<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 1999
FILE NO. 33-42484
FILE NO. 811-6400
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 38 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 37 /X/
------------------------
THE ADVISORS' INNER CIRCLE FUND
(Exact Name of Registrant as Specified in Charter)
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (800) 932-7781
MARK E. NAGLE
c/o SEI Corporation
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)
COPIES TO:
Richard W. Grant, Esquire
John H. Grady, Esquire
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
------------------------
It is proposed that this filing become effective (check appropriate box)
<TABLE>
<C> <S>
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/X/ 75 days after filing pursuant to paragraph (a)
/ / on [date] pursuant to paragraph (a) of Rule 485.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
PROSPECTUS
MAY ___, 1999
HGK EQUITY VALUE FUND
HGK MID CAP VALUE FUND
INVESTMENT ADVISER
HGK ASSET MANAGEMENT, INC.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.
Page 1 of 20
<PAGE>
HOW TO READ THIS PROSPECTUS
The HGK Funds is a mutual fund family that offers shares in separate investment
portfolios (Funds). The portfolios have individual investment goals and
strategies. This prospectus gives you important information about the HGK
Equity Value Fund and the HGK Mid Cap Value Fund that you should know before
investing. Please read this prospectus and keep it for future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT THE FUNDS. FOR MORE DETAILED INFORMATION
ABOUT THE FUNDS, PLEASE SEE:
Page
HGK Equity Value Fund XXX
HGK Mid Cap Value Fund XXX
More information about risk XXX
Each Fund's other investments XXX
The Investment Adviser and portfolio managers XXX
Purchasing, Selling and Exchanging Fund shares XXX
Dividends, distributions and taxes XXX
How to obtain more information about the
HGK Funds Back Cover
Page 2 of 20
<PAGE>
INTRODUCTION - INFORMATION COMMON TO BOTH FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal.
The investment managers invest Fund assets in a way that they believe will help
each Fund achieve its goal. Still, investing in each Fund involves risk and
there is no guarantee that a Fund will achieve its goal. An investment
manager's judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company performance,
and these judgments may affect the return on your investment. In fact, no
matter how good a job an investment manager does, you could lose money on your
investment in the Fund, just as you could with other investments.
The value of your investment in a Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
Equity Risk
The Funds principally invest (at least 65% of their assets) in equity
securities. Equity securities include public and privately issued equity
securities, common and preferred stocks, warrants, rights to subscribe to common
stock and convertible securities, as well as instruments that attempt to track
the price movement of equity indices. Investments in equity securities and
equity derivatives in general are subject to market risks that may cause their
prices to fluctuate over time. The value of securities convertible into equity
securities, such as warrants or convertible debt, 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 a mutual fund invests
will cause a Fund's net asset value to fluctuate. Historically, the equity
markets have moved in cycles, and the value of the Fund's equity securities
may fluctuate drastically from day-to-day. Individual companies may report
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is
the principal risk of investing in the Fund. An investment in a Fund may be
more suitable for long-term investors who can bear the risk of these share
price fluctuations.
Page 3 of 20
<PAGE>
HGK EQUITY VALUE FUND
INVESTMENT GOAL LONG-TERM CAPITAL APPRECIATION
PRINCIPAL INVESTMENT STRATEGY OF THE HGK EQUITY VALUE FUND
The Fund invests primarily in common stocks of established U.S. companies with
large market capitalizations (on average, between $20 and $30 billion) that
exhibit value characteristics. In choosing investments for the Fund, the
Adviser identifies value through in-depth cash flow analysis, selecting those
companies that exhibit improving cash flow return on investment and that
currently trade at a price below the present value of their discounted cash
flows. The Adviser's process seeks to eliminate the accounting distortions
inherent in financial statements and allow comparisons between companies based
on their ability to generate cash flow for a given level of invested capital.
The Adviser also incorporates traditional "value criteria," such as
price/earnings ratios, to reinforce and enhance the investment selection
process.
The Adviser employs a sell discipline for individual stocks based on a
discounted cash flow model. Using consensus earnings estimates and historical
asset growth rates, a model of future cash flows is constructed with a duration
based on a company's average asset life and a residual value comprised of cash,
land, accounts receivable, and inventories. A company-specific discount rate is
then applied to the cash flows and residual value, resulting in a present value
for the stock. When a stock's present value reaches its market price, it
becomes a candidate for sale.
The Adviser seeks to keep the Fund well-diversified and exposed to all major
market sectors (such as technology, consumer staples, etc.) in the Standard &
Poor's Composite 500 Index (S&P 500) and will overweight sectors which it
believes are undervalued. The Adviser will attempt to avoid overweighting the
Fund's position in any specific sector beyond 150% of the weighting that sector
has in the S&P 500. Conversely, for sectors that it believes are overvalued,
the Adviser will attempt to avoid underweighting the Fund's position in any
specific sector below 50% of the weighting that sector has in the S&P 500.
Page 4 of 20
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE HGK EQUITY VALUE FUND
The Fund is subject to the risk that its market segment, large capitalization
value stocks, may underperform other equity market segments or the equity
markets as a whole.
Investor Profile Investors who seek long term capital appreciation and who
are willing to bear the risks of investing in equity
securities
PERFORMANCE INFORMATION
The Fund is new and did not have performance information at the time this
prospectus was printed.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
<TABLE>
<S> <C>
SHAREHOLDER FEES (fees paid directly from your investment)
- --------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE
OF OFFERING PRICE)* 5.50%
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET
VALUE) NONE
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND
OTHER DISTRIBUTIONS (AS A PERCENTAGE OF OFFERING PRICE) NONE
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) NONE
EXCHANGE FEE NONE
MAXIMUM ACCOUNT FEE NONE
- --------------------------------------------------------------------------------
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE
"PURCHASING FUND SHARES."
</TABLE>
Page 5 of 20
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .90%
Distribution and Service (12b-1) Fees .25%
Other Expenses .XX%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
Fee Waivers and Expense Reimbursements X.XX%
Net Expenses X.XX%
</TABLE>
* THE FUND'S ADVISER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND REIMBURSE
EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.50% FOR A
PERIOD OF ONE YEAR FROM THE DATE OF THIS PROSPECTUS. FOR MORE INFORMATION ABOUT
THESE FEES, SEE "INVESTMENT ADVISER" AND "DISTRIBUTION OF FUND SHARES."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
operating expenses remain the same. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:
<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$____ $____ $____ $____
</TABLE>
Page 6 of 20
<PAGE>
HGK MID CAP VALUE FUND
INVESTMENT GOAL LONG-TERM CAPITAL APPRECIATION
PRINCIPAL INVESTMENT STRATEGY OF THE HGK MID CAP VALUE FUND
The Fund invests primarily in common stocks of established U.S. companies with
medium market capitalizations (between $750 million and $10 billion) that
exhibit value characteristics. In choosing investments for the Fund, the
Adviser identifies value through in-depth cash flow analysis, selecting those
companies that exhibit improving cash flow return on investment and that trade
at a price below the present value of their discounted cash flows. The
Adviser's process seeks to eliminate the accounting distortions inherent in
financial statements and allow comparisons between companies based on their
ability to generate cash flow for a given level of invested capital. The
Adviser also incorporates traditional "value criteria," such as price/earnings
ratios, to reinforce and enhance the investment selection process.
The Adviser seeks to keep the Fund well-diversified and exposed to all major
market sectors (such as technology, consumer staples, etc.) represented in the
broad market and will overweight sectors which it believes are undervalued. The
Adviser will attempt to avoid significant overweighting or underweighting of the
Fund's position in any specific sector.
The Adviser employs a sell discipline for individual stocks based on a
discounted cash flow model. Using consensus earnings estimates and historical
asset growth rates, a model of future cash flows is constructed with a duration
based on a company's average asset life and a residual value comprised of cash,
land, accounts receivable, and inventories. A company-specific discount rate is
then applied to the cash flows and residual value, resulting in a present value
for the stock. When a stock's present value reaches its market price, it
becomes a candidate for sale.
PRINCIPAL RISKS OF INVESTING IN THE HGK MID CAP VALUE FUND
The medium capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, medium capitalization stocks may be more volatile than those of
larger companies. These securities may be traded over-the-counter or listed on
an exchange and may or may not pay dividends.
The Fund is also subject to the risk that its market segment, medium
capitalization value stocks, may underperform other equity market segments or
the equity markets as a whole.
Investor Profile Investors who seek long term capital appreciation and who
are willing to bear the risks of investing in equity
securities of medium sized companies
Page 7 of 20
<PAGE>
PERFORMANCE INFORMATION
The Fund is new and did not have performance information at the time this
prospectus was printed.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE
OF OFFERING PRICE)* 5.50%
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET
VALUE) NONE
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND
OTHER DISTRIBUTIONS (AS A PERCENTAGE OF OFFERING PRICE) NONE
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) NONE
EXCHANGE FEE NONE
MAXIMUM ACCOUNT FEE NONE
- --------------------------------------------------------------------------------
* This sales charge varies depending upon how much you invest. See
"Purchasing Fund Shares."
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .90%
Distribution and Service (12b-1) Fees .25%
Other Expenses .XX%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
Fee Waivers and Expense Reimbursements X.XX%
Net Expenses X.XX%
</TABLE>
* THE FUND'S ADVISER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND REIMBURSE
EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.50% FOR A
PERIOD OF ONE YEAR FROM THE DATE OF THIS PROSPECTUS. FOR MORE INFORMATION ABOUT
THESE FEES, SEE "INVESTMENT ADVISER" AND "DISTRIBUTION OF FUND SHARES."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
operating expenses remain the same. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:
Page 8 of 20
<PAGE>
<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$____ $____ $____ $____
</TABLE>
Page 9 of 20
<PAGE>
MORE INFORMATION ABOUT RISK
YEAR 2000 RISK - The Funds depend on the smooth functioning of computer systems
in almost every aspect of their business. Like other mutual funds, businesses
and individuals around the world, the Funds could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000, and distinguish between the year 2000 and the year
1900. The Funds have asked their service providers whether they expect to have
their computer systems adjusted for the year 2000 transition, and is seeking
assurances from each service provider that they are devoting significant
resources to prevent material adverse consequences to the Funds. While it is
likely that such assurances will be obtained, the Funds and their shareholders
may experience losses if these assurances prove to be incorrect or as a result
of year 2000 computer difficulties experienced by issuers of portfolio
securities or third parties, such as custodians, banks, broker-dealers or others
with which the Funds do business.
Page 10 of 20
<PAGE>
EACH FUND'S OTHER INVESTMENTS
This prospectus describes the Funds' primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that either
Fund will achieve its investment goal.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Fund may invest up to 100%
of its assets in cash or money market instruments that would not ordinarily be
consistent with a Fund's objectives. A Fund will do so only if the Adviser
believes that the risk of loss outweighs the opportunity for capital gains.
