing agent for the Portfolio.

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent for
the Fund.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456,
a wholly-owned subsidiary of SEI Investments Company serves as the Fund's
distributor pursuant to a distribution agreement (the "Distribution Agreement")
with the Fund which applies to Class A and Class B shares of the Portfolio. The
Class A shares of the Portfolio are offered without distribution fees.

The Portfolio may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor for which the affiliate or
the Distributor may receive "usual and customary" compensation.

PURCHASE AND REDEMPTION OF SHARES

Shares of the Portfolio may be purchased by qualified investors by contacting
the Transfer Agent or by calling 1-800-845-3885. Class A shares are offered to
institutional investors acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity, and to AIG Persons (as defined below).
Shares of the Portfolio are offered only to residents of states and other
jurisdictions in which the shares are eligible for purchase. In addition, the
Fund has authorized certain broker-dealers and other financial intermediaries
(collectively, "Authorized Broker-Dealers") to act as the Portfolio's agent for
the purposes of accepting purchase orders and redemption requests. The Portfolio
will be deemed to have received a purchase order or redemption request upon
receipt of the order or request by an Authorized Broker-Dealer.

Purchase of shares of the Portfolio may be made on any day when the New York
Stock Exchange and Federal Reserve Bank are open for business (a "Business
Day"). Eligibility to invest in Class A shares is contingent upon an investor
maintaining a minimum aggregate investment of $10,000,000 in the Portfolio
unless: (a) the investor makes an initial investment of at least $5,000,000 and
has, in the sole judgment of the Distributor and/or any sub-distributor(s),
intent and availability of funds to invest $10,000,000 in Class A shares of the
Portfolio within three months of the initial investment; (b) the investor's
assets are managed pursuant to an investment advisory agreement with a
registered investment advisor that is wholly-owned by AIG; or (c) the investor
is in one of the following categories: AIG and any company as to which AIG owns
more than 19% of the outstanding capital stock, C.V. Starr & Co., Inc. and any
of its direct or indirect subsidiaries and affiliates, senior executive officers
of AIG and their families (collectively referred to as "AIG Persons"), as well
as entities controlled by such AIG Persons, and certain employee benefit plans
sponsored by AIG. There is no minimum for subsequent purchases. The minimum
investment may be waived at the Distributor's discretion.

8
<PAGE>

PURCHASES BY WIRE TRANSFER

INITIAL PURCHASES: Before making an initial investment by wire, an investor
must first telephone 1-800-845-3885 to be assigned an account number. The
investor'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 Portfolio by requesting their
bank to transmit funds by wire to: United Missouri Bank, N.A.; ABA #10-10-00695;
for Account Number 9870600404; Further Credit: AIG Money Market Fund. The
shareholder'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
and account number. The investor's bank may impose a fee for investments by
wire.

GENERAL INFORMATION REGARDING PURCHASES

A purchase order for Class A shares will be effective as of the Business Day
received by the Transfer Agent if the Transfer Agent receives an order prior to
1:00 p.m. Eastern time and receives federal funds before 3:00 p.m. Eastern time.
However, an order for Class A shares may be canceled if federal funds are not
received before 3:00 p.m. Eastern time on the same Business Day. Purchases may
not be made by check. The purchase price for shares is the net asset value per
share next determined after a purchase order has been received by the Transfer
Agent and becomes effective.

The Portfolio reserves the right to reject an account application or a purchase
order when the Distributor or Transfer Agent determines that it is not in the
best interest of the Fund and/or its shareholders to accept such application or
purchase order.

REDEMPTIONS

Redemption orders received by the Transfer Agent prior to 1:00 p.m. Eastern time
on any Business Day will be effective that day. The redemption price of shares
is the net asset value per share of the Portfolio next determined after an
effective redemption order, in good form, is received. Shares redeemed will not
receive the dividend declared on that day. 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 transfer or Automatic Clearing House ("ACH") wire transfer.
There is no charge for having a check for redemption proceeds mailed. The
custodian will deduct a wire charge, currently $10.00, 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 Portfolio by Federal Reserve wire on federal
holidays restricting wire transfers. The Portfolio does not charge for ACH wire
transfers; 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 Fund 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 Fund 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. Such procedures may include
taping of telephone conversations.

CALCULATION OF NET ASSET VALUE

Net asset value per share of the Portfolio is determined as of the earlier of
2:00 p.m. Eastern time or the regularly-scheduled close of normal trading on the
New York Stock Exchange on each Business Day, based on the amortized cost method
described in the Statement of Additional Information. No certificates
representing shares will be issued. The net asset value per share of the
Portfolio is determined by dividing the total market value of the Portfolio's
investments, using amortized cost valuations, and other assets, less any
liabilities, by the total number of outstanding shares of the Portfolio.

9
<PAGE>

PERFORMANCE

From time to time the Portfolio advertises its "current yield," "effective
yield" and total return. Both yield figures are based on historical earnings and
are not intended to indicate future performance. No representation can be made
concerning actual future yields. The "current yield" of the Portfolio refers to
the income generated by an investment in the Portfolio over a stated seven-day
period (which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" (also called
"effective compound yield") is calculated similarly but, when annualized, the
income earned by an investment in the Portfolio is assumed to be reinvested. The
"effective yield" will be slightly higher than the "current yield" because of
the compounding effect of this assumed reinvestment. Total return represents the
change, over a specified period of time, in the value of an investment in the
Portfolio after reinvesting all income distributions. It is calculated by
dividing that change by the initial investment and is expressed as a percentage.
The performance of Class A shares will normally be higher than that of Class B
shares because Class A shares are not subject to distribution expenses charged
to Class B shares. Yield quotations are computed separately for the Class A and
Class B shares.

The Portfolio may periodically compare its performance to the performance of
other mutual funds tracked by mutual fund rating services, broad groups of
comparable mutual funds or unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs.

TAXES

The following summary of certain 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 Portfolio 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 PORTFOLIO

The Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Fund's other portfolios. The Portfolio intends to
continue 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 Portfolio 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) that it distributes to shareholders.

TAX STATUS OF DISTRIBUTIONS

The Portfolio 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. Although the Portfolio does not expect
to recognize any long-term capital gains, any dividends from net capital gain
(the excess of net long-term capital gain over net short-term capital loss) will
be treated as gain from the sale of a capital asset held for more than one year,
regardless of how long the shareholders have held their shares. Generally,
distributions from the Portfolio are taxable to shareholders when they are paid.
However, dividends declared by the Portfolio 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 Portfolio and received by the
shareholders on December 31 of that year, if paid by the Portfolio at any time
during the following January.

The Portfolio will inform shareholders annually of the federal income tax status
of all distributions. Corporate shareholders should note that Portfolio
distributions will not qualify for the dividends-received deduction that is
generally available to corporate taxpayers.

10
<PAGE>

repurchase agreements normally is not exempt from state taxation. The Portfolio
will inform shareholders annually of the percentage of income and distributions
derived from direct United States Government obligations. Shareholders should
consult their tax advisers to determine whether any portion of the income
dividends received from the Portfolio is considered tax exempt in their
particular state.

The Portfolio intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.

A sale, exchange or redemption of the Portfolio's shares is a taxable event to
the shareholder.

Income derived by the Portfolio from securities of foreign issuers may be
subject to foreign withholding taxes. The Portfolio will not be able to elect to
treat shareholders as having paid their proportionate share of such foreign
taxes.

Additional information concerning taxes is set forth in the Statement of
Additional Information.

GENERAL INFORMATION

THE FUND

The Fund, 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 Fund to offer separate series
("portfolios") and classes of shares. All consideration received by the Fund for
shares of any portfolio and all assets of such portfolio belong to that
portfolio and are subject to liabilities related thereto. The Fund reserves the
right to create and issue shares of additional portfolios.

The Portfolio 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 shares
under federal and state securities laws, pricing and insurance expenses,
brokerage costs, interest charges, taxes and organization expenses and (ii) pro
rata share of the Fund's other expenses, including audit and legal expenses.
Expenses not attributable to a specific portfolio are allocated across all of
the portfolios on the basis of relative net assets.

TRUSTEES OF THE FUND

The management and affairs of the Fund 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 Fund.

VOTING RIGHTS

Each share held entitles the shareholder of record to one vote. The shareholders
of each class of the Portfolio will vote separately on matters relating solely
to that class. The Portfolio will vote separately on matters relating solely to
it. As a Massachusetts business trust, the Fund is not required, and does not
intend, to hold annual meetings of shareholders. Shareholder approval will be
sought, however, for certain changes in the operation of the Fund 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 Fund. In the event that
such a meeting is requested, the Fund will provide appropriate assistance and
information to the shareholders requesting the meeting.

As of February 2, 1998, AIG Life Insurance owned a controlling interest in the
Class A Shares of the Portfolio as defined by the Investment Company Act of
1940.

REPORTING

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to AIG Money Market Fund, c/o The
Advisors' Inner Circle Fund, P.O. Box 419009, Kansas City, Missouri 64141-6009
or by calling 1-800-249-7445. Purchase and redemption transactions should be
made through the Transfer Agent by calling 1-800-845-3885.

11
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Portfolio declares dividends of substantially all of its net investment
income (exclusive of capital gains) daily and distributes such dividends
monthly. Shares purchased normally begin earning dividends on the Business Day
on which the purchase order relating to such share purchase is effective. 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 by Federal Reserve or ACH wire transfer.

The amount of dividends payable on Class A shares will be more than those
payable on Class B shares because of the distribution fees paid by Class B
shares.

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

Morgan, Lewis & Bockius LLP serves as counsel to the Fund. Arthur Andersen LLP
serves as the independent public accountants of the Fund.

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 the permitted investments for the Portfolio,
and the associated risk factors:

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.

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.

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.

EURODOLLAR AND YANKEE BANK OBLIGATIONS -- Eurodollar bank obligations are U.S.
dollar-denominated certificates of deposit or time deposits issued outside the
United States by foreign branches of U.S. banks or by foreign banks. Yankee bank
obligations are U.S. dollar denominated obligations issued in the United States
by foreign banks.

ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Portfolio's books. An illiquid security includes a
demand instrument with a demand notice period exceeding seven days, where there
is no secondary market for such security, and repurchase agreements with a
remaining term to maturity in excess of 7 days.

OBLIGATIONS OF SUPRANATIONAL ENTITIES -- Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, the Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and the Nordic Investment
Bank.

REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which the
Portfolio obtains a

12
<PAGE>

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 Portfolio bears a risk of loss in the event the other
party defaults on its obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the Portfolio realizes a
loss on the sale of the collateral. The Portfolio 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.

RESTRICTED SECURITIES -- Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933
or an exemption from registration.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS -- Investments by a money market
fund are subject to limitations imposed under regulations adopted by the SEC.
Under these regulations, money market funds may only acquire obligations that
present minimal credit risk and that are "eligible securities," which means they
are (i) rated, at the time of investment, by at least two NRSROs (one if it is
the only organization rating such obligation) in the highest rating category or,
if unrated, determined to be of comparable quality (a "first tier security"), or
(ii) rated according to the foregoing criteria in the second highest rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). A security is not considered to be unrated if its issuer has
outstanding obligations of comparable priority and security that have a
short-term rating. A money market fund may invest up to 25% of its assets in
"first tier" securities of a single issuer for a period of up to three business
days. The securities that money market funds may acquire may be supported by
credit enhancements, such as demand features or guarantees. The SEC regulations
limit the percentage of securities that a money market fund may hold for which a
single issuer provides credit enhancements.

REVERSE REPURCHASE AGREEMENTS -- Reverse repurchase agreements are agreements by
which the Portfolio sells securities to financial institutions and
simultaneously agrees to repurchase those securities at a mutually agreed-upon
date and price. At the time a Portfolio enters into a reverse repurchase
agreement, the Portfolio 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 Portfolio may decline below
the price at which the Portfolio is obligated to repurchase the securities.
Reverse repurchase agreements are considered to be borrowings by the Portfolio
under the 1940 Act.

STANDBY COMMITMENTS AND PUTS -- Securities subject to standby commitments or
puts permit the holder thereof to sell the securities at a fixed price prior to
maturity. Securities subject to a standby commitment or put may be sold at any
time at the current market price. However, unless the standby commitment or put
was an integral part of the security as originally issued, it may not be
marketable or assignable; therefore, the standby commitment or put would only
have value to the Portfolio owning the security to which it relates. In certain
cases, a premium may be paid for a standby commitment or put, which premium will
have the effect of reducing the yield otherwise payable on the underlying
security. The Portfolio will limit standby commitment or put transactions to
institutions believed to present minimal credit risk.

SECURITES LENDING -- In order to generate additional income, the Portfolio may
lend securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash, or securities of the U.S.
Government or its agencies equal to at least 100% of the market value of the
securities lent. The Portfolio continues to receive interest on the securities
lent while simultaneously earning interest on the investment of cash collateral.
Collateral is marked to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral should the borrower of
the securities fail financially or become insolvent.

13
<PAGE>

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.

STRIPPED GOVERNMENT SECURITIES -- The Portfolio may purchase Separately Traded
Registered Interest and Principal Securities ("STRIPS") that are created when
the coupon payments and the principal payment are stripped from an outstanding
United States Treasury bond by the Federal Reserve Bank of New York and sold
separately. The Portfolio may not actively trade STRIPS.

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 7 days are considered to be illiquid securities.

U.S. GOVERNMENT AGENCY SECURITIES -- Obligations issued or guaranteed by
agencies of the U.S. Government include, 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
include, among others, the Federal Home Loan Mortgage Corporation, 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 Portfolio's shares.

U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
federal book-entry system known as STRIPS.

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. 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 AND DELAYED DELIVERY 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 Portfolio will maintain with the Custodian a separate account with liquid
assets 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 Portfolio 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. Although
the Portfolio generally purchases securities on a when-issued or forward
commitment basis with the intention of actually acquiring securities for its
portfolio, the Portfolio may dispose of a when-issued security or forward
commitment prior to settlement if it deems appropriate.

<PAGE>

Fund:
The Advisors Inner Circle Fund

Portfolio:
AIG Money Market Fund

Adviser:
AIG Capital Management Corp.

Distributor:
SEI Investments Distribution Co.

Administrator:
SEI Fund Resources

Legal Counsel:
Morgan, Lewis & Bockius LLP

Independent Public Accountants:
Arthur Andersen LLP

February 27, 1998
For Information call: 1-800-845-3885
AIG-F-001-04
================================================================================

<PAGE>

================================================================================

Prospectus

AIG
Money Market Fund
Class A

[LOGO]

Advised by
AIG Capital Management Corp.

================================================================================

<PAGE>

AIG MONEY MARKET FUND
CLASS B SHARES

Investment Adviser:
AIG CAPITAL MANAGEMENT CORP.

This Prospectus offers Class B shares of the Portfolio, which are offered to
clients of American International Group, Inc. ("AIG"), certain of its
subsidiaries and affiliates, and other institutional investors acting for
themselves or in a fiduciary, advisory, agency, custodial or similar capacity,
and individual investors.

FEBRUARY 27, 1998

<PAGE>
SUMMARY

The following provides basic information about the Class B shares of the AIG
Money Market Fund (the "Portfolio"). The Portfolio is one of the mutual funds
comprising The Advisors' Inner Circle Fund (the "Fund"). The Fund also offers
Class A shares of the Portfolio in a separate prospectus. This summary is
qualified in its entirety by reference to the more detailed information provided
elsewhere in this Prospectus and in the Statement of Additional Information.

WHO IS THE ADVISER? AIG Capital Management Corp. (the "Adviser") serves as the
investment adviser of the Portfolio. See "Expense Summary" and "The 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 Fund. See "The Transfer
Agent."

WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the "Distributor")
serves as the distributor of the Portfolio's shares. See "The Distributor."

IS THERE A SALES LOAD? Class B shares of the Portfolio are offered without a
front-end sales charge. However, Class B shares are subject to a distribution
fee of .35% of the average daily net assets of the Class B shares. See "The
Distributor."

IS THERE A MINIMUM INVESTMENT? There is a minimum investment requirement of
$25,000 which the Distributor may waive at its discretion.

2
<PAGE>

HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Transfer Agent on any day when the New York Stock Exchange and
Federal Reserve Bank 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 prior to 1:00 p.m. Eastern time and receives
payment with readily available funds prior to 3:00 p.m. Eastern time. To
purchase shares by wire, you must FIRST call 1-800-845-3885. Redemption orders
placed with the Transfer Agent prior to 1:00 p.m. Eastern time on any Business
Day will be effective that Business Day. The purchase and redemption price for
shares is the net asset value per share next determined after a purchase or
redemption order has been received by the Transfer Agent and becomes effective.
The net asset value per share is determined as of the earlier of 2:00 p.m.
Eastern time or the regularly-scheduled close of normal trading on the New York
Stock Exchange on each Business Day. The Fund has also authorized certain
broker-dealers and other financial intermediaries to accept purchase orders and
redemption requests up to the times mentioned above on behalf of the Portfolio.
Shares redeemed on any Business Day will not receive dividends for that day. See
"Purchase and Redemption of Shares."

3
<PAGE>

EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES AIG MONEY MARKET FUND

<TABLE>
<CAPTION>
CLASS B
<S> <C>
- ------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases..................... None
Maximum Sales Load Imposed on Reinvested Dividends.......... None
Deferred Sales Load......................................... None
Redemption Fees(1).......................................... None
Exchange Fees............................................... None
- ------------------------------------------------------------------------------
</TABLE>

ANNUAL OPERATING EXPENSES AIG MONEY MARKET FUND
(as a percentage of average net assets
for the most recent fiscal year)

<TABLE>
<CAPTION>
CLASS B
<S> <C>
- ------------------------------------------------------------------------------
Advisory Fees (after fee waivers)(2)........................ .15%
12b-1 Fees.................................................. .35%
Other Expenses.............................................. .13%
- ------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)(2)............. .63%
- ------------------------------------------------------------------------------
</TABLE>

(2) The Adviser has, on a voluntary basis, agreed to waive 10 basis points
(.10%) of its fee and to waive additional fees and/or reimburse certain
expenses of the Portfolio so that the total expense ratio does not exceed
.75%. The Adviser reserves the right to terminate its waiver or any
reimbursements at any time upon sixty days' notice to the Portfolio in its
sole discretion. Absent such waivers or any reimbursements, advisory fees
for the Class B shares of the Portfolio would be .25% and total operating
expenses, which include advisory fees, would be .74% of the average daily
net assets of the Portfolio on an annualized basis.

EXAMPLE
<TABLE>
<CAPTION>
AIG MONEY MARKET FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------

<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
An investor 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:
CLASS B..................................................... $6 $20 $35 $79
- ---------------------------------------------------------------------------------------------------
</TABLE>

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense table 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 Portfolio. The information set forth in the foregoing table
and example relates only to the Class B shares. Additional information may be
found under "The Adviser" and "The Administrator."

Long-term Class B shareholders may eventually pay more than the economic
equivalent of the maximum front-end sales charges otherwise permitted by the
Conduct Rules of the National Association of Securities Dealers, Inc. (the
"NASD").

4
<PAGE>

FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND

The following information on Class B shares of the AIG Money Market Fund has
been audited by Arthur Andersen LLP, the Fund's independent public accountants,
as indicated in their report dated December 12, 1997 on the Fund's financial
statements as of October 31, 1997. This table should be read in conjunction with
the Fund's audited financial statements and notes thereto. The Portfolio's
financial statements are contained in the Annual Report to Shareholders, which
is available without charge by calling 1-800-249-7445.

For a Class B share of the Portfolio Outstanding Throughout the Period:
<TABLE>
<CAPTION>
AIG MONEY MARKET FUND
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------

<CAPTION>
11/01/96 11/01/95 2/16/95(1)
TO TO TO
10/31/97 10/31/96 10/31/95
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD.................... $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income.............................. 0.05 0.05 0.04
- -----------------------------------------------------------------------------------------------------
Total From Investment Operations........................ 0.05 0.05 0.04
- -----------------------------------------------------------------------------------------------------
Less Distributions:
Distributions From Net Investment Income................ (0.05) (0.05) (0.04)
Total Distributions................................ (0.05) (0.05) (0.04)
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.......................... $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN............................................ 5.04% 4.89% 5.43%*
- -----------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End Of Period (000)......................... $108,754 $135,384 $120,482
Ratio Of Expenses To Average Net Assets................. 0.63% 0.74% 0.75%*
Ratio Of Expenses To Average Net Assets
(Excluding Waivers and Reimbursements)................ 0.74% 0.77% 0.85%*
Ratio Of Net Investment Income To Average
Net Assets............................................ 4.93% 4.79% 5.18%*
Ratio Of Net Investment Income to Average
Net Assets (Excluding Waivers and Reimbursements)..... 4.82% 4.76% 5.08%*
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>

* Annualized
(1) The Class B shares of the AIG Money Market Fund commenced operations on
February 16, 1995.

5
<PAGE>

THE FUND AND THE PORTFOLIO

The Advisors' Inner Circle Fund (the "Fund") offers shares in a number of
separately-managed mutual funds, each of which is a separate series
("portfolio") of the Fund. Each share of each portfolio represents an undivided,
proportionate interest in that portfolio. This Prospectus offers Class B shares
of the Fund's AIG Money Market Fund (the "Portfolio"), a diversified portfolio.
The Portfolio offers two classes of shares (Class A and Class B) which provide
for variations in distribution costs, voting rights and dividends. Except for
these differences, each share of the Portfolio represents an undivided
proportionate interest in the Portfolio. Information regarding the Class A
shares of the Portfolio and the other portfolios in the Fund is contained in
separate prospectuses that may be obtained by calling 1-800-249-7445.

INVESTMENT OBJECTIVE AND POLICIES

The Portfolio intends to comply with regulations of the Securities and Exchange
Commission (the "SEC") applicable to money market funds using the amortized cost
method for calculating net asset value. These regulations impose certain
quality, maturity and diversification restraints on the Portfolio's investments.
Under these regulations, the Portfolio will invest in only U.S. dollar
denominated securities, will maintain an average maturity on a dollar-weighted
basis of 90 days or less, and will acquire only "eligible securities" that both
present minimal credit risks and have a maturity of 397 days or less. For a
further discussion of these rules, see "Description of Permitted Investments and
Risk Factors -- Restraints on Investments by Money Market Funds."

6
<PAGE>

associated with that industry as a whole. The Portfolio may purchase
asset-backed securities rated in the highest NRSRO rating category at the time
of investment. The Portfolio may invest in securities which pay interest on a
variable or floating rate basis. In addition, the Portfolio may acquire
securities on a when-issued basis and may buy securities which are subject to
puts or standby commitments. The Portfolio will not invest more than 10% of its
net assets in illiquid securities. The Portfolio reserves the right to enter
into reverse repurchase agreements and engage in securities lending.

The Portfolio will use NRSROs such as Standard & Poor's Corporation and Moody's
Investors Service, Inc. when determining security credit ratings.

For a description of the above ratings and additional information regarding the
Portfolio's permitted investments, see "Description of Permitted Investments and
Risk Factors" in this Prospectus and "Description of Permitted Investments" in
the Statement of Additional Information.

INVESTMENT LIMITATIONS

The Portfolio may not:

2. Purchase any securities which would cause 25% or more of the total assets of
the Portfolio 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 not apply to investments in the obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities, repurchase
agreements involving such securities and obligations issued by domestic branches
of U.S. banks or U.S. branches of foreign banks subject to the same regulations
as U.S. banks. For purposes of this limitation, (i) utility companies will be
classified according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (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; (iii) supranational
entities will be considered a separate industry; and (iv) asset-backed
securities will be classified according to the underlying assets securing such
securities.

7
<PAGE>

three days thereafter or such longer period as the SEC may prescribe by rules
and regulations, reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. This borrowing
provision is included for temporary liquidity or emergency purposes. All
borrowings will be repaid before making investments and any interest paid on
such borrowings will reduce income.

The foregoing percentages will apply at the time of the purchase of a security,
except for the percentage limitations specified in paragraph 4 above, which will
apply at all times.

THE ADVISER

The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .25% of the average daily net assets of the Portfolio. The
Adviser has voluntarily agreed to waive 10 basis points (.10%) of its fees and
to waive additional fees and/or reimburse certain expenses of the Portfolio to
the extent necessary in order to limit net operating expenses to an annual rate
of not more than .75% of the average daily net assets of the Class B shares of
the Portfolio. The Adviser reserves the right to terminate its waiver or any
reimbursements at any time upon sixty days' notice to the Portfolio in its sole
discretion. For the fiscal year ended October 31, 1997, the Adviser received
(after fee waivers) a fee equal to 0.15% of the Portfolio's average daily net
assets.

THE ADMINISTRATOR

The Administrator also serves as shareholder servicing agent for the Portfolio.

