INVESTMENT ADVISOR:
AIG Capital Management Corp.
70 Pine Street
New York, NY 10270
DISTRIBUTOR:
SEI Investments Distribution Co.
Oaks, PA 19456
For information call: 1-800-845-3885
This information must be preceded or accompanied by a current prospectus.
AIG-F-006-03
AIG
MONEY MARKET FUND
SEMI-ANNUAL REPORT
APRIL 30, 1997
[AIG LOGO]
ADVISED BY
AIG CAPITAL MANAGEMENT CORP.
<PAGE>
THE AIG MONEY MARKET FUND
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS, APRIL 30, 1997
Dear Shareholder:
We are pleased to provide you with this report on the AIG Money Market Fund (the
"Fund") for its semi-annual reporting period ending April 30, 1997. During this
period, short term interest rates were fairly steady, and only began to increase
following the Federal Reserve Chairman's Humphrey Hawkins testimony at the end
of February, suggesting a "preemptive strike" against inflation.
The Federal Open Market Committee ("FOMC") tightened monetary policy at its
March meeting, raising the Federal Funds rate by 25 basis points to 5.50%. This
was the first Fed move in fourteen months, and the first tightening in two
years. The Fed action is consistent with its anti-inflationary strategy. The
increase in interest rates was intended to slow down the U.S. economy which was
growing faster than its non-inflationary growth rate.
The FOMC has signaled its resolve to curb inflationary pressures before such
become evident in the data releases. How long the FOMC remains in a tightening
mode may depend more on the equity markets, which the Fed Chairman has stated
have shown irrational exuberance in racing to new high levels. The sensitivity
of economic activity to higher interest rates cannot be precisely quantified and
it is unclear how much higher rates may go in order to curb the strong economic
growth.
Current releases of economic data have shown a surprising U.S. economy, one that
continues to exhibit strong growth without showing any inflationary pressures.
GDP grew at a 5.6% rate for the first quarter of 1997 and the unemployment rate
fell to 4.9%, a 23 year low. However, the Employment Cost Index increased a
modest 0.6% in the first quarter and was up only 2.9% over the last four
quarters. The April National Association of Purchasing Managers survey revealed
a healthy industrial sector without any apparent price pressures. The market has
begun to factor in that the Fed may tighten monetary policy at its next FOMC
meeting in May. This is in line with the Fed Chairman's desire to slow demand
from its recent pace and prevent inflationary pressures from building up.
The Fund currently maintains a weighted average maturity ("WAM") which is
shorter than the average First Tier Institutional Only Fund as reported by
IBC/Donoghue. We expect this situation to remain mainly unchanged through the
coming months. This variance can be attributed to our belief that the continued
strength of the economy, as evidenced by the recent economic data releases, will
continue to keep the Fed biased towards tightening monetary policy. The Fed
Chairman has expounded at length on the need for the Fed to stay ahead of the
curve on inflation. Regardless of the outcome of the May 20th FOMC meeting,
market concerns over strong 1st quarter economic growth are likely to remain. We
will continue to monitor market conditions in our ongoing effort to meet the
investment objectives of the shareholders of the Fund.
Sincerely,
/S/ SIGNATURE
Daniel K. Kingsbury
President of
AIG Capital Management Corp.
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
APRIL 30, 1997 (UNAUDITED)
================================================================================
AIG MONEY MARKET FUND
- --------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------
COMMERCIAL PAPER* (54.7%)
- --------------------------------------------------------
AUTOMOTIVE RETAIL (1.3%)
- --------------------------------------------------------
Hertz
$ 5,000 5.606, 06/09/97 $ 4,970
- --------------------------------------------------------
CHEMICALS (4.8%)
- --------------------------------------------------------
Great Lakes Chemical (A)
19,000 5.569, 05/07/97 18,983
- --------------------------------------------------------
NATIONAL COMMERCIAL BANKS (12.5%)
- --------------------------------------------------------
Bank of Montreal
10,000 5.478, 07/03/97 9,906
Commerzbank U.S. Finance
15,000 5.379, 05/13/97 14,973
KFW International Finance
10,000 5.413, 06/09/97 9,942
UBS Finance
15,000 5.601, 05/01/97 15,000
- --------------------------------------------------------
49,821
- --------------------------------------------------------
SECURITIES BROKERAGE/DEALERS (12.5%)
- --------------------------------------------------------
Goldman Sachs
15,000 5.550, 05/21/97 14,954
Merrill Lynch
10,000 5.398, 05/09/97 9,988
5,000 5.611, 06/02/97 4,975
5,000 5.623, 06/10/97 4,969
Morgan Stanley Group
15,000 5.383, 05/19/97 14,960
- --------------------------------------------------------
49,846
- --------------------------------------------------------
WHOLESALE TRADE - NON-DURABLE GOODS (3.7%)
- --------------------------------------------------------
Australian Wheat Board
15,000 5.667, 07/07/97 14,844
- --------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS (7.5%)
- --------------------------------------------------------
Associates of North America
15,000 5.615, 06/10/97 14,907
General Electric Capital Services
15,000 5.415, 06/04/97 14,924
- --------------------------------------------------------
29,831
- --------------------------------------------------------
- --------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------
MISCELLANEOUS-BUSINESS CREDIT INSTITUTIONS (6.2%)
- --------------------------------------------------------
Chevron U.K. Investment PLC
$ 5,000 5.622, 06/17/97 $ 4,964
10,000 5.623, 06/17/97 9,927
USAA Capital
10,000 5.422, 08/25/97 9,830
- --------------------------------------------------------
24,721
- --------------------------------------------------------
INDUSTRIAL (3.7%)
- --------------------------------------------------------
General Electric
15,000 5.656, 07/02/97 14,855
- --------------------------------------------------------
PHARMACEUTICALS (2.5%)
- --------------------------------------------------------
Glaxo Wellcome PLC (A)
10,000 5.539, 05/20/97 9,971
- --------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $217,842) 217,842
- --------------------------------------------------------
CERTIFICATES OF DEPOSIT* (28.9%)
- --------------------------------------------------------
Banco Bilbao Vizcaya
10,000 5.420, 06/13/97 10,000
Caisse Nationale de Credit Agricole S.A.
10,000 5.610, 06/16/97 10,000
Canadian Imperial Bank of Commerce
15,000 5.530, 05/19/97 15,000
Deutsche Bank AG
10,000 5.410, 06/02/97 10,000
Industrial Bank of Japan, Ltd.
10,000 5.690, 05/01/97 10,000
Morgan Guaranty Trust
5,000 5.330, 05/22/97 5,000
Rabobank Nederland
10,000 5.420, 06/05/97 10,000
Sanwa Bank, Ltd.
15,000 5.630, 05/23/97 15,000
Societe Generale
15,000 5.780, 08/20/97 14,991
Westpac Banking
15,000 5.440, 06/05/97 15,000
- --------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $114,991) 114,991
- --------------------------------------------------------
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
APRIL 30, 1997 (UNAUDITED)
================================================================================
AIG MONEY MARKET FUND (concluded)
- --------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------
REPURCHASE AGREEMENT* (7.6%)
- --------------------------------------------------------
J.P. Morgan
5.43%, dated 04/30/97, matures
05/01/97, repurchase price
$30,004,525 (collateralized by
various FHLMC obligations,
total par value $25,219,000,
0.00%-8.25%, 05/09/97-06/01/16:
SLMA obligations, total par value
$5,555,000, 0.00%-6.05%,
10/01/97-09/14/00 total market
$30,000 value 30,602,268) $ 30,000
- --------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $30,000) 30,000
- --------------------------------------------------------
TIME DEPOSITS-EURO* (9.0%)
- --------------------------------------------------------
Australia and New Zealand
Banking Group Ltd.
19,000 5.688, 05/01/97 19,000
Fifth Third Bank
16,940 5.750, 05/01/97 16,940
- --------------------------------------------------------
TOTAL TIME DEPOSITS-EURO
(Cost $35,940) 35,940
- --------------------------------------------------------
TOTAL INVESTMENTS (100.2% )
(Cost $398,773) 398,773
- --------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (-0.2%) (802)
- --------------------------------------------------------
- --------------------------------------------------------
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------
Portfolio Shares of Class A (unlimited
authorization -- no par value)
based on 287,398,359 outstanding
shares of beneficial interest $287,398
Portfolio Shares of Class B (unlimited
authorization -- no par value)
based on 110,569,742 outstanding
shares of beneficial interest 110,570
Undistributed net investment income 3
- --------------------------------------------------------
TOTAL NET ASSETS (100.0%) 397,971
- --------------------------------------------------------
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.
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
PLC--PUBLIC LIMITED CORPORATION
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 SIX-MONTH PERIOD ENDED APRIL 30, 1997 (UNAUDITED)
================================================================================
AIG MONEY MARKET FUND (000)
- ------------------------------------------------------------------
INVESTMENT INCOME:
Interest $11,612
-------
Total Investment Income 11,612
-------
EXPENSES:
Investment Advisory Fees 530
Waiver of Investment Advisory Fees (212)
Administrative Fees 207
Waiver of Administrative Fees (27)
Custodian Fees 27
Professional Fees 28
Distribution Fees-- Class B 204
Transfer Agent Fees 22
Printing Fees 10
Trustee Fees 3
Registration and Filing Fees 16
Insurance and Other Fees 16
Amortization of Deferred Organizational Costs 3
-------
Total Expenses 827
-------
Net Investment Income 10,785
-------
NET REALIZED GAIN FROM SECURITIES SOLD 1
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,786
=======
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
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.
==============================================================================================
11/1/96 TO 11/1/95 TO
4/30/97 10/31/96(1)
AIG MONEY MARKET FUND (000) (000)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
Net Investment Income $ 10,785 $ 22,328
Net Realized Gain (Loss) on Securities 1 (1)
----------- -----------
Increase in Net Assets Resulting from Operations 10,786 22,327
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Class A (7,978) (16,913)
Class B (2,807) (5,415)
----------- -----------
Total Distributions (10,785) (22,328)
----------- -----------
SHARE TRANSACTIONS (AT $1.00 PER SHARE):
Class A
Shares Issued 12,198,457 20,518,210
Shares Issued in Lieu of Cash Distributions 7,923 16,941
Shares Redeemed (12,172,845) (20,594,942)
----------- -----------
Net Class A Share Transactions 33,535 (59,791)
----------- -----------
Class B
Shares Issued 184,348 298,083
Shares Issued in Lieu of Cash Distributions 2,818 5,368
Shares Redeemed (211,980) (288,549)
----------- -----------
Net Class B Share Transactions (24,814) 14,902
----------- -----------
Increase (Decrease) in Net Assets From Share Transactions 8,721 (44,889)
----------- -----------
Total Increase (Decrease) in Net Assets 8,722 (44,890)
NET ASSETS:
Beginning of Period 389,249 434,139
----------- -----------
End of Period $ 397,971 $ 389,249
=========== ===========
<FN>
(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>
<TABLE>
<CAPTION>
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 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>
1997 $1.00 0.03 (0.03) $1.00 5.30%* $287,401 0.29%* 5.18%* 0.40%* 5.07%*
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 0.02 (0.02) $1.00 4.93%* $110,570 0.65%* 4.82%* 0.76%* 4.71%*
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
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
(the "1940 Act"), as a diversified open-end management investment company with
nine portfolios. The financial statements herein are those of one such
portfolio, 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. 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
APRIL 30, 1997 (UNAUDITED)
================================================================================
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. 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 provided administrative services for the period
November 1, 1996 through April 30, 1997 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
APRIL 30, 1997 (UNAUDITED)
================================================================================
The Trust and SEI Investments Distribution Co. ("SIDC" or "the
Distributor") have entered into a Distribution Agreement under which SIDC acts
as the Distributor of the Fund's shares. 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 April 30, 1997 is as follows:
S & P MOODY'S
--------------- ---------------
A-1 + 92.5% P-1 92.5%
A-1 7.5% NR 7.5%
------ ------
100.0% 100.0%
<PAGE>
NOTES