INVESTMENT ADVISER
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's respective investment program.
The Board of Trustees of The Advisors' Inner Circle Fund supervises the Adviser
and establishes policies that the Adviser must follow in its management
activities.
HGK Asset Management, Inc (HGK), serves as the Adviser to the Funds. HGK has
provided equity, fixed income and balanced asset management services for the
assets of institutional and individual investors since its inception in 1983.
As of December 31, 1998, HGK had approximately $2.1 billion in assets under
management. For its advisory services to the Funds, HGK is entitled to receive
.90% of the average daily net assets of each Fund. HGK has contractually
agreed, for a period of one year from the date of this prospectus, to waive a
portion of its fees and reimburse certain expenses of the Funds so that total
operating expenses do not exceed 1.50% of each Fund's average daily net assets.
PORTFOLIO MANAGERS
Michael Pendergast, CFA serves as a Senior Equity Portfolio Manager for HGK and
co-manages the HGK Equity Value Fund. He has more than 15 years of investment
experience. Prior to joining HGK in 1983, Mr. Pendergast served as an equity
portfolio manager at L.F. Rothchild, Unterberg, Towbin.
Paul B. Carlson, CFA serves as a Portfolio Manager for HGK and co-manages the
HGK Equity Value Fund. He has more than 10 years of investment experience.
Prior to joining HGK in 1991, Mr. Carlson served as a trading assistant at
Dillon, Read.
Arthur E. Coia, II serves as a managing director of HGK and manages the HGK Mid
Cap Value Fund. He has more than seven years of investment experience. Prior
to joining HGK in 1998, Mr. Coia managed equity accounts for a Manhattan
investment firm.
Page 11 of 20
<PAGE>
THE ADVISER'S PAST PERFORMANCE
The following table represents the average annual return for all of the accounts
managed by HGK with investment goals and strategies that are substantially
similar to those of the HGK Equity Value Fund and the HGK Mid Cap Value Fund and
a comparison to each Fund's respective performance benchmark. These similarly
managed accounts are referred to as "composites." The composites were managed
by the same portfolio managers that currently manage the investments of each
Fund, respectively. The composite performance has been adjusted based on the
applicable sales charges and the estimated total operating expenses of each
Fund, based on the Adviser's contractual agreement to waive its fees and
reimburse fund expenses to limit each Fund's expenses to 1.50% of average daily
net assets. This adjustment reduces the actual performance of the composites.
The comparison of the composites to the benchmarks is meant to provide you with
a general sense of how the composites performed compared to an appropriate
broad-based equity market index. The past performance of the composites is no
guarantee of the future performance of the Funds.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN FOR THE
PERIODS ENDED __________
- --------------------------------------------------------------------------------
SINCE INCEPTION
COMPOSITES/BENCHMARKS 1 YEAR 5 YEARS (10/1/90)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
HGK Equity Value Composite
(gross of sales load and fees) ___% ___% ___%
- --------------------------------------------------------------------------------
HGK Equity Value Composite
(net of sales load and fees) ___% ___% ___%
- --------------------------------------------------------------------------------
Wilshire Large Cap
Value Index 11.25% 19.02% 19.16%
- --------------------------------------------------------------------------------
SINCE INCEPTION
(7/1/98)
- --------------------------------------------------------------------------------
HGK Mid Cap Value Composite
(gross of sales load and fees) ___%
- --------------------------------------------------------------------------------
HGK Mid Cap Value Composite
(net of sales load and fees) ___%
- --------------------------------------------------------------------------------
Wilshire Mid Cap 750 Index ___%
- --------------------------------------------------------------------------------
</TABLE>
Page 12 of 20
<PAGE>
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to buy, sell (sometimes called "redeem") and exchange
shares of the Funds.
The Funds are for individual and institutional investors.
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by:
- - Mail
- - Telephone
- - Wire, or
- - Automated Clearing House (ACH).
To purchase shares directly from us, please call 1-800-932-7781, or complete and
send in the enclosed application. Unless you arrange to pay by wire or through
or ACH, write your check, payable in U.S. dollars, to "HGK Value Equity Fund" or
"HGK Mid Cap Equity Fund." A Fund cannot accept third-party checks, credit
cards, credit card checks or cash.
You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures, which may be different from the procedures for investing directly .
Your institution may charge a fee for its services, in addition to the fees
charged by the Fund. You will also generally have to address your
correspondence or questions regarding a Fund to your institution.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day). Shares cannot be purchased by Federal Reserve Wire
on days when either the New York Stock Exchange or the Federal Reserve is
closed.
A Fund may reject any purchase order if it determines that accepting the order
would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order plus, the
applicable front-end sales charge.
Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the New York Stock Exchange (normally, 4:00 Eastern
time). So, for you to receive the current Business Day's NAV, generally a Fund
must receive your purchase order before 4:00 Eastern time.
Page 13 of 20
<PAGE>
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.
In calculating NAV, a Fund generally values its investment portfolio at market
price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
MINIMUM PURCHASES
To purchase shares for the first time, you must invest at least $2,000 in either
Fund. There is no minimum for subsequent investments in either Fund. A Fund
may accept investments of smaller amounts at its discretion.
SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a bank, you may purchase shares
or either Fund automatically through regular deductions from your account in
amounts of at least $25 per month.
SALES CHARGES
FRONT-END SALES CHARGES
The offering price of Fund shares is the NAV next calculated after a Fund
receives your request, plus the front-end sales load.
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:
<TABLE>
<CAPTION>
YOUR SALES CHARGE AS A YOUR SALES CHARGE AS A
PERCENTAGE OF OFFERING PRICE PERCENTAGE OF YOUR NET INVESTMENT
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
IF YOUR INVESTMENT IS:
Less than $50,000 5.50% 5.82%
$50,000 but less than $100,000 4.75% 4.99%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.75% 2.83%
$500,000 but less than $1,000,000 2.00% 2.04%
$1,000,000 and over 0.00% 0.00%
</TABLE>
Page 14 of 20
<PAGE>
WAIVER OF FRONT-END SALES CHARGE
The front-end sales charge will be waived on shares purchased:
- - through reinvestment of dividends and distributions;
- - by employees, and members of their immediate family, of HGK and its
affiliates and vendors;
- - by employees and retirees of the Administrator or Distributor;
- - by Trustees and officers of The Advisors' Inner Circle Fund;
- - by all Taft-Hartley labor unions and their members and sold through HGK
(purchases made through brokers and dealers that are not affiliated with
HGK may be subject to a sales charge);
- - by existing shareholders of the HGK Fixed Income Fund as of ___, 1999; or
- - by existing clients of HGK.
REDUCED SALES CHARGES
RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate, this
right allows you to add the value of the shares you already own to the amount
that you are currently purchasing. The Fund will combine the value of your
current purchases with the current value of any shares you purchased previously
for (i) your account, (ii) your spouse's account, (iii) a joint account with
your spouse, or (iv) your minor children's trust or custodial accounts. A
fiduciary purchasing shares for the same fiduciary account, trust or estate may
also use this right of accumulation. The Fund will only consider the value of
shares purchased previously that were sold subject to a sales charge. TO BE
ENTITLED TO A REDUCED SALES CHARGE BASED ON SHARES ALREADY OWNED, YOU MUST ASK
US FOR THE REDUCTION AT THE TIME OF PURCHASE. You must provide the Fund with
your account number(s) and, if applicable, the account numbers for your spouse
and/or children (and provide the children's ages). The Fund may amend or
terminate this right of accumulation at any time.
LETTER OF INTENT. You may purchase shares at the sales charge rate applicable
to the total amount of the purchases you intend to make over a 13-month period.
In other words, a Letter of Intent allows you to purchase the shares over a
13-month period and receive the same sales charge as if you had purchased all
the shares at the same time. The Fund will only consider the value of shares
sold subject to a sales charge. As a result, shares of the Fund purchased with
dividends or distributions will not be included in the calculation. To be
entitled to a reduced sales charge based on shares you intend to purchase over
the 13-month period, you must send the Fund a Letter of Intent. In calculating
the total amount of purchases you may include in your letter purchases made up
to 90 days before the date of the Letter. The 13-month period begins on the
date of the first purchase, including those purchases made in the 90-day period
before the date of the Letter. Please note that the purchase price of these
prior purchases will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase the
amount of your shares stated in the Letter. The Letter does, however, authorize
the Fund to hold in escrow 4.0% of the total amount you intend to purchase. If
you do not complete the total intended purchase at the end of the 13-month
period, the Fund's transfer agent will redeem the necessary portion of the
escrowed shares to make up the difference between the reduced rate sales charge
(based on the amount you intended to purchase) and the sales charge that would
normally apply (based on the actual amount you purchased).
Page 15 of 20
<PAGE>
COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the appropriate
sales charge rate, the Fund will combine same day purchases of shares (that are
subject to a sales charge) made by you, your spouse and your minor children
(under age 21). This combination also applies to the shares you purchase with a
Letter of Intent.
GENERAL INFORMATION ABOUT SALES CHARGES
Your securities dealer is paid a commission when you buy your shares and is paid
a servicing fee as long as you hold your shares.
From time to time, some financial institutions, including brokerage firms
affiliated with the Adviser, may be reallowed up to the entire sales charge.
Firms that receive a reallowance of the entire sales charge may be considered
underwriters for the purpose of federal securities law.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide incentives, in the
form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling shares of a Fund.
HOW TO SELL YOUR FUND SHARES
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.
If you own your shares directly, you may sell your shares on any Business Day by
contacting a Fund directly by mail or telephone at 1-800-932-7781.
If you would like to close your account, or have your sale proceeds sent to a
third party or an address other than your own, please notify the Fund in writing
and include a signature guarantee by a bank or other financial institution (a
notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $50,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $100 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account. The
Fund may waive the $50,000 minimum account size for the systematic withdrawal
plan at its discretion.
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RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account (subject to a $10
wire fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY
CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK
HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).
REDEMPTIONS IN KIND
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below $2,000 because of redemptions you may be
required to sell your shares. But, we will always give you at least 60 days'
written notice to give you time to add to your account and avoid the sale of
your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares of the HGK Equity Value Fund for shares of the HGK
Mid Cap Value Fund (and vice versa) on any Business Day by contacting us
directly by mail or telephone.
You may also exchange shares through your financial institution by mail or
telephone.
IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO
EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS
FROM YOUR DATE OF PURCHASE). This exchange privilege may be changed or canceled
at any time upon 60 days' notice.