8
<PAGE>

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent for
the Fund.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456,
a wholly-owned subsidiary of SEI Investments Company, serves as the Fund's
distributor pursuant to a distribution agreement (the "Distribution Agreement")
with the Fund which applies to Class A and Class B shares of the Portfolio. The
Class B shares of the Portfolio are subject to a distribution plan (the "Class B
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"). As provided in the Distribution Agreement and the
Class B Plan, the Portfolio pays an annual fee of .35% of the Class B shares'
average daily net assets to the Distributor as compensation for its services.
From this amount the Distributor and any sub-distributor appointed by the
Distributor may make payments pursuant to written agreements to financial
institutions and intermediaries such as banks, savings and loan associations,
insurance companies including, without limit, other subsidiaries and affiliates
of AIG, investment counselors, broker-dealers and the Distributor's affiliates
and subsidiaries (collectively, "Agents") as compensation for services,
reimbursement of expenses incurred in connection with distribution assistance or
provision of shareholder services. The Class B Plan is characterized as a
compensation plan since the distribution fee will be paid to the Distributor
without regard to the distribution or shareholder service expenses incurred by
the Distributor or the amount of payments made to other financial institutions
and intermediaries. Investors should understand that some Agents may charge
their clients fees in connection with purchases of Class B shares or the
provision of shareholder services with respect to Class B shares. The Fund
intends to operate the Class B Plan in accordance with its terms and with the
NASD rules concerning sales charges.

The Distributor has appointed AIG Equity Sales Corp., a wholly-owned subsidiary
of AIG and an affiliate of the Adviser, as sub-distributor and servicing agent
with respect to the Class B shares.

Certain financial institutions offering shares to their customers may be
required to register as dealers pursuant to federal and state laws.

PURCHASE AND REDEMPTION OF SHARES

Shares of the Portfolio may be purchased by qualified investors by contacting
the Transfer Agent or by calling 1-800-845-3885. Shares of the Portfolio are
offered only to residents of states and other jurisdictions in which the shares
are eligible for purchase. In addition, the Fund has authorized certain
broker-dealers and other financial intermediaries (collectively "Authorized
Broker-Dealers") to act as the Portfolio's agent for the purposes of accepting
purchase orders and redemption requests. The Portfolio will be deemed to have
received a purchase order or redemption request upon receipt of the order or
request by an Authorized Broker-Dealer.

Purchase of shares of the Portfolio may be made on any day when the New York
Stock Exchange and Federal Reserve Bank are open for business (a "Business
Day"). The minimum investment in the Class B shares is $25,000; however, the
minimum investment may be waived at the Distributor's discretion. There is no
minimum for subsequent purchases.

9
<PAGE>

PURCHASES BY WIRE TRANSFER

Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Portfolio by requesting their
bank to transmit funds by wire to: United Missouri Bank, N.A.; ABA #10-10-00695;
for Account Number 9870600404; Further Credit: AIG Money Market Fund. The
shareholder's name and account number must be specified in the wire.

GENERAL INFORMATION REGARDING PURCHASES

A purchase order for Class B shares will be effective as of the Business Day
received by the Transfer Agent if the Transfer Agent receives an order prior to
1:00 p.m. Eastern time and receives federal funds before 3:00 p.m. Eastern time.
However, an order for Class B shares may be canceled if federal funds are not
received before 3:00 p.m. on the same Business Day. Purchases may not be made by
check. The purchase price for shares is the net asset value per share next
determined after a purchase order has been received by the Transfer Agent and
becomes effective.

REDEMPTIONS

Redemption orders received by the Transfer Agent prior to 1:00 p.m. Eastern time
on any Business Day will be effective that day. The redemption price of shares
is the net asset value per share of the Portfolio next determined after an
effective redemption order, in good form, is received. Shares redeemed will not
receive the dividends declared on that day. 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.

10
<PAGE>

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. Such procedures may include taping of telephone conversations.

CALCULATION OF NET ASSET VALUE

Net asset value per share of the Portfolio is determined as of the earlier of
2:00 p.m. Eastern time or the regularly-scheduled close of normal trading on the
New York Stock Exchange on each Business Day, based on the amortized cost method
described in the Statement of Additional Information. No certificates
representing shares will be issued. The net asset value per share of the
Portfolio is determined by dividing the total market value of the Portfolio's
investments using amortized cost valuations, and other assets, less any
liabilities, by the total number of outstanding shares of the Portfolio.

PERFORMANCE

TAXES

The following summary of certain federal income tax consequences is based on
current tax laws and regulations, which may be changed by legislative, judicial
or administrative action.

TAX STATUS OF THE PORTFOLIO

11
<PAGE>

long as the Portfolio 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) that it distributes to shareholders.

TAX STATUS OF DISTRIBUTIONS

Income received on direct United States Government 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 Portfolio
provided certain state-specific conditions are satisfied. Interest received on
repurchase agreements normally is not exempt from state taxation. The Portfolio
will inform shareholders annually of the percentage of income and distributions
derived from direct United States Government obligations. Shareholders should
consult their tax advisers to determine whether any portion of the income
dividends received from the Portfolio is considered tax exempt in their
particular state.

The Portfolio intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.

A sale, exchange or redemption of the Portfolio's shares is a taxable event to
the shareholder.

Income derived by the Portfolio from securities of foreign issuers may be
subject to foreign withholding taxes. The Portfolio will not be able to elect to
treat shareholders as having paid their proportionate share of such foreign
taxes.

Additional information concerning taxes is set forth in the Statement of
Additional Information.

GENERAL INFORMATION
THE FUND

The Fund, 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 Fund to offer separate series
("portfolios") and classes of shares. All consideration received by the Fund for
shares of any portfolio and all assets of such portfolio belong to that
portfolio and are subject to liabilities related thereto. The Fund reserves the
right to create and issue shares of additional portfolios.

The Portfolio pays its (i) operating expenses, including fees of its service
providers, expenses of preparing prospectuses, proxy solicitation

12
<PAGE>

material and reports to shareholders, costs of custodial services and
registering shares under federal and state securities laws, pricing and
insurance expenses, brokerage costs, interest charges, taxes and organization
expenses and (ii) pro rata share of the Fund's other expenses, including audit
and legal expenses. Expenses not attributable to a specific portfolio are
allocated across all of the portfolios on the basis of relative net assets.

TRUSTEES OF THE FUND

The management and affairs of the Fund 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 Fund.

VOTING RIGHTS

As of February 2, 1998, NUF/Machine Deductible owned a controlling interest in
the Class B Shares of the Portfolio as defined by the Investment Company Act of
1940.

REPORTING

SHAREHOLDER INQUIRIES

DIVIDENDS AND DISTRIBUTIONS

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 by Federal Reserve or ACH wire transfer.

13
<PAGE>

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

Morgan, Lewis & Bockius LLP serves as counsel to the Fund. Arthur Andersen LLP
serves as the independent public accountants of the Fund.

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
1940 Act.

DESCRIPTION OF PERMITTED
INVESTMENTS AND RISK FACTORS

The following is a description of permitted investments for the Portfolio, and
the associated risk factors:

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.

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.

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.

EURODOLLAR AND YANKEE BANK OBLIGATIONS--Eurodollar bank obligations are U.S.
dollar denominated certificates of deposit or time deposits issued outside the
United States by foreign branches of U.S. banks or by foreign banks. Yankee bank
obligations are U.S. dollar denominated obligations issued in the United States
by foreign banks.

ILLIQUID SECURITIES--Illiquid securities are securities that cannot be disposed
of within seven business days at approximately the price at which they are being
carried on the Portfolio's books.

An illiquid security includes a demand instrument with a demand notice period
exceeding seven days, where there is no secondary market for such security, and
repurchase agreements with a remaining term to maturity in excess of 7 days.

OBLIGATIONS OF SUPRANATIONAL ENTITIES--Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, the Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and the Nordic Investment
Bank.

14
<PAGE>

repurchase agreement. The Portfolio bears a risk of loss in the event the other
party defaults on its obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the Portfolio realizes a
loss on the sale of the collateral. The Portfolio 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.

RESTRICTED SECURITIES--Restricted securities are securities that may not be sold
freely to the public absent registration under the Securities Act of 1933 or an
exemption from registration.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS--Investments by a money market
fund are subject to limitations imposed under regulations adopted by the SEC.
Under these regulations, money market funds may only acquire obligations that
present minimal credit risk and that are "eligible securities," which means they
are (i) rated, at the time of investment, by at least two NRSROs (one if it is
the only organization rating such obligation) in the highest rating category or,
if unrated, determined to be of comparable quality (a "first tier security"); or
(ii) rated according to the foregoing criteria in the second highest rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). A security is not considered to be unrated if its issuer has
outstanding obligations of comparable priority and security that have a
short-term rating. A money market fund may invest up to 25% of its assets in
"first tier" securities of a single issuer for a period of up to three business
days. The securities that money market funds may acquire may be supported by
credit enhancements, such as demand features or guarantees. The SEC regulations
limit the percentage of securities that a money market fund may hold for which a
single issuer provides credit enhancements.

REVERSE REPURCHASE AGREEMENTS--Reverse repurchase agreements are agreements by
which the Portfolio sells securities to financial institutions and
simultaneously agrees to repurchase those securities at a mutually agreed-upon
date and price. At the time a Portfolio enters into a reverse repurchase
agreement, the Portfolio 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 Portfolio may decline below
the price at which the Portfolio is obligated to repurchase the securities.
Reverse repurchase agreements are considered to be borrowings by the Portfolio
under the 1940 Act.

STANDBY COMMITMENTS AND PUTS--Securities subject to standby commitments or puts
permit the holder thereof to sell the securities at a fixed price prior to
maturity. Securities subject to a standby commitment or put may be sold at any
time at the current market price. However, unless the standby commitment or put
was an integral part of the security as originally issued, it may not be
marketable or assignable; therefore, the standby commitment or put would only
have value to the Portfolio owning the security to which it relates. In certain
cases, a premium may be paid for a standby commitment or put, which premium will
have the effect of reducing the yield otherwise payable on the underlying
security. The Portfolio will limit standby commitment or put transactions to
institutions believed to present minimal credit risk.

SECURITIES LENDING--In order to generate additional income, the Portfolio may
lend securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash or securities of the U.S.
Government or its agencies equal to at least 100% of the market value of the
securities lent. The Portfolio continues to receive interest

15
<PAGE>

on the securities lent while simultaneously earning interest on the investment
of cash collateral. Collateral is marked to market daily. There may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially or become insolvent.

SECURITIES OF FOREIGN ISSUERS--There are certain risks connected with investing
in securities of foreign issuers. 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 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.

STRIPPED GOVERNMENT SECURITIES--The Portfolio may purchase Separately Traded
Registered Interest and Principal Securities ("STRIPS") that are created when
the coupon payments and the principal payment are stripped from an outstanding
United States Treasury bond by the Federal Reserve Bank of New York and sold
separately. The Portfolio may not actively trade STRIPS.

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 a
remaining term to maturity in excess of 7 days are considered to be illiquid
securities.

U.S. GOVERNMENT AGENCY SECURITIES--Obligations issued or guaranteed by agencies
of the U.S. Government include, 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
include, among others, the Federal Home Loan Mortgage Corporation, 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 Portfolio's shares.

U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes and
bonds issued by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through the federal
book-entry system known as STRIPS.

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. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest

16
<PAGE>

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 AND DELAYED DELIVERY 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 Portfolio will maintain with the Custodian a separate account with liquid
assets 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 Portfolio 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. Although
the Portfolio generally purchases securities on a when-issued or forward
commitment basis with the intention of actually acquiring securities for its
portfolio, the Portfolio may dispose of a when-issued security or forward
commitment prior to settlement if it deems appropriate.

<PAGE>

Fund:
The Advisors Inner Circle Fund

Portfolio:
AIG Money Market Fund

Adviser:
AIG Capital Management Corp.

Distributor:
SEI Investments Distribution Co.

Administrator:
SEI Fund Resources

Legal Counsel:
Morgan, Lewis & Bockius LLP

Independent Public Accountants:
Arthur Andersen LLP

February 27, 1998
For Information call: 1-800-845-3885
AIG-F-002-05
================================================================================

<PAGE>

================================================================================

Prospectus

AIG
Money Market Fund
Class B

[LOGO]

Advised by

AIG Capital Management Corp.

================================================================================
<PAGE>

AIG MONEY MARKET FUND

Investment Adviser:
AIG CAPITAL MANAGEMENT CORP.

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and relates only to
the Class A and Class B shares of the AIG Money Market Fund (the "Portfolio").
It is intended to provide additional information regarding the activities and
operations of The Advisors' Inner Circle Fund (the "Fund") and the Portfolio.
This Statement of Additional Information should be read in conjunction with the
Portfolio's Prospectuses dated February 27, 1998, as amended or supplemented
from time to time. A copy of the Prospectuses for the Class A and Class B
shares of the Portfolio may be obtained by calling 1-800-249-7445.

<TABLE>
TABLE OF CONTENTS
<S> <C>
THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . S-2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
TRUSTEES AND OFFICERS OF THE FUND. . . . . . . . . . . . . . . . . . . . . S-7
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . S-10
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . S-11
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . S-12
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . . S-18
5% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>

February 27, 1998

AIG-F-003-05

S-1
<PAGE>

THE FUND

This Statement of Additional Information relates only to the AIG Money Market
Fund (the "Portfolio"). The Portfolio is a separate series of The Advisors'
Inner Circle Fund (the "Fund"), an open-end management investment 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
Fund to offer separate series ("portfolios") of shares of beneficial interest
("shares"). Shares of the Portfolio may be purchased through two separate
classes (Class A and Class B) which provide for variations in distribution fees,
voting rights and dividends. Except for these differences, each share of the
Portfolio represents an equal proportionate interest in the Portfolio. See
"Description of Shares." No investment in shares of the Portfolio should be
made without first reading the applicable Prospectus of the Portfolio.
Capitalized terms not defined herein are defined in the Prospectuses.

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 Prospectuses.

ASSET-BACKED SECURITIES - The Portfolio may invest in asset-backed securities
secured by assets including company receivables, truck and auto loans, leases
and credit card receivables. The Portfolio may invest in other asset-backed
securities that may be created in the future if the 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.

SECURITIES OF FOREIGN GOVERNMENTS - The Portfolio may invest in U.S. dollar
denominated obligations of foreign governments. These instruments may subject
the Portfolio to investment risks that differ in some respects from those
related to investments in obligations of U.S. domestic issuers.

S-2
<PAGE>

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. 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
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.

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.

INVESTMENT LIMITATIONS

In addition to the limitations listed in the "Investment Limitations" section in
the Prospectuses, the Portfolio may not:

1. Acquire more than 5% of the voting securities of any one issuer.

S-3
<PAGE>

2. Invest in companies for the purpose of exercising control.

3. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings as disclosed in the fundamental policies described in the
Prospectuses in aggregate amounts not to exceed 10% of total assets taken
at current value at the time of the incurrence of such loan.

4. Purchase or sell real estate, real estate limited partnership interests,
futures contracts, commodities or commodities contracts and interests in a
pool of securities that are secured by interests in real estate. However,
subject to the permitted investments of the Portfolio, it may invest in
municipal securities or other marketable obligations secured by real estate
or interests therein.

5. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Portfolio may obtain short-term
credits as necessary for the clearance of security transactions.

6. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling the Portfolio security.

7. Purchase securities of other investment companies except as permitted by
the 1940 Act and the rules and regulations thereunder.

8. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.

9. Purchase or retain securities of an issuer if, to the knowledge of the
Portfolio, an officer, trustee, partner or director of the Fund or any
investment adviser of the Portfolio owns beneficially more than 0.5% of the
shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 0.5% of such shares or securities
together own more than 5% of such shares or securities.

10. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.

11. Write puts, calls, options or combinations thereof or invest in warrants.

The foregoing percentages will apply at the time of the purchase of a security.

THE ADVISER

The Fund and AIG Capital Management Corp. (the "Adviser") have entered into an
advisory agreement dated November 21, 1994 (the "Advisory Agreement"). The
Advisory Agreement provides that the Adviser shall not be protected against any
liability to the Fund or its shareholders

S-4
<PAGE>

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.

For the fiscal period ended October 31, 1995 and the fiscal years ended October
31, 1996 and October 31, 1997, the Adviser was paid advisory fees of $548,035,
$1,023,856 and $689,323, respectively, and waived advisory fees of $243,994,
$81,307, and $459,559, respectively, with respect to the Portfolio.

The continuance of the Advisory Agreement must be specifically approved at least
annually (i) by the vote of the Trustees or by a vote of the shareholders of the
Portfolio, 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 Fund or,
with respect to the Portfolio, by a majority of the outstanding shares of the
Portfolio, 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 Fund.

THE ADMINISTRATOR

The Fund and SEI Fund Resources (the "Administrator") have entered into an
administration agreement (the "Administration Agreement"). The Administration
Agreement provides that 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, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations thereunder. For the fiscal period ended
October 31, 1995 and the fiscal years ended October 31, 1996 and October 31,
1997, the Administrator received a fee of $331,829, $411,405 and $326,095,
respectively, from the Portfolio. The Administrator waived $13,365 and $56,655,
respectively, of fees for the fiscal years ended October 31, 1996 and October
31, 1997.

S-5
<PAGE>

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 Funds-Registered Trademark-,
Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, 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, TIP Funds and TIP Institutional Funds.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Fund are parties to a distribution agreement dated
November 14, 1991 ("Distribution Agreement") which applies to both Class A and
Class B shares of the Portfolio.

The Distribution Agreement 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 of the outstanding shares of the Fund upon not more
than 60 days' written notice by either party or upon assignment by the
Distributor. The Distributor does not receive compensation for distribution of
Class A shares of the Portfolio. Class B shares are subject to the terms of a
distribution plan dated August 8, 1994 (the "Class B Plan").

CLASS B PLAN

The Distribution Agreement and the Class B Plan adopted by the sole initial
shareholder of the Class B shares provide that the Class B shares of the
Portfolio will pay the Distributor a fee of .35% of the average daily net assets
of the Class B shares which the Distributor may use to compensate broker-dealers
and service providers, including the Adviser and its affiliates which provide
administrative and/or distribution services to the Class B Shareholders or their
customers who beneficially own Class B shares. The Distributor has appointed
AIG Equity Sales Corp. (the "Sub-Distributor"), a wholly-owned subsidiary of AIG
and an affiliate of the Adviser, as sub-distributor and servicing agent with
respect to the Class B shares of the Portfolio.

The Fund has adopted the Class B Plan in accordance with the provisions of
Rule 12b-1 under the 1940 Act, which regulates circumstances under which an
investment company may directly or indirectly bear expenses relating to the
distribution of its shares. Continuance of the Class B Plan must be approved
annually by a majority of the Trustees of the Fund and by a majority of the
Trustees who are not parties to the Distribution Agreement or interested
persons (as defined by the 1940 Act) of any party to the Distribution
Agreement ("Qualified Trustees"). The Class B Plan requires that quarterly
written reports of amounts spent under the Class B Plan and the purposes of
such expenditures be furnished to and reviewed by the Trustees. The Class B
Plan may not be amended to increase materially the amount which may be spent
thereunder without approval by a majority of

S-6
<PAGE>

the outstanding Class B shares of the Portfolio. All material amendments of
the Plan will require approval by a majority of the Trustees of the Fund and
of the Qualified Trustees.

For the fiscal years ended October 31, 1996 and October 31, 1997, the
Distributor received from the Portfolio, pursuant to the Class B Plan,
distribution fees in the amount of $397,438 and $419,962, respectively, with
respect to the Class B shares. The entire amount of these fees was paid by the
Distributor to the Sub-Distributor, as compensation for its services, in
accordance with an agreement between the Distributor and the Sub-Distributor.

TRUSTEES AND OFFICERS OF THE FUND

The management and affairs of the Fund are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Fund pays the fees for
unaffiliated Trustees.

The Trustees and Executive Officers of the Fund, 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 Fund also serve as officers of some or all
of the following: The Achievement Funds Trust, 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 Funds-Registered Trademark-,
Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, 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, TIP Funds and TIP Institutional
Funds, open-end management investment companies which are managed by SEI Fund
Resources or its affiliates and, except for 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*
- --Currently performs various services on behalf of SEI Investments for which
Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Administrator and the
Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds,
Marquis Funds-Registered Trademark-, Pillar Funds, Rembrandt 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 and SEI Tax Exempt Trust.

JOHN T. COONEY (DOB 01/20/27) -- Trustee** -- Retired since 1992. Formerly
Vice Chairman of Ameritrust Texas N.A., 1989-1992, and MTrust Corp.,
1985-1989. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The
Expedition Funds and Marquis Funds-Registered Trademark-.

S-7
<PAGE>

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 Investments. Trustee of The Advisors' Inner Circle Fund, The Arbor
Fund, The Expedition Funds, Marquis 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 and SEI Tax Exempt Trust.

FRANK E. MORRIS (DOB 12/30/23) -- Trustee** -- Retired since 1990. Peter
Drucker Professor of Management, Boston College, 1989-1990. President,
Federal Reserve Bank of Boston, 1968-1988. Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund, The Expedition Funds, Marquis 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 and SEI Tax Exempt Trust.

ROBERT A. PATTERSON (DOB 11/05/27) -- Trustee** -- 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 Advisors' Inner
Circle Fund, The Arbor Fund, The Expedition Funds, and Marquis
Funds-Registered Trademark-.

EUGENE B. PETERS (DOB 06/03/29) -- Trustee** -- Private investor from 1987 to
present. Vice President and Chief Financial Officer, Western Company of
North America (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 Advisors' Inner Circle Fund, The Arbor Fund, The Expedition Funds and
Marquis Funds-Registered Trademark-.

JAMES M. STOREY (DOB 04/12/31) -- Trustee** -- Partner, Dechert Price &
Rhoads, from September 1987 - December 1993; Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund, The Expedition Funds, Marquis 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 and SEI Tax Exempt 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.

S-8
<PAGE>

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 Counselof SEI Investments, Vice President and Assistant Secretary
of the Administrator and Distributor since 1994. Associate, Morgan, Lewis &
Bockius LLP (law firm), 1989-1994.

MARK E. 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.

JOSEPH M. O'DONNELL (DOB 11/13/54) -- Vice President and Assistant Secretary
- --Vice President and Assistant Secretary of the Administrator and Distributor
since 1998. Vice President and General Counsel, FPS Services, Inc.,
1993-1997. Staff Counsel and Secretary, Provident Mutual Family of Funds,
1990-1993.

- -------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Fund 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 Fund.

The Trustees and officers of the Fund collectively own less than 1% of the
outstanding shares of the Fund. The Fund pays the fees for unaffiliated
Trustees.

S-9
<PAGE>

The following table exhibits Trustee compensation for the fiscal year ended
October 31, 1997.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Total Compensation
From Registrant and
Fund Complex* Paid to
Aggregate Compensation From Pension or Retirement Estimated Annual Trustees for the
Registrant for the Fiscal Benefits Accrued as Benefits Upon Fiscal Year Ended
Name of Person, Position Year Ended October 31, 1997 Part of Fund Expenses Retirement October 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney $8,154 N/A N/A $8,154 for services
on 1 board
- ---------------------------------------------------------------------------------------------------------------------------------
Frank E. Morris $8,154 N/A N/A $8,154 for services
on 1 board
- ---------------------------------------------------------------------------------------------------------------------------------
Robert Patterson $8,154 N/A N/A $8,154 for services
on 1 board
- ---------------------------------------------------------------------------------------------------------------------------------
Eugene B. Peters $8,154 N/A N/A $8,154 for services
on 1 board
- ---------------------------------------------------------------------------------------------------------------------------------
James M. Storey, Esq. $8,154 N/A N/A $8,154 for services
on 1 board
- ---------------------------------------------------------------------------------------------------------------------------------
William A. Doran, Esq. $0 N/A N/A $0 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------
Robert A. Nesher $0 N/A N/A $0 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*For purposes of this table, the fund is the only investment company in the
"Fund Complex."

PERFORMANCE INFORMATION

From time to time, the Fund may advertise yield, effective yield and total
return of the Portfolio. 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. The yield of the Portfolio refers
to the annualized income generated by an investment in the Portfolio over a
specified 7-day period. The yield is calculated by assuming that the income
generated by the investment during that 7-day period is generated in each
period over one year and is shown as a percentage of the investment. The
"effective yield" is calculated similarly, but when annualized, the income
earned by an investment in the Portfolio is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed investment. In particular, these yields
will be calculated as follows:

The current yield of the Portfolio will be calculated daily based upon the
seven days ending on the date of calculation ("base period"). The yield is
computed by determining the net change during the period (exclusive of
capital changes) in the value of a hypothetical pre-existing shareholder
account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing such net change by the value of the account at the
beginning of the same period to obtain the base period return and multiplying
the result by (365/7). Realized and unrealized gains and losses are not
included in the calculation of the yield. The effective yield of the
Portfolio is determined by computing the net change during the period,

S-10
<PAGE>

exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return, according to the following formula:

365/7
Effective Yield = [(Base Period Return + 1) ] - 1.

