AIG
MONEY MARKET FUND
ANNUAL REPORT
OCTOBER 31, 1997
AIG
ADVISED BY
AIG CAPITAL MANAGEMENT CORP.
<PAGE>
THE AIG MONEY MARKET FUND
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS, OCTOBER 31, 1997
Dear Shareholder:
We are pleased to provide you with the annual report on the AIG Money Market
Fund (the "Fund") for its fiscal year ending October 31, 1997.
Despite the heightened volatility of the global financial markets during the
twelve months ended October 31, 1997, the Fund continued to provide competitive
money market returns while seeking to preserve principal value and maintain a
high degree of liquidity. During the reporting period, the U.S. economy was
characterized by moderate growth and low inflation accompanied by considerable
volatility in the equity and bond markets.
Short term interest rates rose modestly from November through March and peaked
in March as a result of the anticipated Federal Reserve Board decision to
increase the federal funds rate by 25 basis points on March 25th in a
"pre-emptive" strike against inflation. By April, however, it became clear that
the economy would moderate and short term yields started to ease. Short term
rates exhibited moderate volatility over the remainder of the reporting period
amid speculation on whether the Federal Reserve Board would raise interest rates
again to keep the economy from overheating and inflation from accelerating.
Despite earlier expectations to the contrary, the Federal Reserve Board kept
interest rates unchanged through the end of the reporting period as a
consequence of two factors: first, the Federal Reserve's widened tolerance of
growth, and second, the turbulence in the financial markets throughout the
world. Despite the Federal Reserve Chairman's recent optimistic statements with
respect to the financial markets, after Monday, October 27th's 554 point Dow
Jones Industrial Average plunge, we believe the Federal Reserve's intentions are
clear: any inflationary uptick will be met with a tightening of rates. Mr.
Greenspan's remarks before Congress on October 2nd were better indications of
his belief that despite little signs of wage-push inflation, employment gains,
averaging 230,000 per month, and hourly earnings, increasing at a 3.6% rate over
the previous 12 months, were well worth watching and remain important indicators
for the Federal Reserve. The Federal Reserve Chairman told a House panel that
the excessive demand for workers and the falling unemployment rate suggest that
the economy remains on an unsustainable growth track. Indeed, the Producer Price
Index rose 0.5% for September (6.0% annualized), indicating that the best
inflation news may be behind us. This may be exacerbated by the U.S. Dollar's
recent weakness: a strong U.S. Dollar has nullified some inflationary pressures
by effectively making imports cheaper. The third quarter Employment Cost Index,
released October 28th, at +0.8% (3.2% annualized), was as expected, but an
increasingly fragile bull market needs better numbers continually to sustain
itself, and thus this figure caused some concern that the Federal Reserve will
not be content to "experiment" much longer before rates are nudged upwards. An
outside crisis, such as the Asian currency and equity market collapse witnessed
near the end of the reporting period, could dampen the Federal Reserve's
enthusiasm to tighten, because more pronounced market linkages leave the U.S.
Economy more vulnerable to downturns from overseas, and cheaper imports could
aid in dampening U.S. inflation.
The Fund continued to maintain a conservative weighted average maturity in its
portfolio, which stood at 37 days on October 31, 1997. This figure is shorter
than the average Prime Institutional Fund as reported by IBC, which is primarily
attributable to the Fund's higher concentration in short term bank obligations
and commercial paper. Over the coming quarters, the Fund's investments are
expected to maintain, but not substantively lengthen, its weighted average
maturity unless prospective market yields warrant an extension strategy. The
following pages contain information on the Fund's performance during the
reporting period and its portfolio holdings at the end of the reporting period.
We appreciate your participation in the Fund.
Sincerely,
/S/ SIGNATURE
Helen Stefanis
President
AIG Capital Management Corp.