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
Page 17 of 20
<PAGE>
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Distribution fees, as a percentage of average daily net assets are as follows:
HGK Equity Value Fund .25%
HGK Mid Cap Value Fund .25%
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund distributes its income monthly and makes distributions of capital
gains, if any, at least annually. If you own Fund shares on a Fund's record
date, you will be entitled to receive the distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax
issues that affect the Funds and their shareholders. This summary is based on
current tax laws, which may change.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Capital
gains distributions may be taxable at different rates depending on the length of
time a Fund holds its portfolio securities. EACH SALE OR EXCHANGE OF FUND
SHARES IS A TAXABLE EVENT.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
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THE ADVISORS' INNER CIRCLE FUND
HGK EQUITY VALUE FUND
HGK MID CAP VALUE FUND
INVESTMENT ADVISER
HGK Asset Management, Inc.
525 Washington Boulevard
Jersey City, New Jersey 07310
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated May ___, 1999, includes detailed information about The Advisors'
Inner Circle Fund and the HGK Equity Value Fund and the HGK Mid Cap Value Fund.
The SAI is on file with the SEC and is incorporated by reference into this
prospectus. This means that the SAI, for legal purposes, is a part of this
prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends. The reports
also contain detailed financial information about the Funds.
TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-932-7781
BY MAIL: Write to us
HGK Funds
c/o The Advisors' Inner Circle Fund
P.O. Box 419009
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Kansas City, Missouri 64141-6009
BY E-MAIL : [email protected]
BY INTERNET: WWW.HGK.COM
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-annual
reports, as well as other information about The Advisors' Inner Circle Fund,
from the SEC's website ("HTTP://WWW.SEC.GOV"). You may review and copy documents
at the SEC Public Reference Room in Washington, DC (for information call
1-800-SEC-0330). You may request documents by mail from the SEC, upon payment
of a duplicating fee, by writing to: Securities and Exchange Commission, Public
Reference Section, Washington, DC 20549-6009. The Advisors' Inner Circle Fund's
Investment Company Act registration number is 811-6400.
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<PAGE>
FUND:
THE ADVISORS' INNER CIRCLE FUND
PORTFOLIOS:
HGK EQUITY VALUE FUND
HGK MID CAP VALUE FUND
INVESTMENT ADVISER:
HGK ASSET MANAGEMENT, INC.
This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and relates only to
the HGK Equity Value Fund and the HGK Mid Cap Value Fund (each a "Portfolio" and
collectively, the "Portfolios"). It is intended to provide additional
information regarding the activities and operations of The Advisors' Inner
Circle Fund (the "Fund") and the Portfolios and should be read in conjunction
with the Portfolios' Prospectus dated ____________, 1999. The Prospectus for
the Portfolios may be obtained by calling 1-800-932-7781.
TABLE OF CONTENTS
THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . .S-__
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . .S-__
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
THE CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . .S-__
LEGAL COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
TRUSTEES AND OFFICERS OF THE FUND. . . . . . . . . . . . . . . . . . . . . .S-__
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
COMPUTATION OF YIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
CALCULATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . . .S-__
PURCHASING SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . .S-__
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
TRADING PRACTICES AND BROKERAGE. . . . . . . . . . . . . . . . . . . . . . .S-__
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . . .S-__
YEAR 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-__
____________, 1999
HGK-F-007-01
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THE FUND
This Statement of Additional Information relates only to the HGK Equity Value
Fund and the HGK Mid Cap Value Fund (each a "Portfolio" and collectively, the
"Portfolios"). The Portfolios are 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 Portfolios.
Each 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 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.
INVESTMENT OBJECTIVES AND POLICIES
IN GENERAL
For temporary defensive purposes during periods when the Adviser determines that
conditions warrant, each 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 Portfolios' investment goal is long-term capital appreciation. This goal is
fundamental, and may not be changed without the consent of shareholders. There
can be no assurance that the Portfolios will be able to achieve their investment
objectives.
The Portfolios may invest in common stocks, preferred stocks and convertible
securities of domestic companies, as well as warrants to purchase such
securities that are traded on registered exchanges or the over-the-counter
market in the United States. The
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Portfolios may also purchase equity securities (including depositary receipts)
and preferred stocks (including depositary stocks convertible into common
stocks) issued by foreign companies, as well as debt securities convertible into
common stock of such companies.
Although a Portfolio will normally be fully invested in equity securities (other
than as considered appropriate for cash reserves), for temporary defensive
purposes during periods when the Adviser determines that market conditions
warrant, up to 100% of a Portfolio's assets may be held from time to time in
cash or cash equivalents. In general, cash or cash equivalents will be held in
U.S. Treasury bills, high quality commercial paper, certificates of deposit and
money market instruments.
AUXILIARY POLICIES OF THE PORTFOLIOS
Although not primary strategies employed by the Adviser in managing the
Portfolios, the Portfolios may engage in a number of investment practices in
order to meet their investment objectives. In this regard, the Portfolios 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 Portfolios 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 Portfolios may purchase securities denominated in foreign currencies in
amounts up to 10% of its total assets. The Portfolios do not have a
corresponding limitation with respect to foreign securities denominated in U.S.
dollars.
It is anticipated that the annual portfolio turnover rate for the Portfolios
will not exceed 100%.
For a description of the permitted investments of the Portfolios and the
associated risk factors, see "Description of Permitted Investments."
DESCRIPTION OF PERMITTED INVESTMENTS
ASSET-BACKED SECURITIES -- Asset-backed securities are securities backed by
non-mortgage assets such as company receivables, truck and auto loans, leases
and credit card receivables. Other asset-backed securities may be created in
the future. These securities 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. These securities are generally issued as pass-through certificates,
which represent undivided fractional ownership interests in the underlying pool
of assets. Asset-backed securities may also be debt obligations, which are
known as collateralized obligations and are generally issued as
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the debt of a special purpose entity, such as a trust, organized solely for the
purpose of owning these assets and issuing debt obligations.
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.
BANK OBLIGATIONS - Bank obligations are short-term obligations issued by U.S.
and foreign banks, including bankers' acceptances, certificates of deposit,
custodial receipts, and time deposits. Eurodollar and Yankee Bank Obligations
are U.S. dollar-denominated certificates of deposit or time deposits issued
outside the U.S. by foreign branches of U.S. banks or by foreign banks.
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.
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COMMON AND PREFERRED STOCKS - Common and preferred stocks represent units of
ownership in a corporation. Owners of common stock typically are entitled to
vote on important matters. Owners of preferred stock ordinarily do not have
voting rights, but are entitled to dividends at a specified rate. Preferred
stock has a prior claim to common stockholders with respect to dividends.
CONVERTIBLE SECURITIES - Convertible securities are securities issued by
corporations that are exchangeable for a set number of another security at a
prestated price. 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 option 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 a Portfolio'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 a Portfolio invests will cause the net asset value of
that Portfolio to fluctuate. An investment in a Portfolio may therefore be more
suitable for long-term investors.
THE EURO - On January 1, 1999, the European Monetary Union (EMU) implemented a
new currency unit, the Euro. The countries initially converting or tieing their
currencies to the Euro include Austria, Belgium, France, Germany, Luxembourg,
the Netherlands, Ireland, Finland, Italy, Portugal, and Spain. Financial
transactions and market information, including share quotations and company
accounts, in participating countries are denominated in Euros. Approximately
46% of the stock exchange capitalization of the total European market is now
reflected in Euros, and participating
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governments now issue their bonds in Euros. Monetary policy for participating
countries is now uniformly managed by a new central bank, the European Central
Bank (ECB).
Although it is not possible to predict the impact of the Euro conversion on the
Portfolios, the transition to the Euro may change the economic environment and
behavior of investors, particularly in European markets. For example, investors
may begin to view those countries participating in the EMU as a single entity,
and the Adviser may need to adapt investment strategies accordingly. The process
of implementing the Euro also may adversely affect financial markets worldwide
and may result in changes in the relative strength and value of the U.S. dollar
or other major currencies, as well as possible adverse tax consequences. The
transition to the Euro is likely to have a significant impact on fiscal and
monetary policy in the participating countries and may produce unpredictable
effects on trade and commerce generally. These resulting uncertainties could
create increased volatility in financial markets world-wide.
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 Portfolios' net
asset value.
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 Portfolios 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 Portfolios may use the longer of the period required
before the Portfolios are 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.
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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 purchase 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.
A 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. They may also be used to minimize fluctuations in foreign currencies
or to gain exposure to a particular market or instrument. A 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
and for which there appears to be a liquid secondary market.
Index futures are futures contracts for various indices that are traded on
registered securities exchanges. An index futures contract obligates the seller
to deliver (and the purchaser to take) an amount of cash equal to a specific
dollar amount times the difference between the value of a specific index at the
close of the last trading day of the contract and the price at which the
agreement is made.
Although futures contracts by their terms call for actual delivery or acceptance
of the underlying securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out an
open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract which has
previously been "purchased") in an identical contract to terminate the position.
Brokerage commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
government securities with or for the account of a broker or custodian to
initiate and maintain open secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close a
futures position. In the event of adverse price movements, a Portfolio would
continue to be required to make daily cash payments to maintain its required
margin. In such situations, if a Portfolio has insufficient cash, it may have
to sell portfolio securities to meet daily margin requirements at a time when it
may be disadvantageous to do so. In addition, the Portfolios may be required to
make delivery of the instruments underlying the futures contracts they hold.
The inability to close options and futures positions also could have an adverse
impact on the ability to effectively hedge the underlying securities.
The risk of loss in trading futures contracts can be substantial, due both to
the low margin deposits required and the extremely high degree of leverage
involved in futures pricing. As a result, a relatively small price movement in
a futures contract may result in immediate and substantial loss (or gain) to a
Portfolio. For example, if at the time of purchase, 10% of the value of the
futures contract is deposited as margin, a
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subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit if the contract were closed
out. Thus, a purchase or sale of a futures contract may result in losses in
excess of the amount invested in the contract. However, because the Portfolios
will be engaged in futures transactions only for hedging purposes, the Adviser
does not believe that the Portfolios will generally be subject to the risks of
loss frequently associated with futures transactions. The Portfolios presumably
would have sustained comparable losses if, instead of the futures contract, they
had invested in the underlying financial instrument and sold it after the
decline. The risk of loss from the purchase of options is less as compared with
the purchase or sale of futures contracts because the maximum amount at risk is
the premium paid for the option.
Utilization of futures transactions by the Portfolios does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the fund securities being hedged. It is also
possible that the Portfolios could both lose money on futures contracts and
experience a decline in value of its fund securities. There is also the risk of
loss by the Portfolios of margin deposits in the event of the bankruptcy of a
broker with whom the Portfolios have an open position in a futures contract or
related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some futures
traders to substantial losses.
