THE PILLAR FUNDS
YOUR INVESTMENT FOUNDATION
ANNUAL
REPORT
TO SHAREHOLDERS
DECEMBER 31, 1996
<PAGE>
TABLE OF CONTENTS
Letter to Shareholders ................... 1
Manager's Discussion & Analysis .......... 3
Statement of NetAssets ................... 12
Statement of Operations .................. 37
Statement of Changes in Net Assets ....... 40
Financial Highlights ..................... 46
Notes to Financial Statements ............ 50
NOT
FDIC MAY LOSE VALUE
INSURED NO BANK GURANTEE
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
LETTER TO SHAREHOLDERS
Fourth quarter returns for financial market averages were the best of the
year. The stock market reached new record levels, up almost 23% for the year in
total returns reflecting a more benign outlook for monetary policy and
surprisingly good corporate earnings. However, interest centered
disproportionately on large capitalization companies, partly because of their
greater ability to capitalize on our powerful position in global markets. The
bond market also responded to signs of modest economic growth, partially
retracing the increase in interest rates from last year end. At this juncture,
equity prices contain considerable optimism as valuation levels, by many
measures, are at historically high levels. A fallout of this condition is the
heightened volatility of both sectors and individual issues as investors react,
sometimes irrationally, to changing momentum.
In early 1997, Summit Bank, the investment advisor for the Pillar Funds,
will be converting its personal common funds into their equivalent Pillar Funds.
In addition, at the time of conversion, a new fund, the Pillar Growth Fund, will
come into being. The Growth Fund will be an equity fund emphasizing companies
whose earnings are expected to grow at a greater rate as compared with the
general market. You, as a shareholder, will benefit from these changes by a
greater choice of funds as well as the efficiencies associated with managing
larger pools of assets.
The path of the economic road ahead seems to change almost weekly depending
upon the tenor of the latest data. There may be, in fact, a sound basis for
these swings of sentiment as there are both distinctly positive and disquieting
elements to the current landscape. The most encouraging evidence for further
growth is the present level of job creation and income gains in the United
States, further enhanced by the wealth creation of the equity market. The
combination is a powerful engine for consumption. However, both demographic
trends and consumer debt levels may temper enthusiasm for spending.
Additionally, our products and services are highly desired in global markets and
very competitive, suggesting that exports will also be a significant contributor
to growth. And finally, the current health of corporate profits together with
the intense pressure on management to boost productivity seems likely to sustain
a high level of demand for capital goods. We believe these trends are powerful
enough to generate 2.5% - 3.0% increases in GDP during the coming year.
With some expections, the outlook for inflation also remains quite
positive. Most encouraging, retail competition for the consumer dollar has not
slackened. So, despite rather sharp price increases in specific products such as
energy, there is no evidence of a broader upswing in inflation, especially since
money creation is relatively subdued. The most important trend to follow will be
the progress of labor costs. Recently, they have been creeping up. Unless offset
by productivity gains, which may be harder to come by with labor resources
reasonably fully utilized, acceleration in wages may set the stage for a further
step-up in inflation. However, underutilized (Europe) and cheap (Asia) pools of
labor will be an important factor in preventing wage demands from getting out of
hand.
(CONTINUED NEXT PAGE)
1
<PAGE>
Also important will be the competition in the marketplace mentioned
earlier. Corporations may find that their ability to pass on increases in the
cost of production, whether raw materials or labor, may be severely constrained,
setting the stage for a squeeze on profit margins. There is ample anecdotal
evidence in industry today to support such a contention. We believe such an
outcome is likely if labor costs rise further. It also buttresses our view that
interest rates are not likely to exceed 7% by much at the long end of the yield
curve during 1997 and are likely to end this year noticeably lower than today.
On the other hand, such an outcome has the potential to create a shortfall in
profit expectations, undermining one element that supports stock prices.
While expectations are low for any substantial changes to come from
Washington, the revamped Clinton Administration and Congress may be able to
agree on some relief for capital gains taxes. Such action would have a very
positive impact on the stock market, particularly those industries that rely on
their stock price to attract management talent and capital.
Growth remains a scarce commodity in the balance of the industrialized
world. Recently the Japanese stock market has dropped sharply as disappointment
grows over the inability of monetary policy to accelerate economic activity. The
combination of a rapidly aging population, regulatory rigidities and the
lingering hangover from banking excesses of the previous decade are proving to
be formidable obstacles to growth. Western Europe also has its problems. An
unfavorable social safety net combined with high labor costs has constrained any
fiscal or monetary response to low growth and high unemployment. Their
contemplated monetary union is only creating additional checks on freedom of
action. These trends in the developed world have only served to further increase
the attractiveness of our financial assets.
Our strategic response to these patterns has been and remains to focus on
those sectors and companies where unit demand growth is above average and likely
to remain so. Over the last five years, many businesses have been able to
increase their profits through margin improvement. That string is coming to an
end. Only those companies with the means to grow their sales, whether through
market share gains or overall market increases, will continue to be able to
increase earnings. And growing sales is no mean feat in an economy showing only
moderate real growth and little pricing power. We continue to believe that
technology is providing great opportunities for both those able to create it as
well as those able to take advantage of it. The healthcare sector also faces
above average demand for its products and services. Many financial institutions
have the right ingredients to meet rapidly changing demands. And those consumer
products companies able to target overseas markets will also thrive. These
sectors are the basic building blocks of our portfolios and give us optimism
that opportunities for reasonable investment returns are still available.
Sincerely,
S/David G. Lee S/Hilton M. Jervey, CFA
David G. Lee Hilton M. Jervey, CFA
President and CEO Senior Vice President
The Pillar Funds Chief Investment Officer
Summit Bank
2
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
MANAGER'S DISCUSSION & ANALYSIS
U.S. TREASURY SECURITIES MONEY MARKET FUND,
PRIME OBLIGATION MONEY MARKET FUND,
U.S. TREASURY SECURITIES PLUS
MONEY MARKET FUND
After a decrease of 25 basis points in the Federal Funds rate at the
January Federal Open Market Committee meeting, the Federal Reserve left
short-term rates unchanged at 5.25% for the remainder of 1996.
The unexpected gain in payrolls reported in February and the corresponding
decrease in the unemployment rate halted any expectations of further interest
rate cuts. Strong economic data encouraged the market to "price in" a Fed
tightening throughout most of 1996. In anticipation of an increase in short-term
rates, maturities in all of the Pillar Money Market Funds were maintained at the
shorter end of the range.
As it became clear that the economy could support economic growth and a
23-year low unemployment rate without a corresponding rise in inflation,
prospects for an increase in short-term rates were eliminated. As a result,
maturities on the Pillar Money Market Funds were extended.
Going forward, we continue to expect moderate economic growth with low
inflation. We do, however, see wage pressures starting to build in the economic
data. This may encourage the Fed to increase short-term rates by 25 basis points
at the end of the first quarter or early in the second quarter. The Pillar Money
Market Funds are positioned to take advantage of this increase.
TAX-EXEMPT MONEY MARKET FUND
Yields on short-term tax-exempt instruments remained fairly constant
throughout 1996. Year end 1995 saw yields at 3.60% versus 3.62% at year end
1996, according to the Bond Buyer One Year Note Index.
The average maturity of the Tax-Exempt Money Market Fund at year end was 57
days, slightly longer than the national average of 51 days.
Presently our economic outlook for 1997 calls for modest economic growth
and subdued inflationary pressures. If we are correct in our assumptions,
short-term tax-exempt yields will remain in a narrow range with little pressure
on the upside.
3
<PAGE>
MANAGER'S DISCUSSION & ANALYSIS (CONTINUED)
SHORT-TERM INVESTMENT FUND
Total return for the Pillar Short-Term Investment Fund Class A shares was
4.86% for the year ended December 31, 1996. The Fund is invested approximately
40% in U.S. Treasury and 60% in high grade corporate bonds. While yields on
longer-term bonds were above 1995 levels, yields on the short end finished the
year below the previous year level. At this time, we expect shorter-term yields
to continue to trade in a narrow band.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 4/30/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar Short-Term Investment Fund, Class A $10,000 $10,250 $10,553 $10,892 $11,566 $12,128
Pillar Short-Term Investment Fund, Class B $ 9,900 $10,130 $10,425 $10,722 $11,379 $11,879
Salomon 1-Year Treasury Benchmark On-the-Run $10,000 $10,344 $10,739 $11,022 $11,914 $12,588
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 4.86% 4.74% 4.16%
- ---------------------------------------------------------
CLASS B (without load) 4.39% 4.45% 3.93%
- ---------------------------------------------------------
CLASS B* (with load) 3.36% 4.10% 3.71%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 1.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. SHORT-TERM INVESTMENT CLASS A
AND CLASS B SHARES COMMENCED OPERATIONS ON APRIL 1, 1992.