The current and the effective yields reflect the reinvestment of net income
earned daily on the Portfolio's assets.

For the 7-day period ended October 31, 1997, the end of the Portfolio's most
recent fiscal year, the current and effective yields for Class A shares of the
Portfolio were 5.37% and 5.52%, respectively, and for Class B shares were 5.01%
and 5.14%, respectively.

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 the 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) to the power of 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. Total return is calculated
separately for each class of shares of the Fund.

The total return for Class A Shares of the Fund for the fiscal year ended
October 31, 1997 was 5.41%, and for the period from December 1, 1994
(commencement of operations) through October 31, 1997, the cumulative return
for Class A Shares of the Fund was 16.79%.

The total return for Class B Shares of the Fund for the fiscal year ended
October 31, 1997 was 5.04%, and for the period from February 16, 1995
(commencement of operations) through October 31, 1997, the cumulative return
for Class B Shares of the Fund was 14.36%.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Distributor on a day when the
New York Stock Exchange and Federal Reserve wire system are open for business.
Shares of the Portfolio are offered on a continuous basis. Currently, the
Portfolio is closed for business when the following holidays are observed: New
Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas.

S-11
<PAGE>

held by the Portfolio in lieu of cash. Shareholders may incur brokerage
charges on the sale of any such securities so received in payment of
redemptions. The Fund has obtained an exemptive order from the SEC that
permits the Fund 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's investment portfolios.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of each class of the Portfolio is calculated by
adding the value of securities and other assets, subtracting liabilities and
dividing by the number of outstanding shares. Securities will be valued by the
amortized cost method which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which a security's value, as determined by this method, is higher or
lower than the price the Portfolio would receive if it sold the instrument.
During periods of declining interest rates, the daily yield of the Portfolio may
tend to be higher than a like computation made by a company with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio securities. Thus, if the
use of amortized cost by the Portfolio resulted in a lower aggregate portfolio
value on a particular day, a prospective investor in the Portfolio would be able
to obtain a somewhat higher yield than would result from investment in a company
utilizing solely market values, and existing investors in the Portfolio would
experience a lower yield. The converse would apply in a period of rising
interest rates.

The use of amortized cost valuation by the Portfolio and the maintenance of the
Portfolio's net asset value at $1.00 are permitted by regulations promulgated by
Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"), provided
that certain conditions are met. Under Rule 2a-7 as amended, a money market
portfolio must maintain a dollar-weighted average maturity in the Portfolio of
90 days or less and not purchase any instrument having a remaining maturity of
more than 397 days. In addition, money market funds may acquire only U.S.
dollar denominated obligations that present minimal credit risks and that are
"eligible securities" which means they are (i) rated, at the time of investment,
by at least two nationally recognized statistical rating organizations (one if
it is the only organization rating such obligation) in the highest short-term
rating category or, if unrated, determined to be of comparable quality (a "first
tier security"), or (ii) rated according to the foregoing

S-12
<PAGE>

criteria in the second highest short-term rating category or, if unrated,
determined to be of comparable quality ("second tier security"). The Adviser
will determine that an obligation presents minimal credit risks or that
unrated instruments are of comparable quality in accordance with guidelines
established by the Trustees. In addition, investments in second tier
securities are subject to the further constraints that (i) no more than 5% of
the Portfolio's assets may be invested in such securities in the aggregate,
and (ii) any investment in such securities of one issuer is limited to the
greater of 1% of the Portfolio's total assets or $1 million. The regulations
also require the Trustees to establish procedures which are reasonably
designed to stabilize the net asset value per share at $1.00 for the
Portfolio. However, there is no assurance that the Portfolio will be able to
meet this objective. The Fund's procedures include the determination of the
extent of deviation, if any, of the Portfolio's current net asset value per
unit calculated using available market quotations from the Portfolio's
amortized cost price per share at such intervals as the Trustees deem
appropriate and reasonable in light of market conditions and periodic reviews
of the amount of the deviation and the methods used to calculated such
deviation. In the event that such deviation exceeds 1/2 of 1%, the Trustees
are required to consider promptly what action, if any, should be initiated.
If the Trustees believe that the extent of any deviation may result in
material dilution or other unfair results to Shareholders, the Trustees are
required to take such corrective action as they deem appropriate to eliminate
or reduce such dilution or unfair results to the extent reasonably
practicable. In addition, if the Portfolio incurs a significant loss or
liability, the Trustees have the authority to reduce pro rata the number of
shares of the Portfolio in each Shareholder's account and to offset each
Shareholder's pro rata portion of such loss or lability from the
Shareholder's accrued but unpaid dividends or from future dividends.

TAXES

S-13
<PAGE>

FEDERAL INCOME TAX

The Portfolio intends to qualify as a "regulated investment company" ("RIC")
as defined under Subchapter M of the Code. By following such a policy, the
Portfolio 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 Portfolio must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) ("Distribution Requirement") and also must meet several
additional requirements. Among these requirements are the following: (i) at
least 90% of the Portfolio'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) at the close of each quarter of the Portfolio'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 Portfolio's assets
and that does not represent more than 10% of the outstanding voting
securities of such issuer; and (iii) at the close of each quarter of the
Portfolio'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 Portfolio controls or which are engaged in the same, similar or related
trades or business.

Notwithstanding the Distribution Requirement described above, which requires
only that the Portfolio 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 Portfolio 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 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.

S-14
<PAGE>

months and otherwise generally will be treated as a short-term capital gain
or loss. If shares of the Portfolio 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.

If the Portfolio fails to qualify as a RIC for any taxable year, it will be
taxable at regular corporate rates. In such an event, all distributions
(including capital gains distributions) will be taxable as ordinary dividends
to the extent of the Portfolio's current and accumulated earnings and profits
and such distributions will generally be eligible for the corporate
dividends-received deduction.

STATE TAXES

PORTFOLIO TRANSACTIONS

The money market instruments in which the Portfolio 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 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

S-15
<PAGE>

executing portfolio securities transactions of the Portfolio will primarily
consist of dealer spreads and underwriting commissions.

The Adviser may, consistent with the interests of the Portfolio, select brokers
on the basis of the research services they provide to the Adviser. Such
services may include analyses of the business or prospects of a company,
industry or economic sector, or statistical and pricing services. Information
so received by the Adviser will be in addition to and not in lieu of the
services required to be performed by the Adviser under the Advisory Agreement.
If, in the judgment of the Adviser, a Portfolio or other accounts managed by the
Adviser will be benefitted by supplemental research services, the Adviser is
authorized to pay brokerage commissions to a broker furnishing such services
which are in excess of commissions which another broker may have charged for
effecting the same transaction. These research services include advice, either
directly or through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software used in security analyses; and providing
portfolio performance evaluation and technical market analyses. The expenses of
the Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information, such services may not be used exclusively, or at all,
with respect to the Portfolio or account generating the brokerage, and there can
be no guarantee that the Adviser will find all of such services of value in
advising the Portfolio. For the fiscal year ended October 31, 1997, the
Portfolio directed no transactions to broker-dealers for research services.

For the fiscal years ended October 31, 1995, 1996 and 1997, the Portfolio paid
the following brokerage commissions:

S-16
<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Total Brokerage Commissions Amount Paid to SEI Investments(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1996 1997 1995 1996 1997
- -------------------------------------------------------------------------------
$0 $0 $0 $0 $0 $2,260
- -------------------------------------------------------------------------------
</TABLE>

* An asterisk indicates that the portfolio had not commenced operations for the
period indicated.
(1) The amounts paid to SEI Investments reflect fees paid in connection with
repurchase agreement transactions.

For the fiscal years indicated, the portfolio paid the following brokerage
commissions:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
% of Total % of Total
Total $ Amount of Brokerage Total $ Amount of Brokerage Brokerage
Commissions Paid Brokerage Commissions Commissions Transactions
Paid to Affiliated Brokers Paid to the Effected Through
Affiliated Affiliated
Brokers Brokers
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 1996 1997 1995 1996 1997 1997 1997
- ------------------------------------------------------------------------------------------------------
$0 $0 $0 $0 $0 $0 0% 0%
- ------------------------------------------------------------------------------------------------------
</TABLE>

* An asterisk indicates that the portfolio had not commenced operations as of
the period indicated.

Since the Portfolio does not market its shares through intermediary brokers
or dealers, it is not the Fund'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 may place portfolio orders with qualified
broker-dealers who recommend the Portfolio'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 Portfolio is required to identify any securities of its "regular
brokers or dealers" (as such term is defined in the 1940 Act), which the
Portfolio has acquired during its most recent fiscal year. As of October 31,
1997, the Portfolio held $19,736,997 of debt securities issued by Merrill
Lynch, $14,995,258 of debt securities issued by UBS Securities, $19,840,533 of
debt securities issued by J.P. Morgan, and $19,970,972 of debt securities
issued by Goldman Sachs.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and different classes of 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

S-17
<PAGE>

provides that the Trustees of the Fund may create additional series of shares
divided into different classes. All consideration received by the Fund 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

LIMITATION OF TRUSTEES' LIABILITY

5% SHAREHOLDERS

As of February 1, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Fund, beneficial owners) of 5% or more
of each class of the Portfolio's shares.

S-18

<PAGE>

Shareholder Number of Shares %
- ----------- ---------------- -------
<S> <C> <C>
CLASS A:
- --------

AIG Life Insurance -- Investment 314,679,866.5400 48.34%

Transatlantic Reinsurance -- Investment 40,304,118.6400 6.19%

Ernest E. Stempel 37,235,994.6600 5.72%

CLASS B:
- --------

NUF/Machine Deductible 45,681,947.9000 39.30%

National Union Fire Insurance Co. of 7,098,890.7500 6.11%
Pittsburgh PA as Secured Party --
Leased Equipment Reinsurance Co.
Inc. as Pledgor

National Union Fire Insurance Co. 6,318,420.90000 5.44%
of Pittsburgh PA as a Secured Party
Montgomery Ward & Co.
Inc. as Pledgor

</TABLE>

The Fund believes that most of the shares referred to above were held by the
above persons in accounts for their fiduciary, agency or custodial customers.

EXPERTS

FINANCIAL STATEMENTS

The financial statements for the fiscal year ended October 31, 1997, including
notes thereto and the report of Arthur Andersen LLP thereon, are herein
incorporated by reference in reliance upon the authority of said firm as experts
in giving said report. A copy of the 1997 Annual Report to Shareholders must
accompany the delivery of this Statement of Additional Information.

S-19
<PAGE>

APPENDIX

DESCRIPTION OF RATINGS

The following descriptions are summaries of published ratings.

A-1 - This is Standard & Poor's Corporation ("S&P") highest category and
indicates that the degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics
are denoted with a plus sign (+) designation.

A-2 - Capacity for timely payment for this S&P category on issues with this
designation is satisfactory and the obligation is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories.

PRIME-1 - Issues rated Prime-1 (or supporting institutions) by Moody's
Investors Service, Inc. ("Moody's") have a superior ability for repayment of
senior short-term debt obligations. Prime-1 repayment ability will often be
evidenced by many of the following characteristics:

- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

PRIME-2 - Issuers rated Prime-2 (or supporting institutions) by Moody's have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch Investors Service, Inc. ("Fitch"). Paper rated Fitch-1 is regarded as
having the strongest degree of assurance for timely payment. The rating Fitch-2
(Very Good Grade) is the second highest short-term obligations rating assigned
by Fitch which reflects an assurance of timely payment only slightly less in
degree than the strongest issues.

The rating Duff-1 is the highest short-term obligations rating assigned by Duff
& Phelps, Inc. ("Duff"). Paper rated Duff-1 is regarded as having very high
certainty of timely payment with excellent liquidity factors which are supported
by ample asset protection. Risk factors are minor.

A-1
<PAGE>

Paper rated Duff-2 is regarded as having good certainty of timely payment,
good access to capital markets and sound liquidity factors and company
fundamentals. Risk factors are small. The designation A1 by IBCA, Inc.
("IBCA") indicates that the obligation is supported by a very strong capacity
for timely repayment. Those obligations rated A1+ are supported by the
highest capacity for timely repayment. Obligations rated A2 are supported by
a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.

A-2
<PAGE>

FMC SELECT FUND

Investment Adviser:
FIRST MANHATTAN CO.

This Prospectus offers shares of the FMC Select Fund (the "Fund"), which is a
separate series of The Advisors' Inner Circle Fund (the "Trust").

This Prospectus sets forth concisely the information about the Fund and the
Trust 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 February 27, 1998 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. The Statement of Additional Information, material
incorporated by reference into this document, and other information regarding
the Trust is maintained electronically with the Securities and Exchange
Commission at its internet web site (http://www.sec.gov).

FEBRUARY 27, 1998

THE ADVISORS' INNER CIRCLE FUND

<PAGE>

SUMMARY

The following provides basic information about the FMC Select Fund (the "Fund"),
one of the mutual funds comprising The Advisors' Inner Circle Fund (the
"Trust"). This summary is qualified in its entirety by reference to the more
detailed information provided elsewhere in this Prospectus and in the Statement
of Additional Information.

WHAT IS THE FUND'S INVESTMENT OBJECTIVE AND POLICIES? The Fund seeks to obtain
a favorable rate of return principally through capital appreciation and to a
limited degree through current income by investing in a portfolio of equity and
fixed income securities, including money market instruments.

WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? An investment in
the Fund entails certain risks and considerations of which investors should be
aware. The Fund invests in equity and fixed income securities that fluctuate in
value, and investors should expect the Fund's net asset value per share to
fluctuate in value. The Fund also may invest in securities that have speculative
characteristics. See "Investment Objective," "General Investment Policies,"
"Risk Factors" and "Description of Permitted Investments and Risk Factors."

WHO IS THE ADVISER? First Manhattan Co. (the "Adviser") serves as the
investment adviser to the Fund. In addition to advising the Fund, the Adviser
provides advisory services to individuals, partnerships, trusts, pension and
other employee benefit plans, and eleemosynary and other institutions. See "The
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")
serves 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? The Fund requires a minimum initial investment
of $10,000, and subsequent investments must total $1,000 or more. These minimum
purchase requirements may be reduced or waived by the Distributor or for
investors who purchase shares of the Fund through omnibus accounts maintained by
registered broker-dealers who have executed sub-distribution agreements with the
Distributor.

<PAGE>

HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made on
any day when the New York Stock Exchange is open for business ("a Business
Day"). A purchase order will be effective as of the Business Day received by the
Fund's Transfer Agent if the Transfer Agent receives an order and payment by
check or with readily available funds prior to the time the Fund calculates its
net asset value (normally, 4:00 p.m., Eastern time). To open an account using
wired funds, you must first call 1-800-808-4921. Redemption orders placed prior
to the time the Fund calculates its net asset value (normally, 4:00 p.m.,
Eastern time) on any Business Day will be effective that day. The Trust has also
authorized certain broker-dealers and other financial intermediaries to accept
purchase orders and redemption requests up to the times mentioned above on
behalf of the Fund. The Fund also offers both a Systematic Investment Plan and a
Systematic Withdrawal Plan. 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. 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 quarterly
dividends. Any realized capital gain is distributed at least annually.
Distributions of net investment income and capital gains are paid in additional
shares unless the shareholder elects to take the payment in cash. See "General
Information -- Dividends and Distributions."

<PAGE>

EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES FMC SELECT FUND

<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Sales Load Imposed on Purchases............................. None
Sales Load Imposed on Reinvested Dividends.................. None
Deferred Sales Load......................................... None
Redemption Fees(1).......................................... None
Exchange Fees............................................... None
- --------------------------------------------------------------------------------
</TABLE>

(1) A wire redemption charge, currently $10.00, is deducted from the amount of a
Federal Reserve wire redemption payment made at the request of a
shareholder.

ANNUAL OPERATING EXPENSES FMC SELECT FUND
<TABLE>
<S> <C>
(as a percentage of average net assets)
- --------------------------------------------------------------------------------
Advisory Fees (after waivers)(2)............................ .73%
12b-1 Fees.................................................. None
Other Expenses.............................................. .37%
- --------------------------------------------------------------------------------
Total Operating Expenses(2)................................. 1.10%
- --------------------------------------------------------------------------------
</TABLE>

(2) The Adviser has, on a voluntary basis, agreed to waive Fund expenses in
order to limit the Fund's total operating expenses to a maximum of 1.10% of
average daily assets. The Adviser reserves the right to terminate this
arrangement at any time in its sole discretion. Absent such waivers,
advisory fees and total operating expenses for the Fund would be .80% and
1.17% of average daily net assets, respectively. See "The Adviser."

EXAMPLE
<TABLE>
<CAPTION>
FMC SELECT FUND
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------

<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment
in the fund assuming (1) 5% annual return and (2)
redemption at the end of each time period................. $11 $35 $61 $134
- ---------------------------------------------------------------------------------------------------
</TABLE>

THE EXAMPLE IS BASED UPON TOTAL OPERATING EXPENSES OF THE FUND AFTER FEE WAIVERS
AS SHOWN IN THE EXPENSE TABLE. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURRE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN. The purpose of the expense table 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>

FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND

The following information on the FMC Select Fund has been audited by Arthur
Andersen LLP, the Fund's independent public accountants, as indicated in their
report dated December 12, 1997 on the Fund's financial statements as of October
31, 1997. This table should be read in conjunction with the Fund's audited
financial statements and notes thereto. The Fund's financial statements and
additional performance information are contained in the Annual Report to
Shareholders, which is available without charge by calling 1-800-932-7781.

For a Share of the Portfolio Outstanding Throughout the Period:
<TABLE>
<CAPTION>
FMC SELECT FUND
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------

<CAPTION>
11/1/96 11/1/95 5/8/95(1)
TO TO TO
10/31/97 10/31/96 10/31/95
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 13.42 $ 10.97 $ 10.00
- -------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income.................................... 0.16 0.14 0.10
Realized and Unrealized Gains on Securities.............. 3.81 2.48 0.96
- -------------------------------------------------------------------------------------------------------
Total From Investment Operations........................... 3.97 2.62 1.06
- -------------------------------------------------------------------------------------------------------
Less Distributions:
Distributions From Net Investment Income................... (0.16) (0.14) (0.09)
Distributions from Capital Gains........................... (0.41) (0.03) --
Total Distributions...................................... (0.57) (0.17) (0.09)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD............................. $ 16.82 $ 13.42 $ 10.97
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN............................................... 30.51% 23.99% 10.60%**
- -------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End Of Period (000)............................ $75,691 $47,909 $27,202
Ratio Of Expenses To Average Net Assets.................... 1.10% 1.10% 1.10%*
Ratio Of Expenses To Average Net Assets
(Excluding Waivers and Reimbursements)................... 1.17% 1.20% 1.57%*
Ratio Of Net Investment Income To Average Net Assets....... 1.08% 1.10% 1.96%*
Ratio Of Net Investment Income To Average Net Assets
(Excluding Waivers and Reimbursements)................... 1.01% 1.00% 1.49%*
Portfolio Turnover Rate.................................... 21.71% 24.39% 1.87%
Average Commission Rate(2)................................. $0.0590 $0.0600 --
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized

** Total Return is for the period indicated and has not been annualized.

(1) The FMC Select Fund commenced operations on May 8, 1995.

(2) Average commission rate paid per share for the security purchases and sales
on which commissions were paid during the period. Presentation of the rate
is required for fiscal years beginning after September 1, 1995.

<PAGE>

THE TRUST AND THE FUND

The Advisors' Inner Circle Fund (the "Trust") is designed to provide a
convenient and economic means of investing in professionally managed portfolios
of securities by offering shares in a number of separately-managed 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 FMC Select Fund (the "Fund"), a
diversified portfolio.

INVESTMENT OBJECTIVE

The Fund seeks a favorable rate of return principally through capital
appreciation and to a limited degree through current income. There can be no
assurance that the Fund will be able to achieve its investment objective.

GENERAL INVESTMENT POLICIES

The Fund invests principally in equity securities, and to a limited degree in
fixed income securities, including money market instruments. The Fund ordinarily
will invest a predominant portion of its assets (75%-85%) in equity securities
and the remainder in fixed income securities, including money market
instruments. The exact percentage of the Fund's assets invested in equity and
fixed income securities will vary from time to time in accordance with the
Adviser's assessment of investment opportunities.

EQUITY SECURITIES -- The equity securities in which the Fund may invest are
common stocks, preferred stocks, and convertible securities of domestic
companies, as well as warrants to purchase such securities. The Adviser may also
purchase equity securities (including depositary receipts) and preferred stocks
(including preferred stocks convertible into common stocks) issued by foreign
companies, as well as debt securities convertible into common stocks, and shares
of closed-end investment companies. The Fund may purchase equity securities that
are traded on registered exchanges or the over-the-counter market in the United
States.

In selecting equity securities for the Fund, the Adviser will not attempt to
forecast either the economy or the stock market, but rather will focus its
efforts on searching out investment opportunities in equity securities of
companies with strong balance sheets, favorable returns on equity and businesses
of which the Adviser has an understanding, and in equity securities of companies
where all of these factors may not be present, but whose shares nevertheless
sell at a market valuation below their perceived intrinsic value.

FIXED INCOME SECURITIES -- The fixed income securities that may be purchased by
the Fund are: (i) obligations issued or guaranteed as to principal and interest
by the U.S. Government, its agencies or instrumentalities ("U.S. Government
securities"); (ii) dollar denominated corporate bonds and debentures of U.S. and
foreign companies that are rated BBB- or higher by Standard & Poor's Corporation
("S&P") or Baa3 or higher by Moody's Investors Services, Inc. ("Moody's"), or
are unrated but of comparable quality as determined by the Adviser; (iii)
mortgage-backed securities that are issued or guaranteed by a U.S. Government
agency or that are privately-issued collateralized mortgage obligations ("CMOs")
or real estate mortgage investment conduits ("REMICs") rated in one of the top
two categories by S&P or Moody's; (iv) high quality commercial paper; (v)
securities issued by the Government of Canada and supranational agencies such as
the World Bank; (vi) asset-backed securities rated in one of the top two
categories by S&P or Moody's; (vii) short-term debt obligations of U.S. and
foreign banks; (viii) zero coupon securities; (ix) money market instruments; and
(x) repurchase agreements.

Debt Rated BBB- by S&P is regarded as having an adequate capacity to pay
interest and repay principal. In S&P's view, whereas the issuer normally
exhibits adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories. Bonds
rated Baa3 by Moody's are considered medium grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
In the view of Moody's, such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well. In the event

<PAGE>

any fixed income security held by the Fund is downgraded below the applicable
rating category set forth above, the Adviser will review the security and
determine whether to retain or dispose of it.

In selecting fixed income securities for the Fund, the Adviser will seek added
returns from the long-term compounding of incremental yields rather than from
attempting to anticipate bond market price swings. The sources of incremental
returns are (1) the higher yields on corporate and government agency securities
compared to U.S. Treasury securities and (2) mispriced prepayment options. The
fixed income component of the Fund ordinarily will consist of securities with a
duration of up to eight years. Interest rate forecasting will not play a
significant role in the Adviser's fixed income investment strategy.

FOREIGN SECURITIES -- The Fund may purchase securities denominated in foreign
currencies in amounts up to 10% of its total assets. The Fund does not have a
corresponding limitation with respect to foreign securities denominated in U.S.
dollars.

AUXILIARY POLICIES

Although not primary strategies employed by the Adviser in managing the Fund,
the Fund may engage in a number of investment practices in order to meet its
investment objective. In this regard, the Fund may invest in variable and
floating rate obligations, enter into forward commitments, purchase securities
on a when-issued basis and sell securities short against the box. The Fund may
also purchase put and call options and write covered call options on fixed
income and equity securities, and may enter into futures contracts (including
index futures contracts), purchase options on futures contracts, and lend its
securities.

The Fund also may invest up to 5% of its total assets in convertible debt
securities rated Caa or higher by Moody's or CCC or higher by S&P, Duff & Phelps
Corporation or Fitch Investor Services, Inc. While the Adviser will purchase
such securities with a view to the capital appreciation potential associated
with the underlying equity security, below investment-grade issues, otherwise
known as "junk bonds," present special risks. See the "Description of Permitted
Investments and Risk Factors."

For temporary defensive purposes during periods when the Adviser determines that
market conditions warrant, the Adviser may invest up to 100% of the Fund's
assets in cash or money market instruments.

For a description of the permitted investments of the Fund and the associated
risk factors, see "Description of Permitted Investments and Risk Factors." For a
description of ratings, see the Appendix to the Statement of Additional
Information.

RISK FACTORS

EQUITY SECURITIES -- Investments in common stocks are subject to market risks
which may cause their prices to fluctuate over time. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer and any call provisions. Changes in the value of portfolio securities
will not necessarily affect cash income derived from these securities but will
affect the Fund's net asset value.

FIXED INCOME SECURITIES -- The market value of fixed income investments will
generally 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.