INVESTMENT COMPANY SECURITIES - A Portfolio's purchase of investment company
securities will result in the layering of expenses. A Portfolio is prohibited
from acquiring the securities of other investment companies if, as a result of
such acquisition, the Portfolio 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 Portfolio, 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 Portfolio.
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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 Portfolios' 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 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, Fannie Mae and the Federal Home Loan Mortgage Corporation.
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.
Obligations of GNMA are backed by the full faith and credit of the United
States Government. Obligations of Fannie Mae and FHLMC are not backed by
the full faith and credit of the United States Government but are
considered to be of high quality since they are considered to be
instrumentalities of the United States. The market value and interest
yield of these mortgage-backed securities 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 with a maximum maturity of 30 years. However, due to scheduled and
unscheduled principal payments on the underlying loans, these securities
have a shorter average maturity and, therefore, less principal volatility
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than a comparable 30-year bond. Since prepayment rates vary widely, it is
not possible to accurately predict the average maturity of a particular
mortgage-backed security. The scheduled monthly interest and principal
payments relating to mortgages in the pool will be "passed through" to
investors. Government mortgage-backed 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 these securities may offer yields higher
than those available from other types of U.S. Government securities,
mortgage-backed securities 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 these securities 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 mortgage-backed security originally purchased at a
premium to decline in price to its par value, which may result in a loss.
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. The two principal types of private
mortgage-backed securities are collateralized mortgage obligations ("CMOs")
and real estate mortgage investment conduits ("REMICs").
CMOs: 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 are rated in one of the two highest categories
by S&P or Moody's. Many CMOs are issued with a number of classes or series
which have different expected maturities. Investors purchasing such CMOs
are credited with their portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal based on a predetermined priority schedule. 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
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U.S. Government agencies or instrumentalities, the CMOs themselves are not
generally guaranteed.
REMICs: REMICs 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 and
are rated in one of the two highest categories by S&P or Moody's.
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. GNMA REMIC Certificates are
backed by the full faith and credit of the U.S. Government.
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
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.
OPTIONS - A Portfolio may write call options on a covered basis only, and will
not engage in option writing strategies for speculative purposes. A call option
gives the purchaser of such option the right to buy, and the writer, in this
case the Portfolio, the obligation to sell the underlying security at the
exercise price during the option period. The advantage to the Portfolios of
writing covered calls is that the Portfolios receive a premium which is
additional income. However, if the security rises in value, the Portfolios 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. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. 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.
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A closing purchase transaction cannot be effected with respect to an option once
the option writer has received an exercise notice for such option.
Closing purchase transactions will ordinarily be effected to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
to permit the sale of the underlying security or to enable a Portfolio to write
another call option on the underlying security with either a different exercise
price or expiration date or both. A Portfolio may realize a net gain or loss
from a closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security.
If a call option expires unexercised, a Portfolio will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market value
of the underlying security during the option period. If a call option is
exercised, a Portfolio will realize a gain or loss from the sale of the
underlying security equal to the difference between the cost of the underlying
security, and the proceeds of the sale of the security plus the amount of the
premium on the option, less the commission paid.
The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security, and the time remaining until the expiration date.
The Portfolios will write call options only on a covered basis, which means that
a Portfolio will own the underlying security subject to a call option at all
times during the option period. Unless a closing purchase transaction is
effected, a Portfolio would be required to continue to hold a security which it
might otherwise wish to sell, or deliver a security it would want to hold.
Options written by the Portfolios will normally have expiration dates between
one and nine months from the date written. The exercise price of a call option
may be below, equal to, or above the current market value of the underlying
security at the time the option is written.
REPURCHASE AGREEMENTS -Repurchase agreements are agreements by which a person
(E.G., the Portfolios) obtains a security and simultaneously commits to return
the security to the seller (a primary securities dealer as recognized by the
Federal Reserve Bank of New York or a national member bank as defined in Section
3(d)(1) of the Federal Deposit Insurance Act, as amended) 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
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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 Portfolios for purposes
of their investment limitations. The repurchase agreements entered into by the
Portfolios 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 Portfolios, the appropriate Custodian or its
agent must take possession of the underlying collateral. However, if the seller
defaults, the Portfolios 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 Portfolios may incur delay and costs in selling the
underlying security or may suffer a loss of principal and interest if the
Portfolios is treated as an unsecured creditor and required to return the
underlying security to the seller's estate.
RESTRICTED SECURITIES - Restricted securities are securities that may not be
sold to the public without registration under the Securities Act of 1933 (the
"1933 Act") or an exemption from registration. Permitted investments for the
Portfolios includes restricted securities. Restricted securities, including
securities eligible for re-sale under 1933 Act Rule 144A, that are determined to
be liquid are not subject to this limitation. This determination is to be made
by the Portfolios' Adviser pursuant to guidelines adopted 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, 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, each Adviser intends to purchase
securities that are exempt from registration under Rule 144A under the 1933 Act.
SECURITIES OF FOREIGN GOVERNMENTS - The Portfolios 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 Portfolios may invest in American
Depositary Receipts. These instruments may subject the Portfolios 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
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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 Portfolios'
investments denominated in foreign currencies will depend on the relative
strengths of those currencies and the U.S. dollar, and the Portfolios 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
Portfolios.
SECURITIES LENDING - Each Portfolio may lend securities pursuant to agreements
which require that the loans be continuously secured by collateral at all times
equal to 100% of the market value of the loaned securities which consists of:
cash, securities of the U.S. Government or its agencies, or any combination of
cash and such securities. Such loans will not be made if, as a result, the
aggregate amount of all outstanding securities loans for a Portfolio exceed
one-third of the value of the Portfolio's total assets taken at fair market
value. A Portfolio will continue to receive interest on the securities lent
while simultaneously earning interest on the investment of the cash collateral
in U.S. Government securities. However, a Portfolio will normally pay lending
fees to such broker-dealers and related expenses from the interest earned on
invested collateral. There may be risks of delay in receiving additional
collateral or risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail financially.
However, loans are made only to borrowers deemed by the appropriate Adviser to
be of good standing and when, in the judgment of that Adviser, the consideration
which can be earned currently from such securities loans justifies the attendant
risk. Any loan may be terminated by either party upon reasonable notice to the
other party. The Portfolios may use the Distributor or a broker-dealer
affiliate of an Adviser as a broker in these transactions.
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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.
U.S. GOVERNMENT AGENCY OBLIGATIONS - U.S. Government agency obligations are
obligations issued or guaranteed by agencies or instrumentalities of the U.S.
Government. Agencies of the United States Government which issue 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 ("FHLMC"), Federal Intermediate Credit Banks, Federal Land Banks,
Fannie Mae and the United States Postal Service as well as government trust
certificates. 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 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 the value of the
obligation prior to maturity.
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 Separately Traded Interest and Principal Risk
Securities.
VARIABLE AND FLOATING RATE SECURITIES - Variable and floating rate instruments
involve certain obligations that 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 set 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.
VARIABLE RATE MASTER DEMAND NOTES - Variable rate master demand notes permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to direct arrangements between a Portfolio, as lender, and a borrower. Such
notes provide that the interest rate on the amount outstanding varies on a
daily, weekly or monthly basis
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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 and it is not generally
contemplated that such instruments will be traded. The quality of the note or
the underlying credit must, in the opinion of the appropriate Adviser, be
equivalent to the ratings applicable to permitted investments for the particular
Portfolio. The appropriate Adviser will monitor on an ongoing basis the earning
power, cash flow and liquidity ratios of the issuers of such instruments and
will similarly monitor the ability of an issuer of a demand instrument to pay
principal and interest on demand. Variable rate master demand notes may or may
not be backed by bank letters of credit.
WARRANTS - Warrants give holders the right, but not the obligation, to buy
shares of a company at a given price, usually higher than the market price,
during a specified period.
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 Portfolios 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 Portfolios 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 Portfolios generally purchase securities on a when-issued or forward
commitment basis with the intention of actually acquiring securities for their
portfolio, the Portfolios 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 obligations that do
not bear any interest, but instead are issued at a deep discount from face value
or par. The value of a zero coupon obligation increases over time to reflect
the interest accumulated. 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 face value or par and pay interest periodically.
INVESTMENT LIMITATIONS
The following are fundamental policies of the Portfolios and cannot be changed
with respect to a Portfolio without the consent of the holders of a majority of
a Portfolio's outstanding shares. The term "majority of the outstanding shares"
means the vote of (i) 67% or more of a Portfolio's shares present at a meeting,
if more than 50% of the
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outstanding shares of the Portfolio are present or represented by proxy, or (ii)
more than 50% of a Portfolio's outstanding shares, whichever is less.
Each 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 a Portfolio would be invested in the securities of such
issuer. This restriction applies to 75% of a Portfolio's total assets.
2. Purchase any securities which would cause 25% or more of the total assets
of a 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. Acquire more than 10% of the voting securities of any one issuer.
4. Invest in companies for the purpose of exercising control.
5. 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 a Portfolios' assets, asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time fall
below 300%, a 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.
6. Make loans, except that a Portfolio may purchase or hold debt instruments
in accordance with its investment objective and policies and may enter into
repurchase agreements.
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7. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (5) above in aggregate amounts not to exceed 10% of
total assets taken at current value at the time of the incurrence of such
loan.
8. 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 each Portfolio, it may invest in
municipal securities or other marketable obligations secured by real estate
or interests therein.
9. Make short sales of securities, maintain a short position or purchase
securities on margin, except that each Portfolio may obtain short-term
credits as necessary for the clearance of security transactions.
10. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a Portfolio security.
11. 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.
12. 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.
13. 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.
14. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.
15. 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
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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.
The Adviser was incorporated in 1983 by three principals, Jeffrey T. Harris,
Warren A. Greenhouse and Joseph E. Kutzel. The Adviser has provided equity,
fixed income and balanced fund management of individually structured portfolios
since its inception. As of December 31, 1998, total assets under management
were approximately $2.1 billion. The principal business address of the Adviser
is Newport Tower, 525 Washington Boulevard, Jersey City, New Jersey, 07310.
The Adviser makes the investment decisions for the assets of each Portfolio and
continuously reviews, supervises and administers each Portfolio's investment
program, subject to the supervision of, and policies established by, the
Trustees of the Fund.
[INSERT NEW PORTFOLIO MANAGERS]
The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .90% of the average daily net assets of the HGK Equity Value
Fund and the HGK Mid Cap Value Fund, respectively. The Adviser has
contractually agreed to waive all or a portion of its fees for, and reimburse
expenses of, a Portfolio to the extent necessary in order to limit total
operating expenses to an annual rate of not more than ____% of the Portfolio's
average daily net assets for a period of one year from the date of the
Prospectus. The Adviser may, from its own resources, compensate broker-dealers
whose clients purchase shares of a Portfolio.
