[Photo of office building omitted]
CRA
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REALTY
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SHARES
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PORTFOLIO
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1997
ADVISED BY:
CRA REAL ESTATE
SECURITIES L.P.
<PAGE>
CRA
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REALTY
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SHARES
MANAGER'S DISCUSSION OF FUND PERFORMANCE
To Our Shareholders:
This is our report for the CRA Realty Shares Portfolio for the period ended
April 30, 1997, which includes the four months since the inception of the fund
on January 1, 1997. This period has been a challenging environment for real
estate securities marked by significant volatility in the equity markets and a
large volume of new stock offerings by public real estate companies. The table
below compares the net return for the portfolio since inception to the two major
real estate securities indices and the broad stock market as measured by the S&P
500 Index:
Since Inception
1/1/97
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CRA Realty Shares Portfolio -0.70%
Wilshire R.E. Securities -1.45
NAREIT - Equity REITs -2.05
S&P 500 8.72
Key economic indicators released in the first half of April and first quarter
corporate earnings releases gave stock market investors comfort that corporate
earnings are growing and that inflation is under control, leading to a strong
rally of the S&P 500 index stocks in the second half of April. REITs and other
real estate securities, however, did not participate in the market rebound in
late April, which we attribute substantially to the large volume and continuing
pipeline of stock offerings. So far this year, public real estate companies
raised $9.1 billion in 87 offerings, including $2.8 billion in 23 offerings
since March 31st. Meanwhile, funds flow to real estate securities mutual funds
has slowed and was actually negative in April.
As a result, April was a dismal month for real estate securities total returns.
Not a single property type reported positive total returns for the month of
April, though hotel and diversified companies continue to show positive returns
year-to-date. The table below recaps the performance by property type as tracked
by Wilshire. Portfolio performance, while exceeding the real estate securities
benchmarks for the period since inception, has suffered due to an overweighting
in companies owning office and industrial properties.
WILSHIRE REAL ESTATE SECURITIES INDEX
PERFORMANCE BY PROPERTY TYPE
Weight Year to
Property Type in Index Date
Hotels 16.0% 6.58%
Diversified 14.0 1.18
Shopping Ctrs. 13.5 -0.17
Apartments 20.6 -1.76
Industrial 5.3 -3.71
Office 11.0 -4.44
Mfr. Homes 2.0 -4.53
Malls 10.4 -5.88
Storage 6.0 -8.80
Outlet Center 1.2 -13.71
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Total 100.0% -1.45%
CRA REAL ESTATE SECURITIES L.P.
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AN AFFILIATE OF JONES LANG WOOTTON REALTY ADVISORS
<PAGE>
Unfortunately, relief may be some time in coming. Five new public real estate
companies have priced initial public offerings (IPOs) so far this year, raising
$763 million. Another five IPOs are in registration to offer $1.9 billion of
stock. This compares to the 1996 total of $1.1 billion raised in five IPO's. The
pipeline of new companies includes some very well-qualified new entrants to the
public markets, but also some marginal companies.
In some respects the current landscape conjures up memories of 1994. Interest
rates were on the rise and the REIT market was characterized by a heavy offering
calendar. Marginal companies, anxious to make it "out", assisted by equally
anxious bankers endeavoring to get just one more deal completed, caused pressure
on prices that eventually closed the IPO window and sent bankers and "wanna-be"
public companies home to lick their wounds and develop alternative financing
strategies. Unfortunately, Wall Street fund raising cycles tend to repeat
themselves and we are increasingly resigned to another few months of choppy
market conditions.
Yet, operating results continue to be quite good. Our compilation of nearly 99
companies reporting first quarter earnings finds that the average company's per
share earnings (funds from operations) were up 10.6% versus a year ago, and
exceeded analysts' consensus estimates by 1.8%.