FIXED INCOME FUND
The Pillar Fixed Income Fund Class A shares produced a 2.94% total return
for the year ended December 31, 1996. These results reflect a very volatile and
difficult U.S. bond market. Although the year started off on a positive note
for fixed income investments, the bond market came under intense pressure in
February with no relief until late in the third quarter. The dramatic increase
in interest rates was fueled by stronger than expected economic growth combined
with surging commodity prices. These factors raised fears of higher levels of
inflation in the future.
Throughout this period the Pillar Fixed Income Fund maintained a
conservative structure. As of year end, the quality profile was very high with
over 75% of the portfolio invested in U.S. Government issues. In addition, the
average maturity of the portfolio was approximately 5 years in length.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 4/30/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar Fixed Income Fund, Class A $10,000 $10,867 $12,069 $11,386 $13,408 $13,802
Pillar Fixed Income Fund, Class B $ 9,600 $10,417 $11,539 $10,858 $12,743 $13,084
Lehman Intermediate Government/Corporate Index $10,000 $10,721 $11,663 $11,438 $13,189 $13,724
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 2.94% 4.58% 7.02%
- ---------------------------------------------------------
CLASS B (without load) 2.68% 4.28% 6.74%
- ---------------------------------------------------------
CLASS B* (with load) -1.45% 2.86% 5.82%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. FIXED INCOME FUND CLASS A
AND CLASS B SHARES COMMENCED OPERATIONS ON APRIL 1, 1992.
4
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
NEW JERSEY MUNICIPAL SECURITIES FUND
Municipal issues outperformed their taxable counterparts throughout 1996 as
fears of tax reform abated and economic conditions provided a favorable
environment for interest rates. Declining new issuance lent further support to
bond prices as demand exceeded supply in many maturities and sectors. This in
turn led to rich prices which made tax-exempt issues less attractive to all but
those investors in the highest tax brackets.
The Pillar New Jersey Municipal Securities Fund Class A shares posted a
total return of 3.42% for the year ending December 31, 1996 while the Lehman
7-Year Municipal Bond Index rose 4.4%. The difference in return lies in the
Fund's single state status coupled with an average weighted maturity of 6.5
years, slightly less than the index.
How much new debt the state and local governments sell going forward will
depend upon maintenance of fiscal restraint. This will prove challenging in
light of the federal government's intent to further reduce financial support.
Ten-year municipals yielded approximately 74% of taxable treasuries as of year
end and we do not expect the ratios to change much during 1997 barring enactment
of significant tax reform.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 5/31/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar NJ Municipal Fund, Class A $10,000 $10,505 $11,605 $11,127 $12,637 $13,069
Pillar NJ Municipal Fund, Class B $ 9,900 $10,386 $11,434 $10,937 $12,391 $12,773
Lehman 7-Year Municipal Bond Index $10,000 $10,610 $11,716 $11,392 $13,006 $13,576
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 3.42% 4.04% 6.10%
- ---------------------------------------------------------
CLASS B (without load) 3.08% 3.76% 5.73%
- ---------------------------------------------------------
CLASS B* (with load) 2.04% 3.41% 5.50%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 1.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. NEW JERSEY MUNICIPAL SECURITIES
FUND CLASS A AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 4, 1992.
5
<PAGE>
MANAGER'S DISCUSSION & ANALYSIS (CONTINUED)
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
The Pillar Intermediate-Term Government Fund Class A shares total return
for the year ending December 31, 1996 was 3.26%. Interest rates started last
year lower than they are today but rose during the year before starting to
decline again in August. The yield curve has flattened and we expect interest
rates to trade in a narrow band for awhile. As of the end of the year, the Fund
had an average weighted maturity of 3.6 years with a duration of 3.14 years. The
Fund is invested with 44% of its assets in U.S. Treasury Notes and 54% in U.S.
Government Agency securities.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 4/30/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar Intermediate-Term Government Fund, Class A $10,000 $10,540 $11,417 $10,863 $12,493 $12,900
Pillar Intermediate-Term Government Fund, Class B $ 9,600 $10,112 $10,915 $10,360 $11,884 $12,241
Lehman Intermediate Government/Corporate Index $10,000 $10,721 $11,663 $11,438 $13,189 $13,724
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 3.26% 4.15% 5.62%
- ---------------------------------------------------------
CLASS B (without load) 3.01% 3.89% 5.36%
- ---------------------------------------------------------
CLASS B* (with load) -1.10% 2.49% 4.45%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. INTERMEDIATE-TERM GOVERNMENT
SECURITIES CLASS A AND CLASS B SHARES COMMENCED OPERATIONS ON APRIL 1, 1992.
PENNSYLVANIA MUNICIPAL SECURITIES FUND
Market yields rose substantially during the first third of 1996. We had a
summer rally lasting until after the election with a sell off in December.
Inflation remained subdued through the year although some storm clouds were
appearing on the horizon in the fourth quarter. The economy gained strength
during the second half of the year and we may see some pressure on rates in the
early part of 1997. We made some adjustments to the Fund by raising the average
coupon yield and finished the year with a strong fourth quarter. If rates rise
in 1997 we will view this as an opportunity to capture higher returns.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 5/31/93 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C>
Pillar PA Municipal Securities Fund, Class A $10,000 $10,417 $10,149 $11,319 $11,759
Pillar PA Municipal Securities Fund, Class B $ 9,900 $10,309 $10,018 $11,135 $11,551
Lehman 5-Year Municipal Bond Index $10,000 $10,501 $10,338 $11,541 $12,030
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 3.89% 4.12% 4.46%
- ---------------------------------------------------------
CLASS B (without load) 3.74% 3.86% 4.28%
- ---------------------------------------------------------
CLASS B* (with load) 2.73% 3.52% 4.00%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 1.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. PENNSYLVANIA MUNICIPAL SECURITIES
FUND CLASS A AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 3, 1993 AND
MAY 13, 1993, RESPECTIVELY.
6
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
GNMA FUND
The Pillar GNMA Fund Class A shares had a total return of 3.09% for the
year ending December 31, 1996. Mortgage prepayments for the year were at a
minimum. There was little refinancing as a result of the rise in interest rates.
As of the end of the year, the Fund was invested exclusively in GNMA pooled
bonds. Most of the bonds were purchased at a discount so any prospective
refinancing would only enhance returns from the Fund.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 5/31/93 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C>
Pillar GNMA Fund, Class A $10,000 $10,162 $ 9,684 $11,574 $11,931
Pillar GNMA Fund, Class B $ 9,700 $ 9,850 $ 9,353 $11,152 $11,457
Salomon Mortgage Bond Index $10,000 $10,281 $10,135 $11,835 $12,470
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 3.09% 5.50% 5.00%
- ---------------------------------------------------------
CLASS B (without load) 2.73% 5.16% 4.64%
- ---------------------------------------------------------
CLASS B* (with load) -0.38% 4.12% 3.77%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 3.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. GNMA FUND CLASS A AND CLASS B
SHARES COMMENCED OPERATIONS ON MAY 3, 1993 AND MAY 5, 1993, RESPECTIVELY.
EQUITY VALUE FUND
The Pillar Equity Value Fund posted good performance for the year ending
December 31, 1996 with the Class A shares rising a total of 21.69% vs. the S&P
500 Composite Index return of 22.9%. Shareholders benefited from good stock
selection in contrast to 1995 when overweightings in the financial, healthcare,
and technology sectors provided most of the positive influence. While those
sectors continued to perform well, good returns in 1996 were more the result of
an eclectic mix of larger capitalization names ranging from natural resource
companies to bank holding concerns. Generally, the stock market reached new
record levels, reflecting a more benign outlook for monetary policy and
surprisingly good corporate earnings.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 4/30/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar Equity Value Fund, Class A $10,000 $10,668 $11,321 $10,686 $14,608 $17,777
Pillar Equity Value Fund, Class B $ 9,600 $10,231 $10,829 $10,199 $13,906 $16,847
S&P 500 Composite Index $10,000 $10,726 $11,802 $11,957 $16,446 $20,218
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 21.69% 16.23% 13.14%
- ---------------------------------------------------------
CLASS B (without load) 21.15% 15.87% 12.82%
- ---------------------------------------------------------
CLASS B* (with load) 16.34% 14.31% 11.85%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. EQUITY VALUE FUND CLASS A AND
CLASS B SHARES COMMENCED OPERATIONS ON APRIL 1, 1992.
