<PAGE>
THE ADVISORS' INNER CIRCLE FUND
CLOVER CAPITAL EQUITY VALUE FUND
CLOVER CAPITAL FIXED INCOME FUND
ANNUAL REPORT TO SHAREHOLDERS
AS OF OCTOBER 31, 1995
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS FOR
EACH FUND DESCRIBED.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
CLOVER CAPITAL MANAGEMENT, INC.
CLOVER CAPITAL EQUITY VALUE FUND
The Clover Capital Equity Value Fund utilizes a research driven, value oriented
approach to equity investing. The Fund invests in equity and convertible
securities which possess favorable valuation attributes relative to the stock
market averages or the valuation characteristics of the company's stock in past
years. Valuations are measured by a stock's price relative to the company's per
share cash flows, revenues, book value, earnings and its liquidation value on
the private market. Earnings and cash flow are normalized in the case of
companies where improvements in profit margins are anticipated.
For the fiscal year ended October 31, 1995, the Equity Value Fund enjoyed a
total return of 21.3% versus a total return of 26.4% for the Standard & Poor's
Corporate Composite 500 Stock Price Index ("S&P 500 Index"). In this period,
equity markets enjoyed dramatic price gains due to an optimal environment of
rising earnings, falling interest rates and substantial merger and acquisition
activity. Growth sectors, such as technology and pharmaceuticals, were stock
market leaders. Financial stocks also experienced exceptional returns as merger
activity bloomed in every sector of the banking industry. Cyclical industries
underperformed the market in general as earnings flattened and investors
searched for more recession-proof, secular growth plays.
The Fund's performance was lead by fundamental improvements among several of
its computer software and service holdings. Additional gains were provided by
an eclectic group of holdings from the airline, super market and utility
industries. Lagging performance in the medical services, retail and consumer
services industries along with the relatively high average cash balances
contributed to the Fund's performance shortfall versus the stock market indices
for the fiscal year ended October 31, 1995.
Since the end of 1991, prevailing valuations in the stock market averages have
persisted at or near record levels without a meaningful correction. The Fund
will continue to look patiently for good opportunities among the lower value,
out-of-favor groups in the market. At present, investor pessimism and
uncertainty is evident in the low valuations accorded to the retail sector and
medical services industries. Selections from these two groups compose the
Fund's largest holdings and additional selections may be added if the valuation
discounts to the market averages persists. Buying opportunities are also
expected in the specialty chemical and economically sensitive industry groups
as the year progresses. The overall stock market is unlikely to retain 1995's
vigor, and as always, selectivity remains the key to negotiating potentially
difficult future market environments.
Comparison of Change in the Value of a $10,000 investment in the
Advisors' Inner Circle Clover Capital Equity Value
Fund, versus the S&P 500 Index
[GRAPH APPEARS HERE]
------------------------------
Average Annual Total Return/1/
------------------------------
Since
One Year 3 Year Inception
------------------------------
21.25% 18.27% 15.29%
------------------------------
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $10,000
in the Clover Capital Equity Value Fund from December 31, 1991 through
October 31, 1995 as compared with the growth of a $10,000 investment
in the S&P 500 Index. The plot points used to draw the line graph were
as follows:
<TABLE>
<CAPTION>
Period Ended Growth of $10,000 Invested Growth of $10,000 Invested
in the Clover Capital Equity in the S&P 500 Index
Value Fund
<S> <C> <C>
12/31/91 $10,000 $10,000
10/31/92 9,938 10,282
10/31/93 11,511 11,818
10/31/94 13,560 12,273
10/31/95 16,442 15,517
</TABLE>
/1/ These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
CLOVER CAPITAL MANAGEMENT, INC.
CLOVER CAPITAL FIXED INCOME FUND
The Clover Capital Fixed Income Fund produced a total rate of return for the
fiscal year ended October 31, 1995 of 15.3%, slightly underperforming the total
return of 15.8% posted by the Merrill Lynch Corporate-Government Mortgage Bond
Index ("Merrill Lynch CGMB Index").
For the fiscal year, interest rates, which had risen in dramatic fashion in the
prior fiscal year, reversed course and began to decline. Yields on two year
Treasury notes declined nearly 1.25% during the period to end at 5.61%. Ten
year Treasury issues had their yields reduced from 7.81% at the beginning of
the fiscal year to 6.02%. Long term bond yields, measured by the thirty year
Treasury also posted a sharp decline from 7.97% to 6.33% at year end. The rally
in the bond market began in the second calendar quarter of 1995 when several
economic reports gave evidence that the U.S. Federal Reserve Board's tight
money policy had succeeded in slowing the growth rate of the U.S. economy. It
was confirmed by the Fed itself on July 6, 1995 when it lowered the target rate
on overnight Federal Funds from 6% to 5 3/4%.
On a sector basis, the corporate bond market posted the best returns for the
year with a total return of 18.45%. The government bond sector recorded a total
return of 15.41% and the mortgage sector came in last place with a still
healthy 14.94%.
The Fund's slight underperformance relative to the benchmark Merrill Lynch CGMB
Index, for the fiscal year ended October 31, 1995, resulted primarily from the
increased exposure to government bonds as compared to corporate bonds. The Fund
managers believe that the slowdown that is evident in the economic data
released over the past several months, combined with historically narrow yield
spreads between corporate and Treasury issues, will result in improved relative
performance of the government sector. Although this strategy has had a slightly
negative effect on both the current yield and returns over the past year it is
the managers' belief that this strategy will provide superior relative returns
in future periods.
Going forward, the Fund continues to operate as a market risk bond portfolio
targeting sectors where we see value and attempting to avoid sectors and
credits where risk does not justify participation while maintaining an
intermediate maturity structure at all times.
Comparison of Change in the Value of a $10,000 investment in the
Advisors' Inner Circle Clover Capital Fixed Income Fund, versus
the Merrill Lynch Corporate-Government Mortgage Bond Index
[GRAPH APPEARS HERE]
------------------------------
Average Annual Total Return/1/
------------------------------
Since
Once Year 3 Year Inception
------------------------------
15.27% 8.05% 8.28%
------------------------------
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $10,000 in
the Clover Capital Fixed Income Fund from December 31, 1991 through
October 31, 1995 as compared with the growth of a $10,000 investment in
the Merrill Lynch Corporate/Government/Mortgage Bond Index. The plot
points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
Period Ended Growth of $10,000 Invested Growth of $10,000 Invested
in the Clover Capital Fixed in the Merrill Lynch Corporate/
Income Fund Government/Mortgage Bond Index
<S> <C> <C>
12/31/91 $10,000 $10,000
10/31/92 10,582 10,596
10/31/93 12,002 11,869
10/31/94 11,582 11,440
10/31/95 13,350 13,248
</TABLE>
/1/ These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of
Clover Capital Equity Value Fund and
Clover Capital Fixed Income Fund of
The Advisors' Inner Circle Fund:
We have audited the accompanying statements of net assets of Clover Capital
Equity Value Fund and Clover Capital Fixed Income Fund (two of the funds
constituting The Advisors' Inner Circle Fund) as of October 31, 1995, and the
related statements of operations, changes in net assets and financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Clover Capital Equity Value Fund and Clover Capital Fixed Income Fund of The
Advisors' Inner Circle Fund as of October 31, 1995, the results of their
operations, changes in their net assets, and financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
CLOVER CAPITAL EQUITY VALUE FUND Shares (000)
<S> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCK -- 73.7%
AIR TRANSPORTATION -- 3.2%
United Air Lines Par $0.01*................................... 9,400 $ 1,653
-------
BAKERY PRODUCTS -- 5.4%
Interstate Bakeries........................................... 50,000 1,069
United Biscuits Holdings ADR.................................. 400,000 1,724
-------
2,793
-------
CHEMICALS -- 2.6%
Fuller H.B.................................................... 5,000 158
OM Group...................................................... 40,000 1,160
-------
1,318
-------
COMMUNICATIONS EQUIPMENT -- 2.8%
California Microwave*......................................... 65,000 1,430
-------
COMPUTERS & SERVICES -- 11.8%
Gtech Holdings*............................................... 50,000 1,225
Marcam*....................................................... 135,100 2,026
Policy Management Systems*.................................... 19,000 895
Sungard Data Systems*......................................... 70,600 1,942
-------
6,088
-------
ELECTRICAL SERVICES -- 3.4%
Sierra Pacific Resources...................................... 75,000 1,753
-------
ENTERTAINMENT -- 5.7%
King World Productions*....................................... 85,000 2,964
-------
MACHINERY -- 0.7%
Binks Manufacturing........................................... 15,104 372
-------
MEDICAL PRODUCTS & SERVICES -- 12.4%
Caremark International........................................ 155,000 3,197
Horizon/CMS Healthcare*....................................... 53,970 1,094
Salick Health Care*........................................... 27,500 1,000
Tenet Healthcare*............................................. 61,000 1,090
-------
6,381
-------
MISCELLANEOUS BUSINESS SERVICES -- 1.7%
Advo Systems.................................................. 16,400 418
Ideon Group................................................... 50,000 444
-------
862
-------
PHARMACEUTICALS -- 1.0%
Mallinckrodt Group............................................ 15,000 521
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Shares/Face Market
Amount Value
CLOVER CAPITAL EQUITY VALUE FUND (Continued) (000) (000)
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCK (Concluded)
PRINTING & PUBLISHING -- 1.8%
American Greetings......................................... 30,000 $ 945
-------
RETAIL -- 13.9%
Cash America International................................. 125,000 641
Kroger*.................................................... 50,000 1,669
Melville................................................... 60,000 1,918
Pier 1 Imports............................................. 89,250 859
Service Merchandise*....................................... 200,000 1,075
TJX........................................................ 75,000 1,013
-------
7,175
-------
RUBBER & PLASTIC -- 3.2%
Hanna (M.A.)............................................... 65,000 1,666
-------
SEMI-CONDUCTORS/INSTRUMENTS -- 4.1%
Amphenol*.................................................. 75,000 1,622
IEC Electronics*........................................... 54,500 497
-------
2,119
-------
TOTAL COMMON STOCK (Cost $34,051,501)........................ 38,040
-------
U. S. GOVERNMENT FLOATING RATE AGENCIES -- 6.7%
FHLB
4.373%, 02/14/97 (coupon indexed to the one month 11th Dis-
trict COFI minus .76%) (A)................................ $ 1,000 975
5.740%, 02/14/97 (coupon indexed to the three month T-bill
plus .15%) (A)............................................ 1,000 998
FNMA
5.55%, 06/02/99 (A)........................................ 1,500 1,485
-------
TOTAL U. S. GOVERNMENT FLOATING RATE AGENCIES
(Cost $3,466,408)........................................... 3,458
-------
REAL ESTATE INVESTMENT TRUST -- 4.3%
Manufactured Home Communities............................... 75 1,238
Meditrust................................................... 9 312
Storage Equities Pfd Convertible to 1.6835 shares........... 22 670
-------
TOTAL REAL ESTATE INVESTMENT TRUST (Cost $2,045,000)......... 2,220
-------
CORPORATE OBLIGATIONS -- 2.8%
Canandiagua Wine
8.750%, 12/15/03........................................... 500 498
Service Merchandise Callable 12/15/97 @ 104.50
9.000%, 12/15/04........................................... 1,163 947
-------
TOTAL CORPORATE OBLIGATIONS (Cost $1,449,174)................ 1,445
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Amount Value
CLOVER CAPITAL EQUITY VALUE FUND (Concluded) (000) (000)
<S> <C> <C>
- -------------------------------------------------------------------------------
CONVERTIBLE BONDS -- 2.1%
Meditrust Convertible to 27.6396 Shares per 1,000
7.500%, 03/01/01............................................ $ 600 $ 608
Pier 1 Imports Convertible to 87.4891 Shares per 1,000
6.875%, 04/01/02............................................ 463 472
-------
TOTAL CONVERTIBLE BONDS (Cost $1,008,777)..................... 1,080
-------
U. S. TREASURY OBLIGATIONS -- 1.9%
U. S. Treasury Bill
11/24/95.................................................... 1,000 997
-------
TOTAL U. S. TREASURY OBLIGATIONS
(Cost $996,576).............................................. 997
-------
REPURCHASE AGREEMENT -- 11.0%
Lehman Securities 5.54%, dated 10/31/95, matures 11/01/95,
repurchase price $5,691,288.33 (collateralized by U.S.
Treasury Note, par value $5,630,395, 7.50%, matures
01/31/97: market value $5,860,888.72)....................... 5,691
-------
TOTAL REPURCHASE AGREEMENT (Cost $5,691,288).................. 5,691
-------
TOTAL INVESTMENTS -- 102.5% (Cost $48,708,724)................ 52,931
-------
OTHER ASSETS AND LIABILITIES -- (2.5%)
Other Assets and Liabilities, Net............................ (1,284)
-------
NET ASSETS:
Portfolio shares (unlimited authorization--no par value)
based on 3,377,737 outstanding shares of beneficial
interest.................................................... 43,080
Undistributed net investment income.......................... 97
Accumulated net realized gain on investments................. 4,248
Net unrealized appreciation on investments................... 4,222
-------
TOTAL NET ASSETS: -- 100.0%................................... $51,647
=======
Net Asset Value, Offering Price and Redemption Price Per
Share....................................................... $ 15.29
=======
</TABLE>
*Non-income producing security
ADR--American Depository Receipt
FHLB--Federal Home Loan Bank
FNMA--Federal National Mortgage Association
(A) Variable rate security -- The rate reflected on the Statement of Net Assets
is the rate in effect at October 31, 1995.
The accompanying notes are an integral part of the financial statments.
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Amount Value
CLOVER CAPITAL FIXED INCOME FUND (000) (000)
<S> <C> <C>
- -------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 38.3%
Bass America
6.750%, 08/01/99.............................................. $450 $ 457
Canandiagua Wine
8.750%, 12/15/03.............................................. 600 599
Commonwealth Edison
5.750%, 11/01/96.............................................. 400 399
CSX
8.400%, 08/01/96.............................................. 250 254
Dayton Hudson
7.500%, 03/01/99.............................................. 500 516
Florida Power & Light
5.500%, 07/01/99.............................................. 500 492
General Motors Acceptance
7.750%, 01/15/99.............................................. 400 417
Grand Metro Investment
6.500%, 09/15/99.............................................. 250 253
Masco
9.000%, 04/15/96.............................................. 300 304
6.125%, 09/15/03.............................................. 200 192
Mattel
6.750%, 05/15/00.............................................. 350 354
Northern Illinois Gas
5.875%, 05/01/00.............................................. 400 393
Private Export Funding
6.620%, 10/01/05.............................................. 250 254
Service Merchandise
9.000%, 12/15/04 callable 12/15/97 @ 104.50................... 600 488
Union Electric
5.500%, 03/01/97.............................................. 250 248
-------
TOTAL CORPORATE OBLIGATIONS (Cost $5,565,520)................... 5,620
-------
U. S. TREASURY OBLIGATIONS -- 29.4%
U. S. Treasury Bonds
9.375%, 02/15/06.............................................. 400 500
7.500%, 11/15/16.............................................. 550 619
8.000%, 11/15/21.............................................. 250 299
U. S. Treasury Notes
6.875%, 07/31/99.............................................. 500 518
7.500%, 10/31/99.............................................. 250 265
7.500%, 11/15/01.............................................. 500 541
7.500%, 05/15/02.............................................. 500 543
7.250%, 05/15/04.............................................. 650 703
7.500%, 02/15/05.............................................. 300 331
-------
TOTAL U. S. TREASURY OBLIGATIONS (Cost $4,061,639).............. 4,319
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Amount Value
CLOVER CAPITAL FIXED INCOME FUND (Continued) (000) (000)
<S> <C> <C>
- -------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 20.0%
FHLB
4.373%, 02/14/97 (coupon indexed to the one month 11th
District COFI minus .76%) (A)................................ $250 $ 244
FHLMC CMO Pool #1546-H
7.000%, 12/15/22.............................................. 390 387
FHLMC Pool #252641
8.000%, 07/01/07.............................................. 115 117
FHLMC Pool #277449
8.500%, 09/01/09.............................................. 108 112
FNMA CMO-Remic 1993-95 Pe
6.500%, 10/25/07.............................................. 750 750
FNMA MTN
6.250%, 01/14/04.............................................. 250 243
FNMA Pool #G93-21-Remic
6.600%, 11/25/07.............................................. 184 181
GNMA Pool #013125
8.000%, 10/15/06.............................................. 43 45
GNMA Pool #187899
8.000%, 05/15/17.............................................. 293 302
GNMA Pool #196477
10.000%, 04/15/10............................................. 141 151
GNMA Pool #202886
8.000%, 03/15/17.............................................. 293 302
GNMA Pool #221235
8.500%, 07/15/17.............................................. 103 107
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $2,932,775)...... 2,941
-------
CONVERTIBLE BONDS -- 6.0%
Meditrust Convertible to 27.6396 Shares
7.500%, 03/01/01.............................................. 570 577
Pier 1 Imports Convertible to 83.33 Shares
6.875%, 04/01/02.............................................. 300 306
-------
TOTAL CONVERTIBLE BONDS (Cost $870,725)......................... 883
-------
REPURCHASE AGREEMENT -- 5.5%
Lehman Brothers Securities 5.54% dated 10/31/95, matures
11/01/95, repurchase price $810,309.12 (collateralized by U.S.