The good news to be found in the aftermath of the poor April performance is: (1)
operating results continue to be impressive and are exceeding analysts
expectations, and (2) some very fine companies are now available at very
attractive prices. We expect the value of seasoned companies to grow in
importance as the year progresses and the well-capitalized, well-managed
companies differentiate themselves from their marginal competitors. Under
similar conditions in 1994, we repositioned portfolios away from the offering
flood (then concentrated in apartments) and focused on finding superior values
in other property sectors. We are following a similar strategy this year and
believe full-year results will reflect the efficacy of this strategy.
We are still enthusiastic about prospects for companies in the office sector and
expect continued strong results from full-service hotel operators. However, much
of the expected offering activity will be concentrated in these two sectors
(especially office) and may affect near-term returns. It may be a few more
months before the pricing pressure of a full offering pipeline recedes to let
the intrinsic value of companies in these sectors shine through, but we expect
eventually for this supply induced hangover to pass. An uncertain interest rate
environment and the potential for additional interest rate increases may also
contribute to near term weakness.
We continue to manage the Portfolio with the objective of delivering long-term
superior total return. As always, we appreciate your continued faith and
confidence.
Sincerely,
[s/signiture] [s/signiture]
T. Ritson Ferguson Kenneth D. Campbell
Co-Chief Investment Officer Co-Chief Investment Officer
CRA REAL ESTATE SECURITIES L.P.
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AN AFFILIATE OF JONES LANG WOOTTON REALTY ADVISORS
<PAGE>
STATEMENT OF NET ASSETS
April 30, 1997 (Unaudited)
Market
Value
CRA REALTY SHARES PORTFOLIO Shares (000)
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EQUITIES (100.1%)
APARTMENTS (19.7%)
Apartment Investment & Management 14,500 $ 402
Avalon Properties 19,300 509
Bay Apartment Communities 21,100 707
Columbus Realty Trust 18,400 389
Evans Withycombe Residential 20,800 411
Gables Residential Trust 10,000 248
Summit Properties 17,100 338
United Dominion Realty Trust 29,600 407
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3,411
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DIVERSIFIED (6.6%)
Colonial Properties Trust 18,300 519
First Union Real Estate Investments 17,100 233
Trizec Hahn 18,100 396
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1,148
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HOTELS (12.3%)
Felcor Suite Hotels 14,000 502
Host Marriott* 25,100 436
Patriot American Hospitality 20,900 449
Starwood Lodging Trust 19,050 733
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2,120
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INDUSTRIAL (8.4%)
Bedford Property Investors 7,000 123
Centerpoint Properties 17,100 515
First Industrial Realty Trust 17,000 502
Weeks Corporation 10,000 314
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1,454
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OFFICE (14.2%)
Beacon Properties 13,000 401
Brandywine Realty Trust 2,500 47
Cali Realty 10,900 322
CarrAmerica Realty 22,000 613
Highwoods Properties 22,200 691
Kilroy Realty 16,000 376
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2,450
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OFFICE/INDUSTRIAL (9.6%)
Duke Realty Investments 12,500 459
Liberty Property Trust 13,900 335
Prentiss Properties Trust 17,900 423
Spieker Properties 12,900 450
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1,667
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RETAIL - MALLS (10.4%)
General Growth Properties 20,100 641
Rouse Company 16,400 445
Simon DeBartolo Group 25,228 722
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1,808
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RETAIL - OUTLET CENTERS (2.6%)
Chelsea GCA Realty 12,900 453
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Shares/ Market
Face Amount Value
(000) (000)
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RETAIL - SHOPPING CENTERS (12.8%)
Bradley Real Estate 22,977 439
Burnham Pacific Properties 35,000 438
Developers Diversified Realty 16,800 620
JDN Realty 15,900 445
The Price REIT 7,300 276
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2,218
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SELF STORAGE (3.5%)
Public Storage 22,400 602
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TOTAL EQUITIES
(Cost $16,364) 17,331
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REPURCHASE AGREEMENT (7.1%)
Lehman Brothers 5.01%, dated 04/30/97,
matures 05/01/97, repurchase price
$1,226,500 (collateralized by U.S.