OPTIONS -- Risks associated with options transactions include the following: (1)
if hedging, the success of such a strategy may depend on an ability to
accurately predict movements in the prices of individual securities,
fluctuations in markets and movements in interest rates; (2) there may be an
imperfect correlation between the movement in prices of options and the
securities underlying them; (3) there may not be a liquid secondary market for
an option; and (4) while the Fund will receive a premium when it writes covered
call options, it may not participate fully in a rise in the market value of the
underlying security.

<PAGE>

imposition of exchange controls or other government restrictions, less
uniformity in accounting and reporting requirements, the 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 of foreign investments in other jurisdictions, difficulties in
effecting repatriation of capital invested abroad, and the 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.

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 with respect to the Fund
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 as
to principal and interest 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 not apply to investments in U.S. Government securities and
repurchase agreements involving such securities. For purposes of this limitation
(i) utility companies will be classified according to their services, for
example, gas, gas transmission, electric and telephone will each be considered a
separate industry, (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, and
(iii) supranational entities will be considered to represent one industry.

3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of its total assets. The Fund will not
purchase additional securities while borrowings exceed 5% of its assets.

As relating to investment limitation numbers 1 and 2, the foregoing percentages
will apply at the time of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional Information.

THE ADVISER

First Manhattan Co. is a professional investment management firm organized as a
limited partnership that was founded in 1964. Because of the amount of his
ownership of the firm's outstanding partnership interests, Mr. David S.
Gottesman is deemed to control the Adviser. As of December 31, 1997, the Adviser
had management authority with respect to approximately $7 billion of assets. The
principal business address of the Adviser is 437 Madison Avenue, New York, New
York 10022.

The Adviser serves as the Fund's investment adviser pursuant to an investment
advisory agreement (the "Advisory Agreement"). Under the terms of 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. In addition to advising the Fund, the Adviser provides
advisory services to individuals, partnerships, trusts, pension and other
employee benefit plans, and eleemosynary and other institutions.

Bernard C. Groveman, CFA, and A. Byron Nimocks, general partners of the Adviser
since 1994 and 1990, respectively, have managed the equity component of the Fund
since the Fund commenced operations. From 1990-1993, Mr. Groveman was a
portfolio manager with the Adviser.

William K. McElroy, a Managing Director of the Adviser, has managed the fixed
income component of the Fund since the Fund commenced operations. Mr. McElroy
has been a portfolio manager with the Adviser since 1987.

For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate

<PAGE>

of .80% of the average daily net assets of the Fund. The Adviser has voluntarily
agreed to waive a portion of its advisory fee in order to limit total operating
expenses of the Fund to not more than 1.10% of its average daily net assets. The
Adviser reserves the right, in its sole discretion, to terminate its fee waiver
at any time. For the fiscal year ended October 31, 1997, the Adviser received a
fee (after waiver) equal to .73% of the Fund's average daily net assets.

THE ADMINISTRATOR

SEI Fund Resources (the "Administrator") serves as the Administrator of the
Trust. The Administrator provides the Trust 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 .20% of the average daily net assets. The Administrator's fee is subject
to an annual minimum of $75,000.

The Administrator also serves as shareholder servicing agent for the Fund under
a shareholder servicing agreement with the Trust.

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent for
the Trust under a transfer agency agreement with 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 pursuant to a distribution agreement (the "Distribution Agreement").
No compensation is paid to the Distributor for distribution services for the
shares of the Fund.

FUND TRANSACTIONS

The Advisory Agreement authorizes the Adviser to select broker-dealers that will
execute the purchase or sale of securities for the Fund and directs the Adviser
to seek to obtain the best net results. The Fund expects to execute all or a
substantial portion of its brokerage or other agency transactions through the
Adviser, and may execute agency transactions through the Distributor, for which
each may receive usual and customary compensation.

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, or by contacting the Adviser. 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 when the New York Stock
Exchange is 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. In
addition, the Trust has authorized certain broker-dealers and other financial
intermediaries (collectively "Authorized Broker-Dealers") to act as the Fund's
agent for the purposes of accepting purchase orders and redemption requests. The
Fund will be deemed to have received a purchase order or redemption request upon
receipt of the order or request by an Authorized Broker-Dealer.

The minimum initial investment in the Fund is $10,000, and subsequent purchases
must be at least $1,000. These minimum purchase requirements may be reduced or
waived by the Distributor or for investors who purchase shares of the Fund
through omnibus accounts maintained by registered broker-dealers who have
executed sub-distribution agreements with the Distributor. No minimum applies to
subsequent purchases effected by dividend reinvestment. As described below,
subsequent purchases through the Fund's Systematic Investment Plan must be at
least $100.

PURCHASES BY MAIL

An account may be opened by mailing a check or other negotiable bank draft
(payable to the FMC Select Fund) for $10,000 or more, together with a completed
Account Application, to the Transfer Agent at: The Advisors' Inner Circle, P.O.
Box 419009, Kansas City, Missouri 64141-6009. Third-party checks,

<PAGE>

credit cards, credit card checks and cash will not be accepted. Subsequent
investments may also be mailed directly to the Transfer Agent.

PURCHASES BY WIRE TRANSFER

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, N.A.; ABA #10-10-00695; for
Account Number 9870601087; Further Credit: FMC Select Fund. The shareholder's
name and account number must be specified in the wire.

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, 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.

SUBSEQUENT PURCHASES: Additional investments may be made at any time through the
wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.

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 the Fund calculates
its net asset value, normally, 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 net asset value per share next determined after a purchase order is
effective. Purchases will be made in full and fractional shares of the Fund
calculated to three decimal places. The Trust will not issue certificates
representing shares of the Fund.

If a check received for the purchase of shares does not clear, the purchase will
be canceled, and the investor could be liable for any losses or fees incurred.
The Trust reserves the right to reject a purchase order when the Trust
determines that it is not in the best interest of the Trust or its shareholders
to accept such order.

SYSTEMATIC INVESTMENT PLAN

A shareholder may also arrange for periodic additional investments in the Fund
through automatic deductions by Automated Clearing House ("ACH") transactions
from a checking or savings account by completing the appropriate section of the
Account Application form. This Systematic Investment Plan is subject to account
minimum initial purchase amounts and a minimum pre-authorized investment amount
of $25 per month. An Account Application form may be obtained by calling
1-800-932-7781.

REDEMPTIONS

Redemption orders received by the Transfer Agent prior to the time the Fund
calculates its net asset value (normally, 4:00 p.m., Eastern time) on any
Business Day will be effective that day. The redemption price of shares is the
net asset value of the Fund next determined after the redemption order is
effective. Payment on redemption will be made as promptly as possible and, in
any event, within seven days after the redemption order is received, provided,
however, that the investment being redeemed has been in the shareholder's
account for a minimum of 15 days. Shareholders may not close their accounts by
telephone.

Shareholders may receive redemption payments in the form of a check or by
Federal Reserve wire transfer or Automated Clearing House ("ACH") wire transfer.
There is no charge for having a check for redemption proceeds mailed. The
custodian will deduct a wire charge, currently $10.00, from the amount of a
Federal Reserve wire redemption payment made at the request of a shareholder.
Shareholders cannot redeem shares of the Fund by Federal Reserve wire on Federal
holidays restricting wire transfers. The Trust does not charge for ACH wire
transfers; however, such transactions will not be posted to a shareholder's bank
account until the second Business Day following the transaction.

SYSTEMATIC WITHDRAWAL PLAN -- The Fund offers a Systematic Withdrawal Plan
("SWP") for shareholders who wish to receive regular distributions from their
account. Upon commencement of the SWP, the account must have a current value of
$25,000 or

<PAGE>

more. Shareholders may elect to receive automatic payments via ACH wire
transfers of $100 or more on a monthly, quarterly, semi-annual or annual basis.
An application form for SWP may be obtained by calling 1-800-932-7781.

Shareholders should realize that if withdrawals exceed income dividends, their
invested principal in the account will be depleted. Thus, depending on the
frequency and amounts of the withdrawal payments and/or any fluctuations in the
net asset value per share, their original investment could be exhausted
entirely. To participate in the SWP, shareholders must have their dividends
automatically reinvested. Shareholders may change or cancel the SWP at any time,
upon written notice to the Transfer Agent.

ADDITIONAL REDEMPTION INFORMATION -- 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 to be genuine. The
Trust and the Transfer Agent will each employ reasonable procedures to confirm
that telephone instructions are genuine. Such procedures may include taping of
telephone conversations.

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.

CALCULATION OF 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 the regularly-scheduled
close of normal trading on the New York Stock Exchange (normally, 4:00 p.m.,
Eastern time) on any Business Day. Purchase or redemption orders received by the
Fund after its net asset value has been calculated will be priced at the next
Business Day's net asset value. The Fund will use a pricing service to provide
market quotations. With respect to fixed income securities, the pricing service
may use a matrix system of valuation 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 earnings 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.), or by financial and business publications and periodicals, broad groups
of comparable mutual funds and unmanaged indices. The performance of unmanaged
indices 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 United States. 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

<PAGE>

fluctuations or total returns to a benchmark while measures of benchmark
correlation indicate how valid a comparative benchmark might be.

TAXES

The following summary of certain 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 funds. The Fund intends to continue to
qualify for the special tax treatment afforded regulated investment companies
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. It can be expected that only certain dividends of
the Fund will qualify for that deduction. Any net capital gains will be
distributed annually and will be taxed to shareholders as gain from the sale of
a capital asset held for more than one year, 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, including the amount of
dividends eligible for the dividends-received deduction.

Certain securities purchased by the Fund are sold with original issue discount
and thus generally do not make periodic cash interest payments. The Fund will be
required to include as part of its current income a portion of the accrued
discount on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
all of its net investment income to its shareholders, the Fund may have to sell
fund securities to distribute such accreted income, which may occur at a time
when the Adviser would not have chosen to sell such securities and which may
result in a taxable gain or loss.

Income received on direct U.S. government 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 derived from direct U.S.
government 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. Such distributions will
be invested in additional shares of the fund unless the investor has chosen to
receive distributions in cash.

A sale, exchange or redemption of the Fund's shares is a taxable event to the
shareholder.

<PAGE>

GENERAL INFORMATION

THE TRUST

The Trust, an open-end investment management 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 of
shares. All consideration received by the Trust for shares of any portfolio and
all assets of such portfolio belong to that portfolio and would be subject to
liabilities related thereto. The Trust reserves the right to create and issue
shares of additional portfolios. Information regarding the other portfolios of
the Trust is contained in separate prospectuses that may be obtained by calling
1-800-932-7781.

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 shares
under federal and state securities laws, pricing and insurance 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.
Expenses not attributable to a specific fund are allocated across all of the
funds on the basis of relative net assets.

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 share held entitles the shareholder of record to one vote. The Fund will
vote separately on matters relating solely to it. As a Massachusetts business
trust, the Trust is not required, and does not intend, to hold annual meetings
of shareholders. Shareholder approval will be sought, however, 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.

As of February 1, 1998, the First Manhattan Co. Omnibus Account for the
Exclusive Benefit of Customers (New York, NY) owned a controlling interest in
the Fund as defined by the Investment Company Act of 1940, as amended.

REPORTING

The Trust issues unaudited financial information semiannually and audited
financial statements annually to shareholders of record for the Fund. The Trust
also furnishes periodic reports and, as necessary, proxy statements to
shareholders of record.

SHAREHOLDER INQUIRIES

Shareholder inquiries not involving orders to purchase or redeem shares may be
directed to the FMC Select Fund, c/o The Advisors' Inner Circle Fund, P.O. Box
419009, Kansas City, Missouri 64141-6009 or by calling 1-800-932-7781. Purchases
and redemptions of shares may be made through the Transfer Agent by calling
1-800-808-4921.

DIVIDENDS AND DISTRIBUTIONS

Substantially all of the net investment income (excluding capital gain) of the
Fund is distributed in the form of quarterly dividends. Shareholders of record
on the last Business Day of each quarter will be entitled to receive the
quarterly dividend distribution. If any capital gain is realized, substantially
all of it is distributed at least annually.

Shareholders automatically receive all income dividends and capital gain
distributions in additional shares at the net asset value next determined
following the record date, 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 by Federal Reserve wire transfer or ACH wire transfer.

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

<PAGE>

dividend or the distribution of ordinary income or capital gains, a shareholder
will pay the full price for the shares and receive some portion of the price
back as a taxable dividend or distribution.

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 serves as the custodian (the "Custodian") of the Fund. The
Custodian holds cash, securities and other assets of the Trust as required by
the Investment Company Act of 1940, as amended.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

The following is a description of certain permitted investments and associated
risk factors for the Fund:

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.

BANK OBLIGATIONS -- Debt obligations issued by U.S. and foreign banks, including
bankers' acceptances (bills of exchange or time drafts drawn on and accepted by
commercial banks and used by corporations to finance the shipment and storage of
goods and to furnish dollar exchange), certificates of deposit (negotiable
interest bearing instruments with specific maturities issued by banks and
savings and loan institutions in exchange for the deposit of funds), and time
deposits (non-negotiable receipts issued by banks in exchange for the deposit of
funds that earn a specified rate of interest over a definite period of time).

COMMERCIAL PAPER -- Unsecured short-term promissory notes issued by corporations
and other entities. The maturities on these issues vary from a few days to nine
months.

CONVERTIBLE SECURITIES -- Convertible securities have characteristics of both
fixed income and equity securities. Because of the conversion feature (which may
be mandatory or optional), the market value of convertible securities tends to
move together with the market value of the underlying stock. As a result, the
Fund's selection of convertible securities is based, to a great extent, on the
potential for capital appreciation that may exist in the underlying stock. The
value of convertible securities is also affected by prevailing interest rates,
the credit quality of the issuer, and any call provisions.

HIGH RISK, HIGH YIELD CONVERTIBLE SECURITIES -- Fixed income securities
(including convertible securities) rated below investment grade are often
referred to as "junk bonds." Such securities involve greater risk of default or
price declines than investment grade securities due to changes in the issuer's
creditworthiness and the outlook for economic growth. The market for these
securities may be less active, causing market price volatility and limited
liquidity in the secondary market. This may limit the Fund's ability to sell
such securities at their market value. In addition, the market for these
securities may also be adversely affected by legislative and regulatory
developments. Credit quality in the junk bond market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks imposed by a particular security.

CORPORATE BONDS -- Debt instruments issued by a private 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; and (3) they have a term maturity. They are sometimes traded on
major exchanges.

EQUITY SECURITIES -- Investments in equity securities in general are subject to
market risks that may cause their prices to fluctuate over time. The value of
securities, such as warrants or convertible debt, exercisable for or convertible
into equity securities is also affected by prevailing interest rates, the credit
quality of the issuer and any call provision. Fluctuations in the value of
equity securities in which the Fund invests will cause the net asset value of
the Fund to fluctuate. An investment in the Fund may therefore be more suitable
for long-term investors.

<PAGE>

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.

Stock index futures are futures contracts for various stock indices that are
traded on registered securities exchanges. A stock index futures contract
obligates the seller to deliver (and the purchaser to accept) an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to accurately predict
movements in the prices of individual securities, fluctuations in markets and
movements in interest rates, (2) there may be an imperfect or no correlation
between the changes in market value of the securities held by the Fund and the
prices of futures and options on futures, (3) there may not be a liquid
secondary market for a futures contract or option, (4) trading restrictions or
limitations may be imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and futures options.

INVESTMENT COMPANY SECURITIES -- The Fund's purchase of investment company
securities will result in the layering of expenses. The Fund is prohibited from
acquiring the securities of other investment companies if, as a result of such
acquisition, the Fund owns in the aggregate (1) more than 3% of the total
outstanding voting stock of the acquired company, (2) securities issued by the
acquired company having an aggregate value of 5% of the value of the total
assets of the Fund, or (3) securities issued by the acquired company and all
other investment companies having an aggregate value in excess of 10% of the
value of the total assets of the Fund.

MONEY MARKET INSTRUMENTS -- These high quality, short-term debt instruments
consist of U.S. Government securities; certificates of deposit, time deposits
and bankers' acceptances issued by high quality banks or savings & loan
associations; commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's, or, if not rated, determined by the Adviser to be of comparable
quality; repurchase agreements involving any of the foregoing securities; and,
to the extent permitted by applicable law, shares of other investment companies
investing solely in money market instruments.

MORTGAGE BACKED SECURITIES -- The Fund may acquire securities representing an
interest in a pool of mortgage loans that are issued or guaranteed by a U.S.
Government agency. The primary issuers or guarantors of these mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), Fannie Mae
and Federal Home Loan Mortgage Corporation ("FHLMC"). The Fund may also purchase
collateralized mortgage obligations and real estate mortgage investment conduits
issued by governmental and non-governmental entities. The mortgages backing
these securities include conventional 30 year fixed rate mortgages, graduated
payment mortgages, and adjustable rate mortgages. These mortgages may be
supported by various types of insurance, may be backed by GNMA certificates or
other mortgage pass-throughs issued or guaranteed

<PAGE>

by the U.S. Government, its agencies or instrumentalities. However, the
guarantees do not extend to the mortgage backed securities' market value, which
is likely to vary inversely with fluctuations in interest rates. These
certificates are in most cases "pass-through" instruments, through which the
holder receives a share of all interest and principal payments from the
mortgages underlying the certificate. Because the prepayment rates of the
underlying mortgages fluctuate, it is not possible to predict accurately the
average life or anticipated yield of a particular issue of pass-through
certificates. During periods of declining interest rates, prepayment of
mortgages underlying mortgage backed securities can be expected to accelerate.
When the mortgage obligations are prepaid, the Fund reinvests the prepaid
amounts in securities, the yield of which reflects interest rates prevailing at
the time. Moreover, prepayments of mortgages which underlie securities purchased
at a premium could result in capital losses.

OPTIONS -- A put option gives the purchaser of the option the right to sell, and
the writer of the option the obligation to buy, the underlying security at any
time during the option period. A call option gives the purchaser of the option
the right to buy, and the writer of the option the obligation to sell, the
underlying security at any time during the option period. The premium paid to
the writer is the consideration for undertaking the obligations under the option
contract. The initial purchase (sale) of an option contract is an "opening
transaction." In order to close out an option position, the Fund may enter into
a "closing transaction," which is simply the sale (purchase) of an option
contract on the same security with the same exercise price and expiration date
as the option contract originally opened.

The Fund may purchase put and call options to protect against a decline in the
market value of the securities in its fund or to protect against an increase in
the cost of securities that the Fund may seek to purchase in the future. When
purchasing put and call options, the Fund pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for the Fund, loss of the premium paid may be offset by
an increase in the value of the Fund's securities or by a decrease in the cost
of acquisition of securities by the Fund.

The Fund may write covered call options as a means of increasing the yield on
its fund and as a means of providing limited protection against decreases in its
market value. When the Fund sells an option, if the underlying securities do not
increase or decrease to a price level that would make the exercise of the option
profitable to the holder thereof, the option generally will expire without being
exercised and the Fund will realize as profit the premium received for such
option. When a call option of which the Fund is the writer is exercised, the
Fund will be required to sell the underlying securities to the option holder at
the strike price, and will not participate in any increase in the price of such
securities above the strike price. The Fund may purchase and write options only
on an exchange.

RISK FACTORS. Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to accurately predict
movements in the prices of individual securities, fluctuations in markets and
movements in interest rates; (2) there may be an imperfect correlation between
the movement in prices of options and the securities underlying them; (3) there
may not be a liquid secondary market for options; and (4) while the Fund will
receive a premium when it writes covered call options, it may not participate
fully in a rise in the market value of the underlying security.

REPURCHASE AGREEMENTS -- Repurchase Agreements are agreements by which a person
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. The Custodian or
its agent will hold the security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to 102% of the purchase
price. 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 its right to dispose
of the collateral securities or if the Fund realizes a loss on the sale of the
collateral securities. The Adviser will enter into repurchase agreements on
behalf of the Fund only with financial institutions deemed to present minimal
risk of bankruptcy during the term of the agreement based on guidelines
established and periodically reviewed by the Trustees. Repurchase agreements are
considered to be loans by the Fund.

<PAGE>

SECURITIES OF FOREIGN ISSUERS -- The Fund will purchase only those securities of
foreign issuers (including American Depositary Receipts or "ADRs") that are
traded on registered exchanges or the over-the-counter market in the United
States. ADRs are typically issued by a U.S. financial institution and evidence
ownership of underlying securities issued by a foreign issuer. Investments in
securities of foreign issuers are subject to special risks such as future
adverse political and economic developments, possible seizure, nationalization
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation at the source,
greater fluctuation in value due to changes in exchange rates, or the adoption
of other foreign governmental restrictions. Foreign securities issuers are often
subject to accounting treatment and engage in business practices different from
those respecting domestic securities issuers.

SECURITIES LENDING -- In order to generate additional income, the Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash, securities of the U.S.
Government or its agencies equal to at least 100% of the market value of the
securities lent. The Fund continues to receive interest on the securities lent
while simultaneously earning interest on the investment of cash collateral.
Collateral is marked to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral should the borrower of
the securities fail financially or become insolvent.

U.S. GOVERNMENT SECURITIES -- Certain federal agencies have been established as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States or are guaranteed by the Treasury. Issues of other agencies or
instrumentalities are supported only by the issuing agency's right to borrow
from the Treasury or by the credit of the agency or instrumentality. Any
guaranty by the U.S. Government, its agencies or instrumentalities of the
securities in which the Fund invests guarantees only the payment of principal
and interest on the guaranteed security and does not guarantee the yield or
value of that security or the yield or value of shares of the Fund.

U.S. TREASURY SECURITIES -- U.S. Treasury securities consist of bills, notes and
bonds issued by the U.S. Treasury and 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").

VARIABLE AND FLOATING RATE SECURITIES -- Certain of the obligations purchased by
the Fund may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. Such instruments bear interest at rates that are not fixed,
but vary with changes in specified market rates or indices, such as a Federal
Reserve composite index.

WHEN-ISSUED TRANSACTIONS -- The Fund may enter into forward commitments or
purchase securities on a when-issued basis, in which case delivery and payment
normally take place at a future date. The interest rate on these securities is
fixed as of the purchase date although no interest accrues until the settlement
date. These securities are subject to market fluctuation due to changes in
market interest rates during the period between the purchase date and the
delivery date.

ZERO COUPON SECURITIES -- Zero coupon obligations are debt securities that do
not bear any interest, but instead are issued at a deep discount from par. The
value of a zero coupon obligation increases over time to reflect the interest
accreted. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at par and pay interest periodically.

Please see the Statement of Additional Information for more information about
the permitted investments of the Fund.

<PAGE>

================================================================================
TABLE OF CONTENTS
PAGE
----
SUMMARY ................................................................... 2
EXPENSE SUMMARY ........................................................... 4
FINANCIAL HIGHLIGHTS ...................................................... 5
THE TRUST AND THE FUND .................................................... 6
INVESTMENT OBJECTIVE ...................................................... 6
GENERAL INVESTMENT POLICIES ............................................... 6
AUXILIARY POLICIES ........................................................ 7
RISK FACTORS .............................................................. 7
INVESTMENT LIMITATIONS .................................................... 8
THE ADVISER ............................................................... 8
THE ADMINISTRATOR ......................................................... 9
THE TRANSFER AGENT ........................................................ 9
THE DISTRIBUTOR ........................................................... 9
FUND TRANSACTIONS ......................................................... 9
PURCHASE AND REDEMPTION OF SHARES ......................................... 9
PURCHASES BY MAIL ......................................................... 9
PURCHASES BY WIRE TRANSFER ................................................ 10
GENERAL INFORMATION REGARDING PURCHASES ................................... 10
SYSTEMATIC INVESTMENT PLAN ................................................ 10
REDEMPTIONS ............................................................... 10
PERFORMANCE ............................................................... 11
TAXES ..................................................................... 12
TAX STATUS OF THE FUND .................................................... 12
TAX STATUS OF DISTRIBUTIONS ............................................... 12
GENERAL INFORMATION ....................................................... 13
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS ..................... 14

Fund:
FMC SELECT FUND
P.O. Box 419009
Kansas City, MO 64141-6009

Adviser:
FIRST MANHATTAN CO.
437 Madison Avenue
New York, NY 10022

Distributor:
SEI INVESTMENTS DISTRIBUTION CO.
Oaks, PA 19456

Administrator:
SEI FUND RESOURCES
Oaks, PA 19456

Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP
1800 M Street N.W.
Washington, DC 20036

Independent Public Accountants:
ARTHUR ANDERSEN LLP
1601 Market Street
Philadelphia, PA 19103

For Information call: 1-800-932-7781
FMC-F-001-04
================================================================================

<PAGE>

================================================================================

FMC SELECT FUND

Prospectus
February 27, 1998

Advised By:
FIRST MANHATTAN CO.

================================================================================
<PAGE>

FMC SELECT FUND

A FUND OF:
THE ADVISORS' INNER CIRCLE FUND

INVESTMENT ADVISER:
FIRST MANHATTAN CO.