Treasury Note, par value $818,927.31, 6.625%, matures
03/31/97: market value $834,456.33)........................... 810
-------
TOTAL REPURCHASE AGREEMENT (Cost $810,309)...................... 810
-------
TOTAL INVESTMENTS -- 99.2% (Cost $14,240,968)................... 14,573
-------
OTHER ASSETS AND LIABILITIES -- 0.8%
Other Assets and Liabilities, Net.............................. 112
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<S> <C> <C>
Face Market
Amount Value
CLOVER CAPITAL FIXED INCOME FUND (Concluded) (000) (000)
- -------------------------------------------------------------------------------
NET ASSETS:
Portfolio shares (unlimited authorization -- no par value)
based on 1,484,660 outstanding shares of beneficial interest.. $14,277
Accumulated net realized gain on investments................... 76
Net unrealized appreciation on investments..................... 332
-------
TOTAL NET ASSETS: (100.0%)...................................... $14,685
-------
Net Asset Value, Offering Price and Redemption Price Per
Share......................................................... $ 9.89
=======
</TABLE>
CMO -- Collateralized Mortgage Obligation
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
MTN -- Medium Term Note
REMIC -- Real Estate Mortgage Investment Conduit
(A) Variable rate securities -- The rate reflected on the Statement of Net
Assets is the rate in effect as of October 31, 1995.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the year ending October 31, 1995
<TABLE>
<CAPTION>
CLOVER CAPITAL CLOVER CAPITAL
EQUITY VALUE FIXED INCOME
FUND FUND
-------------- --------------
11/01/94 11/01/94
TO 10/31/95 TO 10/31/95
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividend Income................................. $ 459 $ --
Interest Income................................. 641 791
- --------------------------------------------------------------------------------
Total Investment Income........................ 1,100 791
- --------------------------------------------------------------------------------
Expenses:
Administrator Fees.............................. 74 50
Investment Advisory Fees........................ 278 51
Investment Advisory Fee Waiver.................. (40) (51)
Contributions by Adviser........................ -- (17)
Custodian Fees.................................. 6 5
Transfer Agent Fees............................. 42 18
Professional Fees............................... 23 17
Trustee Fees.................................... 4 3
Registration Fees............................... 12 6
Printing Fees................................... 7 5
Pricing Fees.................................... 2 1
Insurance and Other Fees........................ 2 1
Amortization of Deferred Organizational Costs... 4 3
- --------------------------------------------------------------------------------
Total Expenses................................. 414 92
- --------------------------------------------------------------------------------
Net Investment Income......................... 686 699
- --------------------------------------------------------------------------------
Net Realized Gain from Securities Sold.......... 4,206 76
Net Unrealized Appreciation of Investment Secu-
rities......................................... 1,800 823
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Invest-
ments......................................... 6,006 899
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Opera-
tions.......................................... $6,692 $1,598
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the year ending October 31, 1995
<TABLE>
<CAPTION>
CLOVER CAPITAL CLOVER CAPITAL
EQUITY VALUE FIXED INCOME
FUND FUND
----------------------- -----------------------
11/01/94 11/01/93 11/01/94 11/01/93
TO 10/31/95 TO 10/31/94 TO 10/31/95 TO 10/31/94
(000) (000) (000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Activities:
Net Investment Income......... $ 686 $ 135 $ 699 $ 509
Net Realized Gain on
Securities Sold.............. 4,206 1,834 76 13
Net Unrealized Appreciation
(Depreciation) of Investment
Securities................... 1,800 1,199 823 (824)
- -------------------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations.................. 6,692 3,168 1,598 (302)
- -------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income......... (602) (127) (696) (513)
Capital Gains................. (1,755) (266) (24) (568)
- -------------------------------------------------------------------------------
Total Distributions.......... (2,357) (393) (720) (1,081)
- -------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued................. 23,522 8,392 5,633 4,034
Shares Issued in Lieu of Cash
Distributions................ 2,339 393 588 1,010
Shares Redeemed............... (3,798) (1,381) (2,176) (1,865)
- -------------------------------------------------------------------------------
Increase in Net Assets Derived
from Capital Share
Transactions................. 22,063 7,404 4,045 3,179
- -------------------------------------------------------------------------------
Total Increase in Net As-
sets........................ 26,398 10,179 4,923 1,796
- -------------------------------------------------------------------------------
Net Assets:
Beginning of Period........... 25,249 15,070 9,762 7,966
- -------------------------------------------------------------------------------
End of Period................. $51,647 $25,249 $14,685 $ 9,762
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Shares Issued and Redeemed:
Shares Issued................ 1,618 653 583 419
Issued in Lieu of Cash
Distributions............... 179 32 62 104
Redeemed..................... (257) (109) (228) (189)
- -------------------------------------------------------------------------------
Net Increase in Share
Transactions................. 1,540 576 417 334
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET NET
ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET UNREALIZED FROM NET FROM VALUE
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL END
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLOVER CAPITAL EQUITY VALUE FUND
- --------------------------------
1995 $13.74 0.24 2.46 (0.22) (0.93) $15.29
1994 $11.94 0.08 2.01 (0.08) (0.21) $13.74
1993 $10.45 0.10 1.54 (0.10) (0.05) $11.94
1992(1) $10.00 0.10 0.44 (0.09) -- $10.45
CLOVER CAPITAL FIXED INCOME FUND
- --------------------------------
1995 $ 9.14 0.58 0.77 (0.58) (0.02) $ 9.89
1994 $10.85 0.57 (0.92) (0.57) (0.79) $ 9.14
1993 $10.23 0.61 0.72 (0.61) (0.10) $10.85
1992(1) $10.00 0.56 0.23 (0.56) -- $10.23
</TABLE>
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
<TABLE>
<CAPTION>
RATIO
RATIO OF NET
OF EXPENSES INCOME (LOSS)
NET RATIO TO AVERAGE TO AVERAGE
ASSETS RATIO OF NET NET ASSETS NET ASSETS
END OF EXPENSES INCOME (EXCLUDING (EXCLUDING PORTFOLIO
TOTAL OF PERIOD TO AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
RETURN (000) NET ASSETS NET ASSETS CONTRIBUTIONS) CONTRIBUTIONS) RATE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
21.25 % $51,647 1.10% 1.82% 1.20% 1.72% 84.76%
17.80 % 25,249 1.14% 0.71% 1.30% 0.55% 58.44%
15.83 % 15,070 1.18% 0.89% 1.51% 0.56% 82.51%
5.94 %* 9,005 1.20%* 1.15%* 2.09%* 0.26%* 31.00%
15.27 % $14,685 0.80% 6.13% 1.40% 5.53% 35.84%
(3.54)% 9,762 0.80% 5.88% 1.46% 5.22% 11.11%
13.40 % 7,966 0.78% 5.62% 1.29% 5.11% 68.61%
9.05 %* 8,982 0.80%* 6.28%* 1.76%* 5.32%* 113.00%
</TABLE>
(1) The Clover Capital Fixed Income Fund and the Clover Capital Equity Value
Fund commenced operations on December 6, 1991.
* Annualized
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
1. Organization:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated July 18, 1991. The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company with eleven portfolios. The
financial statements included herein present those of the Clover Capital Equity
Value Fund and the Clover Capital Fixed Income Fund (the "Funds"). 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.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Funds.
Security Valuation -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price.
Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost, which approximates market value.
Federal Income Taxes -- It is each 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
provisions for Federal income taxes are required.
Security Transactions and Related Income -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date, and 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 adjusted for the accretion and amortization of
purchase discounts and premiums during the respective holding period.
Purchase discounts and premiums on securities held by the Funds are
accreted and amortized to maturity using the scientific interest method,
which approximates the effective interest method.
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 ensure that the market
value of the collateral, including accrued interest thereon, is sufficient
in the event of the default of the counterparty. If the counterparty
defaults and the value of the collateral declines or if the counterparty
enters an insolvency proceeding, realization of the collateral by the Funds
may be delayed or limited.
Net Asset Value Per Share -- The net asset value per share of each Fund is
calculated on each business day, by dividing the total value of each Fund's
assets, less liabilities, by the number of shares outstanding.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
Other -- Expenses that are directly related to one of the Funds are charged
to that Fund. Other operating expenses of the Trust are prorated to the
Funds on the basis of relative daily net assets.
Distributions from net investment income are declared quarterly and paid to
Shareholders on a quarterly basis for the Equity Value Fund and declared
daily and paid monthly for the Fixed Income Fund. Any net realized capital
gains on sales of securities 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
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.
3. Organization Costs and Transactions with Affiliates:
The Clover Capital Equity Value Fund and the Clover Capital Fixed Income Fund
incurred organization costs of approximately $15,000 and $14,000 respectively.
These costs have been capitalized by the funds and are being amortized over
sixty months commencing with operations. In the event of the initial shares of
the fund redeemed by any holder thereof during the period that the fund is
amortizing its organizational costs, the redemption proceeds payable to the
holder thereof by the fund 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. These costs
include legal fees of approximately $7,000 per fund for organizational work
performed by a law firm of which an officer of the fund is a partner.
Certain officers and trustees of the Trust are also officers of the
Administrator and/or SENGI Financial Services Company (the "Distributor"). Such
officers and trustees are paid no fees by the Trust for serving as officers and
trustees of the Trust.
4. Administration, Shareholder Servicing and Distribution Agreements:
The Trust and the Administrator are parties to an Administration Agreement,
under which the Administrator provides management and administrative services
for an annual fee of .20% of the average daily net assets of each of the Funds.
There is a minimum annual fee of $50,000 per Fund payable to the Administrator
for services rendered to the Funds under the Administration Agreement.
DST Systems, Inc., (the "Transfer Agent") serves as the transfer agent and
dividend distributing agent for the Funds under a transfer agency agreement
with the Trust.
The Trust and the Distributor are parties to a Distribution Agreement. The
Distributor receives no fees for its distribution services under this
agreement.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
5. Investment Advisory and Custodian Agreements:
The Trust and Clover Capital Management, Inc. (the "Adviser") are parties to an
Investment Advisory Agreement under which the Adviser receives an annual fee
equal to .74% of the average daily net assets of the Equity Value Fund and .45%
of the average daily net assets of the Fixed Income Fund. The Adviser has
voluntarily agreed for an indefinite period of time, to waive all or a portion
of its fees (and to reimburse the expenses of the Funds) in order to limit
operating expenses to not more than 1.20% of the average daily net assets for
net assets below $20 million and to not more than 1.10% for net assets of $20
million or more for the Equity Value Fund. Operating expenses for the Fixed
Income Fund are limited to not more than .80% of the average daily net assets
for net assets below $20 million and to not more than .75% for net assets of
$20 million or more. 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 Funds. Fees
of the Custodian are being paid on the basis of the net assets of the Funds.
The Custodian plays no role in determining the investment policies of the Trust
or which securities are to be purchased or sold in the Funds.
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the year ended October 31, 1995, are as follows:
<TABLE>
<CAPTION>
EQUITY VALUE FIXED INCOME
FUND FUND
(000) (000)
------------ ------------
<S> <C> <C>
Purchases
Government........................................... $ 997 $2,818
Other................................................ 40,001 3,808
Sales
Government........................................... $ 0 $ 625
Other................................................ 24,985 3,045
</TABLE>
At October 31, 1995, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Funds
at October 31, 1995, is as follows:
<TABLE>
<CAPTION>
EQUITY VALUE FIXED INCOME
FUND FUND
(000) (000)
------------ ------------
<S> <C> <C>
Aggregate gross unrealized appreciation............... $ 5,671 $382
Aggregate gross unrealized depreciation............... (1,449) (50)
------- ----
Net unrealized appreciation........................... $ 4,222 $332
======= ====
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
7. Concentration of Credit Risk:
The Fixed Income Fund invests primarily in fixed income securities which are
rated in the top four rating categories by either Moody's Investors Services,
Inc. ("Moody's) or Standard & Poor's Corporation ("S&P"), or if not rated,
determined by the Adviser to be of comparable quality. The ability of the
issuers of the securities held by the Fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
The summary of credit quality rating for securities held by the Fund at October
31, 1995 is as follows:
<TABLE>
<CAPTION>
S&P MOODY'S
---------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
Bonds: AAA 55.7% Aaa 57.4%
AA 7.8% Aa 2.7%
A 13.8% A 18.2%
BBB 11.9% Baa 12.6%
B 9.6% B 9.1%
NR 1.2%
------ ------
100.0% 100.0%
</TABLE>
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
UNAUDITED
For the shareholders that do not have an October 31, 1995 taxable year end,
this notice is for informational purposes only. For shareholders with an
October 31, 1995 taxable year end, please consult your tax adviser as to the
pertinence of this notice.
For the fiscal year ended October 31, 1995, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
Clover Capital Fixed Income Fund..... 1% 99% 100%
Clover Capital Equity Value Fund..... 38% 62% 100%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
<S> <C> <C> <C>
Clover Capital Fixed Income Fund..... 0% 0% 0%
Clover Capital Equity Value Fund..... 32% 0% 0%
</TABLE>
- ----------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income distributions
of the portfolio.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
CLO-F-018-03
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
PIN OAK AGGRESSIVE STOCK FUND
WHITE OAK GROWTH STOCK FUND
ANNUAL REPORT TO SHAREHOLDERS
AS OF OCTOBER 31, 1995
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS FOR EACH FUND DESCRIBED.
<PAGE>
INVESTMENT ADVISOR'S REPORT TO SHAREHOLDERS
OCTOBER 31, 1995
Dear Shareholders:
Enclosed is the 1995 annual report for the Pin Oak Aggressive Stock Fund and
the White Oak Growth Stock Fund.
As you may already know, 1995 has been a great year for both funds. According
to Lipper rankings from The Wall Street Journal, White Oak was listed as the
best-performing fund of 537 growth stock funds and Pin Oak as the seventh-best
performing fund of 288 small company growth funds for the twelve month period
ending October 31, 1995 (Lipper Data are fiscal year 1995 total returns).
While 1995 has been a great year for the funds, we would stress the importance
of long term thinking when it comes to your investment decisions. In spite of
what remains a healthy earnings outlook, volatility can go both ways, at least
in the short run. Whether we're up or down in any given quarter or year should
be less relevant than results achieved over a three to five year time period.
We appreciate your continued confidence in our firm as investment advisor to
the funds. As a reminder, all shareholder questions regarding account balances
or transfers will be referred to DST Systems, Inc., our transfer agent. DST
Systems may be contacted directly at 1 (800) 808-4921.
Kindest Regards,
/s/ Doug MacKay
Doug MacKay
<PAGE>
MANAGER'S DISCUSSION OF FUND PERFORMANCE
GENERAL ECONOMIC OUTLOOK
Last year, we correctly anticipated that "falling rates and continued earnings
strength could produce a stock-market boom in 1995." In fact, interest rates
did reverse course and most of the companies in our portfolios generated strong
results throughout the year. The combination of falling interest rates and
solid earnings led to multiple expansion and great performance for nearly all
of the stock market averages in 1995.
Given the rapid rise in the stock market this year, we get a great number of
questions about the sustainability of this bull run and the probability of a
market correction. In an effort to answer these questions, it might be helpful
to first discuss our outlook for earnings and interest rates in 1996.
With regards to interest rates, we still believe they can go lower. Inflation
remains subdued, wage pressures are mild, and the chances of a Fed-engineered
decrease in rates looks likely given a slowing economy, rising consumer debt
levels, and a poor retailing environment. Real interest rates remain at
historically high levels.
Although we do anticipate an overall earnings slowdown in 1996, we continue to
believe that several groups, particularly technology, healthcare, and
financials, will post solid progress once again in 1996. As long term investors
in these groups, our firm has enjoyed much more than just this year's
tremendous results. In particular, we believe that technology will be one of
the primary growth drivers of the world economy in the years ahead. The United
States leads the world in this area, both in terms of innovation and adoption.
With regards to 1996, we come away with two observations. First, our forecast
of falling interest rates should create a favorable environment for the
financial markets, while slowing earnings may restrain it from achieving the
same type of performance we saw in 1995. As 1994 clearly showed, interest rates
seem to be more important to market performance than earnings in the short run.
Second, corrections are an inevitable market occurrence and are almost always
impossible to time. We believe the prudent position is to remain fully invested
in fundamentally sound holdings over the long term. Trying to out-smart the
market for a few extra dollars in the short-run can be quite costly to an
investment portfolio in the long run.
While our overall outlook remains bullish for the coming year, we're less so
than we were in last year's annual report.
INVESTMENT PHILOSOPHY
In an environment of falling interest rates, slowing economic growth, and mild
inflation, we look for companies with the ability to generate consistently
superior earnings growth over a multiple-year time frame. We try to identify
economic trends to help us select those industries with the best long-term
opportunities. At the current time, health care, technology, and finance remain
favored industries. As a matter of philosophy, we limit our portfolios to fewer
than twenty-five individual stocks. Although our quarterly results can be
volatile, our top-down, concentrated approach to portfolio management has
helped our firm generate superior long term results.
HISTORICAL PERFORMANCE RESULTS
Average Annual Returns
<TABLE>
<CAPTION>
PERIOD PIN OAK WHITE OAK S&P 500 INDEX
------ ------- --------- -------------
<S> <C> <C> <C>
1 Year 49.3% 52.1% 26.4%
2 Years 17.2% 30.7% 14.5%
3 years 19.0% 20.9% 14.7%
Inception
to date 18.5% 20.5% 13.3%
</TABLE>
All results are for periods ending October 31st, 1995, the fund's fiscal year
end. Fund inception date August 3, 1992.
History has shown that smaller cap stocks tend to outperform larger cap stocks
over long periods of time. While it has not been the case so far, we continue
to believe that the Pin Oak Aggressive Stock Fund should outperform the White
Oak Growth Stock Fund over a five year time horizon. However, it may also be
reasonable to expect that shares of the Pin Oak Aggressive Stock Fund will be
considerably more volatile than those of the White Oak Growth Stock Fund. Given
our concentrated investment approach, investors may also expect greater
volatility over time than other funds with similar objectives.
<PAGE>
THE PIN OAK AGGRESSIVE STOCK FUND
The Pin Oak Aggressive Stock Fund had a total return of 49.3% for the year
ended October 31, 1995 while the S&P 500 had a total return of 26.4% for the
same period. According to Lipper rankings from the Wall Street Journal, this
performance made Pin Oak the seventh best performing fund of 288 small company
growth funds during this twelve month period.
Since inception on August 3, 1992, the fund has gained 18.5% on an annualized
basis, exceeding the 13.3% annualized rate of return for the index during the
same time frame. Total assets in the fund grew to $15 million at year end.
The fund's positions in technology related stocks contributed to its large
gains relative to the S&P 500 Index. Some of the top performers for the year
included CISCO SYSTEMS (+157%), BAY NETWORKS (+157%), 3COM (+134%), LINEAR
TECHNOLOGY (+98%), and ATMEL (+92%). We also realized losses on a few holdings
during the year, including VALUE HEALTH (-8%) and NEXTEL COMMUNICATIONS (-29%).
In selecting stocks for the fund, we focus on small to medium sized companies
positioned within emerging growth industries. We base decisions on our outlook
for the economy and our identification of industries with the best long term
prospects. The relationship between a company's expected earnings growth and
multiple is often used as a gauge of value. The twenty stocks currently owned
by the fund have a median price earnings multiple of 27x and market
capitalization of $2.5 billion.
Comparison of Change in the Value of a $25,000 Investment in the
Advisors' Inner Circle Pin Oak Aggressive Stock Fund, versus the S&P 500 Index.
--------------------------------------
Average Annual Total Return/1/
--------------------------------------
Since
One Year 3 Year Inception
--------------------------------------
49.31% 18.99% 18.45%
--------------------------------------
[GRAPH APPEARS HERE]
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $25,000
in the Pin Oak Aggressive Stock Fund from August 31, 1992 through
October 31, 1995 as compared with the growth of a $25,000 investment
in the S&P 500 Index. The plot points used to draw the line graph were
as follows:
<TABLE>
<CAPTION>
Period Ended Growth of $25,000 Invested Growth of $25,000 Invested
in the Pin Oak Aggressive Stock in the S&P 500 Index
Fund
<S> <C> <C>
08/31/92 $25,000 $25,000
10/31/92 27,343 25,381
10/31/93 33,566 29,173
10/31/94 30,854 30,296
10/31/95 46,068 38,303
</TABLE>
/1/ These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
<PAGE>
WHITE OAK GROWTH STOCK FUND
The White Oak Growth Stock Fund had a total return of 52.1% for the year ending
October 31, 1995, easily beating the 26.4% total return of the S&P 500 Index
for the same period. According to Lipper rankings from the Wall Street Journal,
this performance made White Oak the best performing fund of 537 growth stock
funds during this twelve month period.
Since inception on August 3, 1992, the fund has returned 20.5% on an annualized
basis, considerably higher than the index's 13.3% annualized return over the
same time period. Total assets of the fund stood at $10 million as of October
31, 1995.
During the year, most of the fund's holdings generated positive returns. In
addition to holding some of the same top-performing positions owned in the Pin
Oak Aggressive Stock Fund, other strong performers included INTEL (+126%),
MERCK (+66%), and CITICORP (+39%). HOME DEPOT (-18%) and CATERPILLAR TRACTOR (-
43%) were two of the fund's disappointments in 1995.
In selecting stocks for the White Oak Growth Stock, we focus our attention on
larger, more established companies. Once again, our investment decisions are
driven by our outlook for the economy and our identification of industries with
the best long term prospects. The twenty-two securities in the White Oak Growth
Stock Fund currently have a median price-earnings multiple of 18x and a market
capitalization of roughly $21 billion.
