THE ADVISORS' INNER CIRCLE FUND
HGK
FIXED INCOME FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
AS OF APRIL 30, 1998
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS FOR THE FUND DESCRIBED.
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
Face Market
Amount Value
HGK FIXED INCOME FUND (000) (000)
- --------------------------------------------------------
[Pie Chart Omitted]
Plot Points are as follows:
% of Total Fund Investments
Repurchase Agreement 1%
U.S. Treasury Obligations 25%
U.S. Gov't. Mortgage-Backed Securities 3%
Asset Backed Securities 2%
Corporate Obligations 57%
U.S. Gov't Agency Obligations 12%
CORPORATE OBLIGATIONS (56.7%)
AIR TRANSPORTATION (3.2%)
Federal Express, Ser 1996-A1
7.850%, 01/30/15 $147 $ 157
Northwest Airlines
7.068%, 07/02/17 285 287
------
444
------
APARTMENTS (2.8%)
Cyprus Minerals
6.625%, 10/15/05 400 401
------
AUTOMOTIVE (1.7%)
Ford Motor
7.700%, 05/15/97 225 244
------
BANKS (7.1%)
ANZ Banking Group
7.550%, 09/15/06 600 645
Fleet Credit Card LLC
6.450%, 10/30/00 300 299
Peoples Bank
7.200%, 12/01/06 50 51
------
995
------
BROADCASTING, NEWSPAPERS & ADVERTISING (9.9%)
TCI Communications
8.650%, 09/15/04 300 328
7.875%, 02/15/26 225 245
Time Warner
7.400%, 02/01/04 425 438
9.125%, 01/15/13 325 388
------
1,399
------
FINANCIAL SERVICES (9.1%)
Banesto Finance
7.500%, 03/25/07 450 478
Face Market
Amount Value
(000) (000)
- -------------------------------------------------------
Countrywide Funding
6.880%, 08/03/98 $150 $ 150
Lehman Brothers Holdings
7.200%, 08/15/09 100 105
Lehman Brothers Holdings,
Ser E, MTN
6.625%, 12/27/02 375 380
Paine Webber
6.550%, 04/15/08 175 174
------
1,287
------
FOOD, BEVERAGE & TOBACCO (3.4%)
Philip Morris
7.750%, 01/15/27 175 185
RJR Nabisco
8.750%, 07/15/07 275 286
------
471
------
GAS/NATURAL GAS (1.8%)
KN Energy
7.250%, 03/01/28 250 251
------
INSURANCE (1.2%)
Delphi Funding LLC
9.310%, 03/25/27 150 168
------
PETROLEUM & FUEL PRODUCTS (2.6%)
Freeport-McMoran
7.200%, 11/15/26 425 360
------
PETROLEUM REFINING (6.2%)
USX
8.500%, 03/01/23 325 371
YPF Sociedad Anonima
8.000%, 02/15/04 500 506
------
877
------
PRINTING & PUBLISHING (6.8%)
A.H. Belo
7.250%, 09/15/27 300 308
News America Holdings
7.750%, 12/01/45 625 652
------
960
------
RETAIL (0.9%)
Lowe's
6.875%, 02/15/28 50 50
Nordstrom
6.950%, 03/15/28 75 76
------
126
------
TOTAL CORPORATE OBLIGATIONS
(Cost $7,854) 7,983
------
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
Face Market
Amount Value
HGK FIXED INCOME FUND (concluded) (000) (000)
- -------------------------------------------------------
U.S. TREASURY OBLIGATIONS (24.9%)
U.S. Treasury Notes
6.000%, 05/31/98 $ 675 $ 676
4.750%, 10/31/98 1,075 1,072
5.500%, 11/15/98 200 200
5.000%, 01/31/99 250 249
6.875%, 08/31/99 175 178
5.875%, 11/15/99 350 352
6.250%, 05/31/00 100 101
5.750%, 08/15/03 250 251
6.000%, 02/15/26 425 424
------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,506) 3,503
------
U.S. GOVERNMENT AGENCY OBLIGATIONS (12.6%)
FNMA
7.550%, 03/27/07 700 717
FNMA MTN
5.670%, 01/25/01 500 495
6.400%, 11/04/02 350 352
6.875%, 09/10/12 200 208
------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,755) 1,772
------
U.S. GOVERNMENT MORTGAGE-BACKED BOND (3.0%)
GNMA
7.000%, 02/15/06 166 169
7.000%, 12/15/23 255 258
------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED BOND
(Cost $422) 427
------
ASSET-BACKED SECURITY (1.6%)
Equicredit, Ser 1997-B
6.415%, 03/15/12 225 225
------
TOTAL ASSET-BACKED SECURITY
(Cost $225) 225
------
REPURCHASE AGREEMENT (0.3%)
Lehman Brothers,
5.25%, dated 04/30/98, matures
05/01/98, repurchase price $42,873
(collateralized by U.S. Treasury
Bill, par value $46,196,
04/01/99: market value $43,947) 43 43
------
TOTAL REPURCHASE AGREEMENT
(Cost $43) 43
------
Market
Value
(000)
- -------------------------------------------------------
TOTAL INVESTMENTS (99.1%)
(Cost $13,805) $13,953
-------
OTHER ASSETS AND LIABILITIES, NET (0.9%) 125
-------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 1,342,780 outstanding
shares of beneficial interest 13,787
Accumulated net realized gain
on investments 143
Net unrealized appreciation
on investments 148
-------
TOTAL NET ASSETS (100.0%) $14,078
=======
Net Asset Value, Offering and
Redemption Price Per Share $10.48
=======
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MTN--MEDIUM TERM NOTE
SER--SERIES
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the six-month period ended April 30, 1998. (Unaudited)
<TABLE>
<CAPTION>
HGK
FIXED INCOME
FUND
-----------
(000)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest ................................................................................. $ 462
- -------------------------------------------------------------------------------------------------------------------
Total Investment Income................................................................. 462
- -------------------------------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ................................................................. 34
Investment Advisory Fee Waiver ........................................................... (34)
Reimbursements by Advisor................................................................. (25)
Administrative Fees ...................................................................... 37
Custodian Fees ........................................................................... 8
Professional Fees ........................................................................ 10
Transfer Agent Fees ...................................................................... 18
Printing Fees ............................................................................ 4
