THE ADVISORS' INNER CIRCLE FUND
INVESTMENT ADVISER:
SAGE GLOBAL FUNDS, LLC
[LOGO OMITTED]
AMERICA'S FIRST NO GAIN/NO PAIN MUTUAL FUND(R)
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
THE ADVISORS' INNER CIRCLE FUND
INVESTMENT OBJECTIVE
The Fund seeks a high level of current income consistent with preservation
of capital by investing in a portfolio of investment grade corporate bonds
that, in the Adviser's or Sub-Adviser's opinion, will maintain an already
established credit rating or will benefit from an improvement in the
issuer's credit rating.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE SAGE
CORPORATE BOND FUND, VERSUS THE LEHMAN INTERMEDIATE BOND INDEX
----------------------
Total Return1
One Annualized
Year Inception
Return to Date
----------------------
0.10% 2.10%
----------------------
[Line Graph Omitted]
Plot Points are as follows:
SAGE Lehman
Corporate Intermediate Bond
12/31/97 10000 10000
10/98 10374 10700
10/99 10384 10859
1These figures represent past performance. Past performance is no guarantee
of future results. The investment return and principal value of an
investment will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than their original cost.
1
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1999
Face Market
Amount Value
SAGE CORPORATE BONDFUND (000) (000)
- -----------------------------------------------------------
CORPORATE BONDS (76.8%)
AIR TRANSPORTATION (1.6%)
AMR
9.750%, 03/15/00 $107 $ 108
------
BANKS (15.9%)
ABN-Amro Bank NV
7.000%, 04/01/08 100 97
Banque Paribas-NY
6.875%, 03/01/09 150 143
Chase Manhattan
7.125%, 02/01/07 100 100
HSBC Americas
6.625%, 03/01/09 250 236
Long Island Savings Bank
6.200%, 03/02/01 250 247
MBNA America Bank
6.750%, 03/15/08 250 231
------
1,054
------
BROADCASTING, NEWSPAPERS & ADVERTISING (1.5%)
TCI Communications
6.875%, 02/15/06 100 99
------
COMPUTERS & SERVICES (1.5%)
Oracle
6.720%, 02/15/04 100 98
------
ELECTRICAL SERVICES (3.8%)
Niagara Mohawk Power
7.750%, 05/15/06 250 252
------
FINANCIAL SERVICES (5.9%)
Deutsche Bank Financial
6.700%, 12/13/06 100 96
Dresdner Bank-New York
6.625%, 09/15/05 100 96
Lehman Brothers Holdings
7.250%, 10/15/03 100 100
Salomon Smith Barney Holdings
6.625%, 07/01/02 100 99
------
391
------
GAS/NATURAL GAS (12.5%)
Columbia Gas Systems
6.390%, 11/28/00 195 195
Enron
7.125%, 05/15/07 250 243
Union Oil Company of California
7.350%, 06/15/09 150 149
Williams Companies
6.500%, 11/15/02 250 245
------
832
------
Face Market
Amount Value
(000)/Shares (000)
- -----------------------------------------------------------
HOTELS & LODGING (2.8%)
Hilton Hotels
7.950%, 04/15/07 $200 $ 190
-------
PRINTING & PUBLISHING (9.1%)
Harcourt General
8.250%, 06/01/02 200 207
Time Warner
7.750%, 06/15/05 386 396
-------
603
-------
RAILROADS (4.3%)
Conrail
9.750%, 06/01/00 100 102
Union Pacific
7.375%, 05/15/01 85 86
6.000%, 09/01/03 100 96
-------
284
-------
REAL ESTATE (11.4%)
Avalon Properties
6.875%, 12/15/07 250 232
Kimco Realty MTN
6.960%, 07/16/07 250 233
Simon Property Group MTN
7.125%, 09/20/07 311 290
-------
755
-------
TELEPHONES & TELECOMMUNICATION (6.5%)
Airtouch Communications
7.125%, 07/15/01 90 91
7.000%, 10/01/03 100 100
Worldcom
6.400%, 08/15/05 250 243
-------
434
-------
TOTAL CORPORATE BONDS
(Cost $5,329) 5,100
-------
PREFERRED STOCKS (15.8%)
ABN-Amro Capital Funding Trust 4,000 92
ANZ Exchange Preferred Trust 5,000 118
Avalonbay Communities 4,000 91
Conseco Financing Trust 4,000 91
Duke Capital Financing Trust III* 5,000 125
National Rural Utility 5,000 113
Provident Capital Trust II* 8,000 190
Public Storage 5,000 125
Vornado Realty Trust 5,000 103
-------
TOTAL PREFERRED STOCKS
(Cost $1,125) 1,048
-------
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1999
Face Market
SAGE CORPORATE Amount Value
BONDFUND (concluded) (000)/Shares (000)
- -----------------------------------------------------------
FOREIGN GOVERNMENT BOND (4.4%)
Peoples Republic of China
6.500%, 02/17/04 $ 300 $ 292
------
TOTAL FOREIGN GOVERNMENT BOND
(Cost $294) 292
------
CASH EQUIVALENT (0.3%)
Evergreen Select Money Market
Fund Institutional Class
5.360% $19,000 19
------
TOTAL CASH EQUIVALENT
(Cost $19) 19
------
TOTAL INVESTMENTS (97.3%)
(Cost $6,767) 6,459
------
OTHER ASSETS AND LIABILITIES, NET (2.7%) 181
------
NET ASSETS:
Portfolio Shares of (unlimited
authorization -- no par value)
based on 700,262 outstanding
shares of beneficial interest 6,956
Undistributed Net Investment Income 26
Accumulated Net Realized Loss on
Investments (34)
Net Unrealized Depreciation on
Investments (308)
------
TOTAL NET ASSETS (100.0%) $6,640
======
Net Asset Value and Redemption
Price Per Share $9.48
======
* NON-INCOME PRODUCING SECURITY.
MTN--MEDIUM TERM NOTE
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATEMENT OF OPERATION THE ADVISORS' INNER CIRCLE FUND
