THE ADVISORS' INNER CIRCLE FUND
HGK FIXED INCOME FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
AS OF APRIL 30, 1997
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS FOR THE FUND DESCRIBED.
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
April 30, 1997 Unaudited
Face Market
Amount Value
HGK FIXED INCOME FUND (000) (000)
- -------------------------------------------------------
[PIE CHART OMITTED]
% of Total Investments
Repurchase Agreements 1%
Asset-Backed Securities 2%
U.S. Gov't Mortgage-Backed Securities 4%
U.S. Gov't Agency Obligations 18%
Corporate Obligations 54%
U.S. Treasury Obligations 21%
CORPORATE OBLIGATIONS (52.6%)
AIR TRANSPORTATION (4.8%)
Delta Airlines
10.375%, 12/15/22 $ 400 $ 494
Federal Express Series 1996-A1
7.850%, 01/30/15 149 151
--------
645
--------
AUTOMOTIVE (3.0%)
Ford Motor
7.400%, 11/01/46 425 403
--------
BANKS (4.4%)
Deutsche Bank
7.500%, 04/25/09 275 275
First Union
8.000%, 11/15/02 300 312
--------
587
--------
BROADCASTING, NEWSPAPERS & ADVERTISING (7.5%)
Tele-Communications
8.250%, 01/15/03 250 253
7.875%, 08/01/13 100 92
Time Warner
7.400%, 02/01/04 425 420
9.125%, 01/15/13 225 242
--------
1,007
--------
CHEMICALS (2.2%)
Millennium America
7.000%, 11/15/06 300 287
--------
COMPUTERS & SERVICES (0.9%)
Seagate Technology
7.125%, 03/01/04 125 123
--------
FINANCIAL SERVICES (13.0%)
Banesto Finance
7.500%, 03/25/07 500 499
Bear Stearns
7.000%, 03/01/07 250 243
Countrywide Funding MTN
6.880%, 08/03/98 150 151
Face Market
Amount Value
(000) (000)
- -------------------------------------------------------
Lehman Brothers
7.250%, 04/15/03 $ 350 $ 349
7.375%, 01/15/07 100 99
Paine Webber
7.625%, 10/15/09 175 176
Salomon
7.200%, 02/01/04 225 223
--------
1,740
--------
FOOD, BEVERAGE & TOBACCO (3.6%)
Philip Morris
7.750%, 01/15/27 500 484
--------
FOREIGN GOVERNMENT (3.7%)
Republic of Columbia
7.625%, 02/15/07 200 190
State of Israel
6.375%, 12/15/05 325 304
--------
494
--------
INSURANCE (2.6%)
Delphi Funding LLC
9.310%, 03/25/27 150 151
Torchmark
7.875%, 05/15/23 200 194
--------
345
--------
PETROLEUM & FUEL PRODUCTS (3.1%)
Freeport-McMoran
7.200%, 11/15/26 425 412
--------
PRINTING & PUBLISHING (3.8%)
News America Holdings
7.750%, 12/01/45 550 505
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $7,067) 7,032
--------
ASSET-BACKED SECURITIES (2.0%)
Fleetwood Credit 1996-B
6.900%, 03/15/12 263 264
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $263) 264
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS (17.6%)
FNMA
7.550%, 03/27/07 700 706
FNMA MTN
5.000%,02/25/98 675 670
5.230%, 02/18/99 350 344
5.670%, 01/25/01 500 483
7.650%, 05/04/05 150 150
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $2,362) 2,353
--------
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
April 30, 1997 Unaudited
Face Market
Amount Value
HGK FIXED INCOME FUND (concluded) (000) (000)
- -------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED BONDS (3.8%)
GNMA
7.000%, 12/15/23 $ 184 $ 179
6.500%, 10/20/25 361 338
--------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED BONDS
(Cost $516) 517
--------
U.S. TREASURY OBLIGATIONS (20.4%)
U.S. Treasury Notes
6.000%, 05/31/98 1,815 1,815
5.500%, 11/15/98 200 198
5.000%, 01/31/99 250 245
6.875%, 08/31/99 225 227
6.250%, 05/31/00 250 249
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,744) 2,734
--------
REPURCHASE AGREEMENT (1.6%)
Lehman Brothers, 4.92%, dated
04/30/97, matures 05/01/97,
repurchase price $213,196
(collateralized by U.S. Treasury
Bond, par value $172,586,
10.75%, matures 08/15/05:
market value $218,879) $213 213
--------
TOTAL REPURCHASE AGREEMENT
(Cost $213) 213
--------
TOTAL INVESTMENTS (98.0%)
(Cost $13,165) 13,113
--------
OTHER ASSETS AND LIABILITIES, NET (2.0%) 262
--------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 1,314,873 outstanding
shares of beneficial interest 13,474
Accumulated net realized loss
on investments (47)
Net unrealized depreciation
on investments (52)
--------
TOTAL NET ASSETS (100.0%) $13,375
========
Net Asset Value, Offering and
Redemption Price Per Share $10.17
========
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
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 six-month period ended April 30,1997. Unaudited
HGK
FIXED INCOME
FUND
-----------
(000)
- ----------------------------------------------------------------------------
Investment Income:
Interest ................................................ $ 443
- ----------------------------------------------------------------------------
Total Investment Income................................ 443
- ----------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ................................ 32
Investment Advisory Fee Waiver .......................... (32)
Contributions by Advisor ................................ (4)
Administrative Fees ..................................... 37
Custodian Fees .......................................... 2
Professional Fees ....................................... 8
Transfer Agent Fees ..................................... 9
Printing Fees ........................................... 4
Trustee Fees ............................................ 3
Registration Fees ....................................... 2
Amortization of Deferred Organizational Costs ............ 3
Insurance and Other Fees ................................. 1