To the extent a 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 Portfolios, 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 a Portfolio, by a majority of the
outstanding shares of a 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
SEI Investments Mutual Funds Services (the "Administrator") serves as the
administrator of the Fund. The Administrator provides the Fund with
administrative
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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 each Portfolio's average daily net assets.
However, each Portfolio pays the Administrator a minimum annual fee of $75,000,
and consequently the annual administration fee each Portfolio pays will exceed
.20% of the Portfolio's average daily net assets at low asset levels.
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 Portfolios
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.
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.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Administrator. SEI Investments and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors, and
money managers. The Administrator and its affiliates also serve as
administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, Monitor Funds, The
Nevis Funds, Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds,
Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International
Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic
Variable Trust, TIP Funds and Alpha Select Funds.
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<PAGE>
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.
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.
No compensation is paid to the Distributor for distribution services for the
shares of the Portfolios.
THE TRANSFER AGENT
DST Systems, Inc., 330 W. 9th Street, Kansas City, Missouri 64105 serves as
the Fund's transfer agent.
THE CUSTODIAN
First Union National Bank, 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.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP serves as independent public accountants for the Fund.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP, 1800 M Street, N.W., Washington, D.C. 20036
serves as legal counsel to the Fund.
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 Trustees have approved contracts
under which, as described above, certain companies provide essential management
services to the Fund. 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
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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, Armada Funds, Bishop Street Funds,
Boston 1784 Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, Monitor Funds, Oak
Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc., PBHG Insurance
Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust, TIP Funds and Alpha Select Funds, each of which is an open-end management
investment company managed by SEI Investments Mutual Funds Services or its
affiliates and, except for PBHG Advisor Funds, Inc., 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 Arbor Fund, Boston 1784 Funds-Registered Trademark-,
The Expedition Funds, Oak Associates Funds, Pillar Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI Institutional International Trust,
SEI Liquid Asset Trust and SEI Tax Exempt Trust.
JOHN T. COONEY (DOB 01/20/27) -- Trustee** -- Vice Chairman of Ameritrust Texas
N.A., 1989-1992, and MTrust Corp., 1985-1989. Trustee of The Arbor Fund, The
Expedition Funds, and Oak Associates Funds.
WILLIAM M. DORAN (DOB 05/26/40) -- Trustee* --1701 Market Street, Philadelphia,
PA 19103-2921. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to the
Trust, SEI Investments, the Administrator and the Distributor. Director and
Secretary of SEI Investments and Secretary of the Administrator and the
Distributor. Trustee of The Arbor Fund, The Expedition Funds, Oak Associates
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional 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 Arbor Fund, The Expedition Funds and Oak
Associates Funds.
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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 Arbor Fund, The
Expedition Funds and Oak Associates Funds.
JAMES M. STOREY (DOB 04/12/31) -- Trustee** -- Partner, Dechert Price & Rhoads,
from September 1987 - December 1993; Trustee of The Arbor Fund, The Expedition
Funds, Oak Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust,
SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI Institutional International Trust, SEI Liquid Asset Trust and SEI Tax
Exempt Trust.
GEORGE J. SULLIVAN, JR. (DOB 11/13/42) -- Trustee** -- Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991- December 1996; Chief Financial Officer, Noble Partners, L.P.,
March 1991-December 1996; Treasurer and Clerk, Peak Asset Management, Inc.,
since 1991; Trustee, Navigator Securities Lending Trust, since 1995. Trustee of
The Arbor Fund, The Expedition Funds, Oak Associates Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, and SEI Tax Exempt Trust.
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.
JAMES R. FOGGO (DOB 06/30/64) -- Vice President and Assistant Secretary -- Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Associate, Paul Weiss, Rifkind, Wharton & Garrison (law firm), 1998.
Associate, Baker & McKenzie (law firm), 1995-1998. Associate, Battle Fowler
L.L.P. (law firm), 1993-1995. Operations Manager, The Shareholder Services
Group, Inc., 1986-1990.
LYDIA A. GAVALIS (DOB 06/05/64) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and the Distributor
since 1998. Assistant General Counsel and Director of Arbitration, Philadelphia
Stock Exchange, 1989-1998.
KATHY HEILIG (DOB 12/21/58) -- Vice President and Assistant Secretary --
Treasurer of SEI Investments since 1997; Assistant Controller of SEI Investments
since 1995; Vice President of SEI Investments since 1991; Director of Taxes of
SEI Investments, 1987 to 1991. Tax Manager, Arthur Andersen LLP prior to 1987.
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<PAGE>
JOSEPH M. O'DONNELL (DOB 11/13/54) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and the Distributor
since 1998. Vice President and General Counsel, FPS Services, Inc., 1993-1997.
Staff Counsel and Secretary, Provident Mutual Family of Funds, 1990-1993.
KEVIN P. ROBINS (DOB 04/15/61) -- Vice President and Assistant Secretary --
Senior Vice President and General Counsel of SEI Investments, the Administrator
and the Distributor since 1994. Assistant Secretary of SEI Investments since
1992; Secretary of the Administrator since 1994. Vice President, General
Counsel and Assistant Secretary of the Administrator and the Distributor,
1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1988-1992.
LYNDA J. STRIEGEL (DOB 10/30/48) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and the Distributor
since 1998. Senior Asset Management Counsel, Barnett Banks, Inc., 1997-1998.
Partner, Groom and Nordberg, Chartered, 1996-1997. Associate General Counsel,
Riggs Bank, N.A., 1991-1995.
MARK E. NAGLE (DOB 10/20/59) -- Controller and Chief Financial Officer -- Vice
President of Fund Accounting and Administration for SEI Fund Resources and Vice
President of the Administrator since 1996. Vice President of the Distributor
since December 1997. Vice President, Fund Accounting, BISYS Fund Services,
September 1995 to November 1996. Senior Vice President and Site Manager,
Fidelity Investments 1981 to September 1995.
JOHN H. GRADY, JR. (DOB 06/01/61) -- Secretary --1701 Market Street,
Philadelphia, PA 19103-2921, Partner since 1995, Morgan, Lewis & Bockius LLP
(law firm), counsel to the Trust, SEI Investments, the Administrator and the
Distributor.
- -------------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Portfolio as that term is defined in the 1940 Act.
**Messrs. Cooney, Patterson, Peters, Storey and Sullivan serve as members of the
Audit Committee of the Portfolio.
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.
S-24
<PAGE>
PERFORMANCE INFORMATION
From time to time, the Fund may advertise yield, effective 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.
PERFORMANCE COMPARISONS
The Portfolios may periodically compare their performance to other mutual funds
tracked by mutual fund rating services, to broad groups of comparable mutual
funds, or to unmanaged indices. These comparisons may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.
COMPUTATION OF YIELD
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 Portfolios refer
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:
Yield = 2[((a-b)/cd+1)to the power of 6-1], where a = dividends and interest
earned during the period; b = expenses accrued for the period (net of
reimbursement); c = the average daily number of shares outstanding during the
period that were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period.
CALCULATION OF TOTAL RETURN
The total return of the Portfolios refer 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
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.
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PURCHASING 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 Portfolios 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.
REDEEMING SHARES
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 a 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.
A Shareholder will at all times be entitled to aggregate cash redemptions from
all portfolios of the Fund during any 90-day period of up to the lesser of
$250,000 or 1% of the Fund's net assets.
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 a 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 Portfolios 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
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The following is only a summary of certain additional federal income tax
considerations generally affecting A Portfolio and its shareholders that are not
described in the Portfolio's prospectus. No attempt is made to present a
detailed explanation of the tax treatment of the Portfolios or their
shareholders, and the discussion here and in the Portfolios' prospectus 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 TREATMENT OF DIVIDENDS AND DISTRIBUTIONS
The following general discussion of certain federal income tax consequences is
based on the Internal Revenue Code of 1986, as amended (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.
QUALIFICATION AS REGULATED INVESTMENT COMPANY
A Portfolio intends to qualify and elect to be treated as a "regulated
investment company" ("RIC") as defined under Subchapter M of the Code. By
following such a policy, the Portfolios expect to eliminate or reduce to a
nominal amount the federal taxes to which it may be subject.
In order to qualify as a RIC, a Portfolio must distribute at least 90% of its
net investment income (generally, includes dividends, taxable interest, and the
excess of net short-term capital gains over net long-term capital losses less
operating expenses) and at least 90% of its net tax exempt interest income, for
each tax year, if any, to its shareholders and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
a 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 that the Portfolio controls or that are engaged in the same,
similar or related trades or business.
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<PAGE>
Although the Portfolios intend to distribute substantially all of its net
investment income and may distribute its capital gains for any taxable year, A
Portfolio will be subject to federal income taxation to the extent any such
income or gains are not distributed.
If a Portfolio fails to qualify for any taxable year as a RIC, all of its
taxable income will be subject to tax at regular corporate income tax rates
without any deduction for distributions to shareholders and such distributions
generally will be taxable to shareholders as ordinary dividends to the extent of
a Portfolio's current and accumulated earnings and profits. In this event,
distributions generally will be eligible for the dividends-received deduction
for corporate shareholders.
PORTFOLIO DISTRIBUTIONS
Distributions of investment company taxable income will be taxable to
shareholders as ordinary income, regardless of whether such distributions are
paid in cash or are reinvested in additional Shares, to the extent of a
Portfolio's earnings and profits. The Portfolios anticipate that they will
distribute substantially all of their investment company taxable income for each
taxable year.
A Portfolio may either retain or distribute to shareholders its excess of net
long-term capital gains over net short-term capital losses ("net capital
gains"). If such gains are distributed as a capital gains distribution, they
are taxable to shareholders who are individuals at a maximum rate of 20%,
regardless of the length of time the shareholder has held shares. If any such
gains are retained, a Portfolio will pay federal income tax thereon.
In the case of corporate shareholders, distributions (other than capital gains
distributions) from a RIC, generally qualify for the dividends-received
deduction only to the extent of the gross amount of qualifying dividends
received by a portfolio for the year. Generally, and subject to certain
limitations, a dividend will be treated as a qualifying dividend if it has been
received from a domestic corporation. Accordingly, such distributions will
generally qualify for the corporate dividends-received deduction.
Ordinarily, investors should include all dividends as income in the year of
payment. However, dividends declared payable to shareholders of record in
December of one year, but paid in January of the following year, will be deemed
for tax purposes to have been received by the shareholder and paid by a
Portfolio in the year in which the dividends were declared.