7
<PAGE>
EQUITY VALUE FUND (CONTINUED)
The economy, at this juncture, appears to be showing signs of strength as
non-farm payroll employment, industrial production, and consumer spending all
point to a modest increase in GDP. Current estimates for the 4th quarter of 1996
seem to suggest a growth rate somewhat higher than 3%. Corporate profits have
met or exceeded analysts expectations for 1996 and, should faster overall
economic growth come to fruition, the same could very well be the case for 1997.
The greatest risk to the market given this scenario would be a rise in either
short or long-term interest rates resulting in contracting P/E multiples and/or
slower overall growth. The Pillar Equity Value Fund will most likely maintain a
neutral sector allocation vs. the S&P 500 Composite Index as sector rotation
continues to be sharp and frequent. Additionally, companies from a broad range
of industries, i.e., banking, insurance, technology, pharmaceutical, and
consumer products, all have good potential for positive "top line" growth,
particularly as compared with the average company in a continued modest economic
expansion.
EQUITY INCOME FUND
Stocks recorded another stellar performance in 1996 with the S&P 500
Composite Index rising 22.9%. The two year increase of more than 60% was the
best within recent memory. Corporate profits continued to exceed all but the
most bullish expectations. Inflation remained under control and interest rates
were not a hindrance. The Fund's Class A shares advanced by 21.01% for the year
ending December 31, 1996 led by gains in financials and energy where the Fund
was well represented.
As 1997 commences, the outlook for continued profit expansion looks
favorable and estimates are rising. Cash flows for major U.S. companies remain
strong, and companies are increasing their dividends at a faster rate than in
the last several years. This should provide a good environment for the Fund
whose objective is growth of capital consistent with an emphasis on current
income.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 4/30/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar Equity Income Fund, Class A $10,000 $10,662 $11,757 $11,238 $15,233 $18,434
Pillar Equity Income Fund, Class B $ 9,600 $10,215 $11,231 $10,719 $14,493 $17,492
S&P 500 Composite Index $10,000 $10,726 $11,802 $11,957 $16,446 $20,218
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 21.01% 16.18% 14.38%
- ---------------------------------------------------------
CLASS B (without load) 20.70% 15.92% 14.10%
- ---------------------------------------------------------
CLASS B* (with load) 15.83% 14.34% 13.12%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. EQUITY INCOME FUND CLASS A AND
CLASS B SHARES COMMENCED OPERATIONS ON APRIL 1, 1992.
8
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
MID CAP VALUE FUND
Although the Fund had a positive year we underperformed the more popular
higher capitalization indices. The market, due to the high flows into mutual
funds, rewarded the larger capitalized stocks with greater liquidity. The Fund's
return was hampered by an overweighting in economically sensitive companies
although the weighting was reduced by 35% during the year. We also suffered from
the impact of having several very illiquid securities. Our return of 13.56% for
the year ending December 31, 1996 was below the S&P 400 Mid-Cap Index of 19.2%,
but was comparable to the Russell 2000 of 14.4%. We are continuing to structure
the portfolio to more closely represent the securities found in the S&P 400
Mid-Cap Index as we move into 1997.
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 4/30/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar Mid-Cap Value Fund, Class A $10,000 $11,037 $12,496 $11,329 $13,537 $15,372
Pillar Mid-Cap Value Fund, Class B $ 9,600 $10,589 $11,953 $10,813 $12,881 $14,597
S&P 400 Mid-Cap Index $10,000 $11,385 $12,972 $12,506 $16,258 $19,387
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 13.56% 7.15% 9.54%
- ---------------------------------------------------------
CLASS B (without load) 13.32% 6.89% 9.27%
- ---------------------------------------------------------
CLASS B* (with load) 8.80% 5.45% 8.33%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. MID CAP VALUE FUND CLASS A AND
CLASS B SHARES COMMENCED OPERATIONS ON APRIL 1, 1992.
BALANCED GROWTH FUND
The U.S. equity markets outperformed the fixed income markets by a wide
margin in 1996. The S&P 500 Composite Index rose 22.9% while the Lehman
Government/Corporate Index rose just 4%. The Pillar Balanced Growth Fund
returned 13.77% for the year ending December 31, 1996 which was slightly better
than the balanced index return of 13.4%.
The asset allocation of the Fund throughout most of the year was 50% equity
and 50% fixed income. While this position was less aggressive than many balanced
funds, it is consistent with our conservative approach.
Regarding the equity portion, substantial emphasis was placed on the
financial, health care, and
<TABLE>
<CAPTION>
INITIAL INVESTMENT DATE 4/30/92 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Pillar Balanced Growth Fund, Class A $10,000 $10,533 $11,364 $10,840 $13,849 $15,756
Pillar Balanced Growth Fund, Class B $ 9,600 $10,093 $10,862 $10,333 $13,177 $14,942
S&P 500 Composite Index $10,000 $10,726 $11,802 $11,957 $16,446 $20,218
Lehman Intmdt. Gov't/Corp. Index $10,000 $10,721 $11,663 $11,438 $13,189 $13,724
</TABLE>
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year 3 Year Since Inception
- ---------------------------------------------------------
CLASS A 13.77% 11.51% 10.27%
- ---------------------------------------------------------
CLASS B (without load) 13.39% 11.22% 9.97%
- ---------------------------------------------------------
CLASS B* (with load) 8.88% 9.71% 9.02%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. BALANCED GROWTH FUND CLASS A AND
CLASS B SHARES COMMENCED OPERATIONS ON APRIL 1, 1992.
9
<PAGE>
MANAGER'S DISCUSSION & ANALYSIS (CONTINUED)
BALANCED GROWTH FUND (CONTINUED)
technology sectors where overall returns were highest. The vast majority of
issues in this segment were large capitalization stocks that are leaders in
their particular field.
The fixed income segment, as in past years, continued to emphasize very
high quality and a maturity pattern similar to that of the Lehman Intermediate
Government/Corporate Index which has an average life of 4.5 years. This position
was basically neutral to the portfolio's fixed income performance.
INTERNATIONAL GROWTH FUND
For the year ended December 31, 1996, the Pillar International Growth Fund
Class A provided a net return to shareholders of 11.17%. The Fund outperformed
its benchmark, the Morgan Stanley Capital International-Europe, Australia, Far
East Index (MSCI EAFE), which returned 6.06% during the year.
As in 1995, markets throughout the world were generally up during 1996, and
in many cases to a significant degree. One notable exception was the Japanese
market where the Nikkei Index fell 15.4% for the year in U.S. dollar terms (4.8%
in local currency terms). The fall in the Japanese stock market came in the face
of relatively positive economic news. The Japanese economy grew by approximately
3%.
INITIAL INVESTMENT DATE 5/31/95 12/95 12/96
Pillar International Growth Fund, Class A $10,000 $10,747 $11,948
Pillar International Growth Fund, Class B $ 9,600 $10,302 $11,423
Morgan Stanley MSCI EAFE Index $10,000 $10,649 $11,295
INVESTMENT GROWTH ANALYSIS
- ---------------------------------------------------------
Average Annual Total Return 1
- ---------------------------------------------------------
1 Year Since Inception
- ---------------------------------------------------------
CLASS A 11.17% 11.46%
- ---------------------------------------------------------
CLASS B (without load) 10.88% 11.18%
- ---------------------------------------------------------
CLASS B* (with load) 6.42% 8.48%
- ---------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1 FOR THE PERIOD ENDED DECEMBER 31, 1996. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICTIVE OF FUTURE PERFORMANCE. 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. INTERNATIONAL GROWTH FUND
CLASS A AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 1, 1995 AND MAY 4,
1995, RESPECTIVELY.
10
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
during the year while inflation remained under control and the Yen depreciated
to a range that should allow Japanese exporters to become competitive again and
increase market share. Slowing declines in land and condominium prices suggest
that the financial crisis is past the worst period, and private sector machinery
orders have risen sharply. On the negative side, the shares of Japanese bank
stocks have been hurt badly as these banks face the prospect of global
competition after many years of government protection and regulation.
The European markets, contrary to Japan, posted strong returns driven by
falling interest rates and expected economic and corporate earnings acceleration
in 1997. Indeed, continental Europe is gradually picking up steam due to the
effects of stimulative monetary policies and more competitive currency levels.
Inflation should remain low due to keen competition and an excess supply of
labor. The fiscal austerity programs necessary to bring nations into compliance
with EMU restrictions have been largely offset by the accommodative monetary
stance. Spain was the top performing market as it benefited from the interest
rate sensitivity of the banks and utilities which dominate its market. German
stocks posted strong gains during the year driven by the expected benefits from
corporate restructurings. U.K. stocks were also up sharply as the U.K. economy
showed strong growth despite early moves by the Bank of England toward tighter
monetary policy. The U.K. economy is further along in the cycle than the other
European markets, and the Fund's positioning in defensive stocks there proved to
be beneficial. For the year, U.K. equities rose 27.4% in U.S. dollar terms.