<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 (the "Fund"), one of the funds constituting The Advisors' Inner Circle
Fund, as of October 31, 1997, 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
Fund'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, 1997, 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 AIG
Money Market Fund of The Advisors' Inner Circle Fund as of October 31, 1997, 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 12, 1997
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
OCTOBER 31, 1997
================================================================================
AIG MONEY MARKET FUND
- ---------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
COMMERCIAL PAPER* (70.7%)
- ---------------------------------------------------------
Bank Holding Companies (4.5%)
- ---------------------------------------------------------
J.P. Morgan
$20,000 5.571, 12/23/97 $19,841
- ---------------------------------------------------------
BEAUTY PRODUCTS (8.7%)
- ---------------------------------------------------------
Gillette (A)
20,000 5.673, 11/03/97 19,994
Procter & Gamble
18,000 5.576, 11/07/97 17,983
- ---------------------------------------------------------
37,977
- ---------------------------------------------------------
FOOD, BEVERAGE & TOBACCO (4.4%)
- ---------------------------------------------------------
Coca-Cola
5,000 5.529, 11/10/97 4,993
Sara Lee
14,400 5.653, 11/03/97 14,395
- ---------------------------------------------------------
19,388
- ---------------------------------------------------------
INDUSTRIAL (3.4%)
- ---------------------------------------------------------
General Electric
15,000 5.608, 01/08/98 14,843
- ---------------------------------------------------------
MISCELLANEOUS-BUSINESS CREDIT INSTITUTIONS (6.6%)
- ---------------------------------------------------------
Chevron U.K. Investment PLC
5,000 5.529, 11/06/97 4,996
10,000 5.540, 11/20/97 9,971
Vattenfall Treasury
14,000 5.571, 12/09/97 13,919
- ---------------------------------------------------------
28,886
- ---------------------------------------------------------
NATIONAL COMMERCIAL BANKS (16.4%)
- ---------------------------------------------------------
Bank of Montreal
15,000 5.572, 11/24/97 14,947
Bil North America
15,000 5.612, 11/17/97 14,963
Dresdner U.S. Finance
15,000 5.530, 11/04/97 14,993
KFW International Finance
7,000 5.517, 11/05/97 6,996
4,850 5.631, 12/29/97 4,807
UBS Finance
15,000 5.693, 11/03/97 14,995
- ---------------------------------------------------------
71,701
- ---------------------------------------------------------
- ---------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS (3.4%)
- ---------------------------------------------------------
General Electric Capital Services
$15,000 5.669, 01/29/98 $14,793
- ---------------------------------------------------------
PETROLEUM & FUEL PRODUCTS (3.8%)
- ---------------------------------------------------------
Gaz de France
16,700 5.528, 11/18/97 16,657
- ---------------------------------------------------------
PHARMACEUTICALS (2.5%)
- ---------------------------------------------------------
Glaxo Wellcome PLC (A)
11,000 5.669, 01/21/98 10,862
- ---------------------------------------------------------
RETAIL-RESTAURANTS (3.4%)
- ---------------------------------------------------------
McDonald's
15,000 5.653, 11/03/97 14,995
- ---------------------------------------------------------
SECURITIES BROKERAGE/DEALERS (9.1%)
- ---------------------------------------------------------
Goldman Sachs
15,000 5.550, 11/10/97 14,979
5,000 5.547, 11/12/97 4,992
Merrill Lynch
10,000 5.609, 12/04/97 9,949
10,000 5.752, 03/17/98 9,788
- ---------------------------------------------------------
39,708
- ---------------------------------------------------------
TELEPHONES & TELECOMMUNICATION (4.5%)
- ---------------------------------------------------------
Telstra
10,000 5.535, 11/19/97 9,972
10,000 5.553, 12/10/97 9,940
- ---------------------------------------------------------
19,912
- ---------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $309,563) 309,563
- ---------------------------------------------------------
CERTIFICATES OF DEPOSIT* (22.9%)
- ---------------------------------------------------------
ABN Ambro Bank N.V.