For the year ended October 31, 1999
<TABLE>
<CAPTION>
SAGE
CORPORATE
BOND FUND
-----------
(000)
- -----------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest Income .......................................................... $ 57
Dividend Income........................................................... 390
- -----------------------------------------------------------------------------------------------
Total Investment Income................................................. 447
- -----------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ................................................. 52
Investment Advisory Fee Waiver ........................................... (52)
Reimbursements by Adviser................................................. (115)
Administrative Fees ...................................................... 75
Professional Fees ........................................................ 40
Transfer Agent Fees ...................................................... 26
Printing Fees ............................................................ 13
Trustee Fees ............................................................. 6
Insurance and Other Fees ................................................. 1
Custodian Fees ........................................................... 1
Organizational Costs ..................................................... 15
- -----------------------------------------------------------------------------------------------
Total Expenses, Net ...................................................... 62
- -----------------------------------------------------------------------------------------------
Net Investment Income ................................................ 385
- -----------------------------------------------------------------------------------------------
Net Realized Loss from Securities Sold ................................... (15)
Net Change in Unrealized Depreciation of Investment Securities ........... (355)
- -----------------------------------------------------------------------------------------------
Net Realized and Unrealized Loss on Investments ........................ (370)
- -----------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations ..................... $ 15
===============================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the periods ended October 31, THE ADVISORS' INNER CIRCLE FUND
SAGE
CORPORATE
BOND FUND (1)
----------------------------
11/01/98 12/15/97
TO 10/31/99 TO 10/31/98
(000) (000)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income .............................................................. $ 385 $ 253
Net Realized Loss from Securities Sold ............................................. (15) (19)
Net Change in Unrealized Appreciation (Depreciation) of Investment Securities ...... (355) 47
- ---------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations.............................. 15 281
- ---------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income .............................................................. (389) (223)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions............................................................... (389) (223)
- ---------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued ........................................................ 50 7,407
Reinvestment of Cash Distributions ................................................. 239 175
Cost of Shares Redeemed ............................................................ (295) (620)
- ---------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Derived from Capital Share Transactions ........ (6) 6,962
- ---------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets ........................................ (380) 7,020
- ---------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ................................................................ 7,020 --
- ---------------------------------------------------------------------------------------------------------------------
End of Period ...................................................................... $6,640 $7,020
- ---------------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ............................................................................. 5 746
Issued in Lieu of Cash Distributions ............................................... 24 18
Redeemed ........................................................................... (30) (63)
- ---------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Share Transactions....................................... (1) 701
=====================================================================================================================
<FN>
(1) THE SAGE Corporate Bond Fund commenced operations on December 15, 1997.