Treasury Bond , par value $1,013,176,
9.25%, matures 02/15/16:
market value $1,260,299) $1,226 1,226
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TOTAL REPURCHASE AGREEMENT
(Cost $1,226) 1,226
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TOTAL INVESTMENTS (107.2%)
(Cost $17,590) 18,557
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OTHER ASSETS AND LIABILITIES, NET (-7.2%) (1,248)**
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NET ASSETS:
Portfolio Shares -- Class A (unlimited authorization
-- no par value) based on 1,759,707
outstanding shares of beneficial interest 15,900
Distributions in excess of net
investment income (9)
Accumulated net realized gain
on investments 451
Net unrealized appreciation
on investments 967
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TOTAL NET ASSETS (100.0%) $17,309
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Net Asset Value, Offering and Redemption
Price Per Share $ 9.84
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*Non-income producing security
**Other assets and liabilities include $1,369,000 of investment
securities purchased.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS
For the period ended April 30, 1997 (Unaudited)
CRA REALTY SHARES PORTFOLIO (1) (000)
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Investment Income:
Dividend Income................................................... $179
Interest Income .................................................. 12
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Total Investment Income......................................... 191
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Expenses:
Investment Advisory Fees ......................................... 33
Investment Advisory Fee Waiver ................................... (18)
Administrative Fees .............................................. 25
Administrative Waiver............................................. (25)
Custodian Fees ................................................... 1
Professional Fees ................................................ 8
Transfer Agent Fees .............................................. 7
Printing Fees .................................................... 4
Trustee Fees ..................................................... 2
Registration and Filing Fees ..................................... 8
Amortization of Deferred Organizational Costs .................... 2
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Total Expenses ................................................. 47
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Net Investment Income ........................................ 144
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Net Realized Gain from Securities Sold ........................... 451
Net Unrealized Depreciation of Investment Securities ............. (885)
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Net Realized and Unrealized Loss on Investments ................ (434)
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Net Decrease in Net Assets Resulting from Operations.............. $(290)
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(1) The CRA Realty Shares Portfolio commenced operations on January 1, 1997.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
1/1/97
TO 4/30/97
CRA REALTY SHARES PORTFOLIO (2) (000)
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Investment Activities:
Net Investment Income.............................................$ 144
Net Realized Gain on Securities Sold ............................. 451
Net Change in Unrealized Depreciation of Investment Securities ... (885)
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Net Decrease in Net Assets Resulting from Operations............ (290)
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Distributions to Shareholders:
Net Investment Income ............................................ (153)
Realized Capital Gains............................................ --
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Total Distributions ............................................ (153)
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Capital Share Transactions:
Shares Issued .................................................... 10,192
Shares Issued in Connection with Purchase In-Kind (3)............. 7,497
Shares Issued in Lieu of Cash Distributions ...................... 83
Shares Redeemed .................................................. (20)
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Increase in Net Assets Derived from Capital Share Transactions.... 17,752
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Total Increase in Net Assets ................................... 17,309
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Net Assets:
Beginning of Period .............................................. --
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End of Period ....................................................$17,309
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(1) Shares Issued and Redeemed:
Shares Issued ................................................... 1,005
Shares Issued in Connection with Purchase In-Kind................ 749
Shares Issued in Lieu of Cash Distributions ..................... 8
Shares Redeemed ................................................. (2)
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Net Increase in Share Transactions ............................. 1,760
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(2) The CRA Realty Shares Portfolio commenced operations on January 1, 1997.
(3) During 1997, the Fund received securities in-kind with unrealized
appreciation approximating $1,852,000.