Trustee Fees ............................................................................. 4
Registration Fees ........................................................................ 6
Insurance and Other Fees .................................................................. 6
- -------------------------------------------------------------------------------------------------------------------
Total Expenses, Net ...................................................................... 68
- -------------------------------------------------------------------------------------------------------------------
Net Investment Income ................................................................ 394
- -------------------------------------------------------------------------------------------------------------------
Net Realized Gain From Securities Sold ................................................... 144
Net Change in Unrealized Depreciation of Investment Securities ........................... (154)
- -------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Loss on Investments ........................................ (10)
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations ..................................... $ 384
===================================================================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the six-month period ended April 30, 1998 (Unaudited) and the year ended
October 31, 1997
<TABLE>
<CAPTION>
HGK
FIXED INCOME
FUND
-------------------------
11/01/97 11/01/96
TO 04/30/98 TO 10/31/97
(000) (000)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income .......................................................... $ 394 $ 770
Net Realized Gain from Securities Sold ......................................... 144 69
Net Change in Unrealized Appreciation (Depreciation) of Investment Securities .. (154) 227
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations.......................... 384 1,066
- -------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income .......................................................... (394) (770)
Realized Capital Gains ......................................................... (53) --
- -------------------------------------------------------------------------------------------------------------------
Total Distributions........................................................... (447) (770)
- -------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued .................................................... 1,284 2,041
Reinvestment of Cash Distributions ............................................. 377 764
Cost of Shares Redeemed ........................................................ (891) (2,245)
- -------------------------------------------------------------------------------------------------------------------
Increase in Net Assets Derived from Capital Share Transactions ............... 770 560
- -------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets ............................................... 707 856
- -------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ............................................................ 13,371 12,515
- -------------------------------------------------------------------------------------------------------------------
End of Period .................................................................. $14,078 $13,371
- -------------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ......................................................................... 122 197
Issued in Lieu of Cash Distributions ........................................... 36 74
Redeemed ....................................................................... (85) (218)
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Share Transactions.............................................. 73 53
===================================================================================================================
Amounts designated as "--" are $0.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For the six-month period ended April 30, 1998 (Unaudited) and the periods
ended October 31.
For a share outstanding throughout each period
Net Realized and Net Net Ratio
Asset Unrealized Distributions Distributions Asset Assets Ratio of Net
Value Net Gains or from Net From Value End of Expenses Income
Beginning Investment (Losses) on Investment Capital End Total of Period to Average to Average
of Period Income Securities Income Gains of Period Return (000) Net Assets Net Assets
-------- -------- ---------- ------------- ------------- --------- ------ --------- ---------- ----------
- -----------------
HGK FIXED INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998** $10.53 0.30 (0.01) (0.30) (0.04) $10.48 2.84%+ $14,078 1.00% 5.81%
1997 $10.29 0.60 0.24 (0.60) -- $10.53 8.47% $13,371 1.00% 5.85%
1996 $10.88 0.61 (0.17) (0.61) (0.42) $10.29 4.29% $12,515 1.00% 5.92%
1995(1) $10.00 0.67 0.88 (0.67) -- $10.88 16.07%* $10,420 1.00%* 6.38%*
</TABLE>
Ratio
Ratio of Net
of Expenses Investment
to Average Income to
Net Assets Average net
(Excluding Assets (Excluding Portfolio
Waivers and (Excluding Waivers Turnover
Reimbursements and Reimbursements) Rate
-------------- ------------------ --------
- -----------------
HGK FIXED INCOME
- -----------------
1998** 1.87% 4.94% 93.10%
1997 1.64% 5.21% 256.52%
1996 1.51% 5.41% 264.02%
1995(1) 2.37%* 5.01%* 300.48%
Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized
** For the period ended April 30, 1998. All ratios have been annualized.
+ Total return is for the period indicated and has not been annualized.