Comparison of Change in the Value of a $25,000 Investment in the
Advisors' Inner Circle White Oak Growth Stock Fund, vrsus the S&P 500 Index
-----------------------------------------
Average Annual Total Return/1/
-----------------------------------------
Since
One Year 3 Year Inception
-----------------------------------------
52.07% 20.92% 20.46%
-----------------------------------------
[GRAPH APPEARS HERE]
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $25,000
in the White Oak Growth Stock Fund from August 31, 1992 through
October 31, 1995 as compared with the growth of a $25,000 investment
in the S&P 500 Index. The plot points used to draw the line graph were
as follows:
<TABLE>
<CAPTION>
Period Ended Growth of $25,000 Invested Growth of $25,000 Invested
in the White Oak Growth Stock in the S&P 500 Index
Fund
<S> <C> <C>
08/31/92 $25,000 $25,000
10/31/92 27,055 25,381
10/31/93 28,026 29,173
10/31/94 31,456 30,296
10/31/95 47,835 38,303
</TABLE>
/1/ These figures represent past performance. Past performance is no guarantee
of future results. The Investment return and principal value of an
Investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of Pin Oak Aggressive Stock Fund and White Oak
Growth Stock Fund of The Advisors' Inner Circle Fund:
We have audited the accompanying statements of net assets of Pin Oak Aggressive
Stock Fund and White Oak Growth Stock Fund (two of the funds constituting The
Advisors' Inner Circle Fund) as of October 31, 1995, and the related statements
of operations, changes in net assets and financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Pin
Oak Aggressive Stock Fund and White Oak Growth Stock Fund of The Advisors'
Inner Circle Fund as of October 31, 1995, the results of their operations,
changes in their net assets, and financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<PAGE>
STATEMENT OF NET ASSETS
October 31, 1995
<TABLE>
Market
PIN OAK AGGRESSIVE Value
STOCK FUND Shares (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 93.7%
CELLULAR 2.7%
Mobile Telecommunication Technology* 15,000 $ 426
-------
COMPUTER COMMUNICATIONS EQUIPMENT 27.2%
3COM* 34,000 1,598
Bay Networks* 15,400 1,020
Cisco Systems* 21,200 1,643
-------
4,261
-------
COMPUTER SERVICES 0.3%
ARI Network Services* 25,000 47
-------
COMPUTER-AIDED DESIGN SOFTWARE 11.6%
Parametric Technology* 16,000 1,070
Synopsys* 20,000 750
-------
1,820
-------
COMPUTERS-HARDWARE 8.7%
Avid Technology* 17,000 744
Sun Microsystems* 8,000 624
-------
1,368
-------
FINANCIAL SERVICES 4.1%
Medaphia* 20,000 635
-------
HOSPITAL SUPPLY & MANAGEMENT 4.6%
Express Scripts, Cl A* 19,000 722
-------
PHARMACEUTICALS 2.2%
Forest Labs* 8,300 343
-------
PREPACKAGED SOFTWARE 7.9%
Adobe Systems 14,000 798
Xcellenet* 25,500 440
-------
1,238
-------
SEMI-CONDUCTORS/ELECTRONICS 15.1%
Atmel* 28,000 875
Linear Technology 17,600 770
Maxim Integrated Product* 9,500 710
-------
2,355
-------
</TABLE>
THE ADVISORS' INNER CIRCLE FUND
<TABLE>
<CAPTION>
Shares/
Face Market
Amount Value
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT 9.3%
Aspect Telecommunications* 20,500 $ 704
DSC Communications* 16,000 592
Ortel* 15,000 154
-------
1,450
-------
TOTAL COMMON STOCK
(Cost $8,168,329)
14,665
-------
MONEY MARKET 5.0%
SEI Daily Income Trust Money Market Fund 5.680%, 406 406
SEI Daily Income Trust Prime Money Market
Fund 5.650%, 385 385
-------
TOTAL MONEY MARKET
(Cost $790,772) 791
-------
TOTAL INVESTMENTS 98.7%
(Cost $8,959,101) 15,456
-------
OTHER ASSETS AND LIABILITIES 1.3%
Receivables for Securities Sold 336
Payables for Securities Purchased (247)
Other Assets and Liabilities, Net 107
-------
TOTAL OTHER ASSETS AND LIABILITIES 196
-------
NET ASSETS:
Portfolio shares (unlimited authorization--no
par value)
based on 903,492 outstanding shares of beneficial
interest 9,967
Accumulated net realized loss on investments (812)
Net unrealized appreciation on investments 6,497
-------
TOTAL NET ASSETS: 100.0% $15,652
=======
Net Asset Value, Offering Price and Redemption Price Per
Share $ 17.32
=======
</TABLE>
* Non-Income producing security.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF NET ASSETS
October 31, 1995
<TABLE>
<CAPTION>
Market
WHITE OAK GROWTH Value
STOCK FUND Shares (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 92.4%
BANKS 12.9%
Bankers Trust New York 4,200 $ 268
Citicorp 8,000 519
Nationsbank 5,600 368
Synovus Financial 8,000 201
------
1,356
CELLULAR 0.5%
Nextel Communications, Cl A* 4,000 56
------
COMPUTER COMMUNICATIONS
EQUIPMENT 20.0%
3COM* 10,000 470
Bay Networks* 8,600 570
Cisco Systems* 13,600 1,054
------
2,094
------
COMPUTER-AIDED DESIGN SOFTWARE 3.8%
Parametric Technology* 6,000 401
------
COMPUTERS-HARDWARE 9.7%
Compaq Computer* 8,500 474
Sun Microsystems* 7,000 546
------
1,020
------
CONGLOMERATES 3.2%
General Electric 5,300 335
------
FINANCIAL SERVICES 4.1%
First Data 6,502 430
------
HOSPITAL SUPPLY & MANAGEMENT 3.0%
Columbia HCA Healthcare 6,500 319
------
INSURANCE 3.6%
American International Group 4,425 373
------
PHARMACEUTICALS 6.8%
American Home Products 4,000 355
Merck 6,300 362
------
717
------
PREPACKAGED SOFTWARE 7.8%
Microsoft* 8,200 820
------
RETAIL 2.3%
Home Depot 6,500 242
------
</TABLE>
THE ADVISORS' INNER CIRCLE FUND
<TABLE>
<CAPTION>
Shares/
Face Market
Amount Value
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
SEMI-CONDUCTORS/ELECTRONICS 14.7%
Intel 9,400 $ 658
Linear Technology 9,000 394
Motorola 7,400 485
-------
1,537
-------
TOTAL COMMON STOCK
(Cost $5,514,046) 9,700
-------
MONEY MARKET 6.7%
SEI Daily Income Trust Money Market Fund 5.680%, $436 436
SEI Daily Income Trust Prime Money Market
Fund 5.650%, 268 268
-------
TOTAL MONEY MARKET
(Cost $704,286) 704
-------
TOTAL INVESTMENTS 99.1%
(Cost $6,218,332) 10,404
-------
OTHER ASSETS AND LIABILITIES 0.9%
Other Assets and Liabilities, Net 91
-------
NET ASSETS:
Portfolio shares (unlimited authorization--no par
value) based on 580,547 outstanding shares of
beneficial interest 6,471
Undistributed net investment income 2
Accumulated net realized loss on investments (164)
Net unrealized appreciation on investments 4,186
-------
TOTAL NET ASSETS: 100.0% $10,495
=======
Net Asset Value, Offering Price and Redemption
Price Per Share $ 18.08
=======
</TABLE>
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the Year Ended October 31, 1995
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE STOCK GROWTH STOCK
FUND FUND
---------------- ------------
11/01/94 11/01/94
TO 10/31/95 TO 10/31/95
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividend Income................................. $ 11 $ 71
Interest Income................................. 22 19
- --------------------------------------------------------------------------------
Total Investment Income........................ 33 90
- --------------------------------------------------------------------------------
Expenses:
Administrator Fees.............................. 50 50
Investment Advisory Fees........................ 86 53
Investment Advisory Fee Waiver.................. (78) (53)
Contribution by Adviser......................... -- (26)
Custodian Fees.................................. 2 2
Transfer Agent Fees............................. 26 20
Professional Fees............................... 14 13
Trustee Fees.................................... 2 2
Registration Fees............................... 4 3
Printing Fees................................... 3 1
Insurance and Other Fees........................ 1 1
Amortization of Deferred Organizational Costs... 3 3
- --------------------------------------------------------------------------------
Total Expenses................................. 113 69
- --------------------------------------------------------------------------------
Net Investment Income (Loss)................... (80) 21
- --------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities Sold... (352) 298
Net Unrealized Appreciation of Investment
Securities..................................... 5,190 2,893
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on
Investments................................... 4,838 3,191
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations..................................... $4,758 $3,212
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the Year Ended October 31, 1995
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE STOCK GROWTH STOCK
FUND FUND
----------------------- -----------------------
11/01/94 11/01/93 11/01/94 11/01/93
TO 10/31/95 TO 10/31/94 TO 10/31/95 TO 10/31/94
(000) (000) (000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Activities:
Net Investment Income
(Loss)...................... $ (80) $ (56) $ 21 $ 11
Net Realized Gain (Loss) on
Securities Sold............. (352) (154) 298 (177)
Net Unrealized Appreciation
(Depreciation) of Investment
Securities.................. 5,190 (605) 2,893 794
- --------------------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations................. 4,758 (815) 3,212 628
- --------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income........ -- -- (17) (11)
- --------------------------------------------------------------------------------
Total Distributions......... -- -- (17) (11)
- --------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued................ 2,432 2,310 1,820 1,863
Shares Issued in Lieu of Cash
Distributions............... -- -- 17 10
Shares Redeemed.............. (1,162) (950) (479) (2,087)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets Derived from Capital
Share Transactions.......... 1,270 1,360 1,358 (214)
- --------------------------------------------------------------------------------
Total Increase in Net
Assets..................... 6,028 545 4,553 403
- --------------------------------------------------------------------------------
Net Assets:
Beginning of Period.......... 9,624 9,079 5,942 5,539
- --------------------------------------------------------------------------------
End of Period................ $15,652 $9,624 $10,495 $5,942
- --------------------------------------------------------------------------------
Shares Issued and Redeemed:
Shares Issued................ 163 191 119 167
Issued in Lieu of Cash
Distributions............... -- -- 1 1
Redeemed..................... (89) (81) (38) (190)
- --------------------------------------------------------------------------------
Net Increase (Decrease) in
Share Transactions.......... 74 110 82 (22)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Realized Net Net Ratio
Asset and Distributions Asset Assets Ratio of Net
Value Net Unrealized from Net Distributions Value End of Expenses Income
Beginning Investment Gains or Losses Investment from Capital End Total of Period to Average to Average
of Period Income on Securities Income Gains of Period Return (000) Net Assets Net Assets
--------- ---------- --------------- ------------- ------------- --------- ------- --------- ----------- ----------
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PIN OAK AGGRESSIVE STOCK FUND
- -----------------------------
1995 $11.60 (0.08) 5.80 -- -- $17.32 49.31% $15,652 0.98% (0.70)%
1994 $12.62 (0.06) (0.96) -- -- $11.60 (8.08)% 9,624 0.96% (0.62)%
1993 $10.28 (0.05) 2.39 -- -- $12.62 22.76% 9,079 0.98% (0.48)%
1992(1) $10.00 -- 0.28 -- -- $10.28 11.57% 4,127 1.00%* 0.03 %*
- ---------------------------------
WHITE OAK GROWTH STOCK FUND
- ---------------------------
1995 $11.92 0.04 6.15 (0.03) -- $18.08 52.07% $10,495 0.97% 0.29%
1994 $10.64 0.02 1.28 (0.02) -- $11.92 12.24% 5,942 0.97% 0.19%
1993 $10.33 0.05 0.32 (0.06) -- $10.64 3.59% 5,539 0.97% 0.54%
1992(1) $10.00 0.02 0.33 (0.02) -- $10.33 14.30% 3,195 1.00%* 0.74%*
<CAPTION>
Ratio
Ratio of Net
of Expenses Income (Loss)
to Average to Average
Net Assets Net Assets
(Excluding (Excluding Portfolio
Waivers and Waivers and Turnover
Reimbursements) Reimbursements) Rate
--------------- --------------- ---------
- -----------------------------------
<S> <C> <C> <C>
PIN OAK AGGRESSIVE STOCK FUND
- -----------------------------
1995 1.65% (1.37)% 49.28%
1994 1.74% (1.40)% 48.88%
1993 2.07% (1.57)% 68.32%
1992(1) 4.06%* (3.03)%* 4.00%
- ---------------------------------
WHITE OAK GROWTH STOCK FUND
- ---------------------------
1995 2.06% (0.80)% 22.43%
1994 2.24% (1.08)% 37.42%
1993 2.71% (1.20)% 27.48%
1992(1) 4.78%* (3.04)%* --
</TABLE>
*Annualized
(1)The White Oak Growth Stock Fund and the Pin Oak Aggressive Stock Fund
commenced operations on August 3, 1992
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
1. Organization:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated July 18, 1991. The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company with eleven portfolios. The
financial statements included herein present those of the White Oak Growth
Stock Fund and the Pin Oak Aggressive Stock Fund (the "Funds"). 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.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Funds.
Security Valuation -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price.
Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost, which approximates market value.
Federal Income Taxes -- It is each 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
provisions for Federal Income taxes are required.
Security Transactions and Related Income -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date, and 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.
THE ADVISORS' INNER CIRCLE FUND
Net Asset Value Per Share -- The net asset value per share of each Fund is
calculated on each business day, by dividing the total value of each Fund's
assets, less liabilities, by the number of shares outstanding.
Other -- Expenses that are directly related to one of the Funds are charged
to that Fund. Other operating expenses of the Trust are prorated to the
Funds on the basis of relative daily net assets.
Distributions from net investment income are declared and paid to
Shareholders on a quarterly basis. Any net realized capital gains on sales
of securities 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
accounting principals. 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. Accordingly, the following permanent difference,
primarily attributable to certain net operating losses which, for tax
purposes, are not available to offset future income, has been reclassified
to paid-in-capital.
<TABLE>
<CAPTION>
(000)
-----
<S> <C>
Pin Oak Aggressive Stock Fund.......................................... $170
</TABLE>
This reclassification has no effect on net assets or net asset value per
share.
3. Organization Costs and Transactions with Affiliates:
The Funds incurred organization costs of approximately $12,000 each. These
costs have been capitalized by the funds and are being amortized over sixty
months commencing with operations. In the event of the initial shares of the
fund redeemed by any holder thereof during the period that the fund is
amortizing its organizational costs the redemption proceeds payable to the
holder thereof by the fund 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. These costs
include legal fees of approximately $1,000 per fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
October 31, 1995
for organizational work performed by a law firm of which an officer of the fund
is a partner.
Certain officers and Trustees of the Trust are also officers of SEI Financial
Management Company (the "Administrator") and/or SEI Financial Services Company
(the "Distributor"). Such officers and trustees are paid no fees by the Trust
for serving as officers and trustees 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, under which the Administrator provides management and
administrative services for an annual fee of .20% of the average daily net
assets of each of the Funds. There is a minimum annual fee of $50,000 per Fund
payable to the Administrator for services rendered to the Funds under the
Administration Agreement.
DST Systems, Inc., (the "Transfer Agent") serves as the transfer agent and
dividend distributing agent for the Funds under a transfer agency agreement
with the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated
November 14, 1991. The Distributor receives no fees for its distribution
services under this agreement.
5. Investment Advisory and Custodian Agreements:
The Trust and Oak Associates (the "Adviser") are parties to an Investment
Advisory Agreement dated July 20, 1992 under which the Adviser receives an
annual fee equal to .74% of the average daily net assets of each Fund. The
Adviser has voluntarily agreed for an indefinite period of time, to waive all
or a portion of its fees (and to reimburse the expenses of the Funds) in order
to limit operating expenses to not more than 1.00% of the average daily net
assets of each of the Funds. 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 Funds. Fees
of the Custodian are being paid on the basis of the net assets of the Funds.
The Custodian plays no role in determining the investment policies of the Trust
or which securities are to be purchased or sold in the Funds.
THE ADVISORS' INNER CIRCLE FUND
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the year ended October 31, 1995 are as follows:
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE STOCK GROWTH STOCK
FUND FUND
(000) (000)
---------------- ------------
<S> <C> <C>
Purchases
Government....................................... $ 0 $ 0
Other............................................ 6,267 2,296
Sales
Government....................................... $ 0 $ 0
Other............................................ 5,536 1,549
</TABLE>
At October 31, 1995, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Funds
at October 31, 1995, is as follows:
<TABLE>
<CAPTION>
PIN OAK WHITE OAK
AGGRESSIVE STOCK GROWTH STOCK
FUND FUND
(000) (000)
---------------- ------------
<S> <C> <C>
Aggregate gross unrealized appreciation........... $6,747 $4,255
Aggregate gross unrealized depreciation........... (250) (69)
------ ------
Net unrealized appreciation....................... $6,497 $4,186
====== ======
</TABLE>
7. Capital Loss Carryforwards
The White Oak Growth Stock Fund used $297,764 of its capital loss carryforward
from the prior year.
The capital loss carryforwards at October 31, 1995, for Federal Income Tax
purposes are as follows:
<TABLE>
<S> <C>
Pin Oak Aggressive Stock Fund......................... $ 17,985 expiring in 2000
288,322 expiring in 2001
153,978 expiring in 2002
351,788 expiring in 2003
White Oak Growth Stock Fund........................... $163,669 expiring in 2001
</TABLE>
The capital loss carryforwards will be used to offset future net realized
gains, if any, and such gains so offset will not be distributed.
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(UNAUDITED)
For the shareholders that do not have an October 31, 1995 taxable year end,
this notice is for information purposes only. For shareholders with an October
31, 1995 taxable year end, please consult your tax adviser as to the pertinence
of this notice.
For the fiscal year ended October 31, 1995, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
White Oak Growth Stock Fund.......... 0% 100% 100%
Pin Oak Aggressive Stock Fund........ 0% 0% 0%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
<S> <C> <C> <C>
White Oak Growth Stock Fund.......... 73% 0% 0%
Pin Oak Aggressive Stock Fund........ 0% 0% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income distributions
of the portfolio.
<PAGE>
OAK-F-020-04
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
A+F LARGE-CAP FUND
ANNUAL REPORT TO SHAREHOLDERS
AS OF OCTOBER 31, 1995
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS FOR THE FUND DESCRIBED.
<PAGE>
LETTER TO SHAREHOLDERS
Dear Fellow Shareholder:
The A+F Large-Cap Fund provided a return of 27.3% for the fiscal year ending
October 31, 1995. The S&P 500 returned 26.4% and the Russell 1000 Value 24.7%.
Our sector concentrations align with the S&P 500. Our value-oriented stock
selection more closely corresponds to the Russell 1000 Value Index.
Over the long haul, our goal is to achieve above-market profits from holding a
diversified portfolio of attractive large-cap equity securities. Our advantage
will come from superior stock selection because we are neither market timers
nor sector bettors. By focusing on asset-rich companies with attractive
earnings yields and proven track records of growth, we aim to achieve our goal.
We welcome your questions and comments.
Sincerely,
/s/ Theodore A. Aronson
Theodore R. Aronson
Aronson + Fogler
Portfolio Manager
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
The fiscal year ended October 31, 1995, was in stark contrast to the prior
fiscal year. Not only was the market up sharply, but our returns pulled ahead
of most appropriate benchmarks--for instance, the S&P 500 and Russell Value
1000 Index. Among Morningstar's 409 growth and income funds, your fund ranked
13th from the top! (Morningstar data are fiscal year 1995 total returns, from
Mutual Funds, publication date November 1995.)
Three holdings provided more than their fair share of profits: Sun
Microsystems, Nike, and Citicorp. At the other extreme, Advanced Micro Devices,
Philips NV, and TRW held back results.
Our superior returns--as well as any inferior returns--come from stock
selection. We choose attractive securities based on quantitative measures of
value, assets and earnings, as well as management and momentum.
Here are winners and losers (in terms of dollar profits and losses) in each of
11 major sectors:
<TABLE>
<CAPTION>
WINNER LOSER
------ -----
<S> <C> <C>
Capital goods Deere Philips NV
Consumer durables Goodyear GM
Consumer nondurables Nike Reebok
Energy Williams Cos Occidental Petroleum
Finance Citicorp First Union
Healthcare UpJohn Columbia/HCA
Materials and services Champion Int'l Willamette Inds
Technology Sun Microsystems Advanced Micro Devices
Telecommunications BellSouth Sprint
Transportation Union Pacific KLM Royal Dutch
Utilities Detroit Edison Ohio Edison
</TABLE>
Portfolio turnover was 126%, above our long-term expectations of closer to 100%
annually. Although the market itself was not volatile, individual pockets were
quite volatile (especially technology issues). Higher-than-average turnover
resulted from just such internal volatility. Trading practices and methods are
aimed at minimizing total transaction costs. One visible sign of our success is
the low average commission paid during the year (less than 3(cents) per share).
We make no effort to anticipate market direction, so cash reserves are minimal
at all times. Cash reserves, to the extent they are ever held, are usually
"equitized" in Standard & Poor's Depositary Receipts, an equity security that
mimics the performance of the S&P 500.
Comparison of Change in the Value of a $5,000,000 Investment in the Advisors'
Inner Circle A+F Large-Cap Fund, versus the S&P 500 Index
---------------------------------------
Average Annual Total Return /1/
---------------------------------------
Since
One Year Inception
---------------------------------------
27.31% 13.99%
---------------------------------------
[GRAPH APPEARS HERE]
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $5,000,000 in
the A+F Large-Cap Fund from November 30, 1993 through October 31, 1995 as
compared with the growth of a $5,000,000 investment in the S&P 500 Index.