On balance, our positive fundamental outlook for the Asian economies and
the long term prospects of the Asian stock market remain intact. The winning
formula has been and remains: high savings and investment, an educated and
disciplined workforce, low taxes, and limited spending on social welfare
programs and defense. Despite the recent slowdown, Asian economies (excluding
Japan) continue to grow at twice the rate of the developed countries and well in
excess of most of the world's emerging markets in other geographical regions.
Many of these markets tend to be highly correlated with the U.S. equity market.
As an example, Hong Kong followed Wall Street to a record high, up 33.1% in U.S.
dollar terms for the year.
Recoveries in the big Latin American economies--Argentina, Brazil and
Mexico--are gathering steam. We expect strong GDP growth in these nations to
continue through 1997 and to help bolster equity returns during the period. In
1996, Brazil, Argentina and Mexico all registered strong double digit market
returns in U.S. dollars.
11
<PAGE>
STATEMENT OF NET ASSETS
U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--96.9%
U.S. Treasury Bills (A)
4.670%, 01/02/97 $ 45,000 $ 44,994
4.690%, 01/09/97 65,000 64,932
4.980%, 01/16/97 60,000 59,876
4.960%, 01/23/97 10,000 9,970
4.770%, 02/06/97 80,000 79,599
4.970%, 02/13/97 40,000 39,762
4.840%, 02/27/97 40,000 39,693
4.870%, 03/06/97 110,000 109,048
4.970%, 03/13/97 35,000 34,657
U.S. Treasury Note
6.625%, 03/31/97 10,000 10,035
--------
Total U.S. Treasury Obligations
(Cost $492,566) 492,566
--------
CASH EQUIVALENT--3.5%
SEI Liquid Asset Trust --
Treasury Portfolio 17,643 17,643
--------
Total Cash Equivalent
(Cost $17,643) 17,643
--------
Total Investments--100.4%
(Cost $510,209) 510,209
--------
OTHER ASSETS AND LIABILITIES--(0.4%)
Other Assets and Liabilities, Net (1,977)
--------
NET ASSETS:
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 504,555,616 outstanding shares of
beneficial interest 504,556
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 3,503,782 outstanding shares of
beneficial interest 3,504
Undistributed net investment
income 131
Accumulated net realized gain
on investments 41
--------
Total Net Assets--100.0% $508,232
========
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) THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS REPRESENTS THE SECURITY'S
DISCOUNT RATE AT PURCHASE.
PRIME OBLIGATION MONEY MARKET FUND
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--52.1%
Federal Farm Credit Bank
5.230%, 01/06/97 $ 5,000 $ 4,996
5.320%, 02/03/97 5,000 5,000
5.320%, 03/03/97 5,000 5,000
Federal Home Loan Bank
5.525%, 01/03/97 5,000 5,000
5.230%, 01/09/97 20,000 19,977
5.440%, 01/10/97 5,000 5,000
5.210%, 01/16/97 15,000 14,967
5.300%, 01/16/97 5,000 5,000
5.220%, 01/23/97 5,000 4,984
5.255%, 01/29/97 5,000 5,000
5.245%, 02/06/97 5,000 5,000
5.250%, 02/07/97 5,000 5,000
5.050%, 02/21/97 5,000 5,000
5.265%, 03/13/97 5,000 5,000
5.500%, 03/25/97 5,000 4,999
5.200%, 03/26/97 5,000 4,939
5.590%, 04/01/97 5,000 5,000
5.670%, 04/24/97 5,000 5,000
5.705%, 05/01/97 5,000 5,000
5.965%, 10/09/97 5,000 5,000
5.905%, 10/15/97 5,000 5,000
5.800%, 11/04/97 5,000 5,000
Federal National Mortgage Association
5.220%, 01/16/97 5,000 4,989
5.220%, 01/17/97 10,000 9,977
5.220%, 01/22/97 10,000 9,970
5.230%, 01/31/97 5,000 4,978
5.260%, 02/06/97 5,000 4,974
5.240%, 02/10/97 5,000 4,971
5.450%, 02/13/97 5,000 5,000
5.250%, 02/14/97 5,000 4,968
5.210%, 03/14/97 5,000 4,948
5.340%, 03/18/97 5,900 5,835
5.340%, 03/24/97 10,000 9,878
5.230%, 03/31/97 10,000 9,871
--------
Total U.S. Government Agency Obligations
(Cost $215,221) 215,221
--------
COMMERCIAL PAPER--33.9%
Abbey National Bank
5.290%, 03/03/97 5,000 4,955
5.320%, 03/11/97 5,000 4,949
6.000%, 10/30/97 5,000 5,009
American Express Credit
5.280%, 02/18/97 5,000 4,965
5.300%, 03/11/97 5,000 4,949
American General Finance
5.310%, 01/13/97 5,000 4,991
5.300%, 01/21/97 5,000 4,985
12
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Centric Funding
5.330%, 01/10/97 $ 5,000 $ 4,993
5.340%, 01/28/97 5,000 4,980
Dean Witter
5.300%, 02/28/97 5,000 4,957
Ford Motor Credit
5.580%, 01/03/97 5,000 4,999
5.310%, 01/13/97 5,000 4,991
General Electric Capital
5.390%, 01/09/97 5,000 4,994
5.330%, 02/24/97 5,000 4,960
5.290%, 03/04/97 5,000 4,955
Georgia Power
5.570%, 02/03/97 5,000 4,975
GTE Northwest
5.650%, 01/17/97 5,000 4,987
Merrill Lynch
5.330%, 01/17/97 5,000 4,988
5.330%, 01/21/97 5,000 4,985
5.450%, 01/23/97 5,000 4,983
Norwest Financial
5.320%, 01/21/97 10,000 9,970
PHH
5.350%, 01/24/97 5,000 4,983
Republic of New York
5.300%, 01/27/97 10,000 9,962
Safeco Credit
5.290%, 01/06/97 5,500 5,496
5.290%, 03/12/97 2,000 1,979
5.320%, 03/13/97 5,000 4,948
Southern California Edison
5.300%, 01/10/97 3,000 2,996
--------
Total Commercial Paper
(Cost $139,884) 139,884
--------
CERTIFICATE OF DEPOSIT--2.4%
Societe General
5.400%, 01/06/97 10,000 10,000
--------
Total Certificate of Deposit
(Cost $10,000) 10,000
--------
TIME DEPOSIT--2.4%
Deutsche Bank
5.380%, 01/15/97 10,000 10,000
--------
Total Time Deposit
(Cost $10,000) 10,000
--------
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--8.9%
J.P. Morgan Securities
6.60%, dated 12/31/96, matures
01/02/97, repurchase price
$27,558,957 (collateralized by
U.S. Treasury Bonds, par
value $27,435,000, maturity
dates ranging from 11/15/16 to
08/15/23, market value
$28,104,850) (A) $27,549 $ 27,549
Nomura Securities
6.60%, dated 12/31/96, matures
01/02/97, repurchase price
$8,988,793 (collateralized by
U.S. Treasury STRIPS, par value
$39,895,000, matures 11/15/18,
market value $9,165,318) (A) 8,986 8,986
--------
Total Repurchase Agreements
(Cost $36,535) 36,535
--------
Total Investments--99.7%
(Cost $411,640) 411,640
--------
OTHER ASSETS AND LIABILITIES--0.3%
Other Assets and Liabilities, Net 1,130
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 401,442,019
outstanding shares of
beneficial interest 401,442
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 11,346,795
outstanding shares of
beneficial interest 11,347
Undistributed net investment income 13
Accumulated net realized loss on investments (32)
--------
Total Net Assets--100.0% $412,770
========
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) TRI PARTY REPURCHASE AGREEMENT.