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and relates only to
the FMC Select 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 February 27, 1998. The Prospectus for the Fund may
be obtained by calling 1-800-932-7781.

TABLE OF CONTENTS

THE TRUST AND THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . S-2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . . S-9
COMPUTATION OF YIELD AND TOTAL RETURN. . . . . . . . . . . . . . . . . . S-12
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . .S-13
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . .S-13
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-14
FUND TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-16
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .S-18
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . .S-18
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . .S-18
5% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-19
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-19
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .S-19
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

February 27, 1998

FMC-F-002-05

<PAGE>

THE TRUST AND THE FUND

This Statement of Additional Information ("Statement") relates only to the
FMC Select 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 ("funds") 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 fund should be made
without first reading that fund's prospectus. Capitalized terms not defined
herein are defined in the Prospectus offering shares of the Fund.

DESCRIPTION OF PERMITTED INVESTMENTS

MORTGAGE BACKED SECURITIES

The Fund may invest in securities issued or guaranteed by the Government
National Mortgage Association ("GNMA"), a wholly-owned U.S. Government
corporation which guarantees the timely payment of principal and interest. The
market value and interest yield of these instruments can vary due to market
interest rate fluctuations and early prepayments of underlying mortgages. These
securities represent ownership in a pool of federally insured mortgage loans.
GNMA certificates consist of underlying mortgages with a maximum maturity of 30
years. However, due to scheduled and unscheduled principal payments, GNMA
certificates have a shorter average maturity and, therefore, less principal
volatility than a comparable 30-year bond. Since prepayment rates vary widely,
it is not possible to accurately predict the average maturity of a particular
GNMA pool. The scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. GNMA securities
differ from conventional bonds in that principal is paid back to the certificate
holders over the life of the loan rather than at maturity. As a result, there
will be monthly scheduled payments of principal and interest. In addition,
there may be unscheduled principal payments representing prepayments on the
underlying mortgages. Although GNMA certificates may offer yields higher than
those available from other types of U.S. Government securities, GNMA
certificates may be less effective than other types of securities as a means of
"locking in" attractive long-term rates because of the prepayment feature. For
instance, when interest rates decline, the value of a GNMA certificate likely
will not rise as much as comparable debt securities due to the prepayment
feature. In addition, these prepayments can cause the price of a GNMA
certificate originally purchased at a premium to decline in price to its par
value, which may result in a loss.

S-2
<PAGE>

The Fund may invest in MORTGAGE BACKED SECURITIES consisting of
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). CMOs typically are issued with a number
of classes or series which have different maturities and which are retired
using cash flow from underlying collateral according to a specified plan.

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 are not generally
guaranteed.

REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured by
an interest in real property. REMICs are similar to CMOs in that they issue
multiple classes of securities.

REPURCHASE AGREEMENTS are agreements by which a person (e.g., the Fund) obtains
a security and simultaneously commits to return the security to the seller (a
member bank of the Federal Reserve System or primary securities dealer as
recognized by the Federal Reserve Bank of New York) at an agreed upon price
(including principal and interest) on an agreed upon 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
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.

Repurchase agreements are considered to be loans by the Fund for purposes of its
investment limitations. 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

S-3
<PAGE>

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 Bankruptcy Code provides protection for most repurchase agreements, if
the seller should be involved in bankruptcy or insolvency proceedings, the
Fund may incur delay and costs in selling the underlying security or may
suffer a loss of principal and interest if the Fund is treated as an
unsecured creditor and is required to return the underlying security to the
seller's estate.

The Fund only invests in investment grade fixed income securities; however, it
may hold up to 5% of its total assets in convertible debt securities which are
rated as low as Caa by Moody's or CCC by S&P. Such below investment grade
instruments are high risk, high yield securities (known as "JUNK BONDS") that
involve greater risk of default or price declines than investment grade
securities due to changes in the issuers' creditworthiness and the outlook for
economic growth. The market for these securities may be thinner and less active
causing market price volatility and limited liquidity in the secondary market.
This may limit the ability of the Fund to sell such securities at their market
value. In addition, the market for these securities may also be adversely
affected by legislative and regulatory developments. Credit quality in the junk
bond market can change suddenly and unexpectedly, and even recently issued
credit ratings may not fully reflect the actual risks imposed by a particular
security. For these reasons, it is the Fund's policy to use such ratings in
conjunction with the Adviser's own independent, ongoing review of credit
quality.

The Fund may invest in VARIABLE AMOUNT MASTER DEMAND NOTES which may or may not
be backed by bank letters of credit. These notes permit the investment of
fluctuating amounts at varying market rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. Such notes provide
that the interest rate on the amount outstanding varies on a daily, weekly or
monthly basis depending upon a stated short-term interest rate index. Both the
lender and the borrower have the right to reduce the amount of outstanding
indebtedness at any time. There is no secondary market for the notes. It is
not generally contemplated that such instruments will be traded.

The Fund may invest in WHEN-ISSUED SECURITIES. These securities involve the
purchase of debt obligations on a when-issued basis, in which case delivery and
payment normally take place at a future date. The Fund will only make
commitments to purchase obligations on a when-issued basis with the intention of
actually acquiring the securities, but may sell them before the settlement date.
The when-issued securities are subject to market fluctuation, and no interest
accrues on the security to the purchaser during this period. The payment
obligation and the interest rate that will be received on the securities are
each fixed at the time the purchaser enters into the commitment. Purchasing
obligations on a when-issued basis is a form of leveraging and can involve a
risk that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself. In that case
there could be an unrealized loss at the time of delivery.

S-4
<PAGE>

Segregated accounts will be established with the custodian, and the Fund will
maintain liquid assets (cash, U.S. Government obligations, or liquid, high
quality debt obligations) in an amount at least equal in value to its
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund will place additional liquid assets in the account on a daily
basis so that the value of the assets in the account is equal to the amount of
such commitments.

The Fund may invest in WARRANTS in an amount not exceeding 5% of the Fund's net
assets as valued at the lower of cost or market value. Included in that amount,
but not to exceed 2% of the Fund's net assets, may be warrants not listed on the
New York Stock Exchange or American Stock Exchange.

INVESTMENT COMPANY SHARES

The Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. 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 the Fund's
usual expenses. See also "Investment Limitations."

INVESTMENT LIMITATIONS

The following policies are, except for policies 3, 6, 8 and 10, non-fundamental
policies of the Fund. Non-fundamental polices may be changed or eliminated by
the Trust's Board of Trustees without a vote of the Fund's shareholders. The
term "majority of the outstanding shares" of the Fund or the Trust,
respectively, means the vote of (i) 67% or more of the Fund's or the Trust's
shares present at a meeting, if more than 50% of the outstanding shares of the
Fund or the Trust are present or represented by proxy, or (ii) more than 50% of
the Fund's or the Trust'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. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of total assets. Borrowings from a
bank require asset coverage of at least 300%. In the event that such asset
coverage shall at any time fall below 300%, the Fund shall, within three
days thereafter or such longer period as the Securities and Exchange
Commission (the "SEC") may

S-5
<PAGE>

prescribe by rules and regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such borrowings shall be at
least 300%. All borrowings in excess of 5% of total assets will be repaid
before making additional investments and any interest paid on such
borrowings will reduce income.

4. Make loans, except that the Fund may purchase or hold debt instruments in
accordance with its investment objective and policies, may lend its
portfolio securities, and may enter into repurchase agreements, as
described in the Prospectus and in this Statement of Additional
Information.

5. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by (3) above in aggregate amounts not to exceed 10% of total
assets taken at current value at the time of the incurrence of such loan.

6. Purchase or sell real estate, real estate limited partnership interests or
commodities provided that this shall not prevent the Fund from investing in
readily marketable securities of issuers which can invest in real estate or
commodities, institutions that issue mortgages, and real estate investment
trusts which deal in real estate or interests therein, and provided further
that this shall not prevent the Fund from investing in commodities
contracts relating to financial instruments.

7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Fund may obtain short-term credits as
necessary for the clearance of security transactions and may sell
securities short "against the box."

8. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

9. Invest its assets in securities of any investment company, except as
permitted by the Investment Company Act of 1940 or pursuant to an order of
exemption therefrom.

10. Issue senior securities (as defined in the Investment Company Act of 1940)
except as permitted by rule, regulation or order of the SEC.

11. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.

12. Invest in illiquid securities. An illiquid security is a security which
cannot be disposed of in the usual course of business within seven days, at
approximately the value at which the Fund has valued the instrument.
Illiquid securities include repurchase agreements maturing in excess of
seven days, time deposits with a

S-6
<PAGE>

withdrawal penalty, non-negotiable instruments and instruments for which
no market exists.

The foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess occurs or exists
immediately after and as a result of a purchase of such security as to each
limitation except number 3.

THE ADVISER

The Trust and First Manhattan Co. (the "Adviser") have entered into an advisory
agreement (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.

For the fiscal period ended October 31, 1995 and the fiscal years ended October
31, 1996 and October 31, 1997, the Adviser was paid $90,353, $268,433, and
$458,786, respectively, and for the fiscal period ended October 31, 1995
reimbursed fees of $53,582 and for the fiscal years ended October 31, 1996 and
October 31, 1997 waived fees of $38,766 and $46,194, respectively.

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 Advisory 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, by a majority of the outstanding shares of the
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.

THE ADMINISTRATOR

The Trust and SEI Fund Resources (the "Administrator") have entered into an
administration agreement (the "Administration Agreement"). The Administration
Agreement provides that the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which the Administration Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations thereunder. The Administration Agreement shall
remain in effect for a period of five years after the effective date of the
agreement and shall continue in effect for successive periods of two years
unless terminated by either party on not less than 90 days' prior written notice
to the other party.

S-7
<PAGE>

For the fiscal period ended October 31, 1995 and the fiscal
years ended October 31, 1996 and October 31, 1997, the Administrator received
fees of $36,370, $81,018, and $126,246, respectively, for the Fund.

The Trust and the Administrator have also entered into a shareholder servicing
agreement pursuant to which the Administrator provides certain shareholder
services in addition to those set forth in the Administration Agreement.

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, 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 or sub-administrator to the following other mutual
funds: The Achievement Funds Trust, 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 Funds-Registered Trademark-, Monitor Funds,
Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series
Fund, Inc., The Pillar Funds, 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, TIP
Funds and TIP Institutional Funds.

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
the distribution of shares of the Fund.

S-8
<PAGE>

TRUSTEES AND OFFICERS OF THE TRUST

The management and affairs of the Fund are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. Each may have held other positions
with the named companies during that period. The Fund pays the fees for
unaffiliated Trustees.

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 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 Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, 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, TIP Funds and TIP Institutional Funds, open-end management investment
companies which are managed by SEI Fund Resources or its affiliates and, except
for 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* --
Currently performs various services on behalf of SEI Investments for which Mr.
Nesher is compensated. Executive Vice President of SEI Investments, 1986-1994.
Director and Executive Vice President of the Administrator and the Distributor,
1981-1994. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, Boston
1784 Funds-Registered Trademark-, The Expedition Funds, Marquis Funds-Registered
Trademark-, Pillar Funds, Rembrandt 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 Trustand SEI Tax Exempt Trust.

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

S-9
<PAGE>

Trust, Administrator and Distributor, Director and Secretary of SEI
Investments. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The
Expedition Funds, Marquis 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 and SEI Tax Exempt Trust.

ROBERT A. PATTERSON (DOB 11/05/27) -- Trustee** -- 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 Advisors' Inner Circle Fund, The Arbor
Fund, The Expedition Funds, and Marquis Funds-Registered Trademark-.

SANDRA K. ORLOW (DOB 10/18/53) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and Distributor
since 1988.

S-10
<PAGE>

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 Investments, Vice President and Assistant
Secretary of the Administrator and Distributor since 1994. Associate, Morgan,
Lewis & Bockius LLP (law firm), 1989-1994.

TODD B. CIPPERMAN (DOB 02/14/66) -- Vice President and Assistant Secretary
- -- Vice President and Assistant Secretary of SEI Investments, the
Administrator and the Distributor since 1995. Associate, Dewey Ballantine
(law firm) (1994-1995). Associate, Winston & Strawn (law firm) (1991-1994).

- -----------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Fund 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 Fund.

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.

S-11
<PAGE>

The following table exhibits Trustee compensation for the fiscal year ended
October 31, 1997.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Total Compensation From
Registrant and Trust
Complex* Paid to
Aggregate Compensation From Pension or Retirement Estimated Annual Trustees for the Fiscal
Registrant for the Fiscal Benefits Accrued as Benefits Upon Year Ended October 31,
Name of Person, Position Year Ended October 31, 1997 Part of Trust Expenses Retirement 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney $8,154 N/A N/A $8,154 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------

Frank E. Morris $8,154 N/A N/A $8,154 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------

Robert Patterson $8,154 N/A N/A $8,154 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------

Eugene B. Peters $8,154 N/A N/A $8,154 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------

James M. Storey, Esq. $8,154 N/A N/A $8,154 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------

William M. Doran, Esq. $0 N/A N/A $0 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------

Robert A. Nesher $0 N/A N/A $0 for services on 1
board
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*For the purpose of this table, the Trust is the only investment company in the
"Trust Complex."

COMPUTATION OF YIELD AND TOTAL RETURN

From time to time the Trust may advertise its 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) to the 6th power - 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.

For the 30-day period ended October 31, 1997, the yield for the Fund was 1.06%.

S-12
<PAGE>

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 the 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) to the power of 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.

For the fiscal year ended October 31, 1997 and for the period from May 8, 1995
(commencement of operations) through October 31, 1997, the total return for the
Fund was 30.51% and 26.43% (annualized) respectively. The cumulative total
return for the Fund from May 8, 1995 through October 31, 1997 was 78.97%.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Transfer Agent on any Business
Day. Shares of the Fund are offered on a continuous basis. Currently, the Fund
is closed for business when the following holidays are observed: New Year's
Day, Martin Luther King Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor 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, readily marketable
securities held by the 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 obtained an exemptive order from the SEC that
permits the Trust to make in-kind redemptions to those Shareholders that are
affiliated with the Trust solely by their ownership of a certain percentage
of the Trust's investment portfolios.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
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 the 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.

S-13
<PAGE>

DETERMINATION OF NET ASSET VALUE

The securities of the Fund are valued by the Administrator. The Administrator
uses 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 federal income 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 advisors with specific reference to their own tax situations, including
their state and local tax liabilities.

FEDERAL INCOME TAX

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 must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("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) 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

S-14
<PAGE>

represent more than 10% of the outstanding voting securities of such issuer; and
(iii) 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 or which are engaged in the same,
similar or related trades or business.

Notwithstanding the Distribution Requirement described above, which
requires only that the 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 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.

Any gain or loss recognized on a sale or redemption of shares of a 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 eighteen months, will be treated as a mid-term capital gain if the
shares have been held for more than twelve, but not more than eighteen, months
and otherwise generally will be treated as a short-term capital gain or loss.
If shares of the 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
taxable at regular corporate rates. In such an event, all distributions
(including capital gains distributions) will be taxable as ordinary dividends
to the extent of the Fund's current and accumulated earnings and profits and
such distributions will generally be eligible for the corporate
dividends-received deduction.

S-15
<PAGE>

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. Distributions by the Fund
to shareholders and the ownership of shares may be subject to state and local
taxes.

FUND 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 is
responsible for placing the orders to execute transactions for the Fund. In
placing orders, it is the policy of the Fund 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 the 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 may invest 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 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. Fixed income securities are generally traded on a
net basis and do not normally involve either brokerage commissions or
transfer taxes. The cost of executing fixed income portfolio securities
transactions of the Fund will primarily consist of dealer spreads and
underwriting commissions.

The Adviser may, consistent with the interests of the Fund, select brokers on
the basis of the research services they provide to the Adviser. Such services
may include analyses of the business or prospects of a company, industry or
economic sector, or statistical and pricing services. Information so received
by the Adviser will be in addition to and not in lieu of the services required
to be performed by the Adviser under the Advisory Agreement. If, in the
judgment of the Adviser, the Fund or other accounts managed by the Adviser will
be benefitted by supplemental research services, the Adviser is authorized to
pay brokerage commissions to a broker furnishing such services which are in
excess of commissions which another broker may have charged for effecting the
same transaction. These research services include advice, either directly or
through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on

S-16
<PAGE>

economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; and providing
portfolio performance evaluation and technical market analyses. The expenses
of the Adviser will not necessarily be reduced as a result of the receipt of
such supplemental information, such services may not be used exclusively, or
at all, with respect to the Fund or account generating the brokerage, and
there can be no guarantee that the Adviser will find all of such services of
value in advising the Fund. For the fiscal year ended October 31, 1997, the
Fund directed all of its brokerage to the Adviser.

It is expected that the Fund will execute all or substantially all of the Fund's
brokerage or other agency transactions through the Adviser, and may execute
agency transactions through the Distributor, for a commission in conformity with
the Investment Company Act of 1940, the Securities Exchange Act of 1934 and
rules promulgated by the SEC. Under these provisions, the Adviser and the
Distributor are permitted to receive and retain compensation for effecting
portfolio transactions for the Fund on an exchange. These rules further require
that commissions paid to the Adviser or 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 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 Fund, have adopted
procedures for evaluating the reasonableness of commissions paid to the Adviser
and the Distributor and will review these procedures periodically.

For the fiscal year ended October 31, 1997, the Fund paid no brokerage
commissions to the Distributor. For the fiscal years ended October 31, 1996 and
October 31, 1997, all securities transactions for the Fund were directed to the
Adviser. For the fiscal period ended October 31, 1995, and the fiscal years
ended October 31, 1996 and October 31, 1997, the Fund paid $48,428, $56,991 and
$60,672, respectively, in commissions to the Adviser.

For the fiscal years ended October 31, 1996 and October 31, 1997, the portfolio
turnover rate for the Fund was 24.39% and 21.71%, respectively.

For the fiscal year ended October 31, 1997, no commissions were paid on
brokerage transactions, pursuant to an agreement or understanding, to brokers in
return for research services provided by the brokers.

For the period ended October 31, 1995 and for the fiscal years ended October 31,
1996 and 1997, the Fund paid the following brokerage commissions:

S-17
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
TOTAL BROKERAGE COMMISSIONS AMOUNT PAID TO SEI INVESTMENTS(1)
- ------------------------------------------------------------------------
1995 1996 1997 1995 1996 1997
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$51,140 $56,991 $60,672 $0 $0 $0
- ------------------------------------------------------------------------
</TABLE>

* An asterisk indicates that the Fund
had not commenced operations for the period indicated.

For the fiscal period and years indicated, the Fund paid the following brokerage
commissions:

% OF TOTAL % OF TOTAL
TOTAL $ AMOUNT OF TOTAL $ AMOUNT OF BROKERAGE BROKERAGE
BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS COMMISSIONS TRANSACTIONS
PAID PAID TO AFFILIATED BROKERS PAID TO THE EFFECTED THROUGH
AFFILIATED AFFILIATED BROKERS
BROKERS
- -------------------------------------------------------------------------------------------------
1995 1996 1997 1995 1996 1997 1997 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

$48,428 $56,991 $60,672 $48,428 $56,991 $60,672 100% %100
- -------------------------------------------------------------------------------------------------
</TABLE>

* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents
an equal proportionate interest in that 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. All consideration received
by the Trust for shares of any portfolio and all assets in which such
consideration is invested would belong to that portfolio 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

S-18
<PAGE>

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.

5% SHAREHOLDERS

As of February 1, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of each class of the Fund's shares.

<TABLE>
<CAPTION>
Shareholder Number of Shares %
- ----------- ---------------- -
<S> <C> <C>
First Manhattan Co. 4,926,781.8700 96.44%
Omnibus Account for the
Exclusive Benefit of Customers
Attn: Neal K. Stearns
437 Madison Avenue
New York, NY 10022-7001
</TABLE>

The Trust believes that most of the shares referred to above were held by the
persons indicated in accounts for their fiduciary, agency or custodial
customers.

EXPERTS

The financial statements of the Trust have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are

S-19
<PAGE>

incorporated by reference hereto in reliance upon the authority
of said firm as experts in giving said report.

FINANCIAL STATEMENTS

S-20
<PAGE>

APPENDIX

DESCRIPTION OF COMMERCIAL PAPER RATINGS

The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P") and Moody's Investors Service, Inc.
("Moody's"), respectively.

A-1 - This is S&P's highest category and indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.

PRIME-1 - Issues rated Prime-1 (or supporting institutions) by Moody's have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:

DESCRIPTION OF CORPORATE BOND RATINGS

The following descriptions of corporate bond ratings have been published by S&P
and Moody's, respectively.

Debt rated AAA has the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Debt rated AA also qualifies as high-quality debt. Capacity to pay principal
and interest is very strong, and differs from AAA issues only in small degree.
Debt rated A has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

Debt rated BBB by S&P is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

A-1
<PAGE>

Debt rated BB has less near-term vulnerability to default than other speculative
grade debt. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions that could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

Debt rate B has greater vulnerability to default but presently has the capacity
to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions would likely impair capacity or willingness to
pay interest and repay principal. The B rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied BB rating.

Debt rated CCC has a current identifiable vulnerability to default, and is
dependent on favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category also is
used for debt subordinated to senior debt that is assigned an actual or implied
B rating.

Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.

Bonds rated Baa by Moody's are considered as medium grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

A-2
<PAGE>

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

A-3

<PAGE>
CRA REALTY SHARES PORTFOLIO

Investment Adviser:
CRA REAL ESTATE SECURITIES, L.P.

CRA REALTY SHARES PORTFOLIO
CLASS A SHARES
AND
INSTITUTIONAL SHARES

This Prospectus sets forth concisely the information about the Fund and the
Portfolio 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 relating to the Portfolio dated the same
date as this Prospectus has been filed with the Securities and Exchange
Commission and is available without charge by calling 1-888-712-1103. The
Statement of Additional Information is incorporated into this Prospectus by
reference. The Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Fund is
maintained electronically with the Securities and Exchange Commission at its
internet web site (http://www.sec.gov).

February 27, 1998

THE ADVISORS' INNER CIRCLE FUND

<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
Summary..................................................... 3
Expense Summary............................................. 5
Financial Highlights........................................ 6
The Fund and the Portfolio.................................. 7
Investment Objective and Policies........................... 7
General Investment Policies................................. 8
Investment Limitations...................................... 9
The Adviser................................................. 9
The Administrator........................................... 10
The Transfer Agent.......................................... 10
The Distributor............................................. 10
Shareholder Services........................................ 11
Portfolio Transactions...................................... 11
Purchase and Redemption of Shares........................... 11
Net Asset Value............................................. 13
Performance................................................. 13
Taxes....................................................... 14
General Information......................................... 15
Description of Permitted Investments and Risk Factors....... 16
</TABLE>

<PAGE>

SUMMARY

The following summary provides basic information about Class A shares and
Institutional shares of the CRA Realty Shares Portfolio (the "Portfolio"). The
Portfolio is one of the mutual funds comprising The Advisors' Inner Circle Fund
(the "Fund"). This summary is qualified in its entirety by reference to the more
detailed information provided elsewhere in this Prospectus and in the Statement
of Additional Information.

WHAT IS THE INVESTMENT OBJECTIVE AND POLICIES? The Portfolio seeks total return
through an investment in real estate securities. The Portfolio seeks to achieve
its objective through a combination of above-average income and long-term growth
of capital by investing primarily in income-producing equity securities of
publicly traded companies primarily engaged in the U.S. real estate industry
("real estate companies"), including Real Estate Investment Trusts ("REITs").
Under normal circumstances, at least 65% of the Portfolio's total assets will be
invested in income producing equity securities of real estate companies. The
Portfolio seeks to invest in equity securities of companies that provide a
dividend yield that generally exceeds the composite dividend yield of securities
comprising the S&P 500 Index. There is no assurance that the Portfolio will
achieve its investment objective.

WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE PORTFOLIO? The investment
policies of the Portfolio entail certain risks and considerations of which an
investor should be aware. The Portfolio invests in securities that fluctuate in
value, and investors should expect the Portfolio's net asset value per share to
fluctuate. Because the Portfolio invests primarily in the securities of
companies principally engaged in the real estate industry, its investments will
be subject to certain risks associated with the direct ownership of real estate.
Further, because it is expected that the Portfolio will invest a substantial
portion of its assets in REITs, the Portfolio will also be subject to certain
risks associated with REITs. Finally, because the Portfolio concentrates its
investments in companies primarily engaged in the real estate industry and is a
non-diversified portfolio, the Portfolio may invest a greater proportion of its
assets in the securities of a smaller number of issuers and, as a result, will
be subject to a greater risk than would a more diversified portfolio with
respect to its portfolio securities.

For more information about the Portfolio, see "Investment Objective and
Policies," and "Description of Permitted Investments and Risk Factors."