The plot points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
Period Ended Growth of $5,000,000 Invested Growth of $5,000,000
in the A+F Large-Cap Fund Invested in the S&P 500 Index
<S> <C> <C>
11/30/93 $5,000,000 $5,000,000
10/31/94 5,071,499 5,242,669
10/31/95 6,456,525 6,628,306
</TABLE>
/1/ These figures represent past performances. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of A + F Large-Cap Fund of The Advisors' Inner
Circle Fund:
We have audited the accompanying statement of net assets of A + F Large-Cap
Fund (one of the funds constituting The Advisors' Inner Circle Fund) as of
October 31, 1995, and the related statements of operations, changes in net
assets and financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of A + F
Large-Cap Fund of The Advisors' Inner Circle Fund as of October 31, 1995, the
results of its operations, changes in its net assets, and financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
A + F LARGE-CAP FUND Shares (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 99.7%
AEROSPACE & DEFENSE -- 1.0%
McDonnell Douglas 7,000 $ 572
AGRICULTURE PRODUCTS -- 2.8%
Archer Daniels Midland 60,758 980
Pioneer Hi-Bred International 11,200 556
-------
1,536
-------
AIR TRANSPORTATION -- 1.5%
AMR* 3,900 257
KLM Royal Dutch Air 16,202 539
-------
796
-------
APPAREL/TEXTILES -- 1.3%
V F 14,600 699
-------
AUTOMOTIVE -- 1.6%
Ford Motor 10,400 299
General Motors 12,900 564
-------
863
-------
AUTOPARTS -- 2.5%
Eaton 12,200 625
TRW 11,400 750
-------
1,375
-------
BANKS -- 6.5%
Bank of New York 17,600 739
Chemical Banking 17,900 1,018
First Chicago 13,600 923
NationsBank 13,000 855
-------
3,535
-------
COMPUTERS & SERVICES -- 5.9%
Apple Computer 4,500 163
Compaq Computer* 6,800 379
IBM 16,000 1,557
Sun Microsystems* 14,400 1,123
-------
3,222
-------
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT -- 2.6%
Emerson Electric 3,200 228
Philips Electronics ADR 15,900 614
Tandy 11,700 578
-------
1,420
-------
ENERGY & POWER -- 4.2%
Consolidated Edison of New York 15,900 483
Detroit Edison 27,000 911
Pacific Gas And Electric 30,700 902
-------
2,296
-------
FINANCIAL SERVICES -- 3.4%
Merrill Lynch 11,700 $ 649
S & P Depositary Receipt 14,900 870
Travelers 6,700 338
-------
1,857
-------
FOOD, BEVERAGE & TOBACCO -- 5.5%
Anheuser Busch 16,700 1,102
Philip Morris Companies 17,200 1,454
Unilever N V ADR 3,300 432
-------
2,988
-------
HOSPITAL & MEDICAL SERVICE
PLANS -- 2.3%
Tenet Healthcare Corporation* 54,700 977
U.S. Healthcare 7,600 293
-------
1,270
-------
HOUSEHOLD PRODUCTS -- 1.4%
Premark International 16,600 768
-------
INSURANCE -- 5.6%
Allstate 7,694 283
Cigna 9,400 931
CNA Financial* 2,200 251
Loews 6,300 924
Safeco 10,500 674
Transport Holdings* 34 1
-------
3,064
-------
MACHINERY -- 1.6%
Deere 7,200 643
Tenneco 5,100 224
-------
867
-------
MEDICAL PRODUCTS -- 3.3%
Baxter International 23,800 919
Becton Dickinson 13,800 897
-------
1,816
-------
PAPER & PAPER PRODUCTS -- 6.9%
Champion International 17,300 925
International Paper 18,000 666
Union Camp 15,900 809
Westvaco 23,550 654
Willamette Industries 12,600 731
-------
3,785
-------
PETROLEUM REFINING -- 9.7%
Amoco 12,800 818
Exxon 14,700 1,123
Imperial Oil 16,600 606
Mobil 10,600 1,068
Occidental Petroleum 23,000 495
Royal Dutch Petroleum 9,600 1,178
-------
5,288
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
A + F LARGE-CAP FUND (Continued) Shares (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PHARMACEUTICALS -- 4.7%
Bristol Myers Squibb 17,000 $ 1,297
Rhone Poulenc Rorer 4,800 226
Upjohn 20,400 1,035
-------
2,558
-------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.8%
Eastman Kodak 7,300 457
-------
RETAIL -- 4.9%
Dillard Department Stores,
Class A 26,500 719
Gap 7,500 295
J C Penney 11,300 476
Limited 20,200 371
May Department Stores 20,900 821
-------
2,682
-------
SEMI-CONDUCTORS -- 5.8%
Advanced Micro Devices* 22,500 537
Intel 11,200 783
Micron Technology 14,300 1,010
National Semiconductor* 9,200 224
Texas Instruments 8,900 607
-------
3,161
-------
SPORTING AND ATHLETIC GOODS -- 2.6%
Nike, Class B 18,600 1,056
Reebok International 11,500 391
-------
1,447
-------
STEEL & STEEL WORKS -- 1.4%
Phelps Dodge 12,300 780
-------
TELEPHONES & TELECOMMUNICATION -- 8.9%
Ameritech 4,400 238
BellSouth 17,500 1,338
MCI Communications 38,200 953
NYNEX 5,900 277
Pacific Telesis Group 33,900 1,030
Sprint 26,600 1,024
-------
4,860
-------
TIRE AND RUBBER -- 1.0%
Goodyear Tire And Rubber 14,100 536
-------
TOTAL COMMON STOCK
(Cost $48,506,218) 54,498
-------
</TABLE>
<TABLE>
Face Market
Amount Value
A + F LARGE-CAP FUND (Concluded) (000) (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
CASH EQUIVALENTS -- 0.2%
Tempfund
5.725%, $95 $ 95
-------
TOTAL CASH EQUIVALENTS
(Cost $94,968) 95
-------
TOTAL INVESTMENTS -- 99.9%
(Cost $48,601,186) 54,593
-------
OTHER ASSETS AND LIABILITIES -- 0.1%
Other Assets and Liabilities, Net 68
-------
NET ASSETS:
Portfolio shares (unlimited authorization--no par
value) based on 4,392,792 outstanding shares of
beneficial interest 44,032
Undistributed net investment income 56
Accumulated net realized gain 4,581
Net unrealized appreciation on investments 5,992
-------
TOTAL NET ASSETS: -- 100.0% $54,661
=======
Net Asset Value, Offering Price and Redemption Price
Per Share $ 12.44
=======
</TABLE>
* Non-income producing security.
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the year ended October 31, 1995
<TABLE>
<CAPTION>
A+F
LARGE-CAP
FUND
-----------
11/01/94
TO 10/31/95
A + F LARGE-CAP FUND (000)
- --------------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividend Income................................................... $ 1,230
Interest Income................................................... 13
- --------------------------------------------------------------------------------
Total Investment Income.......................................... 1,243
- --------------------------------------------------------------------------------
Expenses:
Advisory Fees..................................................... 186
Administrative Fees............................................... 92
Custodian Fees.................................................... 5
Professional Fees................................................. 23
Transfer Agent Fees............................................... 12
Printing Fees..................................................... 4
Directors' Fees................................................... 4
Registration and Filing Fees...................................... 1
Pricing Fees...................................................... 2
Amortization of Deferred Organizational Costs..................... 3
Insurance and Other Fees.......................................... 1
- --------------------------------------------------------------------------------
Total Expenses................................................... 333
- --------------------------------------------------------------------------------
Net Investment Income............................................ 910
- --------------------------------------------------------------------------------
Net Realized Gain from Securities Sold............................ 5,858
Net Unrealized Appreciation of Investment Securities.............. 4,742
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments.................. 10,600
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations.............. $11,510
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the year ended October 31, 1995
<TABLE>
<CAPTION>
A+F
LARGE-CAP
FUND
------------------------
11/01/94 11/12/93 (2)
TO 10/31/95 TO 10/31/94
A + F LARGE-CAP FUND (000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income............................... $ 910 $ 761
Net Realized Gain (Loss) on Securities Sold......... 5,858 (1,277)
Net Unrealized Appreciation of Investment
Securities......................................... 4,742 1,250
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations........................................ 11,510 734
- --------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income............................... (891) (724)
- --------------------------------------------------------------------------------
Total Distributions................................ (891) (724)
- --------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued....................................... 3,973 40,008
Shares Issued in Lieu of Cash Distributions......... 891 724
Shares Redeemed..................................... (1,414) (150)
- --------------------------------------------------------------------------------
Increase in Net Assets Derived from Capital Share
Transactions....................................... 3,450 40,582
- --------------------------------------------------------------------------------
Total Increase in Net Assets....................... 14,069 40,592
- --------------------------------------------------------------------------------
Net Assets:
Beginning of Period................................. 40,592 --
- --------------------------------------------------------------------------------
End of Period....................................... $54,661 $40,592
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Issued and Redeemed:
Shares Issued....................................... 361 4,017
Issued in Lieu of Cash Distributions................ 81 75
Redeemed............................................ (126) (15)
- --------------------------------------------------------------------------------
Net Increase in Share Transactions................. 316 4,077
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(2) The A+F Large-Cap Fund commenced operations on November 12, 1993.
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Realized and Net Net Ratio
Asset Unrealized Distributions Asset Assets Ratio of Net
Value Net Gains or from Net Distributions Value End of Expenses Income
Beginning Investment Losses on Investment from Capital End Total of Period to Average to Average
of Period Income Securities Income Gains of Period Return (000) Net Assets Net Assets
--------- ---------- ------------ ------------- ------------- --------- ------ --------- ----------- ----------
- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A+F LARGE-CAP FUND
- ------------------
1995 $ 9.96 0.21 2.48 (0.21) -- $12.44 27.31% $54,661 0.72% 1.96%
1994(1) $10.00 0.21 (0.05) (0.20) -- $ 9.96 1.63%+ $40,592 0.70%* 2.13%*
<CAPTION>
Ratio
of Net
Ratio Income
of Expenses (Loss) to
to Average Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
----------- ---------- ---------
- -----------------------
<S> <C> <C> <C>
A+F LARGE-CAP FUND
- ------------------
1995 0.72% 1.96% 126.47%
1994(1) 0.80%* 2.03%* 79.23%
</TABLE>
* Annualized
+ Total Return is cumulative since inception.
(1) The A+F Large-Cap Fund commenced operations on November 12, 1993.
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
1. Organization:
THE ADVISOR'S INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated July 18, 1991. The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company with eleven portfolios. The
financial statements herein present those of the A+F Large-Cap 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.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Fund.
Security Valuation--Investments in equity securities which are traded on a
national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price.
Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost, which approximates market value.
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. Cost 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.
THE ADVISORS' INNER CIRCLE FUND
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.
Other--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 its relative daily net assets to those of the Trust.
Distributions from net investment income are declared and paid to
Shareholders quarterly. 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
accounting principals. 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.
3. Organization Costs and Transactions with Affiliates:
The Fund incurred organization costs of approximately $13,000. These costs have
been capitalized by the fund and are being amortized over sixty months
commencing with operations. In the event of the initial shares of the fund
redeemed by any holder thereof during the period that the fund is amortizing
its organizational costs the redemption proceeds payable to the holder thereof
by the fund 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. These costs include legal
fees of approximately $4,000 for organizational work performed by a law firm of
which an officer of the fund is a partner.
Certain officers and trustees of the Trust are also officers of SEI Financial
Management Company (the "Administrator") and/or SEI Financial Services Company
(the "Distributor"). Such officers and trustees are paid no fees by the Trust
for serving as officers and trustees of the Trust.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
October 31, 1995
4. Administration, Shareholder Servicing and Distribution Agreements:
The Trust and the Administrator are parties to an Administration Agreement
dated November 14, 1991, 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 up to $100 million, .15% on the
next $100 million and .10% on assets in excess of $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. The Distributor receives no fees for its distribution
services under this agreement.
5. Investment Advisory and Custodian Agreements:
The Fund and Aronson+Fogler (the "Advisor") are parties to an Investment
Advisory Agreement dated October 15, 1993 under which the Advisor receives an
annual fee equal to .40% of the Fund's average daily net assets. The Advisor
has voluntarily agreed to waive all or a portion of its fees in order to limit
operating expenses to not more than .75% of the average daily net assets of the
Fund. Fee waivers are voluntary and may be terminated at any time.
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Fund. Fees of
the Custodian are charged on the basis of the net assets of the Fund. The
Custodian plays no role in determining the investment policies of the Fund or
which securities are to be purchased and sold in the Fund.
THE ADVISORS' INNER CIRCLE FUND
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the year ended October 31, 1995, are as follows:
<TABLE>
<CAPTION>
A+F LARGE-CAP
FUND (000)
-------------
<S> <C>
Purchases
Government....................................................... $ 0
Other............................................................ 61,890
Sales
Government....................................................... $ 0
Other............................................................ 58,430
</TABLE>
At October 31, 1995, the total cost of securities and the net realized gains or
losses on securities sold for Federal Income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at October 31, 1995, is as follows:
<TABLE>
<CAPTION>
A+F LARGE-CAP
FUND (000)
-------------
<S> <C>
Aggregate gross unrealized appreciation........................... $7,549
Aggregate gross unrealized depreciation........................... (1,557)
------
Net unrealized appreciation....................................... $5,992
======
</TABLE>
7. Capital Loss Carryforward
The A+F Large Cap Fund utilized their entire capital loss carryforward balance
of $1,276,903 to reduce realized gains incurred which otherwise would have been
distributed.
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
UNAUDITED
For the shareholders that do not have an October 31, 1995 taxable year end,
this notice is for informational purposes only. For shareholders with an
October 31, 1995 taxable year end, please consult your tax adviser as to the
pertinence of this notice.
For the fiscal year ended October 31, 1995, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
A + F LARGE-CAP FUND.................. 0% 100% 100%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
<S> <C> <C> <C>
A + F LARGE-CAP FUND.................. 80% 0% 0%
</TABLE>
- --------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income distributions
of the portfolio.
<PAGE>
A+F-F-004-02
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
HGK FIXED INCOME FUND
ANNUAL REPORT TO SHAREHOLDERS
AS OF OCTOBER 31, 1995
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS FOR THE FUND DESCRIBED.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
HGK FIXED INCOME FUND
INVESTMENT OBJECTIVES
The HGK Fixed Income Fund seeks total return through current income and capital
appreciation consistent with the preservation of capital. The Fund's goal is to
outperform the Lehman Brothers Government/Corporate Bond Index while taking
less risk. HGK controls risk by maintaining a relatively duration-neutral
posture versus the index, while adding value through the overweighting of
particular sectors or areas of the yield curve. The Fund invests primarily in
U.S. Government securities, investment-grade corporate bonds, and asset-backed
securities.
PERFORMANCE SUMMARY
The HGK Fixed Income Fund produced a total return for the period ended October
31, 1995 of 15.93% (net of fees) versus a total return of 16.16% for the Lehman
Brothers Government/Corporate Index. The Fund has also grown to over $10
million in assets.
Bond market conditions were extremely volatile during the period. Since
October, 1994 interest rates declined significantly across the yield curve. For
example the yield on the two year U.S. Treasury note declined from 6.83% to
5.60%; the ten year U.S. Treasury Note declined from 7.80% to 6%, and the yield
on the thirty year U.S. Treasury Bond declined from 7.97% to 6.33%.
The bear market of 1994, which was fueled by robust economic growth and
overblown inflation fears, gave way to a significant bond market recovery in
1995. An economic "soft landing", a scenario which includes modest economic
growth and benign inflation, provided the impetus for the dramatic decline in
interest rates and a shift to a more accommodative monetary policy by the
Federal Reserve. Recent evidence pointing to a sluggish manufacturing sector,
subdued job growth, and lackluster consumer spending leaves open the
possibility of the Federal Reserve lowering the interest rate on loans charged
to banks (Fed Funds Rate) for a second time this year in December. While the
bond market, as well as HGK currently anticipates future Fed easings, the
timing and magnitude of such moves depends on the outcome of balanced budget
negotiations in Washington and the Fed's perception of future economic growth
and inflation.
<PAGE>
The "soft landing" of the economy in 1995 proved to be beneficial to corporate
bonds as well. Corporate credit quality improved as a result of stronger
earnings and debt reduction, causing yield spreads on corporate bonds to narrow
sharply versus Treasury bonds. This contraction of spreads has lead to
significant outperformance of corporate bonds relative to government bonds thus
far in 1995. The fundamental and technical environment for corporate bonds
(improving credit profiles, institutional shifts to corporates over mortgages
as the preferred yield-advantage sector, and limited new issue supply) looks to
remain strong and we expect corporates to continue to lead the market going
forward.
Comparison of Change in the Value of a $20,000 Investment in the HGK Fixed
Income Fund versus the Lehman Brothers Government/Corporate Bond Index.
<TABLE>
<CAPTION>
---------------------------------
Total Return/(1)/
---------------------------------
Annualized Cumulative
Since Since
Inception/(2)/ Inception/(2)/
---------------------------------
<S> <C>
16.07% 15.93%
---------------------------------
</TABLE>
[LINE GRAPH APPEARS HERE]
MD+A section:
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $20,000
in the HGK Fixed Income Fund from November 30, 1995 through
October 31, 1995 as compared with the growth of a $20,000 investment
in the Lehman Brothers Government/Corporate Bond Index. The plot
points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
Period Ended Growth of $20,000 Invested Growth of $20,000 Invested
in the HGK Fixed Income in the Lehman Brothers Government/
Fund Corporate Bond Index\
<S> <C> <C>
11/30/94 $20,000 $20,000
10/31/95 22,999 23,273
</TABLE>
/(1)/ These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
/(2)/ The HGK Fixed Income Fund commenced operations on November 3, 1994.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of HGK Fixed Income Fund of The Advisors'
Inner Circle Fund:
We have audited the accompanying statements of net assets of HGK Fixed Income
Fund (one of the funds constituting The Advisors' Inner Circle Fund) as of
October 31, 1995, and the related statements of operations, changes in net
assets and financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that out audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of HGK
Fixed Income Fund of The Advisors' Inner Circle Fund as of October 31, 1995,
the results of its operations, changes in its net assets, and financial
highlights for the period presented, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
[PIE CHART APPEARS HERE]
A pie chart depicting industry breakdowns in the HGK Fixed Income Fund as a
percentage of Total Fund Investments. The breakdown is as follows:
<TABLE>
<CAPTION>
Industry %
-------- -
<S> <C>
Industrial 27%
U.S. Gov't Agency 26%
U.S. Treasury 18%
Financial 10%
Repurchase Agreements 7%
Yankee 7%
Utility 4%
Asset Backed 1%
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Value
HGK FIXED INCOME FUND (000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS -- 47.5%
Asarco
8.500%, 05/01/25 $350 $ 386
Brascan Yankee Bond
7.375%, 10/01/02 250 249
CCP Insurance
10.500%, 12/15/04 250 273
Countrywide Funding MTN
6.880%, 08/03/98 150 152
Dresdner Bank
6.625%, 09/15/05 500 503
General Motors Acceptance Corporation
6.625%, 10/01/02 350 352
General Motors Corporation
7.400%, 09/01/25 175 179
IBM
6.375%, 11/01/97 290 291
KMart
7.950%, 02/01/23 225 188
Lehman Brothers
5.040%, 12/15/03 300 297
Niagara Mohawk Power
7.750%, 05/15/06 500 451
Philip Morris Companies
8.750%, 12/01/96 400 412
Republic of Italy Global Bond
6.875%, 09/27/23 250 230
Time Warner
7.950%, 02/01/00 475 496
Union Pacific Railroad
8.350%, 05/01/25 450 489
-------
TOTAL CORPORATE BONDS
(Cost $4,864,504) 4,948
U.S. GOVERNMENT AGENCY OBLIGATION -- 25.4%
FHLB
5.000%, 07/16/96 $250 $ 249
FHLMC
7.360%, 03/05/98 375 376
6.730%, 03/21/01 250 251
FNMA
6.020%, 09/19/97 callable 9/16/96 @ 100 375 375
FNMA MTN
7.375%, 03/28/05 450 483
7.650%, 05/04/05 150 152
FNMA Pool# 50759
6.000%, 07/01/00 208 205
FNMA Series 1994-M3 Class A CMO
7.710%, 04/25/06 246 257
SLMA
5.240%, 03/03/97 300 297
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATION
(Cost $2,583,702) 2,645
-------
U.S. TREASURY OBLIGATIONS -- 17.7%
U.S. Treasury Bonds
7.500%, 11/15/16 425 479
7.250%, 08/15/22 200 221
U.S. Treasury Notes
7.500%, 01/31/96 250 251
7.250%, 02/15/98 300 310
7.500%, 11/15/01 400 432
5.750%, 08/15/03 150 148
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,736,923) 1,841
-------
ASSET BACKED SECURITIES -- 1.3%
Ford Credit Grantor Trust 94b A
7.300%, 10/15/99 139 141
-------
TOTAL ASSET BACKED SECURITIES
(Cost $138,725) 141
-------
REPURCHASE AGREEMENT -- 6.6%
Lehman Brothers Securities 5.54%, dated 10/31/95, matures
11/01/95, repurchase price $685,478 (collateralized by U.S.