A Portfolio will provide a statement annually to shareholders as to the federal
tax status of distributions paid (or deemed to be paid) by a Portfolio during
the year, including the amount of dividends eligible for the corporate
dividends-received deduction.
SALE OR EXCHANGE OF PORTFOLIO SHARES
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Generally, gain or loss on the sale or exchange of a Share will be capital gain
or loss that will be long-term if the Share has been held for more than twelve
months and otherwise will be short-term. For individuals, long-term capital
gains are currently taxed at a maximum rate of 20% and short-term capital gains
are currently taxed at ordinary income tax rates. However, if a shareholder
realizes a loss on the sale, exchange or redemption of a Share held for six
months or less and has previously received a capital gains distribution with
respect to the Share (or any undistributed net capital gains of a Portfolio with
respect to such Share are included in determining the shareholder's long-term
capital gains), the shareholder must treat the loss as a long-term capital loss
to the extent of the amount of the prior capital gains distribution (or any
undistributed net capital gains of a Portfolio that have been included in
determining such shareholder's long-term capital gains). In addition, any loss
realized on a sale or other disposition of Shares will be disallowed to the
extent an investor repurchases (or enters into a contract or option to
repurchase) Shares within a period of 61 days (beginning 30 days before and
ending 30 days after the disposition of the Shares). This loss disallowance
rule will apply to Shares received through the reinvestment of dividends during
the 61-day period.
In certain cases, a 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 failed to
certify to a Portfolio that such shareholder is not subject to backup
withholding.
FEDERAL EXCISE TAX
If a Portfolio fails to distribute in a calendar year at least 98% of its
ordinary income for the 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 October 31 of that year (and any retained amount
from the prior calendar year), a Portfolio will be subject to a nondeductible 4%
Federal excise tax on the undistributed amounts. A Portfolio intends to make
sufficient distributions to avoid imposition of this tax, or to retain, at most
its net capital gains and pay tax thereon.
STATE AND LOCAL TAXES
A 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 a
Portfolio to shareholders and the ownership of shares may be subject to state
and local taxes.
S-29
<PAGE>
PORTFOLIO TRANSACTIONS
A 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, a Portfolio will not necessarily
be paying the lowest spread or commission available.
The money market instruments in which a 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 executing portfolio
securities transactions of a Portfolio will primarily consist of dealer spreads
and underwriting commissions.
TRADING PRACTICES AND BROKERAGE
The Fund selects brokers or dealers to execute transactions for the purchase or
sale of portfolio securities on the basis of its judgment of their professional
capability to provide the service. The primary consideration is to have brokers
or dealers provide transactions at best price and execution for the Fund. Best
price and execution includes many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Fund's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry.
In some instances, the Fund pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Fund either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is
a spread (the difference between the buy and sell price) which is the equivalent
of a commission.
The Fund may allocate out of all commission business generated by the fund and
accounts under management by the Adviser, brokerage business to brokers or
dealers who provide brokerage and research services. 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
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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. Such services are used by the Adviser in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the fund
or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 (the "1934 Act"), higher
commissions may be paid to broker-dealers who provide brokerage and research
services than to broker-dealers who do not provide such services if such higher
commissions are deemed reasonable in relation to the value of the brokerage and
research services provided. Although transactions are directed to
broker-dealers who provide such brokerage and research services, the Fund
believes that the commissions paid to such broker-dealers are not, in general,
higher than commissions that would be paid to broker-dealers not providing such
services and that such commissions are reasonable in relation to the value of
the brokerage and research services provided. In addition, portfolio
transactions which generate commissions or their equivalent are directed to
broker-dealers who provide daily portfolio pricing services to the Fund.
Subject to best price and execution, commissions used for pricing may or may not
be generated by the funds receiving the pricing service.
The Adviser may place a combined order for two or more accounts or funds engaged
in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in
a manner deemed equitable to each account or fund. It is believed that the
ability of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or the Portfolio may obtain, it is the
opinion of the Adviser and the Fund's Board of Trustees that the advantages of
combined orders outweigh the possible disadvantages of separate transactions.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, a Portfolio, at
the request of the Distributor, gives consideration to sales of shares of the
Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
The Adviser may, consistent with the interest of the Portfolios, 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
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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 a 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.
It is expected that a 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 1934 Act 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 persons" of the Fund, have adopted procedures for evaluating
the reasonableness of commissions paid to the Distributor and will review
these procedures periodically.
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 a 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.
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
S-32
<PAGE>
which such consideration is invested would belong to that series and would be
subject to the liabilities related thereto. Share certificates representing
shares will not be issued.
SHAREHOLDER LIABILITY
The 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.
YEAR 2000
The Fund depends on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Fund could be adversely affected if the computer systems
used by its service providers do not properly process dates on and after January
1, 2000 and distinguish between the year 2000 and the year 1900. The Fund has
asked its service providers whether they expect to have their computer systems
adjusted for the year 2000 transition, and received assurances from each that
its system is expected to accommodate the year 2000 without material adverse
consequences to the Fund. The Fund and its shareholders may experience losses
if these assurances prove to be incorrect or as a result of year 2000 computer
difficulties experienced by issuers of portfolio securities or third parties,
such as custodians, banks, broker-dealers or others with which the Fund does
business.
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<PAGE>
PART C: OTHER INFORMATION
POST EFFECTIVE AMENDMENT NO. 38
ITEM 23. EXHIBITS:
<TABLE>
<S> <C>
(a)(1) Registrant's Agreement and Declaration of Trust dated July 18, 1991, as
originally filed with the SEC on August 29, 1991, is incorporated herein
by reference to Post- Effective Amendment No. 32 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on February 27, 1998.
(a)(2) Registrant's Amendment to the Agreement and Declaration of Trust dated
December 2, 1996, is incorporated herein by reference to Post-Effective
Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on
December 13, 1996.
(a)(3) Registrant's Amendment to the Agreement and Declaration of Trust dated
February 18, 1997, is incorporated herein by reference to Post-Effective
Amendment No. 28 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on
February 27, 1997.
(b)(1) Registrant's By-Laws are incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on August 29, 1991.
(b)(2) Registrant's Amended and Restated By-Laws are incorporated herein by
reference to Post-Effective Amendment No. 27 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on December 12, 1996.
(c) Not Applicable.
(d)(1) Investment Advisory Agreement between Registrant and HGK Asset Management,
Inc. with respect to HGK Fixed Income Fund dated August 15, 1994 as
originally filed with Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on June 15, 1994 is incorporated herein
by reference to Post-Effective Amendment No. 24 filed on February 28,
1996.
(d)(2) Investment Advisory Agreement between Registrant and AIG Capital Management
Corp. with respect to AIG Money Market Fund originally filed with
Post-Effective Amendment No. 17 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on September 19, 1994 is incorporated herein by reference to
Post-Effective Amendment No. 28 filed February 27, 1997.
(d)(3) Investment Advisory Agreement between Registrant and First Manhattan Co.
with respect to FMC Select Fund dated May 3, 1995 as originally filed with
Post-Effective Amendment No. 19 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484) filed with the Securities and Exchange
Commission on February 1, 1995 is incorporated herein by reference to
Post-Effective Amendment No. 24 filed on February 28, 1996.
(d)(4) Investment Advisory Agreement between Registrant and CRA Real Estate
Securities L.P. dated December 31, 1996 with respect to the CRA Realty
Shares Portfolio is incorporated herein by reference to Post-Effective
Amendment No. 29 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484) filed with the Securities and Exchange Commission on May 22,
1997.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(d)(5) Investment Advisory Agreement between Registrant and MDL Capital Management,
Inc. with respect to the MDL Broad Market Fixed Income Portfolio and the
MDL Large Cap Growth Equity Portfolio is incorporated herein by reference
to Post-Effective Amendment No. 32 to Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on February 27, 1998.
(d)(6) Investment Advisory Agreement between Registrant and SAGE Global Funds, LLC
with respect to the SAGE Corporate Bond Fund is incorporated herein by
reference to Post-Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on February 27, 1998.
(d)(7) Investment Sub-Advisory Agreement between SAGE Global Funds, LLC and
Standard Asset Group, Inc. with respect to the SAGE Corporate Bond Fund is
incorporated herein by reference to Post-Effective Amendment No. 33 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on May 18, 1998.
(d)(8) Form of Investment Advisory Agreement between Registrant and LSV Asset
Management Company is incorporated herein by reference to Post-Effective
Amendment No. 34 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on
December 29, 1998.
(d)(9) Amended and Restated Schedule to the Investment Advisory Agreement dated May
3, 1995 between Registrant and First Manhattan Company is incorporated
herein by reference to Post-Effective Amendment No. 34 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on December 29, 1998.
(e)(1) Amended and Restated Distribution Agreement between Registrant and SEI
Financial Services Company dated August 8, 1994 as originally filed with
Post-Effective Amendment No. 17 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484) filed with the Securities and Exchange
Commission on September 19, 1994 is incorporated herein by reference to
Post-Effective Amendment No. 24 filed on February 28, 1996.
(e)(2) Distribution Agreement between Registrant and CCM Securities, Inc. dated
February 28, 1997 is incorporated herein by reference to Post-Effective
Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on June
30, 1997.
(e)(3) Amended and Restated Sub-Distribution and Servicing Agreement between SEI
Investments Company and AIG Equity Sales Corporation is incorporated
herein by reference to Post-Effective Amendment No. 32 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on February 27, 1998.
(f) Not Applicable.
(g) Custodian Agreement between Registrant and CoreStates Bank N.A. originally
filed Pre-Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on October 28, 1991 is incorporated herein by reference to
Post-Effective Amendment No. 28 filed on February 27, 1997.
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
(h)(1) Amended and Restated Administration Agreement between Registrant and SEI
Financial Management Corporation, including schedules relating to Clover
Capital Equity Value Fund, Clover Capital Fixed Income Fund, White Oak
Growth Stock Fund, Pin Oak Aggressive Stock Fund, Roulston Midwest Growth
Fund, Roulston Growth and Income Fund, Roulston Government Securities
Fund, A+P Large-Cap Fund, Turner Fixed Income Fund, Turner Small Cap Fund,
Turner Growth Equity Fund, Morgan Grenfell Fixed Income Fund, Morgan
Grenfell Municipal Bond Fund and HGK Fixed Income Fund dated May 17, 1994
as originally filed with Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on June 15, 1994 is incorporated herein
by reference to Post-Effective Amendment No. 24 filed on February 28,
1996.
(h)(2) Schedule dated November 11, 1996 to Administration Agreement dated November
14, 1991 as Amended and Restated May 17, 1994 adding the CRA Realty Shares
Portfolio is incorporated herein by reference to Post-Effective Amendment
No. 29 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on May 22,
1997.
