AIG MONEY MARKET FUND
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LETTER TO SHAREHOLDERS, OCTOBER 31, 1999
Dear Shareholder:
We are pleased to provide you with the Annual Report for the AIG Money Market
Fund (the "Fund") for the Fund's fiscal year ending October 31, 1999.
The twelve-month period ended in October 31, 1999, commenced in the midst of
extreme volatility and uncertainty in the global financial markets with a
declining interest rate environment in the United States, and concluded in a
favorable market environment of solid economic growth, low unemployment and low
inflation. The Federal Reserve's ease of monetary policy in the fall of 1998,
which was in response to the currency and credit crisis in parts of Asia, was
reversed, in light of continued growth of the U.S. economy, with a series of
interest rate increases starting in the Summer of 1999.
The volatility in the financial markets highlighted the relative safety of money
market funds (compared to both equity and bond funds), as money market funds
continued to offer investors protection of principal, daily liquidity and
current income against the backdrop of market turmoil.
During the period under review, the Fund provided competitive money market
returns while seeking to preserve principal value and maintain a high degree of
liquidity. The following pages contain information on the Fund's performance
during the reporting period and its portfolio holdings at the end of its fiscal
year.
The Adviser will continue to monitor prevailing market conditions in order to
manage the Fund in a manner that will provide competitive returns commensurate
with the Fund's objectives of preservation of principal and liquidity.
We appreciate your participation in the Fund.
Sincerely,
/s/ Signature Omitted
- --------------------
Helen Stefanis
President
AIG Capital Management Corp.
<PAGE>
STATEMENT OF NET ASSETS AIG MONEY MARKET FUND
October 31, 1999
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AIG MONEY MARKET FUND
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Face
Amount Value
(000) (000)
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Commercial Paper* (73.1%)
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Banks (5.3%)
Bil North America
$15,000 5.388, 11/08/99 $14,984
Chase Manhattan
20,000 5.830, 01/24/00 19,734
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34,718
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Beauty Products (3.8%)
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Procter & Gamble
25,000 5.311, 11/29/99 24,897
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24,897
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Chemicals (3.8%)
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Lubrizol Corporation
15,000 5.322, 11/22/99 14,954
10,000 5.368, 11/23/99 9,967
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24,921
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Diversified Operations (3.8%)
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General Electric
25,000 5.324, 11/12/99 24,959
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24,959
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Drugs (7.7%)
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Merck
30,000 5.259, 11/02/99 29,996
Pfizer
20,000 5.296, 12/01/99 19,912
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49,908
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Electrical Services (7.0%)
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Duke Energy
26,000 5.312, 11/01/99 26,000
Florida Power
4,600 5.274, 11/01/99 4,600
15,000 5.326, 11/05/99 14,991
General Electric
25,000 5.324, 11/12/99 --
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45,591
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Face
Amount Value
(000) (000)
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Financial Services (13.0%)
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General Electric Capital
$15,000 5.312, 11/18/99 $ 14,963
Liberty Mutual Capital (A)
5,800 5.311, 11/02/99 5,799
9,200 5.307, 11/16/99 9,180
Merrill Lynch
25,000 5.344, 11/03/99 24,993
UBS Finance Delaware LLC
15,000 5.312, 11/01/99 15,000
USAA Capital
15,000 5.293, 11/01/99 15,000
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84,935
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Food, Beverage & Tobacco (8.8%)
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Heinz
5,500 5.328, 11/23/99 5,482
Hershey Foods
25,000 5.306, 11/01/99 25,000
Sara Lee
26,760 5.293, 11/15/99 26,705
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57,187
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Gas/Natural Gas (3.8%)
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Consolidated Natural Gas
10,000 5.332, 11/04/99 9,996
15,000 5.341, 11/10/99 14,980
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24,976
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Household Products (3.8%)
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Clorox
25,000 5.304, 11/15/99 24,949
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24,949
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Insurance (4.6%)