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
13
<PAGE>
STATEMENT OF NET ASSETS
TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--93.7%
ALASKA--0.6%
Ancorage, Series A (GO)
(AMBAC) (C)
3.800%, 08/01/97 $ 390 $ 390
--------
DELAWARE--0.7%
State, Economic Development
Authority (A) (B) (C)
4.150%, 01/01/97 500 500
--------
FLORIDA--4.5%
Alachua County, Refunding
Bonds (A) (B) (C)
3.450%, 01/01/97 700 700
Orange County, Housing Finance
Authority, Windscape
Project (A) (B) (C)
4.500%, 01/01/97 400 400
State, Housing Finance
Authority (A) (B) (C)
4.150%, 01/01/97 1,900 1,900
Volusia County, Health Facility
Authority, Aces Pooled Hospital
Program (RB) (FGIC) (A)
4.200%, 01/01/97 200 200
--------
3,200
--------
GEORGIA--2.8%
Marietta, Housing Authority,
Bells Ferry (B) (C)
3.550%, 01/15/97 2,000 2,000
--------
ILLINOIS--4.8%
State, Development Finance
Authority, Illinois Power
Project, Series B (A) (B) (C)
4.150%, 01/01/97 2,000 2,000
State, Health Facilities Authority,
Sisters Hospital Service,
Series E (MBIA) (A) (B) (C)
4.150%, 01/01/97 1,400 1,400
--------
3,400
--------
IOWA--0.6%
Polk County, Hospital Equipment
Improvement Authority
(MBIA) (A) (B)
4.100%, 01/01/97 400 400
--------
LOUISIANA--9.6%
New Orleans, Aviation Board,
Series A (MBIA) (A) (B) (C)
4.100%, 01/01/97 2,900 2,900
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
New Orleans, Aviation Board,
Series B (MBIA) (A) (B) (C)
4.100%, 01/01/97 $ 900 $ 900
State, Public Facilities Authority,
Hospital Revenue (AMBAC)
(A) (B) (C)
4.200%, 01/01/97 1,000 1,000
State, Public Facilities Authority,
Willis-Knighton Medical Center
(AMBAC) (A) (B)
4.200%, 01/01/97 2,000 2,000
--------
6,800
--------
MARYLAND--8.7%
Baltimore County
3.650%, 01/09/97 1,000 1,000
Baltimore County, Pollution Control,
Baltimore Gas & Electric
3.400%, 04/02/97 1,000 1,000
Howard County, Multi-Family
Housing Authority, Sherwood
Crossing Project (B) (C)
3.750%, 06/02/97 1,690 1,690
Montgomery County
3.600%, 02/05/97 1,500 1,500
Montgomery County, Draper
Lane Apartments (RB) (FGIC) (A)
4.200%, 01/01/97 1,000 1,000
--------
6,190
--------
MICHIGAN--2.5%
State, Hospital Financing
Authority (A) (B) (C)
4.150%, 01/01/97 1,800 1,800
--------
MINNESOTA--2.0%
New Brighton, Industrial
Development Authority,
Unicare Nursing Homes
Project (A) (B) (C)
4.450%, 01/01/97 1,400 1,400
--------
MISSOURI--3.6%
Osage Beach, Industrial
Development Authority
(A) (B) (C)
3.550%, 01/01/97 275 275
Saint Charles County, Industrial
Development Authority, Cedar
Ridge Apartments (A) (B) (C)
4.200%, 01/01/97 675 675
14
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Saint Louis County, Industrial
Development Authority,
Riverport Associates (A) (B) (C)
4.350%, 01/01/97 $ 400 $ 400
Springfield, Industrial Development
Authority, Pebblecreek Apartments
(A) (B) (C)
4.150%, 01/01/97 1,200 1,200
--------
2,550
--------
NEW HAMPSHIRE--1.4%
New Hampshire Health Facilities
Authority Revenue (RB)
4.000%, 06/01/97 1,000 1,001
--------
NEW JERSEY--14.7%
Bayonne (GO)
4.250%, 07/10/97 1,500 1,502
Middlesex County (GO)
3.900%, 07/15/97 500 501
Morris County (GO)
3.970%, 08/07/97 500 501
New Brunswick, Anticipation Note
4.000%, 12/09/97 1,000 1,003
New Jersey (TRAN)
3.500%, 01/13/97 1,000 1,000
New Jersey Revenue (TAN)
3.600%, 01/13/97 1,000 1,000
New Jersey Tax & Revenue
3.350%, 03/07/97 1,000 1,000
New Providence, Anticipation Note
4.500%, 09/19/97 600 603
Princeton, Anticipation Note
3.850%, 12/12/97 300 301
Rocky Hill, Anticipation Note
4.700%, 02/21/97 500 500
Rutgers State University, Series A,
Prerefunded @ 102 (B) (C) (D)
8.100%, 05/01/97 1,000 1,034
State, Economic Development
Authority, Peddie School
Project (A) (B) (C)
3.900%, 01/02/97 1,350 1,350
Summit, Anticipation Note
3.820%, 12/05/97 150 150
--------
10,445
--------
NEW YORK--2.3%
Garden City, Anticipation Note
3.750%, 04/03/97 650 650
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
New York City Municipal
Water Finance Authority
3.600%, 04/07/97 $1,000 $ 1,000
--------
1,650
--------
NORTH CAROLINA--2.1%
Wake County, Carolina Power &
Light Company (A) (B) (C)
4.150%, 01/01/97 1,100 1,100
Winston Salem, Risk Acceptance
Management Corporation
(A) (B) (C)
4.150%, 01/01/97 365 365
--------
1,465
--------
OHIO--2.1%
Cleveland, Waterworks Revenue
Series F-92 A (AMBAC)
5.200%, 01/01/97 1,000 1,000
Ohio State, Series N (GO)
5.000%, 05/15/97 500 502
--------
1,502
--------
TENNESSEE--5.8%
Morristown, Industrial Development
Board, Williamhouse Regency
Project (A) (B) (C)
4.350%, 01/01/97 2,100 2,100
Nashville & Davidson Counties,
Old Hickory Towers, Series A
(A) (B) (C)
4.350%, 01/01/97 2,000 2,000
--------
4,100
--------
TEXAS--15.1%
Harris County, Housing Finance
Authority, Idlewood Park Project,
Series A (A) (B) (C)
4.200%, 01/01/97 1,400 1,400
Harris County, Toll Road Multimode
Series Lien-A, Prerefunded @ 103
(RB) (D)
7.400%, 02/15/97 1,000 1,034
Hunt County, Industrial
Development Authority, Trico
Industries (A) (B) (C)
3.000%, 01/07/97 2,700 2,700
Texas State (TAN)
4.750%, 08/29/97 5,150 5,190
15
<PAGE>
STATEMENT OF NET ASSETS
TAX-EXEMPT MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Travis County, Housing Finance
Authority, Channings Mark
Apartments Project (A) (B) (C)
4.250%, 01/01/97 $ 400 $ 400
--------
10,724
--------
VIRGINIA--4.1%
Harrisonburg, Redevelopment and
Housing Authority, Rolling Brook
Village Apartments (B) (C)
3.500%, 02/01/98 1,935 1,935
Richmond, Capital Region Authority,
International Airport, Series B
(AMBAC) (A) (B) (C)
4.100%, 01/01/97 1,000 1,000
--------
2,935
--------
WASHINGTON--2.9%
Snohomish, Public Utility, Electric
Revenue, Prerefunded @ 102
(RB) (B) (C) (D)
8.000%, 01/01/97 2,000 2,040
--------
WISCONSIN--2.8%
Milwaukee, Revenue Anticipation
Note, Series A
3.500%, 02/27/97 2,000 1,999
--------
Total Municipal Bonds
(Cost $66,491) 66,491
--------
CASH EQUIVALENTS--5.9%
SEI Institutional Tax-Free Portfolio 2,575 2,575
Goldman Sachs Tax-Free
Money Market 1,605 1,605
--------
Total Cash Equivalents
(Cost $4,180) 4,180
--------
Total Investments--99.6%
(Cost $70,671) 70,671
--------
OTHER ASSETS AND LIABILITIES--0.4%
Other Assets and Liabilities, Net 263
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 67,087,948
outstanding shares of
beneficial interest 67,088
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 3,852,752
outstanding shares of
beneficial interest 3,853
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Accumulated net realized loss
on investments $ (7)
--------
Total Net Assets--100.0% $ 70,934
========
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) FLOATING RATE INSTRUMENT WITH DEMAND FEATURES. THE RATE REFLECTED ON THE
STATEMENT OF NET ASSETS IS THE RATE IN EFFECT ON DECEMBER 31, 1996. THE DATE
SHOWN IS THE LONGER OF THE RESET DATE OR THE DEMAND DATE.
(B) PUT OR DEMAND FEATURES EXIST REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY. THE MATURITY DATE SHOWN IS THE NEXT
DEMAND DATE.
(C) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT OR OTHER CREDIT
SUPPORT.