WHO IS THE ADVISER? CRA Real Estate Securities, L.P. serves as the investment
adviser of the Portfolio (the "Adviser" or "CRA"). In addition to advising the
Portfolio, the Adviser, through its predecessors, has managed investments in
real estate equity securities in a manner consistent with that used by the
Portfolio on behalf of pension funds, insurance companies and wealthy
individuals since 1984. See "Expense Summary" and "The Adviser."

WHO IS THE ADMINISTRATOR? SEI Fund Resources serves as the administrator and
shareholder servicing agent of the Portfolio. See "The Administrator."

WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as the transfer agent and
dividend disbursing agent for the Portfolio. See "The Transfer Agent."

WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. acts as the
distributor of the Portfolio's shares. See "The Distributor."

IS THERE A SALES LOAD? No, shares of each class of the Portfolio are offered on
a no-load basis.

IS THERE A MINIMUM INVESTMENT? The minimum initial investment is $100,000 for
Institutional shares and $5,000 for Class A shares of the Portfolio. Subsequent
investments may be made in any amount. The Portfolio reserves the right to waive
the investment minimums in its sole discretion.

<PAGE>

HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Transfer Agent on any day when the New York Stock Exchange is 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 by check or with readily available funds prior to the time the
Portfolio calculates its net asset value (normally, 4:00 p.m., Eastern time).
Redemption orders placed with the Transfer Agent prior to the time the Portfolio
calculates its net asset value (normally, 4:00 p.m., Eastern time) on any
Business Day will be effective that day. The Fund has also authorized certain
broker-dealers and other financial intermediaries to accept purchase orders and
redemption requests up to the times mentioned above on behalf of the Portfolio.
The Portfolio also offers both a Systematic Investment Plan and a Systematic
Withdrawal Plan. 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. See
"Purchase and Redemption of Shares."

HOW ARE DISTRIBUTIONS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Portfolio is distributed in the form of
quarterly dividends. 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 "Dividends and Distributions."

<PAGE>
5

EXPENSE SUMMARY
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A INSTITUTIONAL
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Sales Load Imposed on Purchases............................. None None
Sales Load Imposed on Reinvested Dividends.................. None None
Deferred Sales Load......................................... None None
Redemption Fees(1).......................................... 0.75%(2) 0.75%(2)
Exchange Fees............................................... None None
- --------------------------------------------------------------------------------------------
</TABLE>

(1) A wire redemption charge, currently $10.00, is deducted from the amount of
wire redemption payments.
(2) The Portfolio charges a 0.75% transaction fee on redemptions of shares that
have been held less than six months to discourage short-term trading.

ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)

<TABLE>
<CAPTION>
CLASS A INSTITUTIONAL
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advisory Fees (after fee waiver)(1)......................... 0.47% 0.47%
Other Expenses(1)........................................... 0.53% 0.53%
Shareholder Service Fees.................................... 0.25% None
- --------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver and
expense reimbursements)(1)................................ 1.25% 1.00%
- --------------------------------------------------------------------------------------------
</TABLE>

(1) The Adviser has agreed, on a voluntary basis, to waive "Advisory Fees" and
reimburse "Other Expenses" for the Portfolio to the extent necessary to keep
the Portfolio's "Total Operating Expenses" during the current fiscal year
from exceeding 1.25% and 1.00% for Class A shares and Institutional shares,
respectively. The Adviser reserves the right to terminate such waivers and
reimbursements at any time in its sole discretion. Absent such waivers and
reimbursements, Advisory Fees, Other Expenses and Total Operating Expenses
for the Class A shares of the Portfolio would be .70%, .53% and 1.48%,
respectively, and such fees and expenses for Institutional Shares of the
Portfolio would be .70%, .53% and 1.23%, respectively. Advisory Fees and
Other Expenses have been restated to reflect current expenses.

EXAMPLE

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor in the Portfolio would pay the following
expenses on a $1,000 investment assuming (1) a 5% annual
return and
(2) redemption at the end of each time period:
Class A shares............................................ $13 $40 $69 $151
Institutional shares...................................... $10 $32 $55 $122
===================================================================================================
</TABLE>

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

THE PURPOSE OF THE EXPENSE TABLE AND EXAMPLE IS TO ASSIST THE INVESTOR IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY
BORNE BY INVESTORS IN EACH CLASS OF THE PORTFOLIO. A person who purchases shares
through a financial institution may be charged separate fees by that
institution. Additional information may be found under "The Adviser," "The
Administrator" and "Shareholder Services."
<PAGE>

FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND

The following information on the CRA Realty Shares Portfolio has been audited by
Arthur Andersen LLP, the Fund's independent public accountants, as indicated in
their report dated December 12, 1997 on the Fund's financial statements as of
October 31, 1997. This table should be read in conjunction with the Fund's
audited financial statements and notes thereto. Class A Shares were not offered
to the public during the fiscal year ended October 31, 1997, and therefore no
financial information is presented for Class A Shares below. The Portfolio's
financial statements and additional performance information are contained in the
Annual Report to Shareholders, which is available without charge by calling
1-888-712-1103.

For a Share of the Portfolio Outstanding Throughout the Period:

INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
CRA REALTY
SHARES
PORTFOLIO
<S> <C> <C>
- ------------------------------------------------------------------------------

<CAPTION>
1/1/97(1)
TO
10/31/97
<S> <C> <C>
- ------------------------------------------------------------------------------
Net Asset Value, Beginning of Period........................ $ 10.00
- ------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income..................................... 0.26
Realized and Unrealized
Gains (or Losses) on Securities......................... 1.53
- ------------------------------------------------------------------------------
Total From Investment Operations............................ 1.79
- ------------------------------------------------------------------------------
Less Distributions:
Distributions From Net Investment Income.................... (0.30)
Distributions From Capital Gains............................ --
Total Distributions..................................... (0.30)
- ------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.49
- ------------------------------------------------------------------------------
TOTAL RETURN................................................ 18.17%**
- ------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End Of Period (000)............................. $34,797
Ratio Of Expenses To Average Net Assets..................... 1.00%*
Ratio Of Expenses To Average Net Assets
(Excluding Waivers and Reimbursements).................... 1.63%*
Ratio Of Net Investment Income To Average
Net Assets................................................ 2.91%*
Ratio Of Net Investment Income to Average Net Assets
(Excluding Waivers and Reimbursements).................... 2.28%*
Portfolio Turnover Rate..................................... 102.74%
- ------------------------------------------------------------------------------
Average Commission Rate(2).................................. $0.0588
==============================================================================
</TABLE>

<TABLE>
<C> <S>
* Annualized
** Total return is for the period indicated and has not been
annualized.
(1) The CRA Realty Shares Portfolio commenced operations on
January 1, 1997.
(2) Average commission rate paid per share for security
purchases and sales during the period.
</TABLE>

<PAGE>

THE FUND AND THE PORTFOLIO

The Advisors' Inner Circle Fund (the "Fund") offers shares of a number of
diversified and non-diversified mutual funds, each of which is a separate series
("portfolio") of the Fund. Each share of each portfolio represents an undivided,
proportionate interest in that portfolio. This Prospectus offers Class A shares
and Institutional shares of the Fund's CRA Realty Shares Portfolio (the
"Portfolio"). Information regarding the other portfolios in the Fund is
contained in separate prospectuses that may be obtained by calling
1-800-932-7781.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Portfolio is total return through investment in
real estate securities. The Portfolio seeks to achieve its investment through a
combination of above-average income and long-term growth of capital by investing
primarily in income-producing equity securities of companies principally engaged
in the U.S. real estate industry, including Real Estate Investment Trusts
("REITs"). There is no assurance that the Portfolio will achieve its investment
objective.

The Portfolio invests primarily in income producing equity securities of
publicly traded companies principally engaged in the real estate industry ("real
estate companies"). Under normal circumstances, at least 65% of the Portfolio's
total assets will be invested in income producing equity securities of real
estate companies. Such equity securities are common stocks (including shares or
units of beneficial interest of REITs), rights or warrants to purchase common
stocks and preferred stock. For purposes of the Portfolio's investment policies,
a company is "principally engaged" in the real estate industry if (i) it derives
at least 50% of its revenues or profits from the ownership, construction,
management, financing or sale of residential, commercial or industrial real
estate, or (ii) it has at least 50% of the fair market value of its assets
invested in residential, commercial or industrial real estate. Companies
principally engaged in the real estate industry include REITs, master limited
partnerships ("MLPs"), and real estate owners, real estate managers, real estate
brokers and real estate dealers. The Portfolio seeks to invest in equity
securities of real estate companies that provide a dividend yield that generally
exceeds the composite dividend yield of securities comprising the S&P 500 Index.

Real Estate Investment Trusts. It is expected that the majority of the
Portfolio's total assets will be invested in securities issued by REITs. REITs
pool investors' funds for investment primarily in income producing real estate
or real estate related loans or interests. A REIT is not taxed at the federal
level on income distributed to its shareholders or unitholders if it complies
with regulatory requirements relating to its organization, ownership, assets and
income, and with a regulatory requirement that it distribute to its shareholders
or unitholders at least 95% of its taxable income for each taxable year.
Generally, REITs can be classified as Equity REITs or Mortgage REITs. Equity
REITs invest the majority of their assets directly in ownership of real property
and derive their income primarily from rental income. Equity REITs are further
categorized according to the types of real estate properties they own, e.g.,
apartment properties, retail shopping centers, office and industrial properties,
hotels, health-care facilities, manufactured housing and mixed-property types.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive their income primarily from interest payments on the credit they have
extended. The Portfolio will invest primarily in Equity REITs. Shareholders in
the Portfolio should realize that by investing in REITs indirectly through the
Portfolio, they will bear not only their proportionate share of the expenses of
the Portfolio but also, indirectly, the management expenses of underlying REITs.

The Portfolio may invest any remaining assets in debt securities issued or
guaranteed by real estate companies or secured by real estate assets and rated,
at time of purchase, in one of the four highest rating categories by a
nationally recognized statistical rating organization (an "NRSRO") or determined
by the Adviser to be of comparable quality at the time of purchase. Investment
grade securities are securities that are rated in one of the four highest rating
categories by an NRSRO. Securities rated in the lowest category of investment
grade securities have speculative characteristics. The Portfolio may also invest
in debt securities rated below investment grade (commonly known as "junk bonds")
although the Portfolio will not purchase such bonds if such investment would
cause more than 5% of its net assets to be so invested. Although there is no
lower limit to the rating assigned to a given security, in the event that a
security held by the Portfolio is downgraded below the stated rating categories,
the Adviser will review and take appropriate action with regard to the security.

<PAGE>

The Portfolio anticipates that its annual portfolio turnover rate will not
exceed 100%, but the turnover rate will not be a limiting factor when the
Adviser deems portfolio changes appropriate. The turnover rate may vary greatly
from year to year. A high portfolio turnover rate may result in higher brokerage
commissions and higher levels of realized capital gains than if the turnover
rate was lower.

GENERAL INVESTMENT POLICIES

BORROWING

The Portfolio's fundamental investment limitations set forth the extent to which
the Portfolio may borrow money. However, the Portfolio's investment policy
further limits its borrowings as follows: (i) the Portfolio will not borrow
money except from banks for temporary or emergency purposes (e.g., to facilitate
orderly redemption of its shares while avoiding untimely disposition of
portfolio holdings); (ii) the Portfolio will not borrow money in excess of 10%
of the value of its total assets (excluding the amount borrowed), at the time of
the borrowing or (iii) mortgage, pledge or hypothecate any assets except to
secure permitted borrowings and then only in an amount not in excess of 15% of
the value of its total assets (excluding the amount borrowed) at the time of
such borrowings. The Portfolio will not borrow for the purpose of leveraging its
investment portfolio. The Portfolio may not purchase additional securities while
its outstanding borrowings exceed 5% of its total assets. The Portfolio's
investment policy with respect to borrowing may be changed by vote of the Board
of Trustees without a shareholder vote.

MONEY MARKET INSTRUMENTS; TEMPORARY DEFENSIVE INVESTMENTS

In order to meet liquidity needs, the Portfolio may hold cash reserves and
invest in money market instruments (including securities issued or guaranteed by
the United States Government, its agencies or instrumentalities, repurchase
agreements, certificates of deposit and bankers' acceptances issued by banks or
savings and loan associations having net assets of at least $500 million as of
the end of their most recent fiscal year and commercial paper) rated at time of
purchase in the top two categories by an NRSRO or determined to be of comparable
quality by the Adviser at the time of purchase.

For temporary defensive purposes when the Adviser determines that market
conditions warrant, the Portfolio may invest up to 100% of its assets in the
money market instruments described above and other long and short-term debt
instruments which are rated at time of purchase in the top two categories by an
NRSRO or determined to be of comparable quality by the Adviser at the time of
purchase, and may hold a portion of its assets in cash. To the extent the
Portfolio is engaged in temporary defensive investments, the Portfolio will not
be pursuing its investment objective.

NON-PUBLICLY TRADED SECURITIES AND RESTRICTED SECURITIES; RULE 144A SECURITIES

The Portfolio may invest in securities that are neither listed on a stock
exchange nor traded over-the-counter, including privately placed securities.
Such unlisted equity securities may involve a higher degree of business and
financial risk that can result in substantial losses. As a result of the absence
of a public trading market for these securities, they may be less liquid than
publicly traded securities. Although these securities may be resold in privately
negotiated transactions, the prices realized from these sales could be less than
those originally paid by the Portfolio or less than what may be considered the
fair value of such securities. Furthermore, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements which might be applicable if their securities were
publicly traded. If such securities are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Portfolio
may be required to bear the expenses of registration. The Portfolio may not
invest more than 15% of its net assets in illiquid securities, including
securities for which there is not a readily available secondary market.

The Portfolio may invest in Restricted Securities that can be offered and sold
to qualified institutional buyers under Rule 144A under that Act ("144A
Securities"). The Board of Trustees has adopted guidelines and delegated to the
Adviser, subject to the supervision of the Board of Trustees, the daily function
of determining and monitoring the liquidity of 144A Securities. 144A Securities
may become illiquid if qualified institutional buyers are not interested in
acquiring the securities.

<PAGE>
9

SECURITIES LENDING

The Portfolio may lend up to 33 1/3% of its total assets to qualified investors
for the purpose of realizing additional income; however, the Portfolio has no
present intention to lend its securities.

OPTIONS AND FUTURES

The Portfolio may purchase or write options, futures and options on futures for
the purpose of managing or hedging portfolio risks, to remain fully invested and
to reduce transaction costs. The Portfolio will not enter into futures
transactions for speculation or achieving leverage. Risks associated with
investing in options and futures may include lack of a liquid secondary market,
trading restrictions which may be imposed by an exchange, government regulations
which may restrict trading, an imperfect correlation between the prices of
securities held by the Portfolio and the price of an option or future.

For additional information regarding the Portfolio's permitted investments, see
"Description of Permitted Investments and Risk Factors" in this Prospectus and
"Description of Permitted Investments" in the Statement of Additional
Information.

INVESTMENT LIMITATIONS

The investment objective and investment limitations are fundamental policies of
the Portfolio. Fundamental policies cannot be changed with respect to the Fund
or the Portfolio without the consent of the holders of a majority of the Fund's
or the Portfolio's outstanding shares. The Portfolio is classified as a
"non-diversified" investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), which means that the Portfolio is not limited by
the 1940 Act in the proportion of its assets that may be invested in the
securities of a single issuer. However, the Portfolio intends to conduct its
operations so as to qualify as a regulated investment company for purposes of
the Internal Revenue Code of 1986, as amended (the "Code"), which will relieve
the Portfolio of any liability for federal income tax to the extent its earnings
are distributed to shareholders. See "Taxes."

The Portfolio may not:

1. Purchase or sell real estate, except that the Portfolio may purchase
securities issued by companies primarily engaged in the real estate industry and
will, as a matter of fundamental policy, concentrate its investments in such
securities of companies principally engaged in the real estate business.

2. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Portfolio may obtain short-term credits as
necessary for the clearance of security transactions.

3. Acquire more than 10% of the voting securities of any one issuer.

Additional investment limitations are set forth in the Statement of Additional
Information.

THE ADVISER

The Adviser, CRA Real Estate Securities, L.P., is a registered investment
advisor and through its predecessors has been managing investments in real
estate securities on behalf of institutional investors since 1984. CRA Real
Estate Securities, L.P. is owned by its principals Messrs. Kenneth D. Campbell,
T. Ritson Ferguson and Jarrett B. Kling and the principals of Clarion Partners,
an affiliate of the Adviser and a registered investment adviser. As of December
31, 1997, the Adviser had approximately $1.4 billion in assets under management.
The principal business address of the Adviser is Suite 205, 259 Radnor-Chester
Road, Radnor, Pennsylvania 19087.

The Adviser uses a two part investment approach comprised of securities analysis
and portfolio allocation. For securities analysis, the Adviser employs
proprietary analytical techniques and databases to identify companies offering,
in the Adviser's view, above-average investment value. For portfolio allocation
purposes, CRA draws upon the proprietary private real estate market knowledge of
its affiliate Clarion Partners, which manages approximately $5.3 billion of real
estate on behalf of its pension clients. The Adviser uses systematic, top-down
research to evaluate property market conditions and trends and to make
judgements regarding which market sectors offer potentially attractive returns.

The Adviser serves as the investment adviser for the Portfolio under an
investment advisory agreement (the "Advisory Agreement") with the Fund. Under
the Advisory Agreement, the Adviser makes the investment decisions for the
assets of the Portfolio and continuously reviews, supervises and administers the
investment program of the Portfolio, subject to the supervision of, and policies
established by, the Trustees of the Fund.

<PAGE>

For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of 0.70% of the average daily net assets of
the Portfolio. The Adviser has voluntarily agreed to waive all or a portion of
its fee for the Portfolio and to reimburse expenses of the Portfolio in order to
limit total operating expenses to an annual rate of not more than 1.25% of
average daily net assets for Class A shares and 1.00% of average daily net
assets for Institutional shares. The Adviser reserves the right, in its sole
discretion, to terminate its voluntary fee waivers and reimbursements at any
time.

PORTFOLIO MANAGERS

Kenneth D. Campbell and T. Ritson Ferguson, CFA have shared primary
responsibility for managing the assets of the Portfolio since its commencement
of operations.

KENNETH D. CAMPBELL is the Chairman, Co-Chief Investment Officer and
Co-Portfolio Manager of the Adviser. Mr. Campbell has been with the Adviser and
its predecessors since 1969, and has managed real estate securities portfolios
since 1980 for a select number of institutional and individual accounts. An MBA
graduate with distinction from New York University and a BA from Capital
University, Mr. Campbell founded and published REALTY STOCK REVIEW, an industry
advisory service, from 1970 until its sale in 1990. He is the editor and
principal author of several book-length investment studies of REITs, including
REAL ESTATE INVESTMENT TRUSTS: AMERICA'S NEWEST BILLIONAIRES (1971). He received
the REIT Industry Leadership Award from the National Association of Real Estate
Investment Trusts (NAREIT) in 1996. He is a member of the New York and
Philadelphia Societies of Security Analysts, the Real Estate Analyst's Group and
an associate member of NAREIT.

T. RITSON FERGUSON, CFA is President, Co-Chief Investment Officer and
Co-Portfolio Manager of the Adviser. Mr. Ferguson provides oversight of CRA's
operations and is a member of the firm's Investment Policy Committee and
Investment Committee. Mr. Ferguson has been a portfolio manager with the Adviser
and its predecessors since 1992. Before joining CRA, Mr. Ferguson gained
extensive direct real estate investment experience at Radnor Advisors and
Trammell Crow Company where he was involved in all facets of the acquisition,
development and management of commercial real estate since 1986. Mr. Ferguson
also served as a Captain in the U.S. Air Force. He received his MBA with
distinction from Wharton (University of Pennsylvania) and holds a B.S. from Duke
University (summa cum laude, Phi Beta Kappa). Mr. Ferguson studied at Oxford
University as an A.B. Duke Scholar. He is a member of the Financial Analysts of
Philadelphia and an associate member of NAREIT. He is a Chartered Financial
Analyst (CFA).

THE ADMINISTRATOR

SEI Fund Resources (the "Administrator") serves as the administrator of the
Fund. 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 from the Portfolio, which fee is calculated daily and paid
monthly, at an annual rate of 0.15% of the first $100 million of the Portfolio's
average daily net assets; 0.125% of the next $100 million of the Portfolio's
average daily net assets; 0.10% of the next $100 million of the Portfolio's
average daily net assets; and 0.08% of the Portfolio's average daily net assets
over $300 million. However, the Portfolio pays the Administrator a minimum
annual fee of $75,000.

The Administrator also serves as the shareholder servicing agent for the
Portfolio under a shareholder servicing agreement with the Fund.

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore St., Second Floor, Kansas City, Missouri 64105
(the "Transfer Agent") serves as the transfer agent and dividend disbursing
agent for the Fund under a transfer agency agreement with the Fund.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments Company, serves as the Fund's distributor pursuant to a
distribution agreement (the "Distribution Agreement"). No compensation is paid
to the Distributor for distribution services for the shares of the Portfolio.

<PAGE>

SHAREHOLDER SERVICES

The Fund has adopted a shareholder servicing plan for Class A shares (the
"Service Plan") under which a shareholder servicing fee of up to .25% of average
daily net assets attributable to Class A shares will be paid to the Distributor.
Under the Service Plan, the Distributor may perform, or may compensate other
service providers for performing, the following shareholder services:
sub-accounting; providing information on share positions to clients; forwarding
shareholder communications to clients; processing purchase, redemption orders;
and processing dividend payments. Under the Service Plan, the Distributor may
retain as a profit any difference between the fee it receives and the amount it
pays to third parties.

PORTFOLIO TRANSACTIONS

The Advisory Agreement authorizes the Adviser to select broker-dealers that will
execute the purchase or sale of investment securities for the Portfolio and
directs the Adviser to seek to obtain the best net results.

The Portfolio may execute brokerage or other agency transactions through the
Distributor for which the Distributor may receive usual and customary
compensation. Because shares of the Portfolio are not marketed through
intermediary broker-dealers, it is not the Portfolio's practice to allocate
brokerage or effect principal transactions with broker-dealers on the basis of
sales of shares that may be made through such firms. However, the Adviser may
place orders for the Portfolio with qualified broker-dealers who refer clients
to the Portfolio.

PURCHASE AND REDEMPTION OF SHARES

Investors may purchase and redeem shares of the Portfolio directly through the
Transfer Agent, P.O. Box 419009, Kansas City, Missouri 64141-6009 by mail or
wire transfer. All shareholders may place wire transfer orders and redemption
orders by telephoning 1-800-808-4921; 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 Portfolio may be made on any Business Day. Shares of the Portfolio
are offered only to residents of states in which such shares are eligible for
purchase. Certain broker-dealers assist their clients in the purchase or
redemptions of shares from the Distributor and charge a fee for this service in
addition to the Portfolio's public offering price. In addition, the Fund has
authorized certain broker-dealers and other financial intermediaries
(collectively, "Authorized Broker-Dealers") to act as the Portfolio's agent for
the purposes of accepting purchase orders and redemption requests. The Portfolio
will be deemed to have received a purchase order or redemption request upon
receipt of the order or request by an Authorized Broker-Dealer.

The Portfolio is eligible for investment by tax-deferred retirement programs
such as 401(k) plans, Simplified Employee Pension Plans ("SEP accounts") and
IRAs. All accounts established in the Portfolio under such programs must elect
to have all dividends reinvested in the Portfolio.

MINIMUM INVESTMENT AND ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

For a Portfolio account, the minimum initial investment and minimum account size
are $5,000 for Class A shares and $100,000 for Institutional shares. If the
value of a Portfolio account falls below $5,000 for Class A shares or below
$100,000 for Institutional shares, because of shareholder redemption(s), the
Fund will notify the shareholder, and if the account value remains below $5,000
or $100,000, respectively, for a continuous 60-day period, the shares in such
account are subject to redemption by the Fund and, if redeemed, the net asset
value of such shares will be promptly paid to the shareholder. The Fund,
however, will not redeem shares based solely upon changes in the market that
reduce the net asset value of shares.

The Fund reserves the right to modify or terminate the involuntary redemption
features of the shares as stated above at any time upon 60 days' notice to
shareholders.

Investors may also invest in the Portfolio by purchasing shares through a trust
department, broker, dealer, agent, financial planner, financial services firm or
investment adviser. An investor may be charged an additional service or
transaction fee by that institution.

The Fund reserves the right to waive the minimum initial investment in its sole
discretion. In addition, the initial minimum investment levels and account sizes
will be waived for the officers and employees, and the family members of the
officers and employees, of the Adviser and its affiliates. The minimum
investment levels and account sizes may also be waived at the discretion of the
Adviser for (i) certain trust departments, brokers, dealers, agents, affinity
groups, financial planners, financial services firms, or investment advisers
that have entered into an

<PAGE>

agreement with the Administrator or its affiliates; and (ii) retirement and
deferred compensation plans and trusts used to fund such plans, including, but
not limited to, those defined in Section 401(a), 403(b) or 457 of the Code, and
"rabbi trusts." Further information regarding rabbi trusts is set forth in the
Statement of Additional Information.