- ----------------------------------------------------------------------------
Total Expenses .......................................... 65
- ----------------------------------------------------------------------------
Net Investment Income ............................... 378
- ----------------------------------------------------------------------------
Net Realized Loss from Securities Sold .................. (30)
Net Unrealized Depreciation of Investment Securities .... (127)
- ----------------------------------------------------------------------------
Net Realized and Unrealized Loss on Investments ....... (157)
- ----------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations .... $ 221
============================================================================
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 six-month period ended April 30,1997 (Unaudited) and the year
ended October 31,1996
<TABLE>
<CAPTION>
HGK
FIXED INCOME
FUND
-------------------------
11/01/96 11/01/95
TO 04/30/97 TO 10/31/96
(000) (000)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income ................................................ $ 378 $ 688
Net Realized Loss on Securities Sold ................................. (30) (17)
Net Unrealized Depreciation of Investment Securities ................. (127) (176)
- ---------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations................ 221 495
- ---------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ................................................ (378) (688)
Realized Capital Gains ............................................... -- (417)
- ---------------------------------------------------------------------------------------------------------
Total Distributions................................................. (378) (1,105)
- ---------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued ........................................................ 1,252 4,139
Shares Issued in Lieu of Cash Distributions .......................... 375 1,095
Shares Redeemed ...................................................... (610) (2,529)
- ---------------------------------------------------------------------------------------------------------
Increase in Net Assets Derived from Capital Share Transactions...... 1,017 2,705
- ---------------------------------------------------------------------------------------------------------
Total Increase in Net Assets ..................................... 860 2,095
- ---------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period .................................................. 12,515 10,420
- ---------------------------------------------------------------------------------------------------------
End of Period ........................................................ $13,375 $12,515
- ---------------------------------------------------------------------------------------------------------
(1)Shares Issued and Redeemed:
Issued ............................................................... 121 402
Issued in Lieu of Cash Distributions ................................. 37 106
Redeemed ............................................................. (60) (249)
- ---------------------------------------------------------------------------------------------------------
Net Increase in Share Transactions.................................... 98 259
=========================================================================================================
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For the six-month period ended April 30,1997 (Unaudited) and the periods ended
October 31.
For a Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Net Realized and Net Net Ratio
Asset Unrealized Distributions Distributions Asset Assets Ratio of Net
Value Net Gains or from Net From Value End of Expenses Income
Beginning Investment (Losses) on Investment Capital End Total of Period to Average to Average
of Period Income Securities Income Gains of Period Return (000) Net Assets Net Assets
-------- -------- ---------- ------------- ------------- --------- ------ --------- ---------- ----------
- -----------------
HGK FIXED INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $10.29 0.29 (0.12) (0.29) -- $10.17 1.70%(1) $13,375 1.00%* 5.79%*
1996 $10.88 0.61 (0.17) (0.61) (0.42) $10.29 4.29% $12,515 1.00% 5.92%
1995(2) $10.00 0.67 0.88 (0.67) -- $10.88 16.07%* $10,420 1.00%* 6.38%*
</TABLE>
<TABLE>
<CAPTION>
Ratio
Ratio of Net
of Expenses Income
to Average to Average
Net Assets Net Assets
(Excluding (Excluding Portfolio
Waivers and Waivers and Turnover
Contributions) Contributions) Rate
-------------- -------------- ----------
- -----------------
HGK FIXED INCOME
- -----------------
<S> <C> <C> <C>
1997 1.56%* 5.23%* 173.27%
1996 1.51% 5.41% 264.02%
1995(2) 2.37%* 5.01%* 300.48%
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized
(1) Total return is for the period indicated and has not been annualized.
(2) The HGK Fixed Income Fund commenced operations on November 3, 1994.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
April 30, 1997 Unaudited
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 nine portfolios. The
financial statements herein are those of the HGK Fixed Income Fund (the "Fund").
The financial statements of the remaining portfolios are presented separately.