10,000 5.650, 12/23/97 9,998
5,000 5.650, 12/23/97 4,999
Australia & New Zealand Banking
Group Limited
10,000 5.670, 02/09/98 10,000
Hong Kong & Shanghai Banking
15,000 5.590, 12/18/97 15,000
Industrial Bank of Japan
10,000 5.650, 11/18/97 10,000
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
OCTOBER 31, 1997
================================================================================
- ---------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
CERTIFICATES OF DEPOSIT (CONTINUED)
- ---------------------------------------------------------
Landesbank Hessen-Thueringen
Girozentrale
$ 5,000 5.800, 01/16/98 $ 4,999
Societe Generale
20,000 5.610, 12/03/97 20,000
Swiss Bank
15,000 5.700, 11/20/97 15,000
Westdeutsche Landesbank Girozentrale
10,000 5.640, 01/15/98 10,000
- ---------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $99,996) 99,996
- ---------------------------------------------------------
EURO TIME DEPOSITS* (6.5%)
- ---------------------------------------------------------
Bayerische Hypotheken-Und
Wechsel-Bank
20,000 5.656, 11/03/97 20,000
BHF-Bank
8,625 5.625, 11/03/97 8,625
- ---------------------------------------------------------
TOTAL EURO TIME DEPOSITS
(Cost $28,625) 28,625
- ---------------------------------------------------------
TOTAL INVESTMENTS (100.1%)
(Cost $438,184) 438,184
- ---------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (-0.1%) (305)
- ---------------------------------------------------------
TOTAL NET ASSETS (100.0%) $437,879
- ---------------------------------------------------------
- ---------------------------------------------------------
VALUE
(000)
- ---------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------
Portfolio Shares of Class A (unlimited
authorization -- no par value)
based on 329,122,284 outstanding
shares of beneficial interest $329,123
Portfolio Shares of Class B
(unlimited authorization --
no par value) based on
108,753,034 outstanding shares
of beneficial interest 108,753
Undistributed Net Investment Income 3
- ---------------------------------------------------------
TOTAL NET ASSETS (100.0%) $437,879
- ---------------------------------------------------------
Net Asset Value, Offering
and Redemption
Price Per Share -- Class A $1.00
Net Asset Value, Offering
and Redemption
Price Per Share -- Class B $1.00
- ---------------------------------------------------------
(A) SECURITY SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT FROM
REGISTRATION UNDER SECTION 4(2) OR 144A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER
"ACCREDITED INVESTORS." THESE SECURITIES HAVE BEEN DETERMINED TO BE LIQUID
UNDER GUIDELINES ESTABLISHED BY THE BOARD OF TRUSTEES.
* DISCLOSURE PRESENTS
ANNUALIZED YIELD AT DATE OF PURCHASE FOR DISCOUNT SECURITIES, AND COUPON FOR
COUPON-BEARING SECURITIES.
PLC -- PUBLIC LIMITED CORPORATION
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
================================================================================
11/1/96 to
10/31/97
AIG MONEY MARKET FUND (000)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $25,591
-------
Total Investment Income 25,591
-------
EXPENSES:
Investment Advisory Fees 1,149
Waiver of Investment Advisory Fees (459)
Administrative Fees 383
Waiver of Administrative Fees (57)
Custodian Fees 54
Professional Fees 50
Distribution Fees (1) 420
Transfer Agent Fees 46
Printing Fees 23
Trustee Fees 6
Registration and Filing Fees 33
Insurance and Other Fees 16
Amortization of Deferred Organizational Costs 7
Rating Fees 15
-------
Total Expenses 1,686
-------
Net Investment Income 23,905
-------
NET REALIZED GAIN FROM SECURITIES SOLD 2
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $23,907
=======
(1) Distribution fees are incurred by the Class B Shares only.
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
================================================================================
11/1/96 to 11/1/95 to
10/31/97 10/31/96
AIG MONEY MARKETFUND (000) (000)
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
Net Investment Income $ 23,905 $ 22,328
Net Realized Gain (Loss) on Securities 2 (1)
----------- -----------
Increase in Net Assets Resulting from Operations 23,907 22,327
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Class A (17,990) (16,913)
Class B (5,915) (5,415)
----------- -----------
Total Distributions (23,905) (22,328)
----------- -----------
SHARE TRANSACTIONS (AT $1.00 PER SHARE):
Class A
Shares Issued 24,277,294 20,518,210
Shares Issued in Lieu of Cash Distributions 17,863 16,941
Shares Redeemed (24,219,898) (20,594,942)
----------- -----------
Net Class A Share Transactions 75,259 (59,791)
----------- -----------
Class B
Shares Issued 398,868 298,083
Shares Issued in Lieu of Cash Distributions 5,874 5,368
Shares Redeemed (431,373) (288,549)
----------- -----------
Net Class B Share Transactions (26,631) 14,902
----------- -----------
Increase(Decrease)in Net Assets From Share Transactions 48,628 (44,889)
----------- -----------
Total Increase (Decrease) in Net Assets 48,630 (44,890)
NET ASSETS:
Beginning of Period 389,249 434,139
----------- -----------
End of Period $ 437,879 $ 389,249
=========== ===========
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
====================================================================================================================================
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
RATIO
RATIO OF NET
NET NET NET RATIO OF EXPENSES INCOME
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF NET TO AVERAGE TO AVERAGE
VALUE NET FROM NET VALUE END OF EXPENSES INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ------------- --------- ------ --------- ----------- ---------- ----------- -----------
- ---------------------
AIG MONEY MARKET FUND
- ---------------------
CLASS A (1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $1.00 0.05 (0.05) $1.00 5.41% $329,125 0.27% 5.30% 0.39% 5.18%
1996 $1.00 0.05 (0.05) $1.00 5.26% $253,865 0.39% 5.15% 0.41% 5.13%
1995 $1.00 0.05 (0.05) $1.00 5.75%* $313,657 0.40%* 5.60%* 0.47%* 5.53%*
CLASS B (1)
1997 $1.00 0.05 (0.05) $1.00 5.04% $108,754 0.63% 4.93% 0.74% 4.82%
1996 $1.00 0.05 (0.05) $1.00 4.89% $135,384 0.74% 4.79% 0.77% 4.76%
1995 $1.00 0.04 (0.04) $1.00 5.43%* $120,482 0.75%* 5.18%* 0.85%* 5.08%*
<FN>
* ANNUALIZED
(1) THE AIG MONEY MARKET FUND CLASS A AND CLASS B COMMENCED OPERATIONS ON DECEMBER 1, 1994 AND FEBRUARY 16, 1995, RESPECTIVELY.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
OCTOBER 31, 1997
================================================================================
1. ORGANIZATION:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a
Massachusetts business trust under an Amended and Restated Agreement and
Declaration of Trust dated February 18, 1997. The Trust is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified
open-end management investment company with nine portfolios, three of which have
not commenced operations as of October 31, 1997. The financial statements herein
are those of one such portfolio, the AIG Money Market Fund (the "Fund"), which
offers 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. The Fund's prospectuses provide 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 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.
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 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
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, 1997
================================================================================
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 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 $33,000. 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 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 were parties to an Administration Agreement
under which the Administrator provided 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. There was a minimum annual fee of $100,000. The Administrator
agreed to waive a portion of its fee in order to limit certain expenses of the
Fund.
Effective May 1, 1997 the Administration Agreement has been amended to
reflect fees at an annual rate of .10% of the Fund's average daily net assets up
to $50 million; .08% of the average daily net assets from $50 million up to and
including $250 million; .06% of the average daily net assets from $250 million
up to and including $450 million; and .05% of the average daily net assets in
excess of $450 million. There is a minimum annual fee of $75,000 per portfolio
plus $15,000 for each additional class.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) THE ADVISORS' INNER CIRCLE FUND
OCTOBER 31, 1997
================================================================================
The Trust and the Distributor entered into a Distribution Agreement dated
November 14, 1991 as amended and restated August 8, 1994. The Distributor
receives no fees for its distribution services under this agreement.
AIG Equity Sales Corp. serves as the Sub-Distributor and Shareholder
Servicing Agent to the Fund. The Fund has adopted a Distribution Plan ("the
Plan") relating to the Class B shares pursuant to the Investment Company Act of
1940, Rule 12b-1. The Plan provides for payment of fees to the Distributor at an
annual rate of .35% of the average daily net assets of the Class B shares. Such
fees are then paid to the Sub-Distributor for services provided.
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.
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
.10% of its fee, and to waive additional fees and/or reimburse certain expenses
of the Portfolio 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 upon sixty days' written notice to the Fund.
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. 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. The summary of credit quality rating for
securities held by the Fund at October 31, 1997 is as follows:
S & P MOODY'S
---------------- ----------------
A-1 + 91.2% P-1 100.0%
A-1 8.8%
--------
100.0%
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(UNAUDITED)
For the shareholders that do not have a October 31, 1997 taxable year end, this
notice is for informational purposes only. For shareholders with a October 31,
1997 taxable year end, please consult your tax adviser as to the pertinence of
this notice.
For the fiscal year ended October 31, 1997, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
AIG Money Market Fund 0% 100% 100%
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS (1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
AIG Money Market Fund 0% 0% 0%
- ---------------
(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>
INVESTMENT ADVISOR:
AIG CAPITAL MANAGEMENT CORP.
70 PINE STREET
NEW YORK, NY 10270
DISTRIBUTOR:
SEI INVESTMENTS DISTRIBUTION CO.
OAKS, PA 19456
SUB-DISTRIBUTOR:
AIG EQUITY SALES CORP.
NEW YORK, NY 10270
For information call: 1-800-845-3885
This information must be preceded or accompanied
by a current prospectus.
AIG-F-005-04