INITIAL PURCHASES DIRECTLY FROM THE FUND

The Fund's determination of an investor's eligibility to purchase shares of a
given class will take precedence over the investor's selection of a class.
Assuming the investor is eligible for the class, the Fund will select the most
favorable class for the investor, if the investor has not done so.

PURCHASES BY MAIL

An account may be opened by mailing a check or other negotiable bank draft
(payable to the name of the Portfolio) for $5,000 or more for Class A shares and
$100,000 or more for Institutional shares, together with a completed Account
Application to the Transfer Agent, 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
CRA Realty Shares Portfolio. Third party checks, credit cards, credit card
checks and cash will not be accepted. When purchases are made by check,
redemption proceeds will not be forwarded until the investment being redeemed
has been in the account for up to 15 business days.

PURCHASES BY WIRE TRANSFER

Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Portfolio by requesting their
bank to transmit funds by wire to: United Missouri Bank, N.A.; ABA #10-10-00695;
for Account Number 98-7052-396-5; Further Credit: CRA Realty Shares Portfolio.
The shareholder's name and account number must be specified in the wire.

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, 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: DST Systems, Inc., P.O. Box
419009, Kansas City, Missouri 64141-6009.

Subsequent Purchases: Additional investments may be made at any time through
the wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.

GENERAL INFORMATION REGARDING PURCHASES

A purchase order will be effective as of the day received by the Transfer Agent
(or an Authorized Broker-Dealer) if the Transfer Agent (or an Authorized
Broker-Dealer) receives the order and payment before the Portfolio calculates
its net asset value (normally, 4:00 p.m., Eastern time). Payment may be made by
check or readily available funds. The purchase price of shares of the Portfolio
is the net asset value per share next determined after a purchase order is
effective. Purchases will be made in full and fractional shares of a Portfolio
calculated to three decimal places. The Fund will not issue certificates
representing shares of the Portfolio.

If a check received for the purchase of shares does not clear, the purchase will
be canceled, and the investor could be liable for any losses or fees incurred.
The Fund reserves the right to reject a purchase order when the Fund determines
that it is not in the best interest of the Fund or its shareholders to accept
such order.

SYSTEMATIC INVESTMENT PLAN -- A shareholder may also arrange for periodic
additional investments in the Portfolio through automatic deductions by
Automated Clearing House ("ACH") transfers from a checking or savings account by
completing the appropriate section of the Account Application form. This
Systematic Investment Plan is subject to the account minimum initial purchase
amounts and a minimum pre-authorized investment amount of $50 per month. An
Account Application form may be obtained by calling 1-888-712-1103.

REDEMPTIONS

Redemption orders received by the Transfer Agent (or an Authorized
Broker-Dealer) prior to the time the portfolio calculates its net asset value
(normally, 4:00 p.m., Eastern time) on any Business Day will be effective that
day. The redemption price of shares is the net asset value per share of the
Portfolio next determined after the redemption order is effective.

<PAGE>
13

Payment on redemption will be made as promptly as possible and, in any event,
within seven days after the redemption order is received, provided, however,
that redemption proceeds for shares purchased by check (including certified or
cashier's checks) will be forwarded only upon collection of payment for such
shares; collection of payment may take up to 15 days. Shareholders may not close
their accounts by telephone.

The Portfolio charges a redemption fee of 0.75% on redemptions of shares that
have been held less than six months. The fee is deducted before your redemption
proceeds are mailed or wired to you; you cannot pay the fee separately. If some
of the shares that you are redeeming have been held for six months or more, the
fee will apply only to those shares held less than six months. The fee does not
apply to reinvested dividends. The redemption fee is designed to discourage
short-term trading and any proceeds of such fee will be credited to the net
assets of the Portfolio.

Shareholders may receive redemption payments in the form of a check or by
Federal Reserve wire transfer or ACH wire transfer. There is no charge for
having a check for redemption proceeds mailed. The custodian will deduct a wire
charge, currently $10.00, from the amount of a wire redemption. Shareholders
cannot redeem shares of a Portfolio by Federal Reserve wire on federal holidays
restricting wire transfers. The Fund does not charge for ACH wire transfers;
however, such transactions will not be posted to a shareholder's bank account
until the second Business Day following the transaction.

SYSTEMATIC WITHDRAWAL PLAN -- The Portfolio offers a Systematic Withdrawal Plan
(the "SWP") for shareholders who wish to receive regular distributions from
their account. Upon commencement of the SWP, the account must have a current
value of $25,000 or more. Shareholders may elect to receive automatic payments
via ACH wire transfers of $100 or more on a monthly, quarterly, semi-annual or
annual basis. An application form for SWP may be obtained by calling
1-888-712-1103.

Shareholders should realize that if withdrawals exceed income dividends, their
invested principal in the account will be depleted. Thus, depending on the
frequency and amounts of the withdrawal payments and/or any fluctuations in the
net asset value per share, their original investment could be exhausted
entirely. To participate in the SWP, shareholders must have their dividends
automatically reinvested. Shareholders may change or cancel the SWP at any time,
upon written notice to the Transfer Agent.

Neither the Fund nor the Transfer Agent will be responsible for the authenticity
of instructions received by telephone if they reasonably believe those
instructions to be genuine. The Fund and the Transfer Agent will each employ
reasonable procedures to confirm that telephone instructions are genuine. Such
procedures may include taping of telephone conversations.

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 a class of the Portfolio is determined by
dividing the total market value of the Portfolio's investments and other assets
attributable to the class, less any liabilities attributable to the class, by
the total number of shares of that class in the Portfolio that are outstanding.
Net asset value per share is determined daily as of the regularly-scheduled
close of normal trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern time) on any Business Day. Purchase or redemption orders received by the
Portfolio after its net asset value has been calculated will be priced at the
next Business Day's net asset value.

PERFORMANCE

From time to time, the Portfolio may advertise its total return. These figures
will be based on historical earnings and are not intended to indicate future
performance. No representation can be made regarding actual future returns. The
total return of the Portfolio 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 Portfolio 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.

<PAGE>

The performance figures for Class A shares will generally be lower than those
for Institutional shares because of the shareholder servicing fees charged to
Class A shares.

The Portfolio may periodically compare its performance to that of other mutual
funds tracked by mutual fund rating services (such as Lipper Analytical
Services, Inc.), or by financial and business publications and periodicals, of
broad groups of comparable mutual funds, unmanaged indices, which may assume
investment of dividends but generally do not reflect deductions for
administrative and management costs, or other investment alternatives. The
Portfolio may quote Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. The Portfolio may quote Ibbotson Associates
of Chicago, Illinois, which provides historical returns of the capital markets
in the United States. The Portfolio 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 Portfolio may also quote financial and business publications and
periodicals as they relate to fund management, investment philosophy, and
investment techniques. The Portfolio may also quote indices relating to real
estate securities published by the National Association of Real
Estate Investment Trusts (NAREIT) and Wilshire
Associates Incorporated ("Wilshire").

The Portfolio 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.

Additional performance information regarding the Portfolio is set forth in the
Fund's Annual Report to Shareholders, which may be obtained on request and
without charge by calling 1-888-712-1103.

TAXES

The following summary of certain 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 Portfolio or its shareholders.
Accordingly, shareholders are urged to consult their tax advisors regarding
specific questions as to federal, state and local income taxes.

TAX STATUS OF THE PORTFOLIO:

The Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Fund's other portfolios. The Portfolio intends to
continue to qualify for the special tax treatment afforded regulated investment
companies as defined under Subchapter M of the Code. So long as the Portfolio
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 Portfolio 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. It can be expected that only certain
dividends of the Portfolio will qualify for that deduction. Any net capital
gains will be distributed annually and will be taxed to shareholders as gain
from the sale of a capital asset held for more than one year, regardless of how
long the shareholder has held shares. The Portfolio will make annual reports to
shareholders of the federal income tax status of all distributions, including
the amount of dividends eligible for the dividends-received deduction.

Certain securities purchased by the Portfolio (such as STRIPS) are sold with
original issue discount and thus do not make periodic cash interest payments.
For a further description of such securities, see "Description of Permitted
Investments and Risk Factors" below. The Portfolio will be required to include
as part of its current income the accrued discount on such obligations even
though the Portfolio has not received any interest payments on such obligations
during that period. Because the Portfolio distributes all of its net investment
income to its shareholders, the Portfolio may have to sell portfolio securities
to distribute such accrued income, which may occur at a time when the Adviser
would not have chosen to sell such securities and which may result in a taxable
gain or loss.

<PAGE>
15

Dividends declared by the Portfolio 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 Portfolio and received by the shareholders on
December 31 of that year, if paid by the Portfolio at any time during the
following January.

The Portfolio intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.

Sale or redemption of the Portfolio's shares is a taxable event to the
shareholder.

GENERAL INFORMATION

THE FUND

The Fund, an open-end investment management company that offers shares of
diversified and non-diversified portfolios, was organized under Massachusetts
law as a business trust under a Declaration of Trust dated July 18, 1991. The
Declaration of Trust permits the Fund to offer separate series ("portfolios") of
shares. All consideration received by the Fund for shares of any portfolio and
all assets of such portfolio belong to that portfolio and would be subject to
liabilities related thereto. The Fund reserves the right to create and issue
shares of additional portfolios.

The Portfolio 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,
brokerage costs, interest charges, taxes and organization expenses and (ii) pro
rata share of the Fund's other expenses, including audit and legal expenses. The
Portfolio's expense ratios are disclosed under "Financial Highlights."

TRUSTEES OF THE FUND

The management and affairs of the Fund 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 Fund.

VOTING RIGHTS

Shareholders of record are entitled to one vote (or fraction thereof) for each
share (or fractional share) held. Each of the Fund's portfolios (or classes of
such portfolios) will vote separately on matters relating
solely to the particular portfolio or class thereof. As a Massachusetts business
trust, the Fund is not required, and does not intend, to hold annual meetings of
shareholders. Shareholder approval will be sought, however, for certain changes
in the operation of the Fund 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 Fund. In the
event that such a meeting is requested, the Fund will provide appropriate
assistance and information to the shareholders requesting the meeting.

REPORTING

The Fund issues unaudited financial information semi-annually and audited
financial statements annually for the Portfolio. The Fund also furnishes
periodic reports and, as necessary, proxy statements to shareholders of record.

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to CRA Realty Shares Portfolio, P.O.
Box 419009, Kansas City, Missouri 64141-6009 or by calling 1-888-712-1103.
Purchases and redemptions of shares should be made through the Transfer Agent by
calling 1-800-808-4921.

DIVIDENDS AND DISTRIBUTIONS

Substantially all of the net investment income (exclusive of capital gains) of
the Portfolio is distributed in the form of quarterly dividends. Shareholders of
record on the next to last Business Day of each quarter will be entitled to
receive the quarterly dividend distribution, which is generally paid within 10
Business Days after the end of the quarter. If any capital gains are realized,
substantially all of it will be distributed at least annually.

Shareholders automatically receive all income dividends and capital gains
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 by Federal Reserve wire transfer or ACH wire transfers.

<PAGE>

Dividends and other distributions of the Portfolio 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
ordinary income or capital gains, a shareholder will pay the full price for the
shares and receive some portion of the price back as a taxable dividend or
distribution.

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

Morgan, Lewis & Bockius LLP serves as counsel to the Fund. Arthur Andersen LLP
serves as the independent public accountants of the Fund.

CUSTODIAN

CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101 acts as the custodian (the "Custodian") of the Fund. The
Custodian holds cash, securities and other assets of the Fund as required by the
1940 Act.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

The following is a description of the permitted investment practices for the
Portfolio, and the associated risk factors:

CONVERTIBLE SECURITIES -- Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both
fixed-income and equity securities. Because of the conversion feature, the
market value of a convertible security tends to move with the market value of
the underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.

EQUITY SECURITIES -- Equity securities represent ownership interests in a
company or corporation and include common stock, preferred stock, and warrants
and other rights to acquire such instruments. Investments in common stocks are
subject to market risks which may cause their prices to fluctuate over time. The
value of convertible securities is also affected by prevailing interest rates,
the credit quality of the issuer and any call provisions. Changes in the value
of portfolio securities will not necessarily affect cash income derived from
these securities but will affect the Portfolio's net asset value.

FIXED INCOME SECURITIES -- Fixed income securities are debt obligations issued
by corporations, municipalities and other borrowers. The market value of fixed
income investments will generally 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 will also affect the value of
these investments. Changes in the value of portfolio securities will not affect
cash income derived from these securities but will affect the Portfolio's net
asset value.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS -- Futures contracts provide
for the future sale by one party and purchase by another party of a specified
amount of a specific security at a specified future time and at a specified
price. An option on a futures contract gives the purchaser the right, in
exchange for a premium, to assume a position in a futures contract at a
specified exercise price during the term of the option. The Portfolio may use
futures contracts and related options for bona fide hedging purposes, to offset
changes in the value of securities held or expected to be acquired or be
disposed of, or to gain exposure to a particular market or instrument. The
Portfolio will minimize the risk that it will be unable to close out a futures
contract by only entering into futures contracts which are traded on national
futures exchanges. In addition, the Portfolio will sell only covered futures
contracts and options on futures contracts. In order to avoid leveraging and
related risks, when the Portfolio purchases futures contracts, it will
collateralize its position by depositing an amount of cash or liquid securities,
equal to the market value of the futures positions held, less margin deposits,
in a segregated account with a third party custodian. Collateral equal to the
current market value of the futures position will be marked to market on a daily
basis.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to accurately predict

<PAGE>
17

movements in the prices of individual securities, fluctuations in markets and
movements in interest rates, (2) there may be an imperfect or no correlation
between the changes in market value of the securities held by the Portfolio and
the prices of futures and options on futures, (3) there may not be a liquid
secondary market for a futures contract or option, (4) trading restrictions or
limitations may be imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and futures options.

ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the fund's books. Illiquid securities include demand
instruments with a demand notice period exceeding seven days, securities for
which there is no secondary market, and repurchase agreements with durations
over 7 days in length.

LOWER RATED SECURITIES -- The Portfolio may invest in lower rated securities.
Lower rated securities (i.e., high yield securities or "junk bonds") are more
likely to react to developments affecting market and credit risk than are more
highly rated securities, which primarily react to movements in the general level
of interest rates. Yields and market values of high yield securities will
fluctuate over time, reflecting not only changing interest rates but the
market's perception of credit quality and the outlook for economic growth. When
economic conditions appear to be deteriorating, medium to lower rated securities
may decline in value due to heightened concern over credit quality, regardless
of prevailing interest rates.

MONEY MARKET INSTRUMENTS -- Money market securities are high-quality, U.S.
dollar-denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government; (iii) high-quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a maturity of one year or less
issued by corporations with outstanding high-quality commercial papers; and (v)
repurchase agreements involving any of the foregoing obligations entered into
with highly-rated banks and broker-dealers.

NON-DIVERSIFICATION -- Investment in the Portfolio, a non-diversified mutual
fund, may entail greater risk than would investment in a diversified investment
company because the concentration in securities of relatively few issuers could
result in greater fluctuation in the total market value of the Portfolio's
holdings. Any economic, political, or regulatory developments affecting the
value of the securities the Portfolio holds could have a greater impact on the
total value of the Portfolio's holdings than would be the case if the portfolio
securities were diversified among more issuers. The Portfolio intends to comply
with the diversification requirements of Subchapter M of the Code. In accordance
with these requirements, the Portfolio will not invest more than 5% of its total
assets in any one issuer; this limitation applies to 50% of the Portfolio's
total assets.

OPTIONS -- A put option gives the purchaser of the option the right to sell, and
the writer of the option the obligation to buy, the underlying commodity or
index at any time during the option period. A call option gives the purchaser of
the option the right to buy, and the writer of the option the obligation to
sell, the underlying security at any time during the option period. The initial
purchase (sale) of an option contract is an "opening transaction." In order to
close out an option position, the Portfolio may enter into a "closing
transaction," which is simply the sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened. If the Portfolio is unable to effect a closing
purchase transaction with respect to an option it has written, it will not be
able to sell the underlying security until the option expires or the Portfolio
delivers the security upon exercise.

Risk Factors -- Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to accurately predict
movements in the prices of individual securities, fluctuations in markets and
movements in interest rates; (2) there may be an imperfect correlation between
the movement in prices of options and the securities underlying them; (3) there
may not be a liquid secondary market for options; and (4) while the Portfolio
will receive a premium when it writes covered call options, it may not
participate fully in a rise in the market value of the underlying security.

<PAGE>

REAL ESTATE SECURITIES -- The Portfolio may be subject to the risks associated
with the direct ownership of real estate because of its policy of concentration
in the securities of companies principally engaged in the real estate industry.
For example, real estate values may fluctuate as a result of general and local
economic conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, demographic trends and variations in
rental income, changes in zoning laws, casualty or condemnation losses,
regulatory limitations on rents, changes in neighborhood values, related party
risks, changes in how appealing properties are to tenants, changes in interest
rates and other real estate capital market influences. The value of securities
of companies which service the real estate business sector may also be affected
by such risks.

Because the Portfolio may invest a substantial portion of its assets in REITs,
the Portfolio may also be subject to certain risks associated with the direct
investments of the REITs. REITs may be affected by changes in the value of their
underlying properties and by defaults by borrowers or tenants. Mortgage REITs
may be affected by the quality of the credit extended. Furthermore, REITs are
dependent on specialized management skills. Some REITs may have limited
diversification and may be subject to risks inherent in financing a limited
number of properties. REITs depend generally on their ability to generate cash
flow to make distributions to shareholders or unitholders, and may be subject to
defaults by borrowers and to self-liquidations. In addition, the performance of
a REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Code or its failure to maintain exemption from registration
under the 1940 Act. Changes in prevailing interest rates may inversely affect
the value of the debt securities in which the Portfolio will invest. Changes in
the value of portfolio securities will not necessarily affect cash income
derived from these securities but will affect the Portfolio's net asset value.
Generally, increases in interest rates will increase the costs of obtaining
financing which could directly and indirectly decrease the value of the
Portfolio's investments.

U.S. GOVERNMENT AGENCIES -- 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, the Federal Home Loan Mortgage Corporation, 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 Portfolio's shares.

U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry Principal Securities ("STRIPS").

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.

Additional information on permitted investments and risk factors can be found in
the Statement of Additional Information.

<PAGE>

CRA
- -----------------------
Realty Shares Portfolio

P.O. Box 419009
Kansas City, MO 64141-6009

Distributor:
SEI Investments Distribution Co.

Investment Adviser:

CRA
REAL ESTATE SECURITIES

To receive account information
or request an investment kit
please call:
1-888-712-1103

Internet:
www.crainvest.com

CRA-F-001-02

<PAGE>

CRA
- --------------------------------------------------------------------------------
REALTY
- --------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------------
Shares
PORTFOLIO
- --------------------------------------------------------------------------------
Fund Prospectus
- --------------------------------------------------------------------------------
February 27, 1998

Investment Adviser:
CRA
REAL ESTATE SECURITIES
<PAGE>
FUND:
THE ADVISORS' INNER CIRCLE FUND

PORTFOLIO:

CRA REALTY SHARES PORTFOLIO

INVESTMENT ADVISER:

CRA REAL ESTATE SECURITIES, L.P.

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and relates only to
the CRA Realty Shares Portfolio (the "Portfolio"). It is intended to provide
additional information regarding the activities and operations of The Advisors'
Inner Circle Fund (the "Fund") and the Portfolio and should be read in
conjunction with the Portfolio's Prospectus dated February 27, 1998. The
Prospectus for the Portfolio may be obtained by calling 1-888-712-1103.

TABLE OF CONTENTS

THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . .S - 2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . .S - 8
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 9
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . S - 10
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . S - 11
TRUSTEES AND OFFICERS OF THE FUND. . . . . . . . . . . . . . . . . S - 11
COMPUTATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . . . . S - 15
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . S - 15
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . S - 16
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 16
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . S - 18
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . S - 20
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . S - 20
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . S - 20
5% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . S - 21
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 22
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . S - 22
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A - 1

FEBRUARY 27, 1998

CRA-F-002-02

<PAGE>

THE FUND

This Statement of Additional Information relates only to the CRA Realty Shares
Portfolio (the "Portfolio"). The Portfolio is a separate series of The
Advisors' Inner Circle Fund (the "Fund"), an open-end investment management
company that offers shares of diversified and non-diversified portfolios,
established under Massachusetts law as a Massachusetts business trust under a
Declaration of Trust dated July 18, 1991. The Declaration of Trust permits the
Fund 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 Portfolio.

DESCRIPTION OF PERMITTED INVESTMENTS

BANKERS' ACCEPTANCES -- A bankers' acceptance is a bill of exchange or time
draft drawn on and accepted by a commercial bank. It is used by corporations to
finance the shipment and storage of goods and to furnish dollar exchange.
Maturities are generally six months or less.

CERTIFICATES OF DEPOSIT -- A certificate of deposit is a negotiable,
interest-bearing instrument with a specific maturity. Certificates of deposit
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 have penalties for early withdrawal.

COMMERCIAL PAPER -- Commercial paper is the term used to designate unsecured,
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a day to nine months.

CONVERTIBLE SECURITIES -- Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, the Portfolio's selection of
convertible securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer and any call provisions.

LOWER RATED SECURITIES -- The Portfolio will invest in lower-rated bonds
commonly referred to as "junk bonds" or high-yield/high-risk securities. Lower
rated securities are defined as securities below the fourth highest rating
category by a nationally recognized statistical rating organization ("NRSRO").
Such obligations are speculative and may be in default. There is no bottom
limit on the ratings of high-yield securities that may be purchased or held by
the Portfolio.

S-2
<PAGE>

In addition, the Portfolio may invest in unrated securities subject to the
restrictions stated in the Prospectus.

CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES. The
descriptions below are intended to supplement the discussion in the Prospectus
under "Risk Factors."

GROWTH OF HIGH-YIELD BOND, HIGH-RISK BOND MARKET. The widespread expansion
of government, consumer and corporate debt within the U.S. economy has made the
corporate sector more vulnerable to economic downturns or increased interest
rates. Further, an economic downturn could severely disrupt the market for
lower rated bonds and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest.

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES. Lower rated bonds are
very sensitive to adverse economic changes and corporate developments. During
an economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals, and to obtain additional financing. If the
issuer of a bond defaulted on its obligations to pay interest or principal or
entered into bankruptcy proceedings, the Portfolio may incur losses or expenses
in seeking recovery of amounts owed to it. In addition, periods of economic
uncertainty and change can be expected to result in increased volatility of
market prices of high-yield, high-risk bonds and the Portfolio's net asset
value.

PAYMENT EXPECTATIONS. High-yield, high-risk bonds may contain redemption
or call provisions. If an issuer exercised these provisions in a declining
interest rate market, the Portfolio would have to replace the security with a
lower yielding security, resulting in a decreased return for investors.
Conversely, a high-yield, high-risk bond's value will decrease in a rising
interest rate market, as will the value of the Portfolio's assets. If the
Portfolio experiences significant unexpected net redemptions, this may force it
to sell high-yield, high-risk bonds without regard to their investment merits,
thereby decreasing the asset base upon which expenses can be spread and possibly
reducing the Portfolio's rate of return.

LIQUIDITY AND VALUATION. There may be little trading in the secondary
market for particular bonds, which may affect adversely the Portfolio's ability
to value accurately or dispose of such bonds. Adverse publicity and investor
perception, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.

LEGISLATION. Federal laws require the divestiture by federally insured
savings and loan associations of their investments in lower rated bonds and
limit the deductibility of interest by certain corporate issuers of high-yield
bonds. These laws could adversely affect the Portfolio's net asset value and
investment practices, the secondary market for high-yield securities, the
financial condition of issuers of these securities and the value of outstanding
high-yield securities.

S-3
<PAGE>

TAXES. The Portfolio may purchase debt securities (such as zero-coupon or
pay-in-kind securities) that contain original issue discount. Original issue
discount that accrues in a taxable year is treated as earned by the Portfolio
and therefore is subject to the distribution requirements of the tax code.
Because the original issue discount earned by the Portfolio in a taxable year
may not be represented by cash income, the Portfolio may have to dispose of
other securities and use the proceeds to make distributions to shareholders.

OPTIONS -- Options are contracts that give one of the parties to the contract
the right to buy or sell the security that is subject to the option at a stated
price during the option period, and obligates the other party to the contract to
buy or sell such security at the stated price during the option period.

The Portfolio may trade put and call options on securities and securities
indices, as the Adviser determines is appropriate in seeking the Portfolio's
investment objective, and except as restricted by the Portfolio's investment
limitations as set forth below. See "Investment Limitations."