(D) PREREFUNDED SECURITY--THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
GO -- GENERAL OBLIGATION
RB -- REVENUE BOND
TAN -- TAX ANTICIPATION NOTE
TRAN -- TAX AND REVENUE ANTICIPATION NOTE
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR CERTAIN
SECURITIES AS DEFINED IN THE STATEMENT OF NET ASSETS:
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
FGIC -- FEDERAL GUARANTY INSURANCE CORPORATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
U.S. TREASURY SECURITIES PLUS MONEY
MARKET FUND
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--59.4%
U.S. Treasury Bills (A)
4.990%, 01/09/97 $ 6,000 5,993
4.970%, 01/16/97 6,000 5,988
4.990%, 01/23/97 6,000 5,982
5.030%, 02/06/97 6,000 5,970
5.080%, 02/13/97 6,000 5,964
5.040%, 04/03/97 3,000 2,961
4.970%, 05/29/97 6,000 5,877
--------
Total U.S. Treasury Obligations
(Cost $38,735) 38,735
--------
REPURCHASE AGREEMENTS--40.7%
J.P. Morgan Securities
6.61%, dated 12/31/96, matures
01/02/97, repurchase price
$13,194,141 (collateralized
by U.S. Treasury STRIPS, par
value $34,119,375, maturity
dates ranging from 02/15/98
to 02/15/12, market value
$13,454,846) (B) 13,189 13,189
16
<PAGE>
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DECEMBER 31, 1996
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Nomura Securities
6.61%, dated 12/31/96, matures
01/02/97, repurchase price
$13,300,910 (collateralized by
U.S. Treasury STRIPS, par value
$59,034,000, matures 11/15/18,
market value $13,562,235) (B) $13,296 $ 13,296
--------
Total Repurchase Agreements
(Cost $26,485) 26,485
--------
Total Investments--100.1%
(Cost $65,220) 65,220
--------
OTHER ASSETS AND LIABILITIES--(0.1)%
Other Assets and Liabilities, Net (47)
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 65,192,853
outstanding shares of beneficial interest 65,193
Accumulated net realized loss
on investments (20)
--------
Total Net Assets--100.0% $ 65,173
========
Net Asset Value, Offering and Redemption
Price Per Share-- Class A $ 1.00
========
(A) THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS REPRESENTS THE SECURITY'S
DISCOUNT RATE AT PURCHASE.
(B) TRI PARTY REPURCHASE AGREEMENT
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
CORPORATE BONDS--58.5%
American General Finance
6.625%, 06/01/97 235 236
American General Finance (MTN)
6.730%, 06/02/97 500 502
American Home Products
6.875%, 04/15/97 1,612 1,617
Associates North America
8.625%, 06/15/97 1,000 1,013
AT&T Capital (MTN)
7.590%, 01/31/97 600 601
4.790%, 02/03/97 1,000 999
Central Illinois Light
5.500%, 03/01/97 100 100
Chrysler Financial (MTN)
7.280%, 03/18/97 1,000 1,003
Conrail
5.570%, 04/01/97 499 499
- --------------------------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Consolidated Natural Gas
9.375%, 02/01/97 $ 160 $ 160
Ford Motor Credit
7.875%, 01/15/97 550 550
Ford Motor Credit (MTN)
7.950%, 03/27/97 300 302
General Electric Capital
8.000%, 02/01/97 50 50
General Motors
7.625%, 02/15/97 300 301
General Motors Acceptance (MTN)
7.900%, 05/01/97 500 504
Household Finance
7.500%, 03/15/97 1,000 1,004
Houston Power & Light
7.625%, 03/01/97 1,000 1,003
Kimberly Clark
9.125%, 06/01/97 100 101
Mobil
6.500%, 02/15/97 1,120 1,121
Morgan Stanley Group
7.320%, 01/15/97 250 250
Pepsico
6.875%, 05/15/97 1,000 1,004
Pepsico Capital (A)
3.550%, 04/01/97 233 230
Pitney Bowes Credit
5.625%, 02/15/97 1,600 1,600
Private Export Funding
8.150%, 04/30/97 500 504
Procter and Gamble
6.850%, 06/01/97 300 301
Public Service Electrical and Gas
7.100%, 04/07/97 1,500 1,504
Shell Oil
6.000%, 01/15/97 710 710
Southern California Edison
5.900%, 01/15/97 361 361
Transamerica Financial
7.875%, 02/15/97 1,000 1,003
--------
Total Corporate Bonds
(Cost $19,128) 19,133
--------
U.S. TREASURY OBLIGATIONS--36.8%
U.S. Treasury Bills (A)
5.290%, 07/24/97 3,000 2,913
5.520%, 08/21/97 1,000 967
5.210%, 09/18/97 5,500 5,296
5.130%, 11/13/97 2,000 1,908
5.160%, 12/11/97 1,000 950
--------
Total U.S. Treasury Obligations
(Cost $12,021) 12,034
--------
17
<PAGE>
STATEMENT OF NET ASSETS
SHORT-TERM INVESTMENT FUND (CONTINUED)
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENTS--3.5%
SEI Liquid Asset Trust --
Government Portfolio $933 $ 933
SEI Liquid Asset Trust--
Treasury Portfolio 212 212
--------
Total Cash Equivalents
(Cost $1,145) 1,145
--------
Total Investments--98.8%
(Cost $32,294) 32,312
--------
OTHER ASSETS AND LIABILITIES--1.2%
Other Assets and Liabilities, Net 394
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 3,160,673
outstanding shares of
beneficial interest 31,673
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 107,312
outstanding shares of
beneficial interest 1,077
Accumulated net realized loss on investments (62)
Net unrealized appreciation on investments 18
--------
Total Net Assets--100.0% $ 32,706
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 10.01
========
Net Asset Value and Redemption
Price Per Share -- Class B $ 10.02
========
Maximum Offering
Price Per Share -- Class B ($10.02/99%) $ 10.12
========
(A) THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS REPRESENTS THE SECURITY'S
DISCOUNT RATE AT PURCHASE.
MTN -- MEDIUM TERM NOTE
FIXED INCOME FUND
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--47.3%
U.S. Treasury Notes
5.375%, 11/30/97 6,000 5,987
7.250%, 02/15/98 14,000 14,226
6.375%, 01/15/00 4,000 4,036
6.375%, 08/15/02 22,000 22,154
U.S. Treasury STRIPS (A)
5.980%, 08/15/03 4,800 3,184
--------
Total U.S. Treasury Obligations
(Cost $50,087) 49,587
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS--29.1%
Federal Farm Credit Bank
6.920%, 09/09/03 1,000 1,020
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Federal Home Loan Bank
7.780%, 10/19/01 $2,000 $ 2,113
6.500%, 11/29/05 500 495
Federal Home Loan
Mortgage Corporation
6.640%, 05/21/99 1,000 999
7.125%, 09/24/03 1,000 1,004
7.030%, 04/05/04 1,000 997
7.550%, 08/23/06 1,000 1,003
7.585%, 09/19/06 1,000 1,022
7.340%, 11/03/06 2,000 1,990
Federal National Mortgage Association
7.050%, 12/10/98 1,000 1,019
7.000%, 08/12/02 2,000 1,988
6.950%, 09/10/02 1,000 998
6.450%, 06/10/03 2,000 1,961
6.200%, 07/10/03 2,000 1,936
5.930%, 09/26/03 1,750 1,661
6.200%, 11/12/03 1,000 962
6.400%, 01/13/04 2,500 2,423
6.850%, 09/12/05 1,000 986
7.760%, 08/02/06 2,000 2,031
7.500%, 08/11/06 2,000 2,001
7.060%, 11/29/06 2,000 1,976
--------
Total U.S. Government Agency Obligations
(Cost $30,585) 30,585
--------
CORPORATE BONDS--21.1%
Anheuser Busch
6.750%, 06/01/05 1,000 990
AT&T
7.500%, 06/01/06 1,000 1,040
Boeing
6.350%, 06/15/03 2,000 1,970
Campbell Soup
6.900%, 10/15/06 500 504
E.I. duPont de Nemours
6.000%, 12/01/01 2,000 1,950
6.750%, 10/15/02 1,000 1,010
Eli Lilly
6.250%, 03/15/03 2,000 1,960
Emerson Electric
6.300%, 11/01/05 500 482
Ford Capital BV
9.125%, 05/01/98 1,000 1,039
Ford Motor Credit
6.375%, 10/06/00 1,000 992
6.750%, 05/15/05 1,000 979
Gannett
5.850%, 05/01/00 1,000 982
General Electric Capital
5.500%, 11/01/01 1,000 952
18
<PAGE>
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DECEMBER 31, 1996
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
H.J. Heinz
6.875%, 01/15/03 $1,000 $ 1,013
New York Telephone
6.250%, 02/15/04 1,000 971
SmithKline Beecham (MTN)
6.625%, 10/01/05 2,000 1,943
U.S. West Communications
6.125%, 11/15/05 2,000 1,898
Union Pacific
6.125%, 01/15/04 1,000 954
Wal-Mart Stores
6.500%, 06/01/03 500 499
--------
Total Corporate Bonds
(Cost $22,129) 22,128
--------
CASH EQUIVALENTS--0.8%
SEI Liquid Asset Trust --
Government Portfolio 834 834
SEI Liquid Asset Trust--
Treasury Portfolio 7 7
--------
Total Cash Equivalents
(Cost $841) 841
--------
Total Investments--98.3%
(Cost $103,642) 103,141
--------
OTHER ASSETS AND LIABILITIES--1.7%
Other Assets and Liabilities, Net 1,818
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 9,808,162
outstanding shares of
beneficial interest 100,427
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 473,467
outstanding shares of
beneficial interest 5,345
Distributions in excess of net investment
income (12)
Accumulated net realized loss on investments (300)
Net unrealized depreciation on investments (501)
--------
Total Net Assets--100.0% $104,959
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 10.21
========
Net Asset Value and Redemption Price
Per Share -- Class B $ 10.20
========
Maximum Offering Price Per Share --
Class B ($10.20 / 96%) $ 10.63
========
(A) THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS REPRESENTS THE SECURITY'S
DISCOUNT RATE AT PURCHASE.