Treasury Note, par value 692,771, 6.625%, matures 03/31/97:
market value 705,905) 685
-------
TOTAL REPURCHASE AGREEMENT
(Cost $685,478) 685
-------
TOTAL INVESTMENTS -- 98.5%
(Cost $10,009,332) $10,260
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
HGK FIXED INCOME FUND (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES -- 1.5%
Other Assets and Liabilities, Net $ 160
=======
NET ASSETS:
Portfolio shares (unlimited authorization--no par value) based on
957,731 outstanding shares of beneficial interest 9,752
Accumulated net realized gain on investments 417
Net unrealized appreciation on investments 251
-------
TOTAL NET ASSETS: -- 100.0% $10,420
=======
Net Asset Value, Offering Price and Redemption Price Per Share $ 10.88
=======
</TABLE>
CMO--Collateralized Mortgage Obligation
FHLB--Federal Home Loan Bank
FHLMC--Federal Home Loan Mortgage Corporation
FNMA--Federal National Mortgage Association
MTN--Medium Term Note
SLMA--Student Loan Marketing Association
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the period ended October 31, 1995
<TABLE>
<CAPTION>
HGK
FIXED INCOME
FUND
------------
11/03/94(1)
TO 10/31/95
(000)
- --------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest Income.................................................. $ 584
- --------------------------------------------------------------------------------
Total Investment Income......................................... 584
- --------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees......................................... 39
Waiver of Investment Advisory Fees............................... (39)
Contributions by Adviser......................................... (69)
Administrative Fees.............................................. 74
Custodian Fees................................................... 4
Professional Fees................................................ 24
Transfer Agent Fees.............................................. 16
Printing Fees.................................................... 6
Directors' Fees.................................................. 4
Registration and Filing Fees..................................... 11
Insurance and Other Fees......................................... 3
Amortization of Deferred Organizational Costs.................... 3
Pricing Fees..................................................... 3
- --------------------------------------------------------------------------------
Total Expenses.................................................. 79
- --------------------------------------------------------------------------------
Net Investment Income.......................................... 505
- --------------------------------------------------------------------------------
Net Realized Gain from Securities Sold........................... 417
Net Unrealized Appreciation of Investment Securities............. 251
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments................. 668
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations............. $1,173
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) The HGK Fund Commenced operations on November 3, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the period ended October 31, 1995
<TABLE>
<CAPTION>
HGK
FIXED INCOME
FUND
------------
11/03/94(2)
TO 10/31/95
(000)
- --------------------------------------------------------------------------------
<S> <C>
Investment Activities:
Net Investment Income............................................. $ 505
Net Realized Gain on Securities Sold.............................. 417
Net Unrealized Appreciation of Investment Securities.............. 251
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations............. 1,173
- --------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income............................................. (505)
- --------------------------------------------------------------------------------
Total Distributions.............................................. (505)
- --------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued..................................................... 10,408
Shares Issued in Lieu of Cash Distributions....................... 504
Shares Redeemed................................................... (1,160)
- --------------------------------------------------------------------------------
Increase in Net Assets Derived from Capital Share Transactions.... 9,752
- --------------------------------------------------------------------------------
Total Increase in Net Assets..................................... 10,420
- --------------------------------------------------------------------------------
Net Assets:
Beginning of Period............................................... --
- --------------------------------------------------------------------------------
End of Period..................................................... $10,420
- --------------------------------------------------------------------------------
Shares Issued and Redeemed:
Shares Issued..................................................... 1,022
Issued in Lieu of Cash Distributions.............................. 48
Redeemed.......................................................... (112)
- --------------------------------------------------------------------------------
Net Increase in Share Transactions............................... 958
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(2) The HGK Fund commenced operations on November 3, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Realized and Net Net Ratio
Asset Unrealized Distributions Asset Assets Ratio of Net
Value Net Gains or from Net Distributions Value End of Expenses Income
Beginning Investment Losses on Investment from Capital End Total of Period to Average to Average
of Period Income Securities Income Gains of Period Return (000) Net Assets Net Assets
--------- ---------- ------------ ------------- ------------- --------- ------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------
HGK FIXED INCOME FUND
- ---------------------
1995(1) $10.00 0.67 0.88 (0.67) -- $10.88 16.07%* 10,420 1.00%* 6.38%*
<CAPTION>
Ratio
Ratio of Net Income
of Expenses (Loss) to
to Average Average
Net Assets Net Assets
(Excluding (Excluding Portfolio
Waivers and Waivers and Turnover
Reimbursements) Reimbursements) Rate
--------------- --------------- ---------
<S> <C> <C> <C>
- ---------------------
HGK FIXED INCOME FUND
- ---------------------
1995(1) 2.37%* 5.01%* 300.48%
</TABLE>
* 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
October 31, 1995
1. Organization:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated July 18, 1991. The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company with eleven portfolios. The
financial statements herein present 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.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Fund.
Security Valuation -- Debt obligations exceeding sixty days to maturity for
which market quotations are readily available are valued at the most recent
quoted bid price. Debt obligations with sixty days or less remaining until
maturity may be valued at their amortized cost, which approximates market
value.
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. Cost 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.
Other -- 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 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
accounting principals. 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.
3. Organization Costs and Transactions with Affiliates:
The Fund incurred organization costs of approximately $13,000. These costs have
been capitalized by the fund and are being amortized over sixty months
commencing with operations. In the event of the initial shares of the fund
redeemed by any holder thereof during the period that the fund is amortizing
its organizational costs the redemption proceeds payable to the holder thereof
by the fund 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. These costs include legal
fees of approximately $11,000 for organizational work performed by a law firm
of which an officer of the fund is a partner.
Certain officers and trustees of the Trust are also officers of SEI Financial
Management Company (the "Administrator") and/or SEI Financial Services Company
(the "Distributor"). Such officers and trustees are paid no fees by the Trust
for serving as officers and trustees of the Trust.
4. Administration, Shareholder Servicing and Distribution Agreements:
The Trust and the Administrator are parties to an Administration Agreement,
under which the
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
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., 811 Main Street, Kansas City, Missouri 64105 (the "Transfer
Agent") serves as the transfer agent and dividend disbursing agent for the Fund
under a transfer agency agreement with the Fund.
The Trust and Distributor are parties to a Distribution Agreement. The
Distributor receives no fees for its distribution services under this
agreement.
5. Investment Advisory and Custodian Agreements:
The Trust and HGK Asset Management, Inc. (the "Advisor") are parties to an
Investment Advisory Agreement under which the Advisor receives an annual fee
equal to .50% of the Fund's average daily net assets. The Advisor has
voluntarily agreed to waive all or a portion of its fees in order to limit
operating expenses to not more than 1.00% of the average daily net assets of
the Fund. Fee waivers are voluntary and may be terminated at any time.
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Fund. Fees of
the Custodian are being paid on the basis of the net assets of the Fund. The
Custodian plays no role in determining the investment policies of the Fund or
which securities are to be purchased and sold in the Fund.
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the period ended October 31, 1995 are as follows:
<TABLE>
<CAPTION>
HGK FIXED INCOME
FUND (000)
----------------
<S> <C>
Purchases
Government.................................................... $10,129
Other......................................................... 20,751
Sales
Government.................................................... $ 6,385
Other......................................................... 15,862
</TABLE>
At October 31, 1995, the total cost of securities and the net realized gains or
losses on securities sold for Federal Income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at October 31, 1995, is as follows:
<TABLE>
<CAPTION>
HGK FIXED INCOME
FUND (000)
----------------
<S> <C>
Aggregate gross unrealized appreciation........................ $312
Aggregate gross unrealized depreciation........................ (61)
----
Net unrealized appreciation.................................... $251
====
</TABLE>
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(UNAUDITED)
For the shareholders that do not have an October 31, 1995 taxable year end,
this notice is for informational purposes only. For shareholders with an
October 31, 1995 taxable year end, please consult your tax adviser as to the
pertinence of this notice.
For the fiscal year ended October 31, 1995, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
HGK Fixed Income Fund................. 0% 100% 100%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
<S> <C> <C> <C>
HGK Fixed Income Fund................. 0% 0% 0%
</TABLE>
- --------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income distributions
of the portfolio.
<PAGE>
HGK-F-004-01
<PAGE>
Dear Shareholder:
We welcome you to the FMC Select Fund (the "Fund"). This is the first annual
report and covers the period from inception on May 8, 1995 through the fiscal
year ended October 31, 1995. During this period the total return for the Fund
was 10.60%, placing performance between that of the Standard & Poor's 500 Index
(12.35%) and the Dow Jones Industrials Index (9.83%), and above that of the
Merrill Lynch Corporate/Government Short Term Index (5.14%, one to ten year
maturities). Within one month of inception the Fund reached its targeted equity
allocation of 75-85% and remained within this range for the rest of the period.
The remaining assets were placed in investment grade, medium term, fixed income
instruments and cash. While this portion of the Fund acts as a restraint on
performance in robust equity markets, such as the recent environment, it should
help preserve capital during corrections.
Comparison of Change in the Value of a $10,000 Investment in the FMC Select
Fund, versus the S&P 500 Index, the Dow Jones Industrial Average, and the
Merrill Lynch 1-10 Year Corporate/Government Index (Computed from May 31, 1995
through October 31, 1995)
<TABLE>
<CAPTION>
----------------------------------
Total Return/(1)/
----------------------------------
Annualized Cumulative
Since Since
Inception/(2)/ Inception/(2)/
----------------------------------
<S> <C>
23.25% 10.60%
----------------------------------
</TABLE>
[GRAPH APPEARS HERE]
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in The FMC Select Fund
from May 31, 1995 through October 31, 1995 as compared with the growth of a
$10,000 investment in the S&P 500 Index, the Dow Jones Industrial Average, and
the Merrill Lynch 1-10 Year Corporate/Government Index. The plot points used to
draw the line graph were as follows:
<TABLE>
<CAPTION>
Period Growth of $10,000 Growth of $10,000 Growth of $10,000 Growth of $10,000
Ended Invested in the FMC Invested in the S&P Invested in the Dow Invested in the
Select Fund 500 Index Jones Industrial Merrill Lynch 1-10
Average Year Corporate/
Government Index
<S> <C> <C> <C> <C>
5/31/95 $10,000 $10,000 $10,000 $10,000
10/31/95 10,844 11,066 10,764 10,353
</TABLE>
/(1)/ These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
/(2)/ The FMC Select Fund commenced operations on May 8, 1995.
<PAGE>
The table below provides a weighted average statistical snapshot of the equity
portion of the Fund. For those of you who are less statistically inclined, the
key point is that the Fund is invested in profitable businesses selling at
attractive valuations.
<TABLE>
<CAPTION>
FMC
SELECT
FUND S&P
(EQUITY INDUSTRIALS
HOLDINGS) INDEX
- ---------------------------------------------------------------------------
<S> <C> <C>
QUALITY
Return-on-Equity (ROE) [1] 21% 20%
Period Needed to Retire Debt from Free Cash Flow [2] 3 Years 7 Years
Estimated Annual EPS Growth for 1996-2000 12% 8%
VALUATION
1996E Price/Earnings 13.4X 15.4X
- ---------------------------------------------------------------------------
</TABLE>
[1] The ROE is based on net income for the trailing four quarters ended 9/30/95
and the average equity over that period. ROE provides insight into both the
quality of the business and the quality of management in its use of the
shareholders' resources. Given the portfolio's heavy skewing towards
businesses with franchises that make them significantly less dependent on
the business cycle than those in the S&P, it is anticipated that the
portfolio's "ROE advantage" relative to the S&P should expand in a
recession.
[2] Free cash flow is defined for this purpose as net income plus depreciation
and amortization minus capital expenditures. We have intentionally omitted
dividends from this calculation in order to separate the enterprise's
underlying economics (the cash generated from operations) from dividend
policy (which is a financing decision). Careful analysis of both working
capital and free cash flow is often more valuable than reported net income
in evaluating changes in a business's fundamentals.
[PIE CHART APPEARS HERE]
A pie chart depicting industry breakdowns in the FMC Select Fund as a percentage
of Total Fund Investments. The breakdown is as follows:
<TABLE>
<CAPTION>
Portfolio Composition
Industry %
-------- -
<S> <C>
Banking 11%
Financial Services 11%
Media 11%
Specialty Chemicals 10%
Consumer Products 9%
Healthcare 8%
U.S. Treasury 8%
Food, Beverage &
Tobacco 5%
Railroads 5%
Corporate Obligations 4%
Other 18%
</TABLE>
Three industry segments each accounted for over 10% of the portfolio as of
October 31, 1995: Financial Services (11.4%), Banks (10.4%) and Media (10.7%).
Our substantial positions in these three industries are driven by what we
believe are attractive valuations of quality businesses. The Fund's largest
holding in Financial Services is Federal Home Loan Mortgage Corp. (4.5% of the
portfolio), also known as "Freddie Mac". Freddie Mac shares a duopoly along
with Fannie Mae in the securitization of residential mortgages. Both duopolists
earn ROE's in excess of 20% and continue to put incremental capital to work at
ROE's in the mid-20's in both mortgage securitization and by retaining
mortgages for investment. Freddie Mac has the additional advantage of having
significantly more balance sheet capacity to retain incremental mortgages,
leading to mid to high teens estimated earnings per share (EPS) growth for the
remainder of the decade. Freddie Mac is selling at 10.5X 1996E EPS.
<PAGE>
Banks constitute our second largest industry segment. The Fund owns six small
and medium sized regional banks and thrifts, all of which are disciplined
lenders with solid balance sheets and high market shares in their respective
geographies. These are the same characteristics that the dozen or so emerging
national banks use in targeting acquisitions. Two of the holdings, Compass
Bancshares and Commercial Federal, have experienced proxy fights to put the
banks up for sale. While we would be surprised if all six of these holdings are
independent three years from now, we are content to own them without an
acquisition, given that they are, cumulatively, selling at about 8.5X 1996E EPS
and growing earnings at over 10% per annum.
Media constitutes the Fund's third largest industry segment, with Gannett (4.7%
of the portfolio) constituting both the largest media and portfolio holding.
Gannett is the nation's leading newspaper chain and owner of USA Today, the
only truly national newspaper. Virtually all of Gannett's 82 local dailies
(over 70% of income) represent extremely profitable mini-monopolies, in that
they are the only vehicle through which many niche advertisers can efficiently
reach consumers. Gannett's newspapers should generate over $500MM in free cash
flow in 1995. Management has been a prudent allocator of this cash flow,
repurchasing over 15% of Gannett's shares in the past four years and limiting
acquisitions to those which are accretive to cash flow, such as the recent
Multimedia acquisition. In addition, USA Today, which was a drag on earnings
until recently, may well experience a surge in profits for the rest of the
decade, as it has finally achieved the critical mass of over 2MM subscribers
needed to make it attractive to national advertisers at substantially higher ad
rates. Gannett is selling at 14.5X 1996E EPS.
We trust that this report has given you useful insights into how we are
managing your assets. We appreciate your confidence.
Very truly yours,
/s/ Bernard Groveman /s/ William McElroy /s/ A. Byron Nimocks
Bernard Groveman William McElroy A. Byron Nimocks
Equity Manager Fixed Income Manager Equity Manager
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of
FMC Select Fund of
The Advisors' Inner Circle Fund:
We have audited the accompanying statement of net assets of FMC Select Fund
(one of the funds constituting The Advisors' Inner Circle Fund) as of October
31, 1995, and the related statements of operations, changes in net assets and
financial highlights for the period presented. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of FMC
Select Fund of The Advisors' Inner Circle Fund as of October 31, 1995, the
results of its operations, changes in its net assets, and financial highlights
for the period presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
FMC SELECT FUND Shares (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 84.8%
AUTO & TRUCK RELATED 1.5%
Mark IV Industries 21,400 $ 417
-------
BANKS 10.8%
Charter One Financial 7,300 207
Commercial Federal* 16,300 536
Compass Bancshares 15,400 477
Dime Bancorp* 52,100 554
North Fork Bancorporation,
New York 31,500 689
TF Financial 32,000 476
-------
2,939
-------
BASIC CHEMICALS 4.2%
Rohm & Haas 4,000 221
W R Grace 16,700 931
-------
1,152
-------
CONSUMER PRODUCTS 8.8%
Colgate Palmolive 5,100 353
Ekco Group 168,600 949
Gillette 11,400 551
Warner Lambert 6,400 545
-------
2,398
-------
FINANCIAL SERVICES 11.4%
Federal Home Loan Mortgage Corporation 15,400 1,066
Fidelity National Financial 36,000 572
Marsh & McLennan 4,200 344
Northern Trust 13,400 640
State Street Boston 12,100 470
-------
3,092
-------
FOOD, BEVERAGE & TOBACCO 5.1%
General Mills 5,300 304
Sara Lee 8,900 261
UST 27,000 811
-------
1,376
-------
<CAPTION>
Shares/
Face Market
Amount Value
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE 8.2%
Johnson & Johnson 3,700 $ 302
Mallinckrodt Group 7,000 243
Pfizer 9,200 528
Sierra Health Services* 25,000 715
US Healthcare 11,400 439
-------
2,227
-------
MEDIA 10.7%
Dimac* 4,800 125
E.W. Scripps 10,600 400
Gannett 20,400 1,109
Harte-Hanks Communications* 22,700 687
Omnicom Group 9,200 588
-------
2,909
-------
METALS & MINING 1.3%
Reynolds Metals 6,900 348
-------
MULTIPLE INDUSTRY 2.8%
General Electric 12,200 772
-------
PACKAGING 2.3%
Sealed Air* 23,600 622
-------
RAILROADS 5.1%
Burlington Northern Santa Fe 8,600 721
Southern Pacific Rail* 30,000 668
-------
1,389
-------
RETAIL 1.7%
CML Group 42,700 246
Sears Roebuck 6,100 207
-------
453
-------
SPECIALTY CHEMICALS 9.6%
Great Lakes Chemical 10,700 718
Loctite 14,700 695
Lubrizol 4,600 132
McWhorter Technologies* 24,300 365
Sherwin Williams 18,900 711
-------
2,621
-------
SPECIALTY MACHINERY 1.3%
York International 8,100 354
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Face Market
Amount Value
FMC SELECT FUND (concluded) (000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCK
(Cost $21,175,499) $23,069
-------
U.S. TREASURY OBLIGATIONS 7.9%
United States Treasury Bills
5.350%, 11/02/95 20 20
5.400%, 11/09/95 85 85
5.300%, 11/16/95 14 14
5.375%, 11/24/95 365 363
5.330%, 11/30/95 72 72
5.300%, 12/07/95 277 276
5.200%, 12/14/95 53 53
5.150%, 12/21/95 267 265
5.350%, 01/04/96 181 179
5.210%, 01/11/96 22 22
United States Treasury Notes
6.875%, 07/31/99 250 259
8.750%, 08/15/00 250 280
8.000%, 05/15/01 250 275
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,145,151) 2,163
-------
CORPORATE OBLIGATIONS 4.3%
AON
7.400%, 10/01/02 150 157
Bellsouth Trust MTN
9.190%, 07/01/03 178 198
Commercial Credit
7.750%, 03/01/05 150 161
General Motors MTN
8.875%, 05/15/03 150 169
Marriott International
7.875%, 04/15/05 150 160
Philip Morris
7.250%, 01/15/03 150 154
United Postal Savings
9.000%, 07/26/99 150 165
-------
TOTAL CORPORATE OBLIGATIONS
(Cost $1,139,048) 1,164
-------
<CAPTION>
Face Market
Amount Value
(000) (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT BOND 2.8%
Federal Home Loan Mortgage Corporation
Callable 6/15/00 @ 100
6.830%, 06/15/05 250 $ 252
Federal National Mortgage Association
8.500%, 01/13/00 250 262
Federal National Mortgage Association
Principal STRIPS Callable 11/1/96
0%, 11/01/01 250 235
-------
TOTAL GOVERNMENT BOND
(Cost $737,541) 749
-------
TOTAL INVESTMENTS 99.8%
(Cost $25,197,239) 27,145
-------
OTHER ASSETS AND LIABILITIES 0.2%
Other Assets and Liabilities, Net 57
-------
NET ASSETS:
Portfolio shares (unlimited
authorization--no par value)
based on 2,479,124 shares of
beneficial interest 25,154
Undistributed net investment income 23
Accumulated net realized gain on investments 77
Net unrealized appreciation on investments 1,948
-------
TOTAL NET ASSETS: (100.0%) $27,202
=======
Net Asset Value, Offering Price
and Redemption Price Per Share $ 10.97
=======
</TABLE>
* Non-Income producing security
STRIPS Separate Trading of Registered Interest and Principal Securities
MTN--Medium-Term Note
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the period ended October 31, 1995
<TABLE>
<CAPTION>
FMC
SELECT
FUND
-----------
5/08/95 (1)
TO 10/31/95
(000)
- --------------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividend Income................................................... $ 168
Interest Income................................................... 178
- --------------------------------------------------------------------------------
Total Investment Income.......................................... $ 346
- --------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees.......................................... $ 90
Reimbursements by Adviser......................................... (54)
Administrative Fees............................................... 36
Custodian Fees.................................................... 4
Professional Fees................................................. 14
Transfer Agent Fees............................................... 8
Printing Fees..................................................... 5
Directors' Fees................................................... 2
Registration and Filing Fees...................................... 14
Pricing Fees...................................................... 1
Insurance and Other Fees.......................................... 3
Amortization of Deferred Organizational Costs..................... 1
- --------------------------------------------------------------------------------
Total Expenses................................................... 124
- --------------------------------------------------------------------------------
Net Investment Income........................................... 222
- --------------------------------------------------------------------------------
Net Realized Gain from Securities Sold............................ 77
Net Unrealized Appreciation of Investment Securities.............. 1,948
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments.................. $2,025
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations.............. $2,247
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) The FMC Select Fund Commenced operations on May 8, 1995.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the Period Ended October 31, 1995
<TABLE>
<CAPTION>
FMC
SELECT
FUND
-----------
5/08/95(2)
TO 10/31/95
(000)
- --------------------------------------------------------------------------------
<S> <C>
Investment Activities:
Net Investment Income............................................ $ 222
Net Realized Gain on Securities Sold............................. 77
Net Unrealized Appreciation of Investment Securities............. 1,948
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations............ 2,247
- --------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income............................................ (199)
- --------------------------------------------------------------------------------
Total Distributions............................................. (199)
- --------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued.................................................... 25,763
Shares Issued in Lieu of Cash Distributions...................... --
Shares Redeemed.................................................. (609)
- --------------------------------------------------------------------------------
Increase in Net Assets Derived from Capital Share Transactions... 25,154
- --------------------------------------------------------------------------------
Total Increase in Net Assets.................................... 27,202
- --------------------------------------------------------------------------------
Net Assets:
Beginning of Period.............................................. --
- --------------------------------------------------------------------------------
End of Period.................................................... $27,202
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Issued and Redeemed:
Shares Issued.................................................... 2,536
Issued in Lieu of Cash Distributions............................. --
Redeemed......................................................... (57)
- --------------------------------------------------------------------------------
Net Increase in Share Transactions............................... 2,479
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(2) The FMC Select Fund commenced operations on May 8, 1995.