(h)(3) Shareholder Service Plan and Agreement for the Class A Shares of the CRA
Realty Shares Portfolio is incorporated herein by reference to
Post-Effective Amendment No. 30 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on June 30, 1997.
(h)(4) Schedule to Amended and Restated Administration Agreement dated May 8, 1995
to the Administration Agreement dated November 14, 1991 as Amended and
Restated May 17, 1994 with respect to the FMC Select Fund is incorporated
herein by reference to Post-Effective Amendment No. 28 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on February 27, 1997.
(h)(5) Consent to Assignment and Assumption of Administration Agreement dated June
1, 1996 is incorporated herein by reference to Post-Effective Amendment
No. 28 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on February
27, 1997.
(h)(6) Schedule to the Amended and Restated Administration Agreement adding the MDL
Broad Market Fixed Income Fund and the MDL Large Cap Growth Equity Fund
incorporated herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on February 27, 1998.
(h)(7) Schedule to the Amended and Restated Administration Agreement adding the
SAGE Corporate Fixed Bond Fund is incorporated herein by reference to
Post-Effective Amendment No. 32 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on February 27, 1998.
(h)(8) Schedule dated May 19, 1997 to Administration Agreement dated November 14,
1991 between the Advisors' Inner Circle Fund and SEI Financial Management
Corporation adding the AIG Money Market Fund is incorporated herein by
reference to Post-Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on February 27, 1998.
(h)(9) Schedule to Administration Agreement relating to the CRA Realty Portfolio is
incorporated herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on February 27, 1998.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
(h)(10) [Form of] Shareholder Servicing Agreement for AIG Money Market Fund is
incorporated herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on February 27, 1998.
(h)(11) Transfer Agency Agreement dated November 30, 1994 is incorporated herein by
reference to Post-Effective Amendment No. 33 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on May 18, 1998.
(h)(12) Amendment dated August 17, 1998 to the Schedule dated May 8, 1995 to the
Administration Agreement dated November 14, 1991 as amended and restated
May 17, 1994 between Registrant and SEI Financial Management Corporation
is incorporated herein by reference to Post-Effective Amendment No. 34 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on December 29, 1998.
(h)(13) Assignment and Assumption Agreement dated February 27, 1998 between
Registrant and Oak Associates Funds is incorporated herein by reference to
Post-Effective Amendment No. 34 to Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on December 29, 1998.
(i) Opinion and Consent of Counsel dated October 24, 1991, as originally filed
October 28, 1991, is incorporated herein by reference to Post-Effective
Amendment No. 32 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on
February 27, 1998.
(j) Not Applicable.
(k) Not Applicable.
(l) Not Applicable.
(m) Distribution Plan for The Advisors' Inner Circle Fund as originally filed
with Post-Effective Amendment No. 17 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and
Exchange Commission on September 19, 1994 is incorporated herein by
reference to Post-Effective Amendment No. 24 filed on February 28, 1996.
(n) Not Applicable.
(o) Rule 18f-3 Plan dated May 15, 1995, as originally filed June 1, 1995, is
incorporated herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the Securities and Exchange Commission on February 27, 1998.
(p) Powers of Attorney for Mark E. Nagle, John T. Cooney, William M. Doran,
Frank E. Morris, Robert A. Nesher, Eugene B. Peters, Robert A. Patterson
and James M. Storey are incorporated herein by reference to Post-Effective
Amendment No. 34 to Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the Securities and Exchange Commission on
December 29, 1998.
</TABLE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
See Statements of Additional Information regarding the control relationships
of The Advisors' Inner Circle Fund (the "Fund"). SEI Investments Management
Corporation a wholly-owned subsidiary of SEI Investments Company ("SEI"), is the
owner of all beneficial interest in SEI Investments Mutual Funds Services ("the
Administrator"). SEI and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers.
C-4
<PAGE>
ITEM 25. INDEMNIFICATION:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit a to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR:
Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of the Adviser is or has been, at
any time during the last two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee are as follows:
HGK ASSET MANAGEMENT, INC.
- -----------------------------
HGK Asset Management, Inc. is the investment adviser for the HGK Fixed
Income Fund. The principal address of HGK Asset Management, Inc. is Newport
Tower, 525 Washington Blvd., Jersey City, NJ 07310.
The list required by this Item 26 of general partners of HGK Asset
Management, Inc., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such general
partners during the past two years is incorporated by reference to Schedules B
and D of Form ADV filed by HGK Asset Management, Inc. under the Advisers Act of
1940 (SEC File No. 801-19314).
AIG CAPITAL MANAGEMENT CORP.
- ----------------------------
AIG Capital Management Corp. is the investment adviser for the AIG Money
Market Fund. The principal address of AIG Capital Management Corp. is 70 Pine
Street, New York, NY 10270.
The list required by this Item 26 of directors and officers of AIG Capital
Management Corp., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such directors and
officers during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by AIG Capital Management Corp. under the Advisers Act
of 1940 (SEC File No. 801-47192).
FIRST MANHATTAN CO.
- -------------------
First Manhattan Co. is the investment adviser for the FMC Select Fund. The
principal address of First Manhattan Co. is 437 Madison Avenue, New York, NY
10022.
The list required by this Item 26 of general partners of First Manhattan
Co., together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by First Manhattan Co. under the Advisers Act of 1940 (SEC File No.
801-12411).
C-5
<PAGE>
CRA REAL ESTATE SECURITIES L.P.
- -------------------------------
CRA Real Estate Securities L.P. is the investment adviser for the CRA Realty
Shares Portfolio. The principal address of CRA Real Estate Securities L.P. is
Suite 205, 259 Radnor-Chester Road, Radnor, PA 19087.
The list required by this Item 26 of general partners of CRA Real Estate
Securities L.P., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such general
partners during the past two years is incorporated by reference to Schedules B
and D of Form ADV filed by CRA Real Estate Securities L.P. under the Advisers
Act of 1940 (SEC File No. 801-49083).
MDL CAPITAL MANAGEMENT, INC.
- ----------------------------
MDL Capital Management, Inc. is the investment adviser for the MDL Broad
Market Fixed Income Portfolio and the MDL Large Cap Growth Equity Portfolio. The
principal address of MDL Capital Management, Inc. is 225 Ross Street,
Pittsburgh, PA 15222.
The list required by this Item 26 of general partners of MDL Capital
Management, Inc., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such general
partners during the past two years is incorporated by reference to Schedules B
and D of Form ADV filed by MDL Capital Management, Inc. under the Advisers Act
of 1940 (SEC File No. 801-43419).
SAGE GLOBAL FUNDS, LLC
- ----------------------
SAGE Global Funds, LLC is the investment adviser for the SAGE Corporate Bond
Fund. The principal address of SAGE Global Funds, LLC is 55 William Street,
Suite G-40, Wellesley, MA 02181.
The list required by this Item 26 of general partners of SAGE Global Funds,
LLC, together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by SAGE Global Funds, LLC under the Advisers Act of 1940 (SEC File No.
801-54753).
STANDARD ASSET GROUP, INC.
- -----------------------------
Standard Asset Group, Inc. is the investment sub-adviser for the SAGE
Corporate Bond Fund. The principal address of Standard Asset Group, Inc. is 55
William Street, Suite G-40, Wellesley, MA 02181.
The list required by this Item 26 of general partners of Standard Asset
Group, Inc., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such general
partners during the past two years is incorporated by reference to Schedules B
and D of Form ADV filed by Standard Asset Group, Inc. under the Advisers Act of
1940 (SEC File No. 801-29883).
LSV ASSET MANAGEMENT COMPANY
- ----------------------------
LSV Asset Management Company is the investment adviser for the LSV Value
Equity Fund. The address of LSV Asset Management Company 200 W. Madison Street,
27th Floor, Chicago, Illinois 60606.
The list required by this Item 26 of general partners of LSV Asset
Management Company, together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
general partners during the past two years is incorporated by reference to
Schedules B and D of Form ADV filed by LSV Asset Management Company under the
Advisers Act of 1940 (SEC File No. 801-47689).
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<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or investment
adviser.
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Funds, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 1998
The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456.
C-7
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President,
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President,
Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President,
Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President,
Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President Controller & Chief
Financial Officer
Joanne Nelson Vice President --
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President,
Assistant Secretary
Sandra K. Orlow Vice President & Assistant Secretary Vice President,
Assistant Secretary
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President,
Assistant Secretary
Lydia J. Streigel Vice President & Assistant Secretary Vice President,
Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-I (d), the required books and records are maintained
at the offices of Registrant's Custodian:
First Union National Bank
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101
(b)/(c) With respect to Rules 31a-1(a); 31a-1 (b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books
and records are maintained at the offices of Registrant's Administrator:
SEI Investments Mutual Funds Services
Oaks, PA 19456
(c) With respect to Rules 31a-1 (b)(5), (6), (9) and (10) and 31a-1 (f),
the required books and records are maintained at the offices of the
Registrant's Advisers:
HGK Asset Management, Inc.
Newport Tower
525 Washington Blvd.
Jersey City, NJ 07310
AIG Capital Management Corp.
70 Pine Street
20th Floor
New York, NY 10270
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<PAGE>
First Manhattan Co.
437 Madison Avenue
New York, NY 10022-7022
CRA Real Estate Securities L.P.
Suite 205
259 North Radnor-Chester Road
Radnor, PA 19087
MDL Capital Management, Inc.
225 Ross Street
Pittsburgh, PA 15222
SAGE Global Funds, LLC
55 William Street, Suite G-40
Wellesley, MA 02181
Standard Asset Group, Inc.
55 William Street
Wellesley, MA 02181
LSV Asset Management Company
200 W. Madison Street, 27th Floor
Chicago, Illinois 60606
ITEM 29. MANAGEMENT SERVICES: None.
ITEM 30. UNDERTAKINGS:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with shareholders of the Fund,
the Trustees will inform such shareholders as to the approximate number of
shareholders of record and the approximate costs of mailing or afford said
shareholders access to a list of shareholders.
Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to assist in communications with
other shareholders as required by the provisions of Section 16(c) of the
Investment Company Act of 1940.
Registrant hereby undertakes to furnish each prospective person to whom a
prospectus for any series of the Registrant is delivered with a copy of the
Registrant's latest annual report to shareholders for such series, when such
annual report is issued containing information called for by Item 5A of Form
N-1A, upon request and without charge.
NOTICE
A copy of the Agreement and Declaration of Trust for The Advisors' Inner
Circle Fund is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Fund by an officer of the Fund as an officer and
by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers, or shareholders individually but are binding only upon the
assets and property of the Fund.
C-10
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 38 to the Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of Oaks,
Commonwealth of Pennsylvania on the 2nd day of March, 1999.
THE ADVISORS' INNER CIRCLE FUND
By: /s/ MARK E. NAGLE
-----------------------------------------
Mark E. Nagle PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacity and on the dates indicated.