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
THE ADVISORS' INNER CIRCLE FUND
For a share outstanding throughout each period
For the periods ended October 31,
Net Realized Net Net
Asset and Distributions Distributions Asset Assets Ratio
Value Net Unrealized From Net From Value End of Expenses
Beginning Investment (losses) on Investment Capital End Total of Period to Average
of Period Income Securities Income Gains Of Period Return (000) Net Assets
--------- ---------- ----------- ------------ ------------- --------- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------
SAGE CORPORATE BOND FUND
- ------------------------
1999 $10.02 0.54 (0.53) (0.55) -- $ 9.48 0.10% $6,640 0.90%
1998(1) $10.00 0.40 (0.02) (0.36) -- $10.02 3.87% $7,020 0.90%*
</TABLE>
<TABLE>
<CAPTION>
Ratio
Ratio of Net
Ratio of Expenses Investment
of Net to Average Income to
Investment Net Assets Average Net
Income (Excluding Assets (Excluding Portfolio
to Average Waivers and Waivers and Turnover
Net Assets Reimbursements) Reimbursements) Rate
---------- --------------- ----------------- ---------
<S> <C> <C> <C>
- ------------------------
SAGE CORPORATE BOND FUND
- ------------------------
5.58% 3.32% 3.16% 16.92%
5.00%* 4.06%* 1.84%* 48.99%
<FN>
* Annualized
(1) The SAGE Corporate Bond Fund commenced operations on December 15, 1997.
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1999
1. ORGANIZATION:
THE ADVISORS' INNER CIRCLE FUND (the "Trust") is organized as a Massachusetts
business trust under an Amended and Restated Agreement and a Declaration of
Trust dated February 18, 1997. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management investment
company with ten portfolios. The financial statements herein are those of the
SAGE Corporate Bond Fund (the "Fund"). 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 prospectus provides a description of the Fund's
investment objectives, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Fund.
SECURITY VALUATION -- Investment securities of the Fund which are listed on
a securities exchange for which market quotations are available are valued
at the last quoted sales price for such securities on each business day,
or, if there is no such reported sales price on the valuation date, at the
most recently quoted bid price. Unlisted securities for which market
quotations are readily available are valued at the most recently quoted
price. Debt obligations with sixty days or less remaining until maturity
may be valued at their amortized cost. Under this valuation method,
purchase discounts and premiums are accreted and amortized ratably to
maturity and are included in interest income. Securities for which
quotations are not readily available are valued at fair value using methods
determined in good faith by the Board of Trustees.
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. Purchase discounts and premiums on securities held by the Fund are
accreted and amortized to maturity using the scientific interest method,
which approximates the effective interest method.
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.
EXPENSES -- Expenses that are directly related to the Fund are charged to
the Fund. Other operating expenses of the Trust are prorated to the Fund on
the basis of relative daily net assets.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared and paid monthly. Any net realized capital gains are
distributed at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with the U.S. Federal income tax regulations,
which may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent, they
are charged or credited to paid-in-capital in the period that the
differences arise. These reclassifications have no effect on net assets or
net asset value.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) THE ADVISORS' INNER CIRCLE FUND
October 31, 1999
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES:
Organizational costs have been capitalized and are being amortized on a straight
line basis over a period of 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.
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.
4. ADMINISTRATION, SHAREHOLDER SERVICING
AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to an Administration Agreement dated
November 14, 1991, as amended and restated on May 17, 1994, under which the
Administrator provides management and administrative services for an annual fee
equal to the higher of $75,000, or .15% on the first $100 million; .125% on the
next $100 million; and .10% on the average daily net assets over $200 million.
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.
The Trust and Distributor are parties to a Distribution Agreement dated November
14, 1991 as amended and restated on August 8, 1994. The Distributor receives no
fees for its distribution services under this agreement.