A put option gives the purchaser (the Portfolio) the right to sell, and imposes
on the writer an obligation to buy, the underlying security at the exercise
price during the option period. The advantage to the Portfolio of buying the
protective put is that if the price of the security falls during the option
period, the Portfolio may exercise the put and receive the higher price for the
security. However, if the security rises in value, the Portfolio will have paid
a premium for the put, which will expire unexercised.

A call option gives the purchaser the right to buy and imposes on the writer
(the Portfolio) the obligation to sell, the underlying security at the exercise
price during the option period. The advantage to the Portfolio of writing
covered call options is that the Portfolio receives a premium, which is
additional income. However, if the security rises in value, the Portfolio may
not fully participate in the market appreciation. During the option period, a
covered call option writer may be assigned an exercise notice by the
broker-dealer through whom such call option was sold requiring the writer to
deliver the underlying security against payment of the exercise price. The
Portfolio's obligation as the writer of a covered call is terminated upon the
expiration of the option period or at such earlier time in which the writer
effects a closing purchase transaction. As noted above, a closing purchase
transaction is one in which the Portfolio, when obligated as a writer of an
option, terminates its obligation by purchasing an option of the same series as
the option previously written. A closing purchase transaction cannot be
effected with respect to an option once the option writer has received an
exercise notice for such option.

The market value of an option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the pricing volatility of the underlying
security and the time remaining until the expiration date.

REAL ESTATE INVESTMENT TRUSTS -- A REIT is a corporation or business trust (that
would otherwise be taxed as a corporation) which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). The
Code permits a qualifying REIT to deduct

S-4
<PAGE>

from taxable income the dividends paid, thereby effectively eliminating
corporate level federal income tax and making the REIT a pass-through vehicle
for federal income tax purposes. To meet the definitional requirements of the
Code, a REIT must, among other things: invest substantially all of its assets in
interests in real estate (including mortgages and other REITs), cash and
government securities; derive most of its income from rents from real property
or interest on loans secured by mortgages on real property; and distribute
annually 95% or more of its otherwise taxable income to shareholders.

REITs are sometimes informally characterized as Equity REITs and Mortgage REITs.
An Equity REIT invests primarily in the fee ownership or leasehold ownership of
land and buildings; a Mortgage REIT invests primarily in mortgages on real
property, which may secure construction, development or long-term loans.

REITs in which the Portfolio invests may be affected by changes in underlying
real estate values, which may have an exaggerated effect to the extent that
REITs in which the Portfolio invests may concentrate investments in particular
geographic regions or property types. Additionally, rising interest rates may
cause investors in REITs to demand a higher annual yield from future
distributions, which may in turn decrease market prices for equity securities
issued by REITs. Rising interest rates also generally increase the costs of
obtaining financing, which could cause the value of the Portfolio's investments
to decline. During periods of declining interest rates, certain Mortgage REITs
may hold mortgages that the mortgagors elect to prepay, which prepayment may
diminish the yield on securities issued by such Mortgage REITs. In addition,
Mortgage REITs may be affected by the ability of borrowers to repay when due the
debt extended by the REIT and equity REITs may be affected by the ability of
tenants to pay rent.

Certain REITs have relatively small market capitalization, which may tend to
increase the volatility of the market price of securities issued by such REITs.
Furthermore, REITs are dependent upon specialized management skills, have
limited diversification and are, therefore, subject to risks inherent in
operating and financing a limited number of projects. By investing in REITs
indirectly through the Portfolio, a shareholder will bear not only his
proportionate share of the expenses of the Portfolio, but also, indirectly,
similar expenses of the REITs. REITs depend generally on their ability to
generate cash flow to make distributions to shareholders.

In addition to these risks, Equity REITs may be affected by changes in the value
of the underlying property owned by the trusts, while Mortgage REITs may be
affected by the quality of any credit extended. Further, Equity and Mortgage
REITs are dependent upon management skills and generally may not be diversified.
Equity and Mortgage REITs are also subject to heavy cash flow dependency
defaults by borrowers and self-liquidation. In addition, Equity and Mortgage
REITs could possibly fail to qualify for tax free pass-through of income under
the Code or to maintain their exemptions from registration under the 1940 Act.
The above factors may also adversely affect a borrower's or a lessee's ability
to meet its obligations to the REIT. In the event of a default by a borrower or
lessee, the REIT may experience delays in enforcing its rights as a mortgagee or
lessor and may incur substantial costs associated with protecting its
investments.

S-5
<PAGE>

REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a person
(e.g., the Portfolio) obtains a security and simultaneously commits to return
the security to the seller (a member bank of the Federal Reserve System or
primary securities dealer as recognized by the Federal Reserve Bank of New York)
at an agreed upon price (including principal and interest) on an agreed upon
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 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.

Repurchase agreements are considered to be loans by the Portfolio for purposes
of its investment limitations. The repurchase agreements entered into by the
Portfolio 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 Portfolio, the custodian or its agent must take
possession of the underlying collateral. However, if the seller defaults, the
Portfolio could realize a loss on the sale of the underlying security to the
extent that the proceeds of the sale, including accrued interest, are less than
the resale price provided in the agreement including interest. In addition,
even though the Bankruptcy Code provides protection for most repurchase
agreements, if the seller should be involved in bankruptcy or insolvency
proceedings, the Portfolio may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the Portfolio is
treated as an unsecured creditor and is required to return the underlying
security to the seller's estate.

RESTRICTED SECURITIES -- Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933,
as amended (the "1933 Act"), or an exemption from registration. Section 4(2)
commercial paper is issued in reliance on an exemption from registration under
Section 4(2) of the 1933 Act, and is generally sold to institutional investors
who purchase for investment. Any resale of such commercial paper must be in an
exempt transaction, usually to an institutional investor through the issuer or
investment dealers who make a market on such commercial paper. Rule 144A
securities are securities re-sold in reliance on an exemption from registration
provided by Rule 144A under the 1933 Act.

SECURITIES LENDING -- In order to generate additional income, the Portfolio may
lend its securities pursuant to agreements requiring that the loans be
continuously secured by cash, securities of the U.S. Government or its agencies,
or any combination of cash and such securities, in an amount at least equal to
the market value of the loaned securities. Loans are made only to borrowers
deemed by the Adviser to be in good standing and when, in the judgment of the
Adviser, the consideration that can be earned currently from such loaned
securities justifies the attendant risk. Any loan may be terminated by either
party upon reasonable notice to the other party. The Portfolio may use the
Distributor as a broker in these transactions.

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

S-6
<PAGE>

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.

VARIABLE OR FLOATING RATE INSTRUMENTS -- Variable or floating rate instruments
may involve a demand feature and may include variable amount master demand notes
available through the Custodian. Variable or floating rate instruments bear
interest at a rate which varies with changes in market rates. 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 Portfolio's
Adviser, be equivalent to the long-term bond or commercial paper ratings
applicable to permitted investments for the Portfolio.

In case of obligations which include a put feature at the option of the debt
holder, the date of the put may be used as an effective maturity date for the
purpose of determining weighted average portfolio maturity.

WHEN-ISSUED SECURITIES -- When-Issued securities are securities that involve the
purchase of debt obligations on a when-issued basis, in which case delivery and
payment normally take place within 45 days after the date of commitment to
purchase. The Portfolio will only make commitments to purchase obligations on a
when-issued basis with the intention of actually acquiring the securities, but
may sell them before the settlement date. The when-issued securities are
subject to market fluctuation, and no interest accrues to the purchaser during
this period. The payment obligation and the interest rate that will be received
on the securities are each fixed at the time the purchaser enters into the
commitment. Purchasing when-issued obligations results in leveraging, and can
involve a risk that the yields available in the market when the delivery takes
place may actually be higher than those obtained in the transaction itself. In
that case there could be an unrealized loss at the time of delivery. The
Portfolio will establish a segregated account with the Custodian and maintain
liquid assets in an amount at least equal in value to that Portfolio's
commitments to purchase when-issued securities. If the value of these assets
declines, the Portfolio involved will place additional liquid assets in the
account on a daily basis so that the value of the assets in the account is equal
to the amount of such commitments. Currently, the Portfolio intends to limit
its commitments to purchase when-issued securities to less than 5% of its net
assets.

OTHER INVESTMENTS

The Fund is not prohibited from investing in obligations of banks that are
clients of SEI Investments Company ("SEI Investments"). However, the purchase
of shares of the Fund by them or by their customers will not be a consideration
in determining which bank obligations the Fund will purchase. The Fund will not
purchase obligations of any of the advisers to the Fund. Distributions by the
Portfolio out of income from taxable securities will generally be taxable to
shareholders of such Portfolio as ordinary income.

S-7
<PAGE>

INVESTMENT COMPANY SHARES

The Portfolio may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Portfolio. The Portfolio'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 Portfolio
expenses. Under applicable regulations, the Portfolio is prohibited from
acquiring the securities of another investment company if, as a result of such
acquisition: (1) the Portfolio 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 Portfolio'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 Portfolio. Additionally, the Portfolio currently
intends to limit its investment in shares of other investment companies to less
than 5% of its net assets. See also "Investment Limitations."

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations are fundamental policies of the Portfolio
that cannot be changed without the consent of the holders of a majority of the
Portfolio's outstanding shares. The phrase "majority of the outstanding shares"
means the vote of (i) 67% or more of the Portfolio's shares present at a
meeting, if more than 50% of the outstanding shares of the Portfolio are present
or represented by proxy, or (ii) more than 50% of the Portfolio's outstanding
shares, whichever is less.

The Portfolio 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 Portfolio 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 Portfolio, and further provided that,
to the extent that such borrowings exceed 5% of the Portfolio's total
assets, all borrowings shall be repaid before the Portfolio makes
additional investments. The term "senior security" shall not include any
temporary borrowings that do not exceed 5% of the value of the Portfolio's
total assets at the time the Portfolio makes such temporary borrowing. In
addition, investment strategies that either obligate the Portfolio to
purchase securities or require the Portfolio to segregate assets will not
be considered borrowings or

S-8
<PAGE>

senior securities. This investment limitation shall not preclude the
Portfolio 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 Portfolio 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, physical commodities, or commodities
contracts, except that the Portfolio may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities or commodities contracts, and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.

6. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

7. Purchase securities of other investment companies except as permitted by
the 1940 Act and the rules and regulations thereunder.

The foregoing percentages, except with respect to fundamental limitation No.3,
will apply at the time of the purchase of a security.

In addition to the foregoing fundamental limitations, it is a fundamental policy
of the Portfolio to concentrate in securities issued by companies primarily
engaged in the real estate industry.

NON-FUNDAMENTAL POLICIES

The following investment limitation of the Portfolio is non-fundamental and may
be changed by the Fund's Board of Trustees without shareholder approval:

1. The Portfolio may not invest in illiquid securities in an amount exceeding,
in the aggregate, 15% of the Portfolio's net assets.

THE ADVISER

The Fund and CRA Real Estate Securities, L.P. (the "Adviser") have entered into
an advisory agreement with respect to the Portfolio (the "Advisory Agreement").
The Advisory Agreement provides that the Adviser shall not be protected against
any liability to the Fund 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.

S-9
<PAGE>

For the fiscal period ended October 31, 1997, the Adviser was paid $35,870 and
waived fees of $84,679 with respect to the Portfolio.

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 Portfolio and (ii) by the vote of a majority of
the Trustees who are not parties to the Advisory 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 Fund or by a majority of the outstanding
shares of the Portfolio, 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 Fund.

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 Portfolio in connection with the matters to
which the Administration Agreement relates, except a loss resulting from willful
misfeasance, 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.

For the fiscal period ended October 31, 1997, the Administrator received a fee
of $38,014 from the Portfolio and voluntarily waived fees of $24,486.

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 Portfolio or the Fund, effective upon the liquidation of the Portfolio
or the Fund, as the case may be.

S-10
<PAGE>

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, 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, TIP Funds and TIP Institutional Funds.

If operating expenses of any Fund exceed limitations established by certain
states, the Administrator will pay such excess. The Administrator will not be
required to bear expenses of any Fund to an extent which would result in the
Fund's inability to qualify as a regulated investment company under provisions
of the Internal Revenue Code. The term "expenses" is defined in such laws or
regulations, and generally excludes brokerage commissions, distribution
expenses, taxes, interest and extraordinary expenses.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Fund are parties to a distribution agreement (the
"Distribution Agreement"). The Distributor will not receive compensation for
distribution of shares of the Portfolio.

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 Fund upon not more than 60 days' written notice by either party or upon
assignment by the Distributor.

TRUSTEES AND OFFICERS OF THE FUND

The management and affairs of the Fund are supervised by the Trustees under
the laws of the commonwealth of Massachusetts. The Fund pays the fees for
unaffiliated Trustees.

The Trustees and Executive Officers of the Fund, 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 Fund also serve as officers of some or all of the following:
The Achievement Funds Trust, 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 Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, 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, TIP Funds and TIP Institutional Funds, open-end management investment
companies which are managed by SEI Fund Resources or its affiliates and, except

S-11
<PAGE>

for Santa Barbara Group of Mutual Funds, Inc., are distributed by SEI
Investments Distribution Co.

ROBERT A. PATTERSON (DOB 11/05/27) -- Trustee** -- 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 Advisors' Inner Circle Fund, The Arbor
Fund, The Expedition Funds, and Marquis Funds-Registered Trademark-.

S-12
<PAGE>

before 1978. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The
Expedition Funds and Marquis Funds-Registered Trademark-.

SANDRA K. ORLOW (DOB 10/18/53) -- Vice President and Assistant Secretary -- Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.

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 Investments, Vice President and Assistant
Secretary of the Administrator and Distributor since 1994. Associate, Morgan,
Lewis & Bockius LLP (law firm), 1989-1994.

S-13
<PAGE>

- ------------------------------
*MESSRS. NESHER and Doran are Trustees who may be deemed to be "interested"
persons of the Fund 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 Fund.

The Trustees and officers of the Fund own less than 1% of the outstanding shares
of the Fund. The Fund pays the fees for unaffiliated Trustees.

The following table exhibits Trustee compensation for the fiscal year ended
October 31, 1997.

Total Compensation
From Registrant and
Aggregate Compensation Fund Complex* Paid
From Registrant for Pension or Retirement Estimated Annual to Trustees for the
the Fiscal Year Ended Benefits Accrued as Benefits Upon Fiscal Year Ended
Name of Person, Position October 31, 1997 Part of Fund Expenses Retirement October 31, 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney $8,154 N/A N/A $8,154 for
services on 1 board
- -----------------------------------------------------------------------------------------------------------------------
Frank E. Morris $8,154 N/A N/A 8,154 for
services on 1 board
- -----------------------------------------------------------------------------------------------------------------------
Robert Patterson $8,154 N/A N/A $8,154 for
services on 1 board
- -----------------------------------------------------------------------------------------------------------------------
Eugene B. Peters $8,154 N/A N/A $8,154 for
services on 1 board
- -----------------------------------------------------------------------------------------------------------------------
James M. Storey, Esq. $8,154 N/A N/A $8,154 for
services on 1 board
- -----------------------------------------------------------------------------------------------------------------------
William M. Doran, Esq. $0 N/A N/A $0 for services on
1 board
- -----------------------------------------------------------------------------------------------------------------------
Robert A. Nesher $0 N/A N/A $0 for services on
1 board
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

*For purposes of this table, the Fund is the only investment company in the
"Fund Complex."

S-14
<PAGE>

COMPUTATION OF TOTAL RETURN

From time to time the Fund may advertise total return of the Portfolio. These
figures will be based on historical earnings and are not intended to indicate
future performance. No representation can be made concerning actual future
returns.

The total return of the Portfolio refers to the average annual compounded rate
of return to a hypothetical investment for designated time periods (including
but not limited to, the period from which the Portfolio 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.

For the fiscal period from January 1, 1997 (commencement of operations) through
October 31, 1997, the total return for the Institutional Shares of the Portfolio
was 18.17% (cumulative) and 22.19% (annualized).

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Transfer Agent on any day the
New York Stock Exchange is open for business. Currently, the Fund is closed for
business when the following holidays are observed: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and Christmas. Shares
of the Portfolio are offered on a continuous basis.

It is currently the Fund's policy to pay all redemptions in cash. The Fund
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 the Portfolio
in lieu of cash. Shareholders may incur brokerage charges on the sale of any
such securities so received in payment of redemptions. The Fund has obtained an
exemptive order from the SEC that permits the Fund 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's investment portfolios.

A discussed in the Prospectus, the minimum investment levels may be waived for
certain classes of investors, including "rabbi trusts." A rabbi trust is a
grantor trust established by an employer that can be used to fund certain
deferred compensation plans. The assets of such trusts are subject to the
employer's creditor's in bankruptcy.

S-15
<PAGE>

as a result of which disposal or valuation of the portfolio's securities is not
reasonably practicable, or for such other periods as the sec has by order
permitted. The fund also reserves the right to suspend sales of shares of the
portfolio 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 Portfolio 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 trade quotations. However, the service may also use a
matrix system to determine valuations of certain securities, which system
considers such factors as security prices, yields, maturities, call features,
ratings and developments relating to specific securities. The procedures of the
pricing service and its valuations are reviewed by the officers of the Fund
under the general supervision of the Trustees.

TAXES

FEDERAL INCOME TAX

S-16
<PAGE>

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 Portfolio's
assets and that does not represent more than 10% of the outstanding voting
securities of such issuer; and (iii) at the close of each quarter of the
Portfolio'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 Portfolio
controls or which are engaged in the same, similar or related trades or
business.

STATE TAXES

S-17
<PAGE>

PORTFOLIO TRANSACTIONS

The Adviser is authorized to select brokers and dealers to effect securities
transactions for the Portfolio. The Portfolio will seek to obtain the most
favorable net results by taking into account various factors, including price,
commission, if any, size of the transactions and difficulty of executions, the
firm's general execution and operational facilities and the firm's risk in
positioning the securities involved. While the Adviser generally seeks
reasonably competitive spreads or commissions, the Portfolio will not
necessarily be paying the lowest spread or commission available. The Adviser
seeks to select brokers or dealers that offer the Portfolio best price and
execution or other services which are of benefit to the Portfolio.

The Adviser may, consistent with the interests of the Portfolio, select brokers
on the basis of the research services they provide to the Adviser. Such
services may include analyses of the business or prospects of a company,
industry or economic sector, or statistical and pricing services. Information
so received by the Adviser will be in addition to and not in lieu of the
services required to be performed by the Adviser under the Advisory Agreement.
If, in the judgment of the Adviser, the Portfolio or other accounts managed by
the Adviser will be benefitted by supplemental research services, the Adviser is
authorized to pay brokerage commissions to a broker furnishing such services
which are in excess of commissions which another broker may have charged for
effecting the same transaction. These research services include advice, either
directly or through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software used in security analyses; and providing
portfolio performance evaluation and technical market analyses. The expenses of
the Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information, such services may not be used exclusively with respect
to the Portfolio or account generating the brokerage, and there can be no
guarantee that the Adviser will find all of such services of value in advising
that Portfolio.

It is expected that the Portfolio 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,
as amended, and rules promulgated by the SEC. Under these provisions, the
Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for the Portfolio on an exchange if a written contract is
in effect between the Distributor and the Portfolio expressly permitting the
Distributor to receive and retain such compensation. These rules further
require that commissions paid to the Distributor by the Portfolio 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 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

S-18
<PAGE>

"interested persons" of the Fund, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review these
procedures periodically.

For the fiscal year ended October 31, 1997, the following commissions were paid
on brokerage transactions, pursuant to an agreement or understanding, to brokers
because of research services provided by the brokers:

- -----------------------------------------------------------------------
Total Dollar Amount of Total Dollar Amount of
Brokerage Commissions for Transactions Involving Directed
Research Services Brokerage Commissions for
Research Services
- -----------------------------------------------------------------------
$5,248 $2,251,332
- -----------------------------------------------------------------------

For the fiscal years ended October 31, 1995, 1996 and 1997, the Portfolio paid
the following brokerage commissions:

<S><C>
- -----------------------------------------------------------------------
Total Brokerage Commissions Amount Paid to SEI
Investments(1)
- -----------------------------------------------------------------------
1995 1996 1997 1995 1996 1997
- -----------------------------------------------------------------------
* * $110,005 * * $317
- -----------------------------------------------------------------------

</TABLE>

* An asterisk indicates that the Portfolio had not commenced operations for the
period indicated.

(1) The amounts paid to SEI Investments reflect fees paid in connection with
repurchase agreement transactions.

For the fiscal years indicated, the Portfolio paid the following brokerage
commissions:

<S><C>
- --------------------------------------------------------------------------------------------------
% of Total % of Total
Total $ Amount of Total $ Amount of Brokerage Brokerage
Brokerage Commissions Brokerage Commissions Transactions
Paid Commissions Paid to Paid to the Effected Through
Affiliated Brokers Affiliated Brokers Affiliated Brokers
- --------------------------------------------------------------------------------------------------

1995 1996 1997 1995 1996 1997 1997 1997
- --------------------------------------------------------------------------------------------------
* * $110,005 * * 0 0 0
- --------------------------------------------------------------------------------------------------
</TABLE>

* An asterisk indicates that the Portfolio had not commenced operations as of
the period indicated.

Because the Portfolio does not market its shares through intermediary brokers or
dealers, it is the Portfolio'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 may place portfolio orders with

S-19
<PAGE>

qualified broker-dealers who recommend the Portfolio'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 Portfolio is required to identify any securities of its "regular brokers or
dealers" (such term is defined in the 1940 Act, which the Portfolio has acquired
during its most recent fiscal year. As of October 31, 1997, the Portfolio held
repurchase agreements valued at $910,237 with Lehman Brothers).

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents
an equal proportionate interest in that 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. All consideration received
by the Fund for shares of any portfolio and all assets in which such
consideration is invested would belong to that portfolio and would be subject to
the liabilities related thereto. Share certificates representing shares will
not be issued.

SHAREHOLDER LIABILITY

LIMITATION OF TRUSTEES' LIABILITY

S-20
<PAGE>

5% SHAREHOLDERS

As of February 1, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Fund, beneficial owners) of 5% or more
of each class of the Portfolio's shares.

Shareholder Number of Shares %
- ----------- ---------------- --
<S> <C> <C>
Dorrance H. Hamilton & 537,796.8860 15.47%
Barbara Cobb Tr.
U/A March 15, 1996
Dorrance H. Hamilton Trust
200 Eagle Rd. Ste 316
Wayne, PA 19087-3115

Hep & Co. 320,683.0720 9.23%
P.O. Box 9800
Calabasas, CA 91372-0800

First Trust Na. Tr. 298,154.7000 8.58%
U/A 10/1/1995
Foodbrands America Inc. Master Tr.
Att Mutual Funds #21707707
P.O. Box 64010
Saint Paul, MN 55164-0010

Bentley College 262,429.4280 7.55%
175 Forest St.
Waltham, MA 02154-4705

Robert Mintz & 245,058.1090 7.05%
Barnard Gottstein Tr. U/A 07/16/1993
Barnard Jacob Gottstein
Revocable Living Trust
550 W. 7th Ave. Ste 1540
Anchorage, AK 99501-3567

Miami University Foundation 238,714.3600 6.87%
c/o Edward J. Demske
202 Roudebush Hall
Oxford, OH 45056

Cynvestors Limited Partnership 195,694.3620 5.63%

</TABLE>

S-21
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
2620 N. Helen St. Apt. 103
Appleton, WI 54911-2306

Trenton Fire & Police Pension Board 193,010.3580 5.55%
2800 3rd St.
Trenton, MI 48183-2918

</TABLE>

The Fund believes that most of the shares referred to above were held by the
persons indicated in accounts for their fiduciary, agency or custodial
customers.

EXPERTS

The financial statements incorporated by reference have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, in reliance upon the authority of said firm as experts in
giving said reports.

FINANCIAL STATEMENTS

The financial statements for the fiscal year ended October 31, 1997, including
notes thereto and the report of Arthur Andersen LLP thereon, are herein
incorporated by reference in reliance upon the authority of said firm as experts
in giving said report. A copy of the 1997 Annual Report to Shareholders must
accompany the delivery of this Statement of Additional Information.

S-22
<PAGE>

APPENDIX

DESCRIPTION OF CORPORATE BOND RATINGS

The following descriptions of corporate bond ratings have been published by
Standard & Poor's Corporation ("S&P") and Moody's Investors Service, Inc.
("Moody's"), respectively.

Debt rated AAA has the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Debt rated AA also qualities as high-quality debt. Capacity to pay principal
and interest is very strong, and differs from AAA issues only in small degree.
Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

Debt rated BB, B, CCC, CC and C is regarded as having predominately speculative
characteristics with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the least degree of
speculation and C the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties of major risk exposures to adverse conditions.

The rating CI is reserved for income bonds on which no interest is being paid.

Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.

Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered

A-1
<PAGE>

adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Bonds rated Baa are considered as medium grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

The following descriptions of commercial paper ratings have been published by
S&P and Moody's, respectively.

- Leading market positions in well-established industries.
- High rates of return on funds employed.

A-2
<PAGE>

- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

A-3