*
- ------------------------------ Trustee March 2, 1999
John T. Cooney
*
- ------------------------------ Trustee March 2, 1999
William M. Doran
*
- ------------------------------ Trustee March 2, 1999
Robert A. Nesher
*
- ------------------------------ Trustee March 2, 1999
Robert A. Patterson
*
- ------------------------------ Trustee March 2, 1999
Eugene Peters
*
- ------------------------------ Trustee March 2, 1999
James M. Storey
/s/ MARK E. NAGLE
- ------------------------------ President, Controller & March 2, 1999
Mark E. Nagle Chief Financial Officer
*By: /s/ MARK E. NAGLE
-------------------------
Mark E. Nagle
ATTORNEY-IN-FACT
C-11
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT NO. AND DESCRIPTION
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<S> <C>
EX-99.A1 Registrant's Agreement and Declaration of Trust dated July 18, 1991, as originally
filed with the SEC on August 29, 1991, is incorporated herein by reference to
Post-Effective Amendment No. 32 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on February
27, 1998.
EX-99.A2 Registrant's Amendment to the Agreement and Declaration of Trust dated December 2,
1996, is incorporated herein by reference to Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on December 13, 1996.
EX-99.A3 Registrant's Amendment to the Agreement and Declaration of Trust dated February 18,
1997, is incorporated herein by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on February 27, 1997.
EX-99.B1 Registrant's By-Laws are incorporated herein by reference to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on August 29, 1991.
EX-99.B2 Registrant's Amended and Restated By-Laws are incorporated herein by reference to
Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on December
12, 1996.
EX-99.C Not Applicable.
EX-99.D1 Investment Advisory Agreement between Registrant and HGK Asset Management, Inc. with
respect to HGK Fixed Income Fund dated August 15, 1994 as originally filed with
Post-Effective Amendment No. 15 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on June 15,
1994 is incorporated herein by reference to Post-Effective Amendment No. 24 filed on
February 28, 1996.
EX-99.D2 Investment Advisory Agreement between Registrant and AIG Capital Management Corp. with
respect to AIG Money Market Fund is incorporated herein by reference to
Post-Effective Amendment No. 17 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on September
19, 1994 is incorporated herein by reference to Post-Effective Amendment No. 28 filed
February 27, 1997.
EX-99.D3 Investment Advisory Agreement Between Registrant and First Manhattan Co. with respect
to FMC Select Fund dated May 3, 1995 as originally filed with Post-Effective
Amendment No. 19 to Registrant's Registration Statement on Form N-1A (File
No.33-42484), filed with the Securities and Exchange Commission on February 1, 1995
is incorporated herein by reference to Post-Effective Amendment No. 24 filed on
February 28, 1996.
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EXHIBIT NO. AND DESCRIPTION
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EX-99.D4 Investment Advisory Agreement between Registrant and CRA Real Estate Securities L.P.
dated December 31, 1996 with respect to the CRA Realty Shares Portfolio is
incorporated herein by reference to Post-Effective Amendment No. 29 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484) filed with the Securities and
Exchange Commission on May 22, 1997.
EX-99.D5 Investment Advisory Agreement between Registrant and MDL Capital Management, Inc. with
respect to the MDL Broad Market Fixed Income Portfolio and the MDL Large Cap Growth
Equity Portfolio is incorporated herein by reference to Post-Effective Amendment No.
32 to Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the Securities and Exchange Commission on February 27, 1998.
EX-99.D6 Investment Advisory Agreement between Registrant and SAGE Global Funds, LLC with
respect to the SAGE Corporate Bond Fund is incorporated herein by reference to
Post-Effective Amendment No. 32 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on February
27, 1998.
EX-99.D7 Investment Sub-Advisory Agreement between SAGE Global Funds, LLC and Standard Asset
Group, Inc. with respect to the SAGE Corporate Bond Fund is incorporated herein by
reference to Post-Effective Amendment No. 33 to Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the Securities and Exchange Commission
on May 18, 1998.
EX-99.D8 Form of Investment Advisory Agreement between Registrant and LSV Asset Management
Company is incorporated herein by reference to Post-Effective Amendment No. 34 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on December 29, 1998.
EX-99.D9 Amended and Restated Schedule to the Investment Advisory Agreement dated May 3, 1995
between Registrant and First Manhattan Company is incorporated herein by reference to
Post-Effective Amendment No. 34 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on December
29, 1998.
EX-99.E1 Amended and Restated Distribution Agreement between Registrant and SEI Financial
Services Company dated August 8, 1994 as originally filed with Post-Effective
Amendment No. 17 to Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the Securities and Exchange Commission on September 19, 1994 is
incorporated herein by reference to Post-Effective Amendment No. 24 filed on February
28, 1996.
EX-99.E2 Distribution Agreement between Registrant and CCM Securities, Inc. dated February 28,
1997 is incorporated herein by reference to Post-Effective Amendment No. 30 to
Registrant's Registration Statement on From N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on June 30, 1997.
EX-99.E3 Amended and Restated Sub-Distribution and Servicing Agreement between SEI Investments
Company and AIG Equity Sales Corporation is incorporated herein by reference to
Post-Effective Amendment No. 32 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on February
27, 1998.
EX-99.F Not Applicable.
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EXHIBIT NO. AND DESCRIPTION
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EX-99.G Custodian Agreement between Registrant and CoreStates Bank N.A. is incorporated herein
by reference to Pre-Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the Securities and Exchange Commission
on October 28, 1991 is incorporated herein by reference to Post-Effective Amendment
No. 28 filed on February 27, 1997.
EX-99.H1 Amended and Restated Administration Agreement between Registrant and SEI Financial
Management Corporation, including schedules relating to Clover Capital Equity Value
Fund, Clover Capital Fixed Income Fund, White Oak Growth Stock Fund, Pin Oak
Aggressive Stock Fund, Roulston Midwest Growth Fund, Roulston Growth and Income Fund,
Roulston Government Securities Fund, A+P Large-Cap Fund, Turner Fixed Income Fund,
Turner Small Cap Fund, Turner Growth Equity Fund, Morgan Grenfell Fixed Income Fund,
Morgan Grenfell Municipal Bond Fund and HGK Fixed Income Fund dated May 17, 1994 as
originally filed with Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on June 15, 1994 is incorporated herein by reference to Post-Effective
Amendment No. 24 filed on February 28, 1996.
EX-99.H2 Schedule dated November 11, 1996 to Administration Agreement dated November 14, 1991 as
Amended and Restated May 17, 1994 adding the CRA Realty Shares Portfolio is
incorporated herein by reference to Post-Effective Amendment No. 29 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the Securities
and Exchange Commission on May 22, 1997.
EX-99.H3 Shareholder Service Plan and Agreement for the Class A Shares of the CRA Realty Shares
Portfolio is incorporated herein by reference to Post-Effective Amendment No. 30 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on June 30, 1997.
EX-99.H4 Schedule to Amended and Restated Administration Agreement dated May 8, 1995 to the
Administration Agreement dated November 14, 1991 as Amended and Restated May 17, 1994
with respect to the FMC Select Fund is incorporated herein by reference to
Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on February
27, 1997.
EX-99.H5 Consent to Assignment and Assumption of Administration Agreement dated June 1, 1996 is
incorporated herein by reference to Post-Effective Amendment No. 28 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the Securities
and Exchange Commission on February 27, 1997.
EX-99.H6 Schedule to the Amended and Restated Administration Agreement adding the MDL Broad
Market Fixed Income Fund and the MDL Large Cap Growth Equity Fund is incorporated
herein by reference to Post-Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on February 27, 1998.
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EXHIBIT NO. AND DESCRIPTION
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EX-99.H7 Schedule to the Amended and Restated Administration Agreement adding the SAGE Corporate
Fixed Bond Fund incorporated herein by reference to Post-Effective Amendment No. 32
to Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with
the Securities and Exchange Commission on February 27, 1998.
EX-99.H8 Schedule dated May 19, 1997 to Administration Agreement dated November 14, 1991 between
the Advisors' Inner Circle Fund and SEI Financial Management Corporation adding the
AIG Money Market Fund is incorporated herein by reference to Post-Effective Amendment
No. 32 to Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the Securities and Exchange Commission on February 27, 1998.
EX-99.H9 Schedule to Administration Agreement relating to the CRA Realty Portfolios is
incorporated herein by reference to Post-Effective Amendment No. 32 to Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the Securities
and Exchange Commission on February 27, 1998.
EX-99.H10 [Form of] Shareholder Servicing Agreement for AIG Money Market Fund is incorporated
herein by reference to Post-Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on February 27, 1998.
EX-99.H11 Transfer Agency Agreement dated November 30, 1994 is incorporated herein by reference
to Post-Effective Amendment No. 33 to Registrant's Registration Statement on Form
N-1A (File No. 33-42484), filed with the Securities and Exchange Commission on May
18, 1998.
EX-99.H12 Amendment dated August 17, 1998 to the Schedule dated May 8, 1995 to the Administration
Agreement dated November 14, 1991 as amended and restated May 17, 1994 between
Registrant and SEI Financial Management Corporation is incorporated herein by
reference to Post-Effective Amendment No. 34 to Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the Securities and Exchange Commission
on December 29, 1998.
EX.99.H13 Assignment and Assumption Agreement dated February 27, 1998 between Registrant and Oak
Associates Funds is incorporated herein by reference to Post-Effective Amendment No.
34 to Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the Securities and Exchange Commission on December 29, 1998.
EX-99.I Opinion and Consent of Counsel dated October 24, 1991, as originally filed October 28,
1991, is incorporated herein by reference to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on February 27, 1998.
EX-99.J Not Applicable.
EX-99.K Not Applicable.
EX-99.L Not Applicable.
EX-99.M Distribution Plan for The Advisors' Inner Circle Fund as originally filed with
Post-Effective Amendment No. 17 to Registrant's Registration Statement on Form N-1A
(File No. 33-42484), filed with the Securities and Exchange Commission on September
19, 1994 is incorporated herein by reference to Post-Effective Amendment No. 24 filed
on February 28, 1996.
EX-99.N Not Applicable.
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EX-99.O Rule 18f-3 Plan dated May 15, 1995, as originally filed June 1, 1995, is incorporated
herein by reference to Post-Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the Securities and Exchange
Commission on February 27, 1998.
EX-99.P Powers of Attorney for Mark E. Nagle, John T. Cooney, William M. Doran, Frank E.
Morris, Robert A. Nesher, Eugene B. Peters, Robert A. Patterson and James M. Storey
are incorporated herein by reference to Post-Effective Amendment No. 34 to
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed with the
Securities and Exchange Commission on December 29, 1998.
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