5. INVESTMENT ADVISORY AND CUSTODIAN
AGREEMENTS:
The Fund and SAGE Global Funds, LLC (the "Adviser") are parties to an Investment
Advisory Agreement dated December 15, 1997 under which the Adviser receives an
annual fee equal to .55% of the Fund's average daily net assets. The Adviser has
voluntarily agreed to waive all or a portion of its fees and to reimburse
expenses in order to limit operating expenses to not more than .90% of the
average daily net assets of the Fund. Fee waivers and expense reimbursements are
voluntary and may be terminated at any time.
Standard Asset Group, Inc. serves as the investment sub-adviser for the Fund
pursuant to the sub advisory agreement dated December 15,1997; the sub-adviser
is entitled to receive a fee which is calculated daily and paid monthly by Sage
Global Funds, LLC at an annual rate of .20% of the average daily net assets of
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 or sold by the Fund.
6. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the period ended October 31, 1999 are as follows:
SAGE CORPORATE
BOND FUND (000)
----------------
Purchases
Government ......................... $ --
Other .............................. 1,089
Sales
Government ......................... $ --
Other .............................. 1,110)
At October 31, 1999, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at October 31, 1999, are as follows:
SAGE CORPORATE
BOND FUND (000)
----------------
Aggregate gross unrealized
appreciation ...................... $ --
Aggregate gross unrealized
depreciation ...................... (308)
------
Net unrealized depreciation ............ $(308)
======
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1999
7. SUBSEQUENT EVENTS:
The accompanying financial statements have been prepared assuming that the Fund
will continue as a going concern.
At a meeting of the Board of Trustees on November 15, 1999, the Board of
Trustees suspended new sales of the Fund pending the resolution of certain
outstanding expense reimbursements from the Adviser.
On December 8, 1999, the Adviser discontinued it's voluntary expene
reimbursements. At a special meeting held on December 14, 1999, the Board of
Trustees voted to close the Fund. The Trust filed a prospectus supplement with
the Securities and Exchange Commission disclosing the decision to close the
Fund, to liquidate and distribute the Fund's net assets and cease operations on
or before December 31, 1999.
As a result of the termination of the Fund, other assets totaling $55,000
(approximately $.07/share) consisting primarily of prepaid state registration
fees and other prepaid costs were written off subsequent to October 31, 1999.
9
<PAGE>
NOTICE TO SHAREHOLDERS
OF
THE ADVISORS' INNER CIRCLE FUND
(UNAUDITED)
For shareholders that do not have an October 31, 1999 taxable year end, this
notice is for informational purposes 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:
LONG TERM ORDINARY
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS(1)
---------- ------------ ------------- ------------ ------------
Sage Corporate
Bond Fund 0% 100% 100% 0%
- --------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributions".
10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
The SAGE Corporate Bond Fund of
The Advisors' Inner Circle Fund:
We have audited the accompanying statement of net assets of the SAGE Corporate
Bond Fund (the "Fund"), one of the funds constituting The Advisors' Inner Circle
Fund, as of October 31, 1999, 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 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
SAGE Corporate Bond Fund of The Advisors' Inner Circle Fund as of October 31,
1999, and the results of its operations, changes in its net assets, and
financial highlights for the periods presented, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Fund
will continue as a going concern. As discussed in Note 7 to the financial
statements, the Board of Trustees voted to close the Fund, to liquidate and
distribute the Fund's net assets and cease operations on or before
December 31, 1999.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
December 18, 1999
11
<PAGE>
[Sage Logo Omitted]
America's First No Gain/No Pain Mutual Fund(R)
TRUST:
THE ADVISORS' INNER CIRCLE FUND
FUND:
SAGE CORPORATE BOND FUND
ADVISER:
SAGE GLOBAL FUNDS, LLC
SUB-ADVISER:
STANDARD ASSET GROUP, INC.
October 31, 1999
DISTRIBUTOR:
SEI INVESTMENTS DISTRIBUTION CO.
ADMINISTRATOR:
SEI INVESTMENTS MUTUAL
FUNDS SERVICES
LEGAL COUNSEL:
MORGAN, LEWIS& BOCKIUS LLP
INDEPENDENT PUBLIC ACCOUNTANTS:
ARTHUR ANDERSEN LLP
SAG-F-004-02