(1) The HGK Fixed Income Fund commenced operations on November 3, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
1. ORGANIZATION:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under an Amended and Restated Agreement and a Declaration of
Trust dated February 18, 1997. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management investment
company with seven portfolios. The financial statements herein are those of the
HGK Fixed Income Fund (the "Fund"). The financial statements of the remaining
portfolios are presented separately. The assets of each portfolio are
segregated, and a Shareholder's interest is limited to the portfolio in which
shares are held. The Fund's prospectus provides a description of the Fund's
investment objectives, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Fund.
SECURITY VALUATION -- Investment securities of the Fund which are listed on
a securities exchange for which market quotations are available are valued
at the last quoted sales price for such securities on each business day,
or, if there is no such reported sales price on the valuation date, at the
most recently quoted bid price. Unlisted securities for which market
quotations are readily available are valued at the most recently quoted
price. Debt obligations with sixty days or less remaining until maturity
may be valued at their amortized cost. Under this valuation method,
purchase discounts and premiums are accreted and amortized ratably to
maturity and are included in interest income. Securities for which
quotations are not readily available are valued at fair value using methods
determined in good faith by the Board of Trustees.
FEDERAL INCOME TAXES -- It is the Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions
of the Internal Revenue Code of 1986, as amended. Accordingly, no provision
for Federal income taxes is required.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Interest income is recognized on the accrual basis. Costs used in
determining realized gains and losses on the sales of investment securities
are those of the specific securities sold during the respective holding
period. Purchase discounts and premiums on securities held by the Fund are
accreted and amortized to maturity using the scientific interest method,
which approximates the effective interest method.
NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund is
calculated on each business day by dividing the total value of assets, less
liabilities, by the number of shares outstanding.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements and provisions adopted by
the Adviser ensure that the market value of the collateral, including
accrued interest thereon, is sufficient in the event of default by the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters into an insolvency proceeding,
realization of the collateral by the Fund may be delayed or limited.
EXPENSES -- Expenses that are directly related to the Fund are charged to
the Fund. Other operating expenses of the Trust are prorated to the Fund on
the basis of relative daily net assets.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared daily and paid to Shareholders monthly. Any net realized
capital gains are distributed to Shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with the U.S. Federal income tax regulations,
which may differ from those amounts determined under generally accepted
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
accounting principles. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent, they
are charged or credited to paid-in-capital in the period that the
differences arise. These reclassifications have no effect on net assets or
net asset value.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES:
Organizational costs have been capitalized by the Trust and are being amortized
on a straight line basis over a period of sixty months commencing with
operations. In the event any of the initial shares of the Trust are redeemed by
any holder thereof during the period that the Trust is amortizing its
organizational costs, the redemption proceeds payable to the holder thereof by
the Portfolio will be reduced by the unamortized organizational costs in the
same ratio as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
Certain officers of the Trust are also officers of SEI Fund Resources (the
"Administrator") and/or SEI Investments Distribution Co. (the "Distributor").
Such officers are paid no fees by the Trust for serving as officers of the
Trust.
4. ADMINISTRATION, SHAREHOLDER SERVICING AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to
an Administration Agreement dated November 14, 1991, as amended and restated on
May 17, 1994, under which the Administrator provides management and
administrative services for an annual fee equal to the higher of $75,000 or .20%
of the Fund's average daily net assets.
DST Systems Inc. (the "Transfer Agent") serves as the transfer agent and
dividend disbursing agent for the Fund under a transfer agency agreement with
the Trust.
The Trust and Distributor are parties to a Distribution Agreement dated November
14, 1991 as amended and restated on August 8, 1994. The Distributor receives no
fees for its distribution services under this agreement.
5. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENTS:
The Fund and HGK Asset Management, Inc. (the "Adviser") are parties to an
Investment Advisory Agreement dated August 15, 1994 under which the Adviser
receives an annual fee equal to .50% of the Fund's average daily net assets. The
Adviser has voluntarily agreed to waive all or a portion of its fees and to
reimburse expenses in order to limit operating expenses to not more than 1.00%
of the average daily net assets of the Fund. Fee waivers and expense
reimbursements are voluntary and may be terminated at any time.
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Fund. The
Custodian plays no role in determining the investment policies of the Fund or
which securities are to be purchased or sold by the Fund.
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
6. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the period ended April 30, 1998 are as follows:
HGK FIXED INCOME
FUND (000)
----------------
Purchases
Government .................. $2,479
Other ....................... 9,252
Sales
Government .................. $3,383
Other ....................... 8,622
At April 30, 1998, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at April 30, 1998, are as follows:
HGK FIXED INCOME
FUND (000)
----------------
Aggregate gross unrealized
appreciation ................ $ 241
Aggregate gross unrealized
depreciation ................ (93)
------
Net unrealized appreciation ...... $ 148
======
<PAGE>
HGK-F-005-02