MTN -- MEDIUM TERM NOTE
STRIPS -- SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL OF SECURITIES
NEW JERSEY MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--99.1%
NEW JERSEY--98.3%
Atlantic County (GO) (MBIA)
5.400%, 12/01/05 $300 $309
Bergen County, General
Improvement Bonds (GO)
5.250%, 08/15/00 300 311
4.700%, 07/15/02 400 406
Bergen County, Utilities Authority,
Series A (RB) (FGIC)
6.100%, 06/15/04 250 272
Brick Township, Municipal
Utilities Authority
(RB) (FGIC)
4.300%, 12/01/00 200 199
Bridgeton (GO) (AMBAC)
5.000%, 01/01/05 300 301
Bridgewater & Raritan (GO)
6.125%, 05/01/05 200 211
6.125%, 05/01/06 100 105
Burlington County (GO)
5.200%, 10/01/07 200 202
Camden County (GO) (FGIC)
5.000%, 02/01/04 200 203
5.000%, 02/01/08 500 492
Camden County (GO) (MBIA)
5.000%, 06/01/99 100 102
5.600%, 06/01/03 200 209
Cape May County (GO) (AMBAC)
5.850%, 04/15/01 150 157
Cape May County, Municipal
Utilities Authority (RB) (AMBAC)
5.000%, 08/01/03 500 511
Cape May County, Municipal
Utilities Authority Series B
(RB) (FGIC)
4.500%, 01/01/03 500 496
Delaware River, PA & NJ Port
Authority (RB) (FGIC)
5.450%, 01/01/12 250 251
Dover Township (GO) (AMBAC)
6.000%, 10/15/03 200 217
Edgewater Borough (GO) (MBIA)
5.100%, 09/15/00 300 309
Edison Township (AMBAC)
4.800%, 01/01/05 300 297
Edison Township (GO)
4.700%, 06/01/98 250 252
5.400%, 06/01/02 250 259
Edison Township (GO) (AMBAC)
4.500%, 01/01/02 500 495
Elizabeth (GO) (FGIC)
4.300%, 07/15/99 200 201
19
<PAGE>
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Essex County, Improvement
Authority (RB) (AMBAC)
4.875%, 12/01/02 $300 $304
5.000%, 12/01/08 250 243
Essex County, Utilities Authority,
Solid Waste Revenue (RB) (FSA)
5.000%, 04/01/04 250 251
Fort Lee (GO)
4.850%, 02/01/02 250 254
Franklin Township (GO)
5.600%, 11/01/05 300 314
Galloway Township (GO)
(AMBAC)
5.000%, 12/15/09 350 343
Gloucester County (GO)
5.000%, 09/01/03 500 501
Gloucester County, General
Improvement, Series A
(GO) (AMBAC)
4.500%, 01/01/03 200 198
Gloucester County, Improvement
Authority, Landfill Project,
Series A (RB)
6.000%, 09/01/06 300 315
Gloucester Township, Municipal
Utilities Authority (RB) (AMBAC)
4.800%, 03/01/02 300 303
Hackensack (GO)
6.100%, 06/01/05 250 265
Hackettstown, Municipal Utilities
Authority Series F (RB) (FGIC)
5.050%, 10/01/04 500 507
Hillsborough Township, Board of
Education (COP) (FSA)
5.500%, 12/15/99 250 259
Long Branch, Sewer Authority
(RB) (FGIC)
5.200%, 06/01/05 500 510
Maple Shade Township (GO)
(AMBAC)
4.300%, 10/01/99 200 201
Mercer County, Improvement
Authority, Ewing Board of
Education Project (RB) (MBIA)
6.300%, 05/15/07 250 275
Mercer County, Improvement
Authority, Hamilton Board of
Education Project (RB) (MBIA)
5.500%, 06/01/01 200 207
4.900%, 12/15/05 150 150
Middlesex County (GO)
4.500%, 07/15/01 500 503
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Middletown Township, Sewer
Authority, Series A (RB) (FGIC)
4.900%, 01/01/05 $300 $299
Monmouth County (RB)
4.500%, 10/01/98 500 504
4.750%, 07/15/03 200 201
Monmouth County, Improvement
Authority (RB) (MBIA)
5.000%, 12/01/08 150 148
Moorestown Township (GO)
5.000%, 02/01/12 150 143
5.000%, 02/01/15 150 141
Moorestown Township (GO)
(AMBAC)
6.000%, 09/01/07 300 317
Morris Plains (GO)
5.000%, 07/01/04 200 199
Mount Laurel Township (GO)
4.650%, 08/01/05 500 487
New Brunswick, Parking
Authority (RB) (FGIC)
4.300%, 09/01/99 300 301
North Bergen Township (MBIA)
4.400%, 08/01/01 500 493
North Bergen Township, Municipal
Utilities Authority (RB) (FGIC)
4.800%, 12/15/03 300 301
North Jersey, District Water Supply,
Wanaque South Project (MBIA)
5.400%, 07/01/02 300 312
Ocean County (GO)
4.600%, 11/01/03 500 497
Ocean Township (GO) (MBIA)
5.400%, 06/01/15 250 247
Parsippany Troy Hills Township (GO)
4.500%, 02/01/01 500 500
4.600%, 02/01/02 100 100
4.700%, 12/01/03 500 498
4.700%, 12/01/04 400 395
Passaic County (GO)
4.700%, 09/01/03 250 252
Passaic County (GO) (FGIC)
4.750%, 09/01/04 500 498
5.550%, 04/01/09 250 257
Passaic County (GO) (MBIA)
4.350%, 05/01/03 200 196
4.450%, 05/01/04 200 195
Pequannock-Lincoln Park, Sewer
Authority (RB) (MBIA)
4.400%, 12/01/02 500 496
Port Authority of New York &
New Jersey (RB)
5.300%, 08/01/03 300 313
20
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Princeton (GO)
4.400%, 09/01/01 $300 $300
Roselle (GO) (MBIA)
4.750%, 10/15/04 500 499
Roxbury (COP)
5.000%, 10/15/00 250 253
Rutgers State University,
Series A (RB)
4.375%, 05/01/01 500 497
Rutgers State University,
Series S (RB)
5.000%, 05/01/04 500 507
Somerset County (GO)
5.000%, 10/01/02 200 206
4.450%, 12/01/02 500 500
4.350%, 12/01/04 300 289
Somerset Raritan Valley, Sewer
Improvement Authority,
Series H (RB)
5.150%, 07/01/01 300 308
South Brunswick Township (GO)
6.300%, 04/01/04 250 270
South Jersey Transportation
Authority, Transportation
Systems, Series B (RB) (MBIA)
5.500%, 11/01/02 250 261
State (GO)
5.100%, 02/15/00 500 513
5.300%, 02/15/02 600 624
5.400%, 02/15/03 300 314
State, Building Authority (RB)
4.400%, 06/15/03 500 490
4.500%, 06/15/04 500 488
4.700%, 06/15/06 250 245
State, Economic Development
Authority (RB)
4.900%, 08/15/04 200 202
State, Economic Development
Authority, Series A (RB) (MBIA)
5.125%, 07/01/00 300 306
5.400%, 07/01/02 300 310
State, Educational Facilities
Authority, Medicine and
Dentistry, Series B (RB) (AMBAC)
5.000%, 12/01/07 250 248
State, Educational Facilities
Authority, Rowan College,
Series C (RB) (MBIA)
4.300%, 07/01/98 300 301
5.250%, 07/01/05 300 306
State, Educational Facilities
Authority, Series A (RB) (AMBAC)
5.125%, 09/01/06 300 303
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
State, Educational Facilities
Authority, Stockton State
College, Series B (RB) (AMBAC)
6.200%, 07/01/04 $300 $326
State, Health Care Facilities
Authority, Atlantic City
Medical Center (RB) (AMBAC)
5.000%, 07/01/02 300 306
State, Health Care Facilities
Authority, Chilton Memorial
Hospital (RB)
6.550%, 07/01/03 300 318
State, Health Care Facilities
Authority, JFK Health Systems
(RB) (FGIC)
4.600%, 07/01/05 250 243
State, Health Care Facilities
Authority, Hackensack Medical
Center (RB) (MBIA)
5.100%, 07/01/03 500 510
State, Health Care Facilities
Authority, Mountain Side
Hospital (RB) (FGIC)
6.000%, 07/01/00 300 317
State, Health Care Facilities
Authority, Shore Memorial
Healthcare Systems (RB) (FGIC)
4.800%, 07/01/03 200 201
State, Health Care Facilities,
St. Peters Medical Center,
Series F (RB) (MBIA)