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Net Net Ratio
Asset Realized and Distributions Distributions Asset Assets Ratio of Net
Value Net Unrealized from Net from Value End of Expenses Income
Beginning Investment Gains or Losses Investment Capital End Total of Period to Average to Average
of Period Income on Securities Income Gains of Period Return (1) (000) Net Assets Net Assets
--------- ---------- --------------- ------------- ------------- --------- ---------- --------- ----------- ----------
- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FMC SELECT FUND
- ---------------
1995(2) $10.00 0.10 0.96 (0.09) -- $10.97 10.60% $27,202 1.10%* 1.96%*
<CAPTION>
Ratio
Ratio of Net
of Expenses Income (Loss)
to Average to Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Reimbursements) Reimbursements) Rate
--------------- --------------- ---------
- --------------------------
<S> <C> <C> <C>
FMC SELECT FUND
- ---------------
1995(2) 1.57%* 1.49%* 1.87%
</TABLE>
* Annualized
(1) Total Return is cumulative since inception.
(2) The FMC Select Fund commenced operations on May 8, 1995.
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
1. Organization:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated July 18, 1991. The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company with eleven portfolios. The
financial statements herein present those of the FMC Select 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.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Fund.
Security Valuation -- Investment in equity securities which are traded on a
national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recent quoted bid price. Debt
obligations with sixty days or less remaining until maturity may be valued
at their amortized cost, which approximates market value.
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).
Costs used in determining realized gains and losses on the sales of
investment securities are those of the specific securities sold, adjusted
for the accretion and amortization of purchase discounts or premiums during
the respective holding period which is calculated using the effective
interest method. Interest Income is recognized on the accrual basis.
Dividend income is recorded on the ex-date.
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.
Other -- 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 from net investment income are declared and paid to
Shareholders quarterly. 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
accounting principals. 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.
3. Organization Costs and Transactions with Affiliates:
The Fund incurred organization costs of approximately $22,000. These costs have
been capitalized by the Fund and are being amortized over sixty months
commencing with the start-up. In the event the initial shares of the Fund are
redeemed by any holder thereof during the period
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
that the Fund is amortizing its organizational costs, the redemption proceeds
payable to the holder thereof by the Fund 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. These costs include legal fees of approximately $11,000 for
organizational work performed by a law firm of which an officer of the Fund is
a partner.
Certain officers and trustees of the Trust are also officers of SEI Financial
Management Company (the "Administrator") and/or SEI Financial Services Company
(the "Distributor"). Such officers and trustees are paid no fees by the Trust
for serving as officers and trustees of the Trust.
4. Administration, Shareholder Servicing and Distribution Agreements:
The Trust and the Administrator are parties to an Administration Agreement
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., 811 Main Street, Kansas City, Missouri 64105 (the "Transfer
Agent") serves as the transfer agent and dividend disbursing agent for the Fund
under a transfer agency agreement with the Fund.
The Trust and Distributor are parties to a Distribution Agreement. The
Distributor receives no fees for its distribution services under this
agreement.
5. Investment Advisory and Custodian Agreements:
The Fund and First Manhattan Co. (the "Adviser") are parties to an Investment
Advisory Agreement under which the Adviser receives an annual fee equal to .80%
of the Fund's average daily net assets. The Adviser has on a voluntary basis,
agreed to reimburse Fund expenses in order to limit the Fund's total operating
expenses to a maximum of 1.10% of the average daily net assets of the Fund. The
Adviser reserves the right to terminate this arrangement at any time in its
sole discretion.
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Fund. Fees of
the Custodian are being paid on the basis of the net assets of the Fund. The
Custodian plays no role in determining the investment policies of the Fund or
which securities are to be purchased and sold in the Fund.
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the period ended October 31, 1995 are as follows:
<TABLE>
<CAPTION>
FMC SELECT
FUND
(000)
----------
<S> <C>
Purchases
Government.......................................................... $ 1,534
Other............................................................... 22,635
Sales
Government.......................................................... $ --
Other............................................................... 396
</TABLE>
At October 31, 1995, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at October 31, 1995, is as follows:
<TABLE>
<CAPTION>
FMC SELECT
FUND
(000)
----------
<S> <C>
Aggregate gross unrealized appreciation.............................. $2,381
Aggregate gross unrealized depreciation.............................. (433)
------
Net unrealized appreciation.......................................... $1,948
======
</TABLE>
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(UNAUDITED)
For the shareholders that do not have an October 31, 1995 taxable year end,
this notice is for informational purposes only. For shareholders with an
October 31, 1995 taxable year end, please consult your tax adviser as to the
pertinence of this notice.
For the fiscal year ended October 31, 1995, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
FMC Select Fund....................... 0% 100% 100%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
<S> <C> <C> <C>
FMC Select Fund....................... 29% 0% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income distributions
of the portfolio.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND:
FMC SELECT FUND
P.O. Box 419009
Kansas City, MO 64141-6009
ADVISER:
FIRST MANHATTAN CO.
437 Madison Avenue
New York, NY 10022
TRUST:
THE ADVISORS' INNER CIRCLE FUND
680 East Swedesford Road
Wayne, PA 19087
DISTRIBUTOR:
SEI FINANCIAL SERVICES COMPANY
680 East Swedesford Road
Wayne, PA 19087
ADMINISTRATOR:
SEI FINANCIAL MANAGEMENT COMPANY
680 East Swedesford Road
Wayne, PA 19087
LEGAL COUNSEL:
MORGAN, LEWIS & BOCKIUS
1800 M Street N.W.
Washington, DC 20006
INDEPENDENT PUBLIC ACCOUNTANTS:
ARTHUR ANDERSEN LLP
1601 Market Street
Philadelphia, PA 19103
This information must be preceded or accompanied by a current prospectus for
the Fund described.
FMC-F-00301
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FMC SELECT FUND
ANNUAL REPORT
OCTOBER 31, 1995
ADVISED BY:
FIRST MANHATTAN CO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FMC-F-003-01
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
TURNER GROWTH EQUITY FUND
TURNER SMALL CAP FUND
ANNUAL REPORT TO SHAREHOLDERS
AS OF OCTOBER 31, 1995
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS FOR EACH FUND DESCRIBED.
<PAGE>
[LOGO OF TURNER FUND GROUP APPEARS HERE]
TURNER GROWTH EQUITY FUND
INVESTMENT ADVISER'S REPORT TO SHAREHOLDERS
To Our Shareholders:
For the year ended October 31, 1995, the Turner Growth Equity Fund posted a
total return of 21.2% compared to 22.8% for the Lipper Capital Appreciation
Funds Index, and 26.4% for the Standard and Poor's 500 Index. Major stock
market indexes posted impressive gains during the past year as lower interest
rates, low inflation and strong corporate profits provided a powerful catalyst
for the market's advance. Since the Fund's inception on March 11, 1992, the
annualized total return for the Fund has been 12.6% versus 13.7% for the S&P
500.
Every investment manager eventually encounters an investment climate when their
approach does not produce successful results for a period of time. During this
difficult stretch of underperformance we experienced, a period that we believe
is now behind us, I can assure you that our earnings-driven investment
philosophy and disciplined process have not changed. I believe that the
process, people, and investment technology are in place to generate superior
returns for the Fund over time, and that a significant component of the Fund's
lagging performance was attributable to an equity market environment that was
temporarily unfavorable toward our style of investing. However, our internal
analysis conducted earlier this year also convinced me it was necessary to
improve our implementation by making some fine-tuning adjustments in the areas
of trading activity, the number of holdings in the Fund, and staffing. All
these issues have been addressed, and I believe that the decisions we made
contributed to our outperformance since June of this year and will continue to
make substantial contributions in the future.
I want to personally thank all our shareholders for your patience during this
challenging phase in the life of the Fund. The current economic climate and
stock market environment favors our investment style and expertise, and the
adjustments we needed to implement are in place and working very effectively.
Although the current economic expansion is now in its fifth year, we continue
to uncover many exciting investment opportunities among companies with
impressive earnings dynamics. As a result, I am confident that we are on track
to regain our ranking as a top performer to the benefit of the assets you have
entrusted to us.
Sincerely,
/s/ Robert E. Turner
Robert E. Turner
Chairman and Chief Investment
Officer
<PAGE>
MANAGEMENT'S DISCUSSION OF PERFORMANCE
TURNER INVESTMENT PARTNERS
THE MARKET ENVIRONMENT
For the year ending October 31, 1995, stocks staged an impressive rebound from
the sub-par results delivered during the previous year, and the S&P 500 Index
advanced 26.4%. After marking time during the first two months of the fiscal
year, the market staged a rally of extraordinary consistency as the S&P 500
rose for ten consecutive months without interruption from December 1994 through
September 1995.
The economic environment during the past year was particularly favorable for
stocks. Lower interest rates, in conjunction with low inflation and strong
corporate profit growth, provided a powerful catalyst for the market's advance.
The yield on the 30-year Treasury bond peaked at 8.16% on November 7, 1994 and
fell steadily through the year until hitting its low of 6.28% on October 17,
1995. Industry sectors among large cap stocks that performed well included:
technology, especially semiconductors; health care stocks, including drugs and
medical products; and financial services. Sectors that registered disappointing
results included: energy, especially oil and gas drilling; materials &
processing, including steel and containers; and consumer discretionary,
particularly apparel and specialty retailers.
During the first half of the year, the engines of the market rally were a
narrow selection of large cap blue chips, technology stocks and multinationals
with foreign currency income. A stable dollar and the market's broader advance
later in the year boosted small cap stock performance. However, for the year
ending October 31, 1995, the 21.4% return for the Russell 2500 Index of small
cap stocks trailed by a significant margin the 26.4% return posted by the S&P
500.
OUR INVESTMENT APPROACH
The firm's approach as a growth-oriented investment manager is to remain fully
invested in the stock market at all times and own a broadly diversified
portfolio of approximately 100 holdings. We always maintain broad industry
sector weightings in line with the market, which frees the investment team to
focus its efforts on stock selection. Individual stocks are bought and sold
based upon three evaluation criteria: (1) a computer ranking in our proprietary
model that identifies stocks with superior earnings and reasonable valuations;
(2) fundamental analysis to evaluate a stock's projected earnings per share
relative to consensus expectations; and (3) technical analysis of the stock's
money flow, which is a measure of market support for a stock based on price and
volume trends. Stocks which are included in the Fund must meet all three
criteria. If any of these criteria are violated, the stock is promptly sold.
Our goal for the Fund is to consistently outperform the S&P 500 Index, leading
to superior returns over time. We did not meet this goal during the most recent
year ended October 31, 1995. Since the inception of the Fund on March 11, 1992,
the annualized total return for the Fund of 12.6% which has modestly lagged the
S&P 500 return of 13.7% for the same period.
FACTORS RELATING TO FISCAL 1995 PERFORMANCE
Strong relative performance for the Fund during the second half of the year was
not sufficient to overcome the lagging results produced earlier in the year.
During the early stages of the stock market rally, investors showed a clear
preference for consistent, visible earnings and other defensive characteristics
in their stock selection. Concerns regarding the dollar, corporate earnings
growth, the Fed, and inflation provided plenty of reasons for investors to
remain anxious. As a result, the initial stage of the rally was narrowly
focused on relatively few large, blue chip, multinationals like Intel, IBM,
Philip Morris, Microsoft, and Exxon. During this period it was particularly
troublesome for active managers, including ourselves, to keep up with the
index.
A related factor that impeded performance is our strategic, but selective
commitment to medium and smaller-capitalization companies. As of October 31,
1995, the Fund was comprised of 55% large cap, 40% medium cap and 5% small cap
stocks. Our investments in medium and smaller-sized enterprises have been
significant contributors to our firm's long-term results. During the past year,
however, performance was negatively affected as defensively-oriented investors
generally favored large and more liquid issues.
<PAGE>
Fund performance improved substantially during the second half of the year. Our
experienced investment team has been able to identify companies that can
deliver superior earnings gains in the midst of the current economic slowdown,
and investors rewarded those companies who reported earnings gains in the
second and third quarters that met or exceeded the expectations of Wall Street
analysts. The outperformance of medium and smaller-capitalization companies
during the second half also contributed to Fund returns.
IN SUMMARY
Although the economic slowdown that began in the second quarter of 1995 will
trim overall corporate profit growth during the coming year, we believe that
the companies in which the Fund is invested possess outstanding potential for
future earnings growth and price appreciation. With the Federal Reserve
committed to prolonging the current economic expansion, and inflation not a
problem, we expect that investors will continue to favor the type of growth
stocks in which we invest.
Comparison of Change in the Value of a $100,000 Investment in the Advisors'
Inner Circle Turner Growth Equity Fund, versus the S&P 500 Composite Index.
<TABLE>
<CAPTION>
-----------------------------------------------
Average Annual Total Return/(1)/
-----------------------------------------------
One Year 3 Year Since Inception/(2)/
-----------------------------------------------
<S> <C> <C>
21.15% 13.80% 12.57%
-----------------------------------------------
</TABLE>
[LINE GRAPH APPEARS HERE]
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $100,000
in the Turner Growth Equity Fund from March 31, 1992 through October 31,
1995 as compared with the growth of a $100,000 investment in the S&P 500
Index. The plot points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
Period Ended Growth of $100,000 Invested Growth of $100,000 Invested
in the Turner Growth Equity in the S&P 500 Index
Fund
<S> <C> <C>
03/31/92 $100,000 $100,000
10/31/92 103,027 105,470
10/31/93 130,927 121,227
10/31/94 125,323 125,894
10/31/95 151,829 159,168
</TABLE>
/(1)/ These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
/(2)/ The Turner Growth Equity Fund commenced operations on March 11, 1992.
<PAGE>
[LOGO OF TURNER FUND GROUP APPEARS HERE]
TURNER SMALL CAP EQUITY FUND
INVESTMENT ADVISER'S REPORT TO SHAREHOLDERS
To Our Shareholders:
For the year ending October 31, 1995, the Turner Small Cap Equity Fund posted a
total return of 47.5% compared to 21.4% for the Russell 2500 Index of small-
capitalization stocks. Major stock market indexes posted impressive gains
during the past year as lower interest rates, low inflation and strong
corporate profits provided a powerful catalyst for the market's advance. Since
the Fund's inception on February 7, 1994, the annualized total return for the
Fund has been 31.4% versus 11.9% for the Russell 2500.
Our sector-neutral approach, which ensures that the Fund weightings in each of
ten broad industry sectors are kept in line with the market, enabled us to
generate strong returns with less exposure to technology-related stocks than
many other small cap growth funds. Performance was fueled by the strong
earnings growth dynamics present in the companies in which we are invested. In
the midst of the current economic slowdown, we continue to uncover many
exciting investment opportunities among smaller companies with dynamic products
and services, entrepreneurial and motivated management, and focused business
plans.
We appreciate the confidence that you have placed in us and look forward to the
opportunity to continue to serve you.
Sincerely,
/s/ William H. Chenoweth
William H. Chenoweth
Senior Equity Portfolio
/s/ Robert E. Turner Manager/Analyst
Robert E. Turner
Chairman and Chief Investment
Officer
<PAGE>
MANAGEMENT'S DISCUSSION OF PERFORMANCE
TURNER INVESTMENT PARTNERS
THE MARKET ENVIRONMENT
For the year ending October 31, 1995, stocks staged an impressive rebound from
the sub-par results delivered during the previous year. The S&P 500 Index
advanced 26.4%, and the Russell 2500 Index of small-capitalization stocks
registered a 21.4% return. After marking time during the first two months of
the fiscal year, the market staged a rally of extraordinary consistency as the
S&P 500 rose for ten consecutive months without interruption from December 1994
through September 1995.
The economic environment during the past year was particularly favorable for
stocks. Lower interest rates, in conjunction with low inflation and strong
corporate profit growth, provided a powerful catalyst for the market's advance.
The yield on the 30-year Treasury bond peaked at 8.16% on November 7, 1994 and
fell steadily through the year until hitting its low of 6.28% on October 17,
1995. Industry sectors among small cap stocks which performed well included:
technology, which benefited from booming demand for products and services as
well as favorable current earnings reports; and financial services, which
benefited from a favorable interest rate climate and industry consolidation.
Sectors that registered disappointing results included energy and consumer
discretionary.
During the first half of the year, the engines of the market rally were a
narrow selection of large cap blue chips, technology stocks and multinationals
with foreign currency income. A stable dollar and the market's broader advance
later in the year boosted small cap stock performance. However, for the year
ending October 31, 1995, the 21.4% return for the Russell 2500 Index of small
cap stocks trailed by a significant margin the 26.4% return posted by the S&P
500.
OUR INVESTMENT APPROACH
The firm's approach as a growth-oriented investment manager is to remain fully
invested in the stock market at all times and own a broadly diversified
portfolio of approximately 115 holdings. We always maintain broad industry
sector weightings in line with the market, which frees the investment team to
focus its efforts on stock selection. Individual stocks are bought and sold
based upon three evaluation criteria; (1) a computer ranking in our proprietary
model that identifies stocks with superior earnings and reasonable valuations;
(2) fundamental analysis to evaluate a stock's projected earnings per share
relative to consensus expectations; and (3) technical analysis of the stock's
money flow, which is a measure of market support for a stock based on price and
volume trends. Stocks which are included in the Fund must meet all three
criteria. If any of these criteria are violated, the stock is promptly sold.
Our goal for the Fund is to consistently outperform the Russell 500 Index,
leading to superior returns over time. We were pleased to achieve this goal for
the year ending October 31, 1995. Since the inception of the Fund on February
7, 1994, the annualized total return for the Fund of 31.4% exceeded the Russell
2500 return of 11.9% for the same period.
FACTORS RELATING TO FISCAL 1995 PERFORMANCES
The Fund's strong performance throughout the year was achieved through the
consistent application of the firm's disciplined approach by our experienced
investment team. We utilize advanced technology, combined with effective team
working and a streamlined decision making process, that enables us to act
quickly on the information we gather from a variety of sources. Performance was
fueled by the strong earnings growth dynamics present in the companies in which
we are invested. For example, cumulative earnings are projected to increase
36.6% over the next twelve months for the companies in the Fund compared to
22.0% for the Russell 2500 and 16.1% for the S&P 500 (Source: Frank Russell
Company).
Investments in a number of initial public offerings (IPO's) issued by companies
that deliver products or services to growing markets and possess strong
earnings dynamics also contributed to our outperformance. In addition, the
prompt sale of holdings that violate our purchase criteria helped us to avoid
major disappointments.
<PAGE>
IN SUMMARY
Although the economic slowdown that began in the second quarter of 1995 will
trim overall corporate profit growth during the coming year, we believe that
the companies in which the Fund is invested possess outstanding potential for
future earnings growth and price appreciation. With the Federal Reserve
committed to prolonging the current economic expansion, and inflation not a
problem, we expect that investors will continue to favor the type of growth
stocks in which we seek to invest.
Comparison of Change in the Value of a $100,000 Investment in the Advisors'
Inner Circle Turner Small Cap Fund, versus the Frank Russell 2500 Index
<TABLE>
<CAPTION>
--------------------------------------
Average Annual Total Return/(1)/
--------------------------------------
One Year Since Inception/(2)/
--------------------------------------
<S> <C>
47.52% 31.45%
--------------------------------------
</TABLE>
[LINE GRAPH APPEARS HERE]
MD+A Section
A line graph depicting the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $100,000
in the Turner Small Cap Fund from February 28, 1994 through October 31,
1995 as compared with the growth of a $100,000 investment in the Frank
Russell 2500 Index. The plot points used to draw the line graph were as
follows:
<TABLE>
<CAPTION>
Period Ended Growth of $100,000 Invested Growth of $100,000 Invested
in the Turner Small Cap Fund in the Frank Russell 2500 Index
<S> <C> <C>
02/28/94 $100,000 $100,000
10/31/94 106,855 98,491
10/31/95 157,632 119,528
</TABLE>
/(1)/ These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
/(2)/ The Turner Small Cap Equity Fund commenced operations on February 7, 1994.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of Turner Growth Equity Fund and Turner Small
Cap Fund of The Advisors' Inner Circle Fund:
We have audited the accompanying statements of net assets of Turner Growth
Equity Fund and Turner Small Cap Fund (two of the funds constituting The
Advisors' Inner Circle Fund) as of October 31, 1995, and the related statements
of operations, changes in net assets and financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Turner Growth Equity Fund and Turner Small Cap Fund of The Advisors' Inner
Circle Fund as of October 31, 1995, the results of their operations, changes in
their net assets, and financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
TURNER GROWTH EQUITY FUND Shares (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 98.7%
AIR TRANSPORTATION -- 0.9%
Delta Air Lines 15,300 $ 1,004
--------
AIRCRAFT -- 1.2%
Boeing 22,080 1,449
--------
APPAREL/TEXTILES --1.1%
Tommy Hilfiger* 35,000 1,334
--------
AUTO & TRUCK RELATED -- 1.7%
Chrysler 18,400 950
General Motors 24,200 1,059
--------
2,009
--------
BANKS -- 4.1%
Ahmanson H F 27,988 700
Chemical Bank 25,210 1,434
First Bank System 21,500 1,070
Nationsbank 24,220 1,592
--------
4,796
--------
BASIC CHEMICALS -- 1.7%
Morton International 36,820 1,123
Sigma Aldrich 18,070 858
--------
1,981
--------
COMMUNICATIONS -- 9.8%
Airtouch Communications* 43,570 1,242
Ascend Communications* 37,440 2,434
Cascade Communications* 18,260 1,301
Glenayre Technologies* 8,980 577
Tele-Communications, Cl A* 85,380 1,451
Ultratech Stepper* 31,010 1,240
Bellsouth 8,870 679
Comcast Special, Cl A 73,545 1,315
HBO 15,920 1,126
--------
11,365
--------
COMPUTERS & SERVICES -- 16.4%
America Online* 15,000 1,200
Bay Networks* 37,500 2,485
Cirrus Logic* 18,750 790
Cisco Systems* 20,000 1,550
Compaq Computer* 28,850 1,608
Informix* 30,270 $ 882
Intuit* 13,840 996
Medic Computer Systems* 13,080 697
Microsoft* 16,220 1,622
Netscape Communications* 14,870 1,309
Oracle* 36,800 1,605
UUNET Technologies* 14,940 908
First Data 20,900 1,382
Hewlett Packard 13,870 1,285
National Data 25,400 673
--------
18,992
--------
CONCRETE & MINERAL PRODUCTS -- 1.0%
Owens Corning Fiberglass* 27,620 1,170
--------
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT --
8.9%
3COM* 18,490 869
Applied Materials* 43,640 2,188
Atmel* 18,880 590
Komag* 16,700 952
LSI Logic* 25,000 1,178
Silicon Valley Group* 26,140 846
Worldcom* 39,460 1,287
Intel 23,000 1,607
Micron Technology 10,390 734
--------
10,251
--------
ENERGY & POWER -- 0.9%
California Energy* 54,570 989
--------
FINANCIAL SERVICES -- 3.5%
Donaldson, Lufkin, & Jenrette* 28,500 848
Block H & R 29,440 1,215
First USA 19,370 891
Household International 19,510 1,097
--------
4,051
--------
FOOD, BEVERAGE & TOBACCO -- 8.8%
Chiquita Brands International 56,390 916
Coca Cola 17,230 1,238
Dole Food 40,000 1,505
Pepsico 35,120 1,853
Philip Morris 23,680 2,001
Sara Lee 50,000 1,469
Seagram 32,720 1,178
--------
10,160
--------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
TURNER GROWTH EQUITY Value
FUND (Continued) Shares (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
FOOTWEAR -- 1.3%
Just For Feet* 27,050 $ 639
Nine West Group* 20,000 890
--------
1,529
--------
GRAIN MILL PRODUCTS -- 1.0%
Ralston Purina 19,460 1,155
--------
HEALTHCARE -- 6.3%
Amgen* 18,130 870
Boston Scientific* 22,290 939
Columbia HCA Healthcare 28,340 1,392
Johnson & Johnson 14,020 1,143
Medtronic 30,000 1,732
Merck 21,300 1,225
--------
7,301
--------
INSURANCE -- 4.1%
Phycor* 16,665 612
Aetna Life & Casualty 20,450 1,439
The PMI Group 17,120 822
United Healthcare 36,200 1,923
--------
4,796
--------
LUMBER & WOOD PRODUCTS -- 1.0%
Georgia-Pacific 13,410 1,106
--------
MACHINERY -- 0.6%
Smith International* 40,000 640
--------
METAL & METAL INDUSTRIES -- 3.4%
Engelhard 68,680 1,709
Phelps Dodge 18,090 1,146
Reynolds Metals 20,480 1,032
--------
3,887
--------
OIL & GAS -- 7.9%
Apache 65,510 1,671
Exxon 19,570 1,495
Helmerich & Payne 25,000 647
Mobil 20,000 2,015
Texaco 30,000 2,043
USX-Marathon Group 73,430 1,303
--------
9,174
--------
PAPER & PAPER PRODUCTS -- 1.1%
Kimberly Clark 17,446 $ 1,267
--------
RAILROADS -- 1.8%
CSX 14,470 1,211
Union Pacific 14,020 917
--------
2,128
--------
RECREATIONAL PRODUCTS & SERVICES -- 2.2%
Mirage Resorts* 34,420 1,127
Walt Disney 24,950 1,438
--------
2,565
--------
RETAIL -- 5.5%
Corporate Express* 48,935 1,278
Micro Warehouse* 24,440 1,088
Officemax* 50,000 1,238
Petsmart* 30,000 1,005
Sunglass Hut International* 40,600 1,106
Zale* 40,530 598
--------
6,313
--------
UTILITIES, ELECTRIC, & GAS -- 2.5%
AES* 46,950 927
Southern 56,070 1,339
Ultramar 26,640 649
--------
2,915
--------
TOTAL COMMON STOCK
(Cost $93,879,341) 114,327
--------
REPURCHASE AGREEMENTS -- 0.1%
Lehman Brothers 5.560%, dated 10/31/95, matures 11/01/95,
repurchase price $152,982 (collateralized by U.S. Treasury
Note, par value $151,419, 7.500%, matures 01/31/97: market
value $157,618) 153
--------
TOTAL REPURCHASE AGREEMENTS (Cost $152,982) 153
--------
TOTAL INVESTMENTS -- 98.8%
(Cost $94,032,323) 114,480
--------
OTHER ASSETS AND LIABILITIES -- 1.2%
Other Assets and Liabilities, Net 1,339
--------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
TURNER GROWTH EQUITY FUND (Concluded)
- ------------------------------------------------------------------------------
<S> <C>
NET ASSETS:
Portfolio shares (unlimited authorization-- no par value)
based on 7,735,310 outstanding shares of beneficial interest $ 89,664
Net investment loss (40)
Accumulated net realized gain on investments 5,747
Net unrealized appreciation on investments 20,448
--------
TOTAL NET ASSETS: -- 100.0% $115,819
========
Net Asset Value, Offering Price and Redemption Price Per Share $14.97
========
</TABLE>
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Market
Value
TURNER SMALL CAP FUND Shares (000)
- ---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 97.7%
AIR TRANSPORTATION -- 2.0%
American West Airlines* 6,000 $ 82
Midwest Express Holdings* 7,034 176
-------
258
-------
APPAREL/TEXTILES -- 1.4%
Tommy Hilfiger* 3,210 122
Westpoint Stevens* 2,630 56
-------
178
-------
BANKS -- 1.2%
TCF Financial 2,700 159
-------
BASIC CHEMICALS -- 2.6%
Applied Extrusion Technologies* 9,600 148
NL Industries* 6,490 84
International Specialty Products 12,790 110
-------
342
-------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 0.6%
Clear Channel Communications* 920 75
-------
COMMUNICATIONS -- 9.1%
Apac Teleservices* 3,450 $ 87
Ascend Communications* 2,680 174
Brightpoint* 3,950 75
Cascade Communications* 1,880 134
Coherent Communications Systems* 6,100 125
Picturetel* 2,300 152
Premisys Communications* 2,000 179
Transaction Network Services* 4,000 92
U.S. Order* 3,240 49
Ultratech Stepper* 3,050 122
-------
1,189
-------
COMPUTERS & SERVICES -- 23.4%
America Online* 1,770 142
Arcsys* 2,320 97
Aspen Technology* 4,390 121
Avid Technology* 4,300 188
Checkfree* 10,700 226
Computervision* 2,600 31
Dendrite International* 7,700 134
Discreet Logic* 2,490 142
HNC Software* 3,800 97
Macro Media* 4,340 161
Maxis* 1,600 71
Medic Computer Sytems* 2,160 115
Netcom On Line Communication Services* 2,200 128
Netscape Communications* 2,120 187
Pure Software* 4,850 178
Shiva* 1,950 117
Spyglass* 2,300 114
Tivoli Systems* 3,550 114
Transaction Systems Architects* 3,105 81
UUNET Technologies* 3,957 242
Verity* 2,970 109
Fair Isaac 3,560 96
National Data 6,127 162
-------
3,053
-------
CONCRETE & MINERAL PRODUCTS -- 1.0%
USG* 4,400 128
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
TURNER SMALL CAP FUND Value
(Continued) Shares (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS -- 2.2%
Department 56* 1,380 $ 63
Guest Supply* 4,200 79
Oakley* 4,190 144
-------
286
-------
ELECTRONIC AND OTHER ELECTRICAL
EQUIPMENT -- 5.8%
Burr-Brown* 3,510 114
Komag* 1,390 79
Oak Technology* 2,750 151
Ontrak Systems* 2,870 56
Sierra Semiconductor* 4,690 84
Silicon Valley Group* 4,770 155
Belden 4,910 118
-------
757
-------
FINANCIAL SERVICES -- 6.2%
Credit Acceptance* 3,420 80
Imperial Credit Industries* 5,400 78
Jayhawk Acceptance* 12,050 144
Litchfield Financial* 3,450 52
Markel* 920 69
Stormedia* 2,050 94
WFS Financial* 5,950 99
Mutual Risk Management 2,600 96
The Money Store 2,463 99
-------
811
-------
FOOD, BEVERAGE & TOBACCO -- 2.5%
Redhook Ale Brewery* 3,315 98
Robert Mondavi* 5,880 166
Interstate Bakeries 3,110 66
-------
330
-------
FOOTWEAR -- 1.4%
Just For Feet* 3,345 79
Nine West Group* 2,490 111
-------
190
-------
HEALTHCARE -- 3.0%
Amerisource Health* 2,550 69
Idexx Laboratories* 2,700 110
Ornda Health* 5,400 95
Physician Sales & Services* 7,675 125
-------
399
-------
HOUSEHOLD PRODUCTS -- 0.5%
RPM 3,520 $ 68
-------
INSURANCE -- 6.8%
Compdent* 5,550 173
Phycor* 3,600 132
Total Renal Care Holdings* 4,634 94
United Dental Care* 4,100 125
CMAC Investment 2,710 129
The PMI Group 2,600 125
Vesta Insurance Group 2,675 108
-------
886
-------
MACHINERY -- 2.7%
C.P. Clare* 4,650 120
Plasma & Materials Technologies* 5,700 66
PRI Automation* 2,280 84
Smith International* 5,100 82
-------
352
-------
MEASURING DEVICES -- 2.2%
Cognex* 1,050 63
Fore Systems* 2,300 122
Veeco Instruments* 4,260 102
-------
287
-------
MEDICAL PRODUCTS & SERVICES -- 2.7%
Medisense* 4,250 91
Medpartners* 2,000 56
Nellcor* 1,740 100
Orthodontic Centers of America* 3,250 104
-------
351
-------
OIL & GAS -- 4.1%
BJ Services* 3,850 90
Citation* 9,040 169
Energy Ventures* 6,000 114
Falcon Drilling* 9,600 100
Nabors Industries* 7,720 67
-------
540
-------
PACKAGING -- 1.0%
Sealed Air* 5,020 132
-------
PAPER & PAPER PRODUCTS -- 0.4%
Boise Cascade 1,640 59
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
TURNER SMALL CAP FUND (Concluded) Shares (000)
- ---------------------------------------------------------------------------
<S> <C> <C>
PROFESSIONAL SERVICES -- 5.6%
ABR Information Services* 4,500 $ 133
Concord EFS* 3,165 109
PMT Services* 4,240 114
Quintiles Transnational* 2,500 161
RTW* 4,740 115
Loewen Group 2,430 97
-------
729
-------
RAILROADS -- 1.5%
Wisconsin Central* 2,040 123
Illinois Central 1,990 76
-------
199
-------
RECREATIONAL PRODUCTS & SERVICES -- 0.5%
Station Casinos* 4,700 61
-------
RETAIL -- 7.3%
Baby Superstore* 1,320 62
Corporate Express* 5,120 134
Eastbay* 5,450 116
Kenneth Cole Production* 1,510 62
Officemax* 5,385 133
Petsmart* 5,065 169
Sunglass Hut International* 4,400 120
U.S. Office Products* 5,410 93
Zale* 4,400 65
-------
954
-------
TOTAL COMMON STOCK
(Cost $9,769,556) 12,773
-------
REPURCHASE AGREEMENTS -- 6.9%
Lehman Brothers 5.560%, dated 10/31/95, matures 11/01/95,
repurchase price $894,718 (collateralized by U.S. Treasury
Note, par value $885,575, 7.500%, matures 01/31/97: market
value $921,828) 895
-------
TOTAL REPURCHASE AGREEMENTS (Cost $894,718) 895
-------
</TABLE>
<TABLE>
<CAPTION>
Market
Value
(000)
- ---------------------------------------------------------------------------
<S> <C>
TOTAL INVESTMENTS -- 104.6%
(Cost $10,664,274 $13,668
-------
OTHER ASSETS AND LIABILITIES -- (4.6%)
Payable for Securities Purchased (688)
Other Assets and Liabilities, Net 92
-------
TOTAL OTHER ASSETS AND LIABILITIES (596)
=======
NET ASSETS:
Portfolio shares (unlimited authorization--no par value) based on
812,803 outstanding shares of beneficial interest 9,154
Net investment loss (8)
Accumulated net realized gain on investments 922
Net unrealized appreciation on investments 3,004
-------
TOTAL NET ASSETS: -- 100.0% $13,072
=======
Net Asset Value, Offering Price and Redemption Price Per Share $ 16.08
=======
</TABLE>
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the year ended October 31, 1995
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
------------- -----------
11/01/94 11/01/94
TO 10/31/95 TO 10/31/95
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividend Income..................................... $ 1,905 $ 30
Interest Income..................................... 155 17
- --------------------------------------------------------------------------------
Total Investment Income............................ 2,060 47
- --------------------------------------------------------------------------------
Expenses:
Administrator Fees.................................. 215 75
Investment Advisory Fees............................ 897 82
Investment Advisory Fee Waiver...................... -- (82)
Contributions by Adviser............................ -- (12)
Custodian Fees...................................... 14 6
Transfer Agent Fees................................. 24 12
Professional Fees................................... 49 15
Trustee Fees........................................ 6 2
Registration Fees................................... (5) 1
Pricing Fees........................................ 5 --
Printing Expense.................................... 16 1
Amortization of Deferred Organizational Costs....... 3 2
Insurance and Other Fees............................ 10 1
Directed Brokerage.................................. (109) --
- --------------------------------------------------------------------------------
Total Expenses..................................... 1,125 103
- --------------------------------------------------------------------------------
Net Investment Income (Loss)...................... 935 (56)
- --------------------------------------------------------------------------------
Net Realized Gain from Securities Sold.............. 11,270 1,005
Net Unrealized Appreciation of Investment
Securities......................................... 11,773 2,573
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments.... 23,043 3,578
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations......................................... $23,978 $3,522
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the period ended October 31, 1995
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
----------------------- -----------------------
11/01/94 11/01/93 11/01/94 02/07/94(2)
TO 10/31/95 TO 10/31/94 TO 10/31/95 TO 10/31/94
(000) (000) (000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss). $ 935 $ 743 $ (56) $ (8)
Net Realized Gain (Loss) on
Securities Sold............. 11,270 (5,082) 1,005 (27)
Net Unrealized Appreciation
of Investment Securities.... 11,773 2,203 2,573 431
- --------------------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations................. 23,978 (2,136) 3,522 396
- --------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income........ (1,022) (704) -- --
- --------------------------------------------------------------------------------
Total Distributions......... (1,022) (704) -- --
- --------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued................ 33,135 68,222 5,250 4,410
Shares Issued in Lieu of Cash
Distributions............... 909 625 -- --
Shares Redeemed.............. (54,140) (6,375) (506) --
- --------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets Derived from Capital
Share Transactions.......... (20,096) 62,472 4,744 4,410
- --------------------------------------------------------------------------------
Total Increase in Net
Assets..................... 2,860 59,632 8,266 4,806
- --------------------------------------------------------------------------------
Net Assets:
Beginning of Period.......... 112,959 53,327 4,806 --
- --------------------------------------------------------------------------------
End of Period................ $115,819 $112,959 $13,072 $4,806
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Issued and Redeemed:
Shares Issued................ 2,600 5,465 407 441
Issued in Lieu of Cash
Distributions............... 70 51 -- --
Redeemed..................... (3,998) (517) (35) --
- --------------------------------------------------------------------------------
Net Increase (Decrease) in
Share Transactions.......... (1,328) 4,999 372 441
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(2) The Turner Small Cap Fund commenced operations on February 7, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE>
For the period ended October 31, 1995.
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Realized and Net Ratio
Asset Unrealized Distributions Assets Ratio of Net
Value Net Gains or from Net Distributions Net Asset End of Expenses Income
Beginning Investment Losses on Investment from Capital Value End Total of Period to Average to Average
of Period Income Securities Income Gains of Period Return (000) Net Assets Net Assets
--------- ---------- ------------ ------------- ------------- --------- ------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------
TURNER GROWTH EQUITY FUND
- -------------------------
1995 $12.46 0.10 2.52 (0.11) -- $14.97 21.15% 115,819 0.94%+ 0.78%+
1994 $13.12 0.10 (0.66) (0.10) -- $12.46 (4.28%) 112,959 0.95% 0.86%
1993 $10.40 0.09 2.72 (0.09) -- $13.12 27.08% 53,327 1.00% 0.80%
1992(1) $10.00 0.03 0.40 (0.03) -- $10.40 6.95%* 7,781 1.44%* 0.73%*
- ---------------------
TURNER SMALL CAP FUND
- ---------------------
1995 $10.90 (0.06) 5.24 -- -- $16.08 47.52% 13,072 1.25% (0.68%)
1994(2) $10.00 (0.02) 0.92 -- -- $10.90 12.35%* 4,806 1.09%* (0.27%)*
<CAPTION>
Ratio
of Net
Ratio of Income
Expenses (Loss) to
to Average Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
---------- ---------- ---------
<S> <C> <C> <C>
- -------------------------
TURNER GROWTH EQUITY FUND
- -------------------------
1995 0.94%+ 0.78%+ 177.86%
1994 1.08% 0.73% 164.81%
1993 1.52% 0.28% 88.35%
1992(1) 2.55%* (0.38%)* 205.00%
- ---------------------
TURNER SMALL CAP FUND
- ---------------------
1995 2.39% (1.82%) 183.49%
1994(2) 4.32%* (3.50%)* 173.92%
</TABLE>
* Annualized
(1) The Turner Growth Equity Fund commenced operations on March 11, 1992.
(2) The Turner Small Cap Fund commenced operations on February 7, 1994.
+ Absent Turner Growth Equity Fund participation in a Directed Brokerage
program, the Ratios of Expenses to Average Net Assets (with and without
waivers) and Expenses to Net Income (with and without waivers) were 1.03%
and .69%, respectively.
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
1. Organization:
THE ADVISORS' INNER CIRCLE FUND (the "'Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated July 18, 1991. The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company with eleven portfolios. The
financial statements included herein present those of the Turner Growth Equity
Fund and the Turner Small Cap Fund (the "Funds"). 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.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Funds.
Security Valuation -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price.
Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost, which approximates market value.
Federal Income Taxes -- It is each 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).
Dividend income is recognized on the ex-dividend date, and 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.
Net Asset Value Per Share -- The net asset value per share of each Fund is
calculated on each business day, by dividing the total value of the Fund's
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 ensure that the market
value of the collateral, including accrued interest thereon, is sufficient
in the event of default of the counterparty. If the counterparty defaults
and the value of the collateral declines or if the counterparty enters an
insolvency proceeding, realization of the collateral by the Funds may be
delayed or limited.
Other -- Expenses that are directly related to one of the Funds are charged
to that Fund. Other operating expenses of the Trust are prorated to the
Funds on the basis of relative daily net assets.
Distributions from net investment income are declared and paid to
Shareholders on a quarterly basis. Any net realized capital gains on sales
of securities 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
accounting principals. 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. Accordingly, the following permanent difference,
primarily attributable to certain net operating losses which, for tax
purposes, are not available to offset future income, has been reclassified
to paid-in-capital.
<TABLE>
<CAPTION>
(000)
-----
<S> <C>
Turner Small Cap Fund.................................................. $56
</TABLE>
This reclassification has no effect on net assets or net asset value per
share.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
3. Organization Costs and Transactions with Affiliates:
The Turner Growth Equity Fund and Turner Small Cap Fund incurred organization
costs of approximately $17,000 and $19,000 respectively. These costs have been
capitalized by the funds and are being amortized over sixty months commencing
with operations. In the event of the initial shares of the fund redeemed by any
holder thereof during the period that the fund is amortizing its organizational
costs the redemption proceeds payable to the holder thereof by the fund 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. These costs include legal fees of
approximately $7,000 and $1,000, respectively, for organizational work
performed by a law firm of which an officer of the fund is a partner.
Certain officers and trustees of the Trust are also officers of SEI Financial
Management Company (the "Administrator") and/or SEI Financial Services Company
(the "Distributor"). Such officers and trustees are paid no fees by the Trust
for serving as officers and trustees 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, under which the Administrator provides management and
administrative services for an annual rate of that Portfolio's proportionate
share of .20% of the aggregate average daily net assets of the Portfolios up to
$75 million and .15% of such assets in excess of $75 million. There is a
minimum annual fee of $75,000 per Fund.
DST Systems, Inc., (the "Transfer Agent") serves as the transfer agent and
dividend distributing agent for the Funds under a transfer agency agreement
with the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated
November 14, 1991. The Distributor receives no fees for its distribution
services under this agreement. However the Distribution Agreement between the
Distributor and the Trust provides that the Distributor may receive
compensation on portfolio transactions effected for the Trust in accordance
with the rules of the Securities and Exchange Commission ("SEC"). Accordingly,
it is expected that portfolio transactions may result in brokerage commissions
being paid to the Distributor. The SEC rules require that such commissions not
exceed usual and customary brokerage commissions. The Distributor returned a
portion of these commissions to the Fund in order to reduce the expenses of the
Growth Equity Fund.
5. Investment Advisory and Custodian Agreements:
The Trust and Turner Investment Partners, Inc. (the "Adviser") are parties to
an Investment Advisory Agreement dated February 21, 1992 under which the
Adviser receives an annual fee equal to .75% of the average daily net assets of
the Growth Portfolio and 1.00% of the average daily net assets of the Small Cap
Fund. The Adviser has voluntarily agreed for an indefinite period of time, to
waive all or a portion of its fees (and to reimburse the Fund's expenses) in
order to limit operating expenses to not more than 1.25% of the average daily
net assets of the Small Cap Portfolio. 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. Fees of
the Custodian are being paid on the basis of the net assets of the Fund. The
Custodian plays no role in determining the investment policies of the Trust or
which securities are to be purchased or sold in the Fund.
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the year ended October 31, 1995, are as follows:
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
(000) (000)
------------- ---------
<S> <C> <C>
Purchases
Government............................................. $ 0 $ 0
Other.................................................. 208,628 19,308
Sales
Government............................................. $ 0 $ 0
Other.................................................. 230,975 14,885
</TABLE>
At October 31, 1995, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
securities held by the Fund at October 31, 1995, is as follows:
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
(000) (000)
------------- ---------
<S> <C> <C>
Aggregate gross unrealized appreciation................. $22,022 $3,254
Aggregate gross unrealized depreciation................. (1,574) (250)
------- ------
Net unrealized appreciation............................. $20,448 $3,004
======= ======
</TABLE>
7. Capital Loss Carryforward
The Turner Growth Equity and Turner Small Cap Funds utilized their entire
capital loss carryforward balances $5,523,115 and $26,470, respectively, to
reduce realized gains incurred which otherwise would have been distributed.
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
UNAUDITED
For the shareholders that do not have an October 31, 1994 taxable year end,
this notice is for informational purposes only. For shareholders with an
October 31, 1994 taxable year end, please consult your tax adviser as to the
pertinence of this notice.
For the fiscal year ended October 31, 1994, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Turner Growth Equity Fund............. 0% 100% 100%
Turner Small Capitalization Fund...... 0% 0% 0%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS (1) INTEREST TAX CREDIT
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Turner Growth Equity Fund............. 73% 0% 0%
Turner Small Capitalization Fund...... 46% 0% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income
distributions of the portfolio.
<PAGE>
TUR-F-017-04
<PAGE>
THE AIG MONEY MARKET FUND
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS, OCTOBER 31, 1995
Dear Shareholder:
In the first quarter of 1995, short term rates continued the then-seemingly
inexorable climb begun in early 1994. Short term investors such as the AIG Money
Market Fund (the "Fund") benefited from generally higher rates throughout the
first and second quarter. The Federal Reserve Bank (FRB) signaled an end to
continued monetary restraint in July 1995 when the Federal Open Market Committee
(FOMC) lowered the target Federal Funds rate 0.25% to 5.75%. The discount rate
remained at 5.25% where it has persisted most of 1995. Announced in response to
its satisfaction that benign inflation trends would continue, the FRB did not,
however, suggest that the cut in reserve pressure was intended to bolster growth
or avoid recession. In fact, the key factors supporting above-trend third
quarter Gross Domestic Product growth appear largely if unevenly in place during
the fourth quarter.
Currently, bullish sentiment in the bond and money markets would appear to
have priced in modest economic growth and a prospective containment of
inflation, which many investors believe will allow the FRB to lower interest
rates. This view is particularly prevalent among investors who anticipate
significant fiscal restraint generated by the enactment of a credible and
substantive Federal Budget Deficit Reduction package. Examination of the various
legislative proposals, however, indicates a low probability of material
restraint before 1998. As a result, the prevailing view suggests a reduction in
the Fed Funds target remains possible, but not assured unless economic
statistical releases continue mixed.
At present, the Fund maintains a shorter Weighted Average Maturity (WAM)
than the average fund as reported by IBC/Donoghue, primarily attributable to
higher concentration in short term bank obligations and commercial paper as well
as to the extension of competing funds beyond the AAAm parameters. Over the
coming quarter, the Fund's investments are expected to at least maintain, but
not substantively lengthen, its WAM unless prospective market yields warrant an
extension strategy. As always, the Fund continues to review all market factors,
concrete economic statistics and anecdotal market psychology, with focus on
continuing to meet our shareholders' investment objectives.
Sincerely,
/s/ ROBERT L. ASH
- -----------------
Robert L. Ash
Chairman
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND TRUSTEES OF AIG MONEY MARKET FUND OF
THE ADVISORS' INNER CIRCLE FUND:
We have audited the accompanying statement of net assets of AIG Money
Market Fund (one of the funds constituting The Advisors' Inner Circle Fund) as
of October 31, 1995, and the related statements of operations, changes in net
assets and financial highlights for the period presented. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of AIG
Money Market Fund of The Advisors' Inner Circle Fund as of October 31, 1995, the
results of its operations, changes in its net assets, and financial highlights
for the period presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
- --------------------------------------------------------------------------------
AIG MONEY MARKET FUND
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
(000) (000)
- -----------------------------------------------------
<S> <C>
COMMERCIAL PAPER (61.5%)
- -----------------------------------------------------
Associates of North America
$ 5,000 5.730%, 11/07/95 $ 4,995
10,000 5.730%, 11/15/95 9,978
Bankers Trust, New York
10,000 5.765%, 12/29/95 9,908
Bil North America
12,375 5.822%, 01/23/96 12,211
Campbell Soup
10,000 5.769%, 11/21/95 9,968
General Electric
5,000 5.730%, 11/10/95 4,993
10,000 5.753%, 11/29/95 9,956
General Electric Capital
10,000 5.740%, 11/10/95 9,986
5,000 5.746%, 12/27/95 4,956
Goldman Sachs
15,000 5.762%, 11/21/95 14,952
Heinz (H.J.)
10,000 5.752%, 12/01/95 9,952
Hertz
10,000 5.757%, 11/13/95 9,981
6,000 5.757%, 11/22/95 5,980
Hitachi America
7,000 5.739%, 11/03/95 6,998
7,200 5.745%, 11/09/95 7,191
J.P. Morgan
15,000 5.737%, 11/06/95 14,988
Kellogg
9,000 5.722%, 11/30/95 8,959
Merrill Lynch
10,000 5.770%, 11/01/95 10,000
5,000 5.760%, 11/15/95 4,989
Morgan Stanley
15,000 5.750%, 11/13/95 14,971
National Westminster Bancorp
15,000 5.761%, 11/29/95 14,933
Northern States Power
10,000 5.733%, 11/06/95 9,992
Pfizer
10,000 5.758%, 11/03/95 9,997
Sara Lee
10,000 5.800%, 11/06/95 9,992
<CAPTION>
Face
Amount Value
(000) (000)
- -----------------------------------------------------
<S> <C>
State Street, Boston
$ 15,000 5.735%, 11/14/95 $ 14,969
USAA Capital
6,000 5.746%, 12/28/95 5,946
Wal-Mart Stores
15,000 5.736%, 11/03/95 14,994
- -----------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $266,735,408) 266,735
- -----------------------------------------------------
TIME DEPOSITS (25.1%)
- -----------------------------------------------------
Bank Austria AG
20,000 5.875%, 11/01/95 20,000
Bank of Nova Scotia
15,000 5.750%, 11/27/95 15,000
Dresdner Bank AG
20,000 5.875%, 11/01/95 20,000
Fifth Third Bank
20,000 5.875%, 11/01/95 20,000
Sun Trust Bank, Atlanta
20,000 5.875%, 11/01/95 20,000
Svenska Handelsbanken
14,060 5.938%, 11/01/95 14,060
- -----------------------------------------------------
TOTAL TIME DEPOSIT
(Cost $109,060,000) 109,060
- -----------------------------------------------------
CERTIFICATES OF DEPOSIT (13.8%)
- -----------------------------------------------------
Abbey National
10,000 5.800%, 01/31/96 10,000
Fuji Bank
10,000 6.310%, 01/05/96 10,000
Industrial Bank of Japan
10,000 5.900%, 11/20/95 10,000
Sanwa Bank
5,000 6.100%, 11/13/95 5,000
Societe Generale
15,000 5.740%, 11/28/95 15,001
Sumitomo Bank
10,000 6.090%, 01/16/96 10,000
- -----------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $60,000,551) 60,001
- -----------------------------------------------------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
- --------------------------------------------------------------------------------
AIG MONEY MARKET FUND (concluded)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
(000) (000)
- -----------------------------------------------------
<S> <C>
TOTAL INVESTMENTS (100.4%)
(Cost $435,795,959) $435,796
- -----------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.4%)
- -----------------------------------------------------
OTHER ASSETS AND
LIABILITIES, NET (1,657)
- -----------------------------------------------------
TOTAL OTHER ASSETS AND
LIABILITIES (1,657)
- -----------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 313,654,621
outstanding shares of
beneficial interest 313,654
Portfolio shares of Class B
(unlimited authorization -- no
par value) based on 120,481,679
outstanding shares of
beneficial interest 120,482
Accumulated net realized gain on
investments 3
- -----------------------------------------------------
TOTAL NET ASSETS: (100.0%) $434,139
- -----------------------------------------------------
Net Asset Value, Offering &
Redemption Price Per Share --
Class A $1.00
Net Asset Value, Offering &
Redemption Price Per Share --
Class B $1.00
- -----------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the Period Ending October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12/1/94 to
10/31/95 (1)
AIG MONEY MARKET FUND (000)
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest $ 18,992
-------
Total Investment Income 18,992
-------
EXPENSES:
Investment Advisory Fees 792
Waiver of Investment Advisory Fees (244)
Administrative Fees 332
Custodian Fees 39
Professional Fees 65
Transfer Agent Fees 41
Printing Fees 20
Directors' Fees 18
Registration and Filing Fees 161
Distribution Fees (2) 131
Insurance and Other Fees 11
Amortization of Deferred Organizational Costs 12
Pricing Fees 3
Rating Fees 15
-------
Total Expenses 1,396
-------
Net Investment Income 17,596
-------
NET REALIZED GAIN FROM SECURITIES SOLD 3
-------
NET REALIZED GAIN ON INVESTMENTS 3
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 17,599
=======
</TABLE>
(1) The AIG Money Market Fund Commenced operations on December 1, 1994.
(2) Distribution Fees are incurred at the Class B level which commenced
operations on February 16, 1995.
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the Period Ending October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12/1/94 to
10/31/95 (2)
AIG MONEY MARKET FUND (000)
- ------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT ACTIVITIES:
Net Investment Income $ 17,596
Net Realized Gain on Securities 3
------------
Increase in Net Assets Resulting from Operations 17,599
------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Class A (15,644)
Class B (1,952)
------------
Total Distributions (17,596)
------------
SHARE TRANSACTIONS (AT $1.00 PER SHARE):
Class A
Shares Issued 14,099,321
Shares Issued in Lieu of Cash Distributions 14,200
Shares Redeemed (13,799,867)
------------
Net Class A Share Transactions 313,654
------------
Class B
Shares Issued 178,792
Shares Issued in Lieu of Cash Distributions 1,516
Shares Redeemed (59,826)
------------
Net Class B Share Transactions 120,482
------------
Increase in Net Assets From Share Transactions 434,136
------------
Total Increase in Net Assets 434,139
============
NET ASSETS:
Beginning of Period --
End of Period $ 434,139
============
</TABLE>
(2) The AIG Money Market Fund Class A and Class B commenced operations on
December 1, 1994 and February 16, 1995 respectively.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For the Period Ending October 31, 1995
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout the Year
<TABLE>
<CAPTION>
Ratio
Net Ratio of Net
Net Net Assets Ratio of Expenses Income (Loss)
Asset Distributions Asset End Ratio of Net to Average to Average
Value Net from Net Value of of Expenses Income Net Assets Net Assets
Beginning Investment Investment End Total Period to Average to Average (Excluding (Excluding
of Period Income Income of Period Return (000) Net Assets Net Assets Waivers) Waivers)
--------- ---------- ------------- --------- ------ ------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------
AIG MONEY MARKET
- ------------------
CLASS A (1)
1995 $1.00 0.05 (0.05) $1.00 5.75%* 313,657 0.40%* 5.60%* 0.47%* 5.53%*
CLASS B (1)
1995 $1.00 0.04 (0.04) $1.00 5.43%* 120,482 0.75%* 5.18%* 0.85%* 5.08%*
</TABLE>
* Annualized
(1) The AIG Money Market Fund Class A and Class B commenced operations on
December 1, 1994 and February 16, 1995 respectively.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a
Massachusetts business trust under a Declaration of Trust dated July 18, 1991.
The Trust is registered under the Investment Company Act of 1940, as amended, as
a diversified open-end management investment company with eleven portfolios. The
financial statements herein present those of the AIG Money Market Fund (the
"Fund"). The Fund is registered to offer two classes of shares: Class A and
Class B. 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.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed
by the Fund.
Security Valuation -- Investment securities are stated at amortized
cost, which approximates market value. Under this valuation method,
purchase discounts and premiums are accreted and amortized ratably to
maturity and are included in interest income.
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. Cost 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.
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 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.
Investment securities of the Fund are stated at amortized cost which
approximates market value. Under this valuation method, purchase
discounts and premiums are accreted and amortized ratably to maturity
and are included in interest income.
Expenses -- Expenses that are directly related to the Fund are charged
directly to the Fund. Other operating expenses of the Trust are prorated
to the portfolios on the basis of relative net asset value. Class
specific expenses, such as the 12b-1 fees, are borne by that class.
Income, other expenses and realized gains and losses of the Fund are
allocated to the respective classes on the basis of the relative net
asset value each day.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
- --------------------------------------------------------------------------------
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 accounting principals. 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.
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES:
The Fund incurred organization costs of $67,000. These costs have been
capitalized by the Fund and are being amortized over sixty months commencing
with operations. In the event any of the initial shares of the Fund are redeemed
by any holder thereof during the period that the Fund is amortizing its
organizational costs, the redemption proceeds payable to the holder thereof by
the Fund 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. Organization costs include
legal fees of approximately $21,000 for organizational work performed by a law
firm of which an officer of the Fund is a partner.
Certain officers and trustees of the Trust are also officers of SEI
Financial Management Company (the "Administrator") and/or SEI Financial Services
Company. Such officers and trustees are paid no fees by the Trust for serving as
officers and trustees of the Trust.
4. ADMINISTRATION, SHAREHOLDER SERVICING AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to an Administration Agreement
under which the Administrator provides administrative services at an annual rate
of .145% of the Fund's average daily net assets up to $100 million; .1125% of
the Fund's average daily assets from $100 million up to and including $200
million; .07% of the Fund's average daily net assets from $200 million up to and
including $450 million; and .05% of the Fund's average daily net assets over
$450 million. The Fund is obligated to pay the Administrator a minimum annual
fee of $100,000.
The Trust and SEI Financial Services Company ("SFS" or "the Distributor")
under which SFS acts as the distributor of the Fund's shares have entered into a
Distribution Agreement. The distributor receives no fees for its distribution
services under this agreement. The Fund has adopted a Distribution Plan ("the
Plan") on behalf of the Class B shares pursuant to Rule 12b-1. The Plan provides
for payment to the Distributor at an annual rate of .35% of the average daily
net assets of the Class B shares.
DST Systems, Inc., 811 Main Street, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent for
the Fund under a transfer agency agreement with the Trust.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
- --------------------------------------------------------------------------------
5. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENTS:
The Trust and AIG Capital Management Corp. (the "Advisor") are parties to
an Investment Advisory Agreement (the "Advisory Agreement"). Under the terms of
the Advisory Agreement, the Advisor receives an annual fee equal to .25% of the
Fund's average daily net assets. The Advisor has voluntarily agreed to waive all
or a portion of its fees in order to limit operating expenses to not more than
.40% of the average daily net assets of Class A and not more than .75% of the
average daily net assets of Class B. Fee waivers are voluntary and may be
terminated at any time.
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Fund.
Fees of the Custodian are being paid on the basis of the net assets of the Fund.
The Custodian plays no role in determining the investment policies of the Fund
or which securities are to be purchased and sold in the Fund.
6. CONCENTRATION OF CREDIT RISK:
The Fund invests primarily in high quality money market instruments. The
Fund maintains a diversified portfolio which currently has a concentration of
assets in the banking industry. The ability of the issuers of the securities
held by the Fund to meet their obligations may be affected by economic
developments in the banking industry.
<PAGE>
---------------------------------------------------------
-------------------------------------------------------
----------------------------------------------------
INVESTMENT ADVISOR:
AIG CAPITAL MANAGEMENT CORP.
70 PINE STREET
NEW YORK, NY 10270
DISTRIBUTOR:
SEI FINANCIAL SERVICES COMPANY
680 EAST SWEDESFORD ROAD
WAYNE, PA 19087-1658
For information call: 1-800-845-3885
This information must be preceded or accompanied by
a current prospectus.
AIG-F-005-01
----------------------------------------------------
-------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
-------------------------------------------------------
----------------------------------------------------
AIG
MONEY MARKET FUND
ANNUAL REPORT
OCTOBER 31, 1995
[AIG LOGO]
ADVISED BY
AIG CAPITAL MANAGEMENT CORP.
----------------------------------------------------
-------------------------------------------------------
---------------------------------------------------------
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(UNAUDITED)
For the shareholders that do not have an October 31, 1995 taxable year end,
this notice is for informational purposes only. For shareholders with an
October 31, 1995 taxable year end, please consult your tax adviser as to the
pertinence of this notice.
For the fiscal year ended October 31, 1995, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
<S> <C> <C> <C>
AIG Money Market Fund................ 0% 100% 100%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
<S> <C> <C> <C>
AIG Money Market Fund................ 0% 0% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income
distributions of the portfolio.