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
For the period ended April 30, 1997 (Unaudited)
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Ratio
Net Net Net of Net
Asset Realized and Distributions Asset Assets Ratio Investment
Value Net Unrealized from Net Value End of Expenses Income
Beginning Investment Loss on Investment End Total of Period to Average to Average
of Period Income Securities Income of Period Return (1) (000) Net Assets Net Assets
--------- ---------- ------------- ------------- --------- ---------- ---------- ------------ ----------
- ---------------------------
CRA REALTY SHARES PORTFOLIO
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<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997(3) $10.00 0.09 (0.16) (0.09) $9.84 (0.70)% $17,309 1.00%* 3.02%*
Ratio
of Net
Ratio Investment
of Expenses Income
to Average to Average
Net Assets Net Assets Portfolio Average
(Excluding (Excluding Turnover Commission
Waivers) Waivers) Rate Rate (2)
----------- ----------- --------- ----------
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CRA REALTY SHARES PORTFOLIO
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<C> <C> <C> <C> <C>
1997(3) 1.90%* 2.12%* 28.16% $0.0600
<FN>
* Annualized
(1) Total return is for the period indicated and has not been annualized.
(2) Average commission rate paid per share for security purchases and sales
during the period.
(3) The CRA Realty Shares Portfolio commenced operations on January 1, 1997.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS CRA REALTY SHARES PORTFOLIO
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 CRA Realty Shares Portfolio (the
"Fund"). The financial statements of the remaining portfolios are not presented
herein. 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 -- 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).
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.
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 compared to the aggregate daily
net assets of the Trust.
DISTRIBUTIONS TO SHAREHOLDERS -- 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 principles. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are
permanent, they are charged or credited to paid-in-capital in the period
that the differences arise. These reclassifications have no effect on net
assets or net asset value.
USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES:
The Fund incurred organization costs of approximately $32,000. 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 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 $13,000 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.
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 under
which the Administrator provides management and administrative services for an
annual fee equal to the higher of $75,000 or 0.15% of the first $100 million of
the Portfolio's average daily net assets; 0.125% of the next $100 million of the
Portfolio's average daily net assets; 0.10% of the next $100 million of the
Portfolio's average daily net assets; and 0.08% of the Portfolio's average daily
net assets over $300 million. The Administrator has agreed to waive all of its
fee during the first four months of operations.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) CRA REALTY SHARES PORTFOLIO
April 30, 1997 (Unaudited)
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. The
Distributor receives no fees for its distribution services under this agreement.
5. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENTS:
The Fund and CRA Real Estate Securities L.P. (the "Adviser") are
parties to an Investment Advisory Agreement under which the Adviser receives an
annual fee equal to .70% 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 1.25% of the average daily
net assets for Class A shares. 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 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:
(000)
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Purchases
Government ................................... $ --
Other ........................................ 14,080
Sales
Government ................................... $ --
Other ........................................ 3,814
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, is as follows:
(000)
---------
Aggregate gross unrealized
appreciation ................................. $1,404
Aggregate gross unrealized
depreciation ................................. (437)
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Net unrealized appreciation .................... $ 967
======
7. SHAREHOLDER VOTE:
On December 31, 1996 the sole shareholder of the CRA Realty Shares Portfolio
approved the following appointments: SEI Fund Resources to serve as
Administrator of the Portfolio, CRA Real Estate Securities L.P. to serve as
investment adviser to the assets of the Portfolio, SEI Investments Distribution
Co. to serve as Distributor of the shares of the Portfolio, and Arthur Andersen
LLP to serve as the Independent Public Accountants of the Portfolio.
<PAGE>
FUND:
CRA REALTY SHARES PORTFOLIO
P.O. Box 419009
Kansas City, MO 64141-6009
ADVISER:
CRA REAL ESTATE SECURITIES L.P.
Suite 205, 259 Radnor-Chester Road
Radnor, PA 19087
DISTRIBUTOR:
SEI INVESTMENTS DISTRIBUTION CO.
Oaks, PA 19456
ADMINISTRATOR:
SEI FUND RESOURCES
Oaks, PA 19456
LEGAL COUNSEL:
MORGAN, LEWIS & BOCKIUS LLP
1800 M Street N.W.
Washington, DC 20036
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.
CRA-F-003-01