The assets of each portfolio are segregated, and a Shareholder's interest is
limited to the portfolio in which shares are held. The Fund's prospectus
provides a description of the Fund's investment objectives, policies and
strategies.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Fund.
SECURITY VALUATION -- Investment securities of the Fund which are
listed on a securities exchange for which market quotations are available
are valued at the last quoted sales price for such securities on each
business day, or, if there is no such reported sales price on the valuation
date, at the most recently quoted bid price. Unlisted securities for which
market quotations are readily available are valued at the most recently
quoted price. Debt obligations with sixty days or less remaining until
maturity may be valued at their amortized cost. Under this valuation
method, purchase discounts and premiums are accreted and amortized ratably
to maturity and are included in interest income. Securities for which
quotations are not readily available are valued at fair value using methods
determined in good faith by the Board of Trustees.
FEDERAL INCOME TAXES --It is the Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions
of the Internal Revenue Code of 1986, as amended. Accordingly, no provision
for Federal income taxes is required.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Interest income is recognized on the accrual basis. Costs used in
determining realized gains and losses on the sales of investment securities
are those of the specific securities sold during the respective holding
period. Purchase discounts and premiums on securities held by the Fund are
accreted and amortized to maturity using the scientific interest method,
which approximates the effective interest method.
NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund
is calculated on each business day by dividing the total value of assets,
less liabilities, by the number of shares outstanding.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for
repurchase agreements are held by the custodian bank until the respective
agreements mature. Provisions of the repurchase agreements ensure that the
market value of the collateral, including accrued interest thereon, is
sufficient in the event of default by the counterparty. If the counterparty
defaults and the value of the collateral declines or if the counterparty
enters into an insolvency proceeding, realization of the collateral by the
Fund may be delayed or limited.
EXPENSES -- Expenses that are directly related to the Fund are charged
to the Fund. Other operating expenses of the Trust are prorated to the Fund
on the basis of relative daily net assets.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment
income are declared daily and paid to Shareholders monthly. Any net
realized capital gains are distributed to Shareholders at least annually.
Distributions from net investment income and net realized capital
gains are determined in accordance with the U.S. Federal income tax
regulations, which may differ from those amounts determined under generally
accepted 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
April 30, 1997 Unaudited
rise. These reclassifications have no effect on net assets or net
asset value.
USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES:
The Fund incurred organization costs of approximately $23,000. These costs have
been capitalized and are being amortized on a straight line basis over a period
of sixty months commencing with operations. Organization costs include legal
fees of approximately $11,000 for organizational work performed by a law firm of
which a trustee of the Trust is a partner and two officers of the Trust are
partners. In the event any of the initial shares of the Trust are redeemed by
any holder thereof during the period that the Trust is amortizing its
organizational costs, the redemption proceeds payable to the holder thereof by
the Trust will be reduced by the unamortized organizational costs in the same
ratio as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
Certain officers of the Trust are also officers of SEI Fund Resources (the
"Administrator") and/or SEI Investments Distribution Co. (the "Distributor").
Such officers are paid no fees by the Trust for serving as officers of the
Trust.
4. ADMINISTRATION, SHAREHOLDER SERVICING AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to an Administration Agreement dated
November 14, 1991, as amended and restated on May 17, 1994, under which the
Administrator provides management and administrative services for an annual fee
equal to the higher of $75,000 or .20% of the Fund's average daily net assets.
DST Systems Inc. (the "Transfer Agent") serves as the transfer agent and
dividend disbursing agent for the Fund under a transfer agency agreement with
the Fund.
The Trust and Distributor are parties to a Distribution Agreement dated November
14, 1991 as amended and restated on August 8, 1994. The Distributor receives no
fees for its distribution services under this agreement.
5. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENTS:
The Trust and HGK Asset Management, Inc. (the "Adviser") are parties to an
Investment Advisory Agreement dated August 15, 1994 under which the Adviser
receives an annual fee equal to .50% of the Fund's average daily net assets. The
Adviser has voluntarily agreed to waive all or a portion of its fees and to
reimburse expenses in order to limit operating expenses to not more than 1.00%
of the average daily net assets of the Fund. Fee waivers and expense
reimbursements are voluntary and may be terminated at any time.
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Fund. 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 or sold by 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 April 30, 1997 are as follows:
HGK FIXED INCOME
FUND (000)
----------------
Purchases
Government $ 6,810
Other 16,137
Sales
Government $ 6,365
Other 15,112
At April 30, 1997, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at April 30, 1997, are as follows:
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
April 30, 1997 Unaudited
HGK FIXED INCOME
FUND (000)
----------------
Aggregate gross unrealized
appreciation $ 41
Aggregate gross unrealized
depreciation (93)
----------------
Net unrealized depreciation $(52)
================
7. CAPITAL LOSS CARRYFORWARDS:
The capital loss carryforward at October 31, 1996 for federal income tax
purposes are as follows:
$16,807 expiring in 2004
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>
HGK-F-005-01
