AIG
MONEY MARKET FUND
SEMI-ANNUAL REPORT
April 30, 1998
[Logo Omitted]
ADVISED BY
AIG CAPITAL MANAGEMENT CORP.
<PAGE>
THE AIG MONEY MARKET FUND
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LETTER TO SHAREHOLDERS, APRIL 30, 1998
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, 1998.
During the reporting period, the Fund continued to provide competitive money
market returns while seeking to preserve principal value and maintain a high
degree of liquidity. The U.S. economy was characterized by robust growth and low
inflation accompanied by considerable volatility in the equity and bond markets.
Global financial markets experienced extreme volatility as instability plagued
the Southeast Asia and Japan, affecting the climate for an interest rate change
in the United States. At its most recent meeting in March, the Federal Reserve
Board left the federal funds rate unchanged. The U.S. Dollar's position as the
world's pre-eminent reserve currency has put an added burden on the Federal
Reserve Board. The main concern, that an interest rate increase would
reverberate throughout the already fragile global financial system, and
especially endanger hopeful recoveries in Southeast Asia, has almost certainly
stayed the Fed's hand from tightening rates.
Short term interest rates fell from highs reached in December as the market
began discounting a Fed rate hike because of the Asian instability. 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
to keep the economy from overheating and inflation from accelerating. Despite
the latest Non-farm Payrolls report for March, which showed a surprising drop of
24,000 jobs, the first quarter average payrolls gain of 211,000 and the reported
4.7% Unemployment Rate (down from 5.2% in March of 1997) indicate that the U.S.
labor market is tightening further. The implied threat of wage-push inflation
will continue to be a concern for the Federal Reserve Board.
The Fund continued to maintain a conservative weighted average maturity in its
portfolio, which stood at 39 days on April 30, 1998. 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. The Fund's weighted average maturity will be maintained at
current levels 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>
STATEMENT OF NET ASSETS AIG MONEY MARKET FUND
APRIL 30, 1998 (UNAUDITED)
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AIG MONEY MARKET FUND
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FACE
AMOUNT VALUE
(000) (000)
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COMMERCIAL PAPER* (71.8%)
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BANK HOLDING COMPANIES (4.7%)
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Citicorp
$20,000 5.541, 05/01/98 $20,000
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BEAUTY PRODUCTS (4.7%)
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Procter & Gamble
20,000 5.527, 05/08/98 19,978
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CHEMICALS (4.7%)
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Great Lakes Chemical (A)
20,000 5.531, 05/01/98 20,000
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ELECTRICAL SERVICES (4.7%)
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Duke Energy
20,000 5.555, 06/08/98 19,883
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FOOD, BEVERAGE & TOBACCO (4.7%)
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Coca-Cola
20,000 5.522, 06/09/98 19,881
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GAS/NATURAL GAS (3.1%)
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Consolidated Natural Gas
13,400 5.524, 05/07/98 13,388
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HOUSEHOLD PRODUCTS (4.6%)
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General Electric
20,000 5.551, 06/26/98 19,832
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INSURANCE (4.7%)
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Pacific Mutual Life Insurance
20,000 5.541, 05/01/98 20,000
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MISCELLANEOUS BUSINESS CREDIT INSTITUTIONS (4.9%)
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Glaxo Wellcome PLC (A)
10,000 5.522, 05/20/98 9,971
Vattenfall Treasury
11,000 5.577, 05/22/98 10,965
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20,936
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FACE
AMOUNT VALUE
(000) (000)
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NATIONAL COMMERCIAL BANKS (13.8%)
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Bil North America
$15,000 5.539, 06/01/98 $14,929
Commerzbank U.S. Finance
14,000 5.518, 05/22/98 13,956
Dresdner U.S. Finance
15,000 5.526, 05/18/98 14,961
UBS Finance
15,000 5.531, 05/01/98 15,000
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58,846
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PERSONAL CREDIT INSTITUTIONS (7.0%)
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Associates Corporation of North America
15,000 5.544, 05/13/98 14,972
General Electric Capital Services
15,000 5.515, 05/04/98 14,993
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29,965
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SECURITY BROKERS & DEALERS (9.3%)
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Merrill Lynch
5,000 5.535, 06/03/98 4,975
15,000 5.585, 06/10/98 14,908
Morgan Stanley, Dean Witter, Discover
20,000 5.564, 07/06/98 19,798
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39,681
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WHOLESALE (0.9%)
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Motorola
4,000 5.522, 05/12/98 3,993
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TOTAL COMMERCIAL PAPER
(Cost $306,383) 306,383
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CERTIFICATES OF DEPOSIT (26.2%)
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ABN Ambro Bank N.V.
20,000 5.600, 09/03/98 20,000
Bank Austria
20,000 5.520, 05/22/98 20,000
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF NET ASSETS AIG MONEY MARKET FUND
APRIL 30, 1998 (UNAUDITED)
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AIG MONEY MARKET FUND (concluded)
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FACE
AMOUNT VALUE
(000) (000)
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CERTIFICATES OF DEPOSIT (CONTINUED)
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Bank of Montreal
$20,000 5.530, 06/08/98 $ 20,000
Bank of Nova Scotia
12,000 5.830, 07/21/98 12,001
Canadian Imperial Bank of Commerce
20,000 5.525, 05/06/98 20,000
Credit Agricole Indosuez
10,000 5.660, 02/26/99 9,997
Societe Generale
5,000 5.550, 02/09/99 4,994
Westpac Banking
5,000 5.885, 08/27/98 5,001
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TOTAL CERTIFICATES OF DEPOSIT
(Cost $111,993) 111,993
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REPURCHASE AGREEMENT (2.2%)
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J.P. Morgan
5.52%, dated 04/30/98,
matures 05/01/98, repurchase
price $9,421,444 (collateralized
by U.S. Treasury Note (par value
$9,276,000, 7.125%, 02/29/00:
9,420 market value $9,608,762) 9,420
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TOTAL REPURCHASE AGREEMENT
(Cost $9,420) 9,420
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TOTAL INVESTMENTS (100.2%)
(Cost $427,796) 427,796
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OTHER ASSETS AND LIABILITIES, NET (-0.2%) (749)
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TOTAL NET ASSETS (100.0%) 427,047
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VALUE
(000)
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NET ASSETS:
- ---------------------------------------------------------
Portfolio Shares of Class A
(unlimited authorization --
no par value) based on
306,100,178 outstanding
shares of beneficial interest $306,100
Portfolio Shares of Class B
(unlimited authorization --
no par value) based on
120,943,381 outstanding shares
of beneficial interest 120,944
Undistributed net investment income 3
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TOTAL NET ASSETS (100.0%) $427,047
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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
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(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 AIG MONEY MARKET FUND
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1998 (UNAUDITED)
================================================================================
AIG MONEY MARKET FUND (000)
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INVESTMENT INCOME:
Interest $16,830
-------
Total Investment Income 16,830
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EXPENSES:
Investment Advisory Fees 744
Waiver of Investment Advisory Fees (298)
Administrative Fees 201
Waiver of Administrative Fees (29)
Custodian Fees 27
Professional Fees 21
Distribution Fees (1) 238
Transfer Agent Fees 30
Printing Fees 36
Trustee Fees 3
Registration and Filing Fees 30
Rating Fees 9
Insurance and Other Fees 14
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Total Expenses, Net 1,026
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Net Investment Income 15,804
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $15,804
=======
(1) Distribution fees are incurred by Class B shares only.
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS AIG MONEY MARKET FUND
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1998 (UNAUDITED) AND THE YEAR ENDED
OCTOBER 31, 1997.
================================================================================
11/1/97 TO 11/1/96 TO
4/30/98 10/31/97
AIG MONEY MARKET FUND (000) (000)
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INVESTMENT ACTIVITIES:
Net Investment Income $ 15,804 $ 23,905
Net Realized Gain on Securities 0 2
----------- -----------
Increase in Net Assets Resulting
from Operations 15,804 23,907
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DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Class A (12,385) (17,990)
Class B (3,419) (5,915)
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Total Distributions (15,804) (23,905)
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SHARE TRANSACTIONS (AT $1.00 PER SHARE):
Class A
Shares Issued 13,083,598 24,277,294
Shares Issued in Lieu of
Cash Distributions 12,012 17,863
Shares Redeemed (13,118,633) (24,219,898)
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Net Class A Share Transactions (23,023) 75,259
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Class B
Shares Issued 253,435 398,868
Shares Issued in Lieu of
Cash Distributions 3,416 5,874
Shares Redeemed (244,660) (431,373)
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Net Class B Share Transactions 12,191 (26,631)
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Increase (Decrease) in Net Assets
From Share Transactions (10,832) 48,628
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Total Increase (Decrease) in Net Assets (10,832) 48,630
NET ASSETS:
Beginning of Period 437,879 389,249
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End of Period $ 427,047 $ 437,879
=========== ===========
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS AIG MONEY MARKET FUND
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1998 (UNAUDITED) AND THE PERIODS ENDED OCTOBER 31.
====================================================================================================================================
FOR A SHARE OUTSTANDING THROUGHOUT EACH 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
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998** $1.00 0.03 (0.03) $1.00 5.40% $306,103 0.26% 5.40% 0.37% 5.29%
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) $1.00 0.05 (0.05) $1.00 5.75% $313,657 0.40% 5.60% 0.47% 5.53%
CLASS B
1998** $1.00 0.02 (0.02) $1.00 5.04% $120,944 0.62% 5.03% 0.73% 4.92%
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) $1.00 0.04 (0.04) $1.00 5.43% $120,482 0.75% 5.18% 0.85% 5.08%
<FN>
* Annualized
** For the period ended April 30, 1998. All ratios including total return have
been annualized.
(1) The AIG Money Market Fund Class A and Class B commenced operations on December 1, 1994 and February 16, 1995,
respectively.
The accompanying notes are an integral part of the financial statements
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS AIG MONEY MARKET FUND
APRIL 30, 1998 (UNAUDITED)
================================================================================
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 seven portfolios. 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
and provisions adopted by the Adviser 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) AIG MONEY MARKET FUND
APRIL 30, 1998 (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:
Organizational costs have been capitalized by the Trust and are being
amortized over sixty months commencing with operations. 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 Portfolio 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 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.
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AIG MONEY MARKET FUND
APRIL 30, 1998 (UNAUDITED)
================================================================================
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 Fund 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. 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, 1998 is as follows:
S & P MOODY'S
--------------- --------------
A1 + 81.4% P1 100%
A1 18.6% NR 0%
------ ----
100.0% 100%
<PAGE>
NOTES
<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-006-04