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Pacific Life Insurance
10,000 5.323, 11/10/99 9,987
20,000 5.302, 11/24/99 19,933
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29,920
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The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF NET ASSETS AIG MONEY MARKET FUND
October 31, 1999
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AIG MONEY MARKET FUND
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Face
Amount Value
(000) (000)
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Photographic Equipment & Supplies (4.6%)
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Xerox
$30,000 5.246, 11/02/99 $29,996
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29,996
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Telephones & Telecommunication (3.1%)
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AT&T
20,000 5.308, 11/08/99 19,979
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19,979
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Total Commercial Paper
(Cost $476,936) 476,936
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Certificates Of Deposit (17.8%)
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Bank Austria
6,000 5.040, 01/12/00 5,995
Bank of Montreal
25,000 5.330, 11/18/99 25,000
Bank of Scotland
10,000 5.630, 02/02/00 10,000
Banque Nationale de Paris
25,000 5.390, 11/01/99 25,000
Bayerische Hypo- Und Vereinsbank AG
10,000 5.075, 02/10/00 9,999
10,000 5.270, 03/03/00 9,998
Landesbank Hessen-Thueringen Girozentrale
10,000 5.215, 02/29/00 9,979
Scotiabank- Bank of Nova Scotia
10,000 5.580, 02/01/00 10,000
Toronto-Dominion Bank
10,000 5.310, 03/06/00 9,999
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Total Certificates Of Deposit
(Cost $115,970) 115,970
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Time Deposits (8.5%)
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Fifth Third Bank
30,000 5.219, 11/01/99 30,000
Societe Generale
25,000 5.250, 11/01/99 25,000
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Total Time Deposits
(Cost $55,000) 55,000
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Total Investments (99.4%)
(Cost $647,906) 647,906
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Value
(000)
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Other Assets and Liabilities, Net (0.6%) $ 3,683
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Net Assets:
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Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 548,015,534 outstanding shares
of beneficial interest 548,016
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 103,569,755 outstanding shares
of beneficial interest 103,570
Accumulated Net Realized Gain on
Investments 3
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Total Net Assets (100.0%) $651,589
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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.
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS AIG MONEY MARKET FUND
For the year ended October 31, 1999
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AIG MONEY MARKET FUND (000)
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INVESTMENT INCOME:
Interest $32,357
-------
Total Investment Income 32,357
-------
EXPENSES:
Investment Advisory Fees 1,590
Waiver of Investment Advisory Fees (636)
Distribution Fees (1) 586
Administrative Fees 423
Custodian Fees 60
Transfer Agent Fees 59
Registration and Filing Fees 52
Insurance and Other Fees 36
Printing Fees 34
Professional Fees 34
Organizational Fees 8
Trustee Fees 6
-------
Total Expenses, Net 2,252
-------
Net Investment Income 30,105
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $30,105
=======
(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
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<TABLE>
<CAPTION>
11/1/98 to 11/1/97 to
10/31/99 10/31/98
AIG MONEY MARKET FUND (000) (000)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income $ 30,105 $ 30,339
Net Realized Gain on Securities -- --
----------- -----------
Increase in Net Assets Resulting from Operations 30,105 30,339
----------- -----------
Distributions to Shareholders:
Net Investment Income
Class A (22,636) (23,453)
Class B (7,469) (6,886)
----------- -----------
Total Distributions (30,105) (30,339)
----------- -----------
Share Transactions (at $1.00 per share):
Class A
Shares Issued 30,307,763 26,714,818
Shares Issued in Lieu of Cash Distributions 24,169 23,085
Shares Redeemed (30,035,003) (26,815,939)
----------- -----------
Net Class A Share Transactions 296,929 (78,036)
----------- -----------
Class B
Shares Issued 655,972 451,047
Shares Issued in Lieu of Cash Distributions 8,054 6,793
Shares Redeemed (715,534) (411,515)
----------- -----------
Net Class B Share Transactions (51,508) 46,325
----------- -----------
Increase (Decrease) in Net Assets from Share Transactions 245,421 (31,711)
----------- -----------
Total Increase (Decrease) in Net Assets 245,421 (31,711)
Net Assets:
Beginning of Period 406,168 437,879
----------- -----------
End of Period $ 651,589 $ 406,168
=========== ===========
</TABLE>