5.000%, 07/01/13 100 94
State, Highway Authority,
Garden State Parkway (RB)
5.300%, 01/01/99 250 255
State, Housing & Mortgage
Finance Agency (RB) (AMBAC)
5.300%, 05/01/06 200 203
State, Series E (GO)
5.000%, 07/15/04 100 103
State, Sports & Exposition
Authority, Series A (RB)
5.000%, 09/01/06 315 314
State, Sports & Exposition
Authority, Convention
Center Luxury Tax (RB) (MBIA)
5.000%, 07/01/98 150 152
State, Transportation Trust Authority,
Transportation System, Series A (RB)
5.600%, 06/15/98 200 205
4.600%, 06/15/01 500 503
21
<PAGE>
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
State, Transportation Trust
Authority, Transportation System,
Series A (RB) (MBIA)
4.625%, 06/15/02 $500 $502
5.500%, 06/15/13 250 249
State, Turnpike Authority,
Series A (RB) (AMBAC)
5.900%, 01/01/04 200 209
6.400%, 01/01/07 300 321
State, Wastewater Treatment
Authority (RB) (AMBAC)
4.250%, 03/01/99 250 250
4.250%, 03/01/00 500 498
4.400%, 03/01/04 200 194
State, Wastewater Treatment
Trust, Series A (RB)
5.000%, 09/01/06 450 451
Stony Brook, Sewer Authority (RB)
4.500%, 12/01/00 500 505
Union County (GO)
4.400%, 09/01/01 250 251
4.400%, 10/01/04 500 487
Union County, Environmental
Improvement Authority (RB)
4.900%, 04/01/02 250 253
5.150%, 04/01/05 500 508
Union County, Improvement
Authority Revenue, County
Granted Capital Equipment
Lease (RB)
4.375%, 11/01/02 200 197
Wanaque Valley, Sewer Authority,
Series B (RB) (AMBAC)
5.100%, 09/01/03 300 306
Warren County, Pollution Control
Finance Authority, Series B
(RB) (MBIA)
5.700%, 12/01/03 300 320
Washington Township (GO) (MBIA)
5.000%, 02/01/06 250 252
Wayne Township (GO)
5.450%, 10/01/04 250 258
West Windsor Township (GO)
6.000%, 10/15/05 200 207
Woodbridge Township, Sewer
Utility Authority, Series B (GO)
4.250%, 09/15/01 250 245
Woodbridge Township, Sewer
Utility, Series B (GO)
5.000%, 09/15/10 250 238
--------
40,251
--------
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
PUERTO RICO--0.8%
Puerto Rico, Telephone Authority,
Series M (RB) (MBIA)
4.400%, 01/01/99 $300 $ 300
--------
Total Investments
(Cost $39,959) 40,551
--------
OTHER ASSETS AND LIABILITIES--0.9%
Other Assets and Liabilities, Net 385
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 1,931,753
outstanding shares of
beneficial interest 20,460
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 1,891,790
outstanding shares of
beneficial interest 20,263
Accumulated net realized loss on investments (379)
Net unrealized appreciation on investments 592
--------
Total Net Assets--100.0% $ 40,936
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 10.71
========
Net Asset Value and Redemption Price
Per Share -- Class B $ 10.70
========
Maximum Offering Price Per Share --
Class B ($10.70 / 99%) $ 10.81
========
COP -- CERTIFICATE OF PARTICIPATION
GO -- GENERAL OBLIGATION
RB -- REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR CERTAIN
SECURITIES AS DEFINED IN THE STATEMENT OF NET ASSETS:
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
FGIC -- FEDERAL GUARANTY INSURANCE CORPORATION
FSA -- FINANCIAL SECURITY ASSURANCE
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--43.5%
U.S. Treasury Notes
5.750%, 09/30/97 1,000 1,002
5.125%, 11/30/98 1,000 987
5.000%, 01/31/99 1,000 983
6.750%, 06/30/99 1,000 1,018
7.750%, 12/31/99 500 523
6.875%, 03/31/00 1,300 1,329
5.875%, 06/30/00 500 497
5.750%, 10/31/00 2,000 1,973
5.625%, 11/30/00 1,800 1,767
22
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
6.625%, 06/30/01 $1,000 $ 1,016
6.500%, 08/31/01 750 758
--------
Total U.S. Treasury Obligations
(Cost $11,798) 11,853
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS--52.8%
Federal Home Loan Bank
6.100%, 02/17/00 1,000 996
5.800%, 07/26/00 1,000 976
5.250%, 09/01/00 500 483
5.800%, 02/20/01 500 485
Federal Home Loan
Mortgage Corporation
6.130%, 08/19/99 500 501
5.875%, 03/15/00 1,000 978
5.400%, 11/01/00 1,000 960
7.055%, 08/02/01 1,000 1,007
7.125%, 09/24/03 1,000 1,004
Federal National
Mortgage Association
6.350%, 08/10/99 750 755
7.240%, 09/02/99 500 503
7.000%, 04/30/01 750 746
7.140%, 08/15/02 800 798
7.200%, 08/19/02 500 499
6.250%, 01/13/03 1,000 969
6.720%, 02/25/03 1,000 987
7.370%, 05/14/03 750 759
7.600%, 05/24/06 1,000 1,005
--------
Total U.S. Government Agency Obligations
(Cost $14,561) 14,411
--------
CASH EQUIVALENTS--2.4%
SEI Liquid Asset Trust --
Government Portfolio 497 497
SEI Liquid Asset Trust--
Treasury Portfolio 154 154
--------
Total Cash Equivalents
(Cost $651) 651
--------
Total Investments--98.7%
(Cost $27,010) 26,915
--------
OTHER ASSETS AND LIABILITIES--1.3%
Other Assets and Liabilities,Net 342
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 2,428,780
outstanding shares of
beneficial interest 25,883
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 253,755
outstanding shares of
beneficial interest $ 2,832
Undistributed net investment income 5
Accumulated net realized loss on investments (1,368)
Net unrealized depreciation on investments (95)
--------
Total Net Assets--100.0% $ 27,257
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 10.16
========
Net Asset Value and Redemption Price
Per Share -- Class B $ 10.16
========
Maximum Offering Price Per Share --
Class B ($10.16 / 96%) $ 10.58
========
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--97.3%
PENNSYLVANIA--93.4%
Allegheny County, Series C-44
(GO) (FGIC)
5.200%, 06/01/08 $150 151
Allentown, Water Improvement
Authority (RB) (AMBAC)
4.850%, 07/15/01 150 152
Beaver County, Series A (GO)
(FGIC)
4.750%, 10/01/03 100 100
Berks County, Series 2 (GO)
(FGIC)
4.700%, 05/15/05 150 148
Bethel Park, School District
(GO) (FGIC)
5.000%, 08/01/04 150 151
Chester County, Health and
Education Facilities Authority
Main Line Health Systems,
Series A (RB)
5.400%, 05/15/09 50 49
Erie County (GO) (FGIC)
5.250%, 09/01/12 95 93
Fort Cherry, School District
Authority (GO) (AMBAC)
4.900%, 10/01/08 100 97
Geisinger, Health System
Authority (RB)
7.375%, 07/01/02 75 81
Lancaster, Higher Education
Authority, Franklin & Marshall
College (RB) (MBIA)
5.650%, 04/15/10 110 112
23
<PAGE>
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Langhorne Manor Borough,
Higher Education and Health
Authority, Wood Services (RB)
6.400%, 11/15/06 $150 $164
Lehigh County, General Purpose
Authority, St. Luke's Hospital
(RB) (AMBAC)
4.750%, 11/15/00 100 101
Lycoming County, Pennsylvania
College of Technology (RB)
(AMBAC)
5.000%, 11/01/02 150 153
North Allegheