THE ADVISORS' INNER CIRCLE FUND
INVESTMENT ADVISER:
SAGE GLOBAL FUNDS, LLC
SAGE
Corporate Bond Fund[REGISTERED MARK]
America's First No Gain/No Pain Mutual Fund
SEMI-ANNUAL REPORT
APRIL 30, 1998
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
Face Market
Amount Value
SAGE CORPORATE BOND FUND (000) (000)
- --------------------------------------------------------
CORPORATE BONDS (94.9%)
AEROSPACE & DEFENSE (3.2%)
Lockheed Martin
7.250%, 05/15/06 $100 $ 105
Ratheon
6.500%, 07/15/05 100 101
--------
206
--------
AIR TRANSPORTATION (1.8%)
AMR
9.750%, 03/15/00 107 114
--------
AUTOMOTIVE (4.0%)
Hertz
7.000%, 05/01/02 250 254
--------
BANKS (16.1%)
ABN-Amro Bank NV (Chicago)
7.000%, 04/01/08 100 104
BankBoston
7.000%, 09/15/07 165 170
Banque Paribas-NY
6.875%, 03/01/09 150 151
Chase Manhattan
7.125%, 02/01/07 100 105
Long Island Savings Bank
6.200%, 04/02/01 250 251
MBNA America Bank
6.750%, 03/15/08 250 248
--------
1,029
--------
BROADCASTING, NEWSPAPERS & ADVERTISING (4.1%)
TCI Communications
8.250%, 01/15/03 150 161
6.875%, 02/15/06 100 101
--------
262
--------
COMPUTERS & SERVICES (1.6%)
Oracle
6.720%, 02/15/04 100 101
--------
FINANCIAL SERVICES (15.5%)
Caterpillar Financial Services
6.480%, 12/12/01 125 127
Deutsche Bank Financial
6.700%, 12/13/06 100 102
Dresdner Bank-NY
6.625%, 09/15/05 100 101
Fleet Financial Group
6.500%, 03/15/08 100 100
Lehman Brothers Holdings
7.250%, 10/15/03 100 103
LGT Asset Management (144a)
6.500%, 12/15/01 250 253
Face Market
Amount Value
(000) (000)
- -------------------------------------------------------
Salomon Brothers
7.125%, 08/01/99 $100 $ 101
Salomon Smith Barney Holdings
6.625%, 07/01/02 100 101
--------
988
--------
FOREIGN GOVERNMENTS (4.6%)
Peoples Republic of China
6.500%, 02/17/04 300 294
--------
GAS/NATURAL GAS (11.0%)
Columbia Gas Systems
6.390%, 11/28/00 195 196
Enron
7.125%, 05/15/07 250 258
Williams Companies
6.500%, 11/15/02 250 251
--------
705
--------
INSURANCE (5.0%)
Cigna
8.750%, 10/01/01 300 322
--------
PRINTING & PUBLISHING (9.8%)
Harcourt General
8.250%, 06/01/02 200 213
Time Warner
7.750%, 06/15/05 386 410
--------
623
--------
RAILROADS (4.6%)
Conrail
9.750%, 06/01/00 100 107
Union Pacific
7.375%, 05/15/01 85 88
6.000%, 09/01/03 100 97
--------
292
--------
RETAIL (4.7%)
Dayton Hudson
9.400%, 02/15/01 280 302
--------
STEEL & STEEL WORKS (5.8%)
Reynolds Metals
9.375%, 06/15/99 360 373
--------
TELEPHONES & TELECOMMUNICATION (3.1%)
Airtouch Communications
7.125%, 07/15/01 90 92
7.000%, 10/01/03 100 103
--------
195
--------
TOTAL CORPORATE BONDS
(Cost $6,110) 6,060
--------
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
Face Market
SAGE CORPORATE Amount Value
BOND FUND (concluded) (000) (000)
- -------------------------------------------------------
CASH EQUIVALENT (3.3%)
Corefund Elite Cash Reserve
Money Market Fund $213 $ 213
--------
TOTAL CASH EQUIVALENT
(Cost $213) 213
--------
TOTAL INVESTMENTS (98.2%)
(Cost $6,323) 6,273
--------
OTHER ASSETS AND LIABILITIES, NET (1.8%) 114
--------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 646,877 outstanding
shares of beneficial interest 6,426
Undistributed net investment income 28
Accumulated net realized loss
on investments (17)
Net unrealized depreciation
on investments (50)
--------
TOTAL NET ASSETS (100.0%) $ 6,387
========
Net Asset Value, Offering and
Redemption Price Per Share $ 9.87
========
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the period ended April 30, 1998 (Unaudited)
SAGE
CORPORATE
BOND FUND (1)
----------
(000)
- -----------------------------------------------------------------------------
Investment Income:
Interest ..................................................... $ 93
- -----------------------------------------------------------------------------
Total Investment Income..................................... 93
- -----------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ..................................... 10
Investment Advisory Fee Waiver ............................... (10)
Reimbursements by Advisor..................................... (52)
Administrative Fees .......................................... 28
Professional Fees ............................................ 9
Transfer Agent Fees .......................................... 11
Printing Fees ................................................ 6
Trustee Fees ................................................. 2
Registration Fees ............................................ 8
Insurance and Other Fees ..................................... 3
- -----------------------------------------------------------------------------
Total Expenses, Net .......................................... 15
- -----------------------------------------------------------------------------
Net Investment Income .................................... 78
- -----------------------------------------------------------------------------
Net Realized Loss from Securities Sold ....................... (17)
Net Change in Unrealized Depreciation of Investment Securities (50)
- -----------------------------------------------------------------------------
Net Realized and Unrealized Loss on Investments ............. (67)
- -----------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations ......... $ 11
=============================================================================
(1) SAGE Corporate Bond Fund commenced operations on December 15, 1997.
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the period ended April 30, 1998 (Unaudited)
SAGE
CORPORATE BOND
FUND
--------------
12/15/97
TO 4/30/98
(000)
- -------------------------------------------------------------------------------------------------
Investment Activities:
<S> <C>
Net Investment Income ....................................................... $ 78
Net Realized Loss from Securities Sold ...................................... (17)
Net Change in Unrealized Depreciation of Investment Securities .............. (50)
- -------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations....................... 11
- -------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ....................................................... (50)
- -------------------------------------------------------------------------------------------------
Total Distributions........................................................ (50)
- -------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued ................................................. 6,777
Reinvestment of Cash Distributions .......................................... 49
Cost of Shares Redeemed ..................................................... (400)
- -------------------------------------------------------------------------------------------------
Increase in Net Assets Derived from Capital Share Transactions............. 6,426
- -------------------------------------------------------------------------------------------------
Total Increase in Net Assets ............................................ 6,387
- -------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ......................................................... --
- -------------------------------------------------------------------------------------------------
End of Period ............................................................... 6,387
- -------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ...................................................................... 682
Issued in Lieu of Cash Distributions ........................................ 5
Redeemed .................................................................... (40)
- -------------------------------------------------------------------------------------------------
Net Increase in Share Transactions........................................... $ 647
=================================================================================================
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For the period ended April 30, 1998 (Unaudited)
For a share outstanding throughout each period
Ratio
Net Realized and Net Net of Net
Asset Unrealized Distributions Distributions Asset Assets Ratio Investment
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
--------- ---------- ------------ ------------- ------------- --------- ------ --------- ---------- ----------
- ------------------------
SAGE CORPORATE BOND FUND
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(1) $10.00 0.14 (0.17) (0.10) -- $9.87 (0.29)%(2) $6,387 0.68%* 3.51%*
</TABLE>
<TABLE>
<CAPTION>
Ratio
Ratio of Net
of Expenses Investment
to Average Income to
Net Assets Average Net
(Excluding Assets (Excluding Portfolio
Waivers and Waivers and Turnover
Reimbursements) Reimbursements) Rate
--------------- ----------------- ----------
- ------------------------
SAGE CORPORATE BOND FUND
- ------------------------
<S> <C> <C> <C>
1998(1) 3.49%* 0.70%* 22.11%
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized
(1) The SAGE Corporate Bond Fund commenced operations on December 15, 1997.
(2) Total return is for the period indicated and has not been annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<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
SAGE Corporate Bond 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 monthly and are paid monthly. Any net realized capital gains
are distributed 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
accounting principles. These book/tax differ-
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
April 30, 1998 (Unaudited)
ences 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 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, which would increase by $15,000 per additional
class, or .15% on the first $100 million; .125% on the next $100 million; and
.10% on the average daily net assets over $200 million.
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 SAGE Global Funds, LLC (the "Adviser") are parties to an Investment
Advisory Agreement dated December 15, 1997 under which the Adviser receives an
annual fee equal to .55% 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 .90% of the
average daily net assets of the Fund. Fee waivers and expense reimbursements are
voluntary and may be terminated at any time.
Standard Asset Group, Inc. serves as the investment sub-adviser for the Fund
pursuant to the sub advisory agreement dated December 15,1997; the sub-adviser
is entitled to receive a fee which is calculated daily and paid monthly at an
annual rate of .20% of the average daily net assets of the Fund.
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.
7
<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:
SAGE CORPORATE
BOND FUND (000)
---------------
Purchases
Government .................... $ --
Other ......................... 7,033
Sales
Government .................... $ --
Other ......................... 893
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:
SAGE CORPORATE
BOND FUND (000)
---------------
Aggregate gross unrealized
appreciation ................... $ 6
Aggregate gross unrealized
depreciation ................... (56)
------
Net unrealized depreciation ......... $(50)
======
8
<PAGE>
SAGE
CORPORATE BOND FUND[REGISTERED MARK]
America's First No Gain/No Pain Mutual Fund
TRUST:
THE ADVISORS' INNER CIRCLE FUND
FUND:
SAGE CORPORATE BOND FUND
ADVISER:
SAGE GLOBAL FUNDS, LLC
SUB-ADVISER:
STANDARD ASSET GROUP, INC.
DISTRIBUTOR:
SEI INVESTMENTS DISTRIBUTION CO.
ADMINISTRATOR:
SEI FUND RESOURCES
LEGAL COUNSEL:
MORGAN, LEWIS & BOCKIUS LLP
INDEPENDENT PUBLIC ACCOUNTANTS:
ARTHUR ANDERSEN LLP
April 30, 1998
SAG-F-003-01