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 AIG Money Market Fund
For a Share Outstanding Throughout Each Period
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For the periods ended October 31,
<TABLE>
<CAPTION>
Ratio
of Net
Ratio Ratio Investment
Net Net Net of Net of Expenses Income
Asset Distributions Asset Assets Ratio Investment 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
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A
1999 $1.00 0.05 (0.05) $1.00 4.94% $548,019 0.26% 4.83% 0.36% 4.73%
1998 $1.00 0.05 (0.05) $1.00 5.49% $251,090 0.26% 5.37% 0.36% 5.27%
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
1999 $1.00 0.05 (0.05) $1.00 4.58% $103,570 0.61% 4.46% 0.71% 4.36%
1998 $1.00 0.05 (0.05) $1.00 5.12% $155,078 0.62% 5.00% 0.72% 4.90%
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%*
</TABLE>
* Annualized
(1) The AIG Money Market Fund Class A and Class B shares commenced operations on
December 1, 1994 and February 16, 1995, respectively.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS AIG MONEY MARKET FUND
October 31, 1999
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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 ten 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 shareholders' interest is limited
to the portfolio in which shares are held. The Funds' prospectuses provide a
description of the Funds' 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 INVESTMENT 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 each
class of the Fund is calculated on each business day by dividing the total value
of assets attributable to such class, less liabilities, by the number of shares
of such class 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
October 31, 1999
- --------------------------------------------------------------------------------
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. ORGANIZATIONAL 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 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. Organizational 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 Investments Mutual
Funds Services (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.
The Fund has entered into an agreement with SEI Investments to manage the
investments of repurchase agreements for the Fund. For its services, SEI
Investments received $12,191 for the period ended October 31, 1999.
4. ADMINISTRATION, SHAREHOLDER SERVICING AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to an Administration Agreement
under which the Administrator provides 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 (continued) AIG MONEY MARKET FUND
October 31, 1999
- --------------------------------------------------------------------------------
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 and
reduce its fee by .10% of the Fund's average daily net assets, and to waive
additional fees and/or reimburse certain expenses of the Fund 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.
First Union National Bank 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 October 31, 1999 is as follows:
S & P MOODY'S
--------------- --------------
A1 + 69.0% P1 100%
A1 31.0% NR 0%
---- ----
100.0% 100%
<PAGE>
Report of Independent Public Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
AIG Money Market Fund of
The Advisors' Inner Circle Fund:
We have audited the accompanying statement of net assets of the AIG Money Market
Fund (the "Fund"), one of the funds constituting The Advisors' Inner Circle
Fund, as of October 31, 1999, and the related statement of operations, the
statements of changes in net assets, and the 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 and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, 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 the
AIG Money Market Fund of The Advisors' Inner Circle Fund as of October 31, 1999,
and the results of its operations, the changes in its net assets, and the
financial highlights for the periods presented, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
December 17, 1999
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(unaudited)
For the shareholders that do not have an October 31, 1999 taxable year end, this
notice is for informational pur-poses only. For shareholders with an October 31,
1999 taxable year end, please consult your tax adviser as to the pertinence of
this notice.
For the fiscal year ended October 31, 1999, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
<TABLE>
<CAPTION>
LONG TERM ORDINARY
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS (1)
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
AIG Money Market Fund ................... 0% 100% 100% 0%
</TABLE>
- ------------
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE
DIVIDENDS RECEIVED DEDUCTION AND IS REFLECTED AS A PERCENTAGE OF "ORDINARY
INCOME DISTRIBUTIONS".
<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.
70 Pine Street
New York, NY 10270
For information call: 1-800-845-3885
This information must be preceded or accompanied by a current prospectus.
AIG-F-005-06
AIG
MONEY MARKET FUND
ANNUAL REPORT
OCTOBER 31, 1999
[LOGO OMITTED]
ADVISED BY
AIG CAPITAL MANAGEMENT CORP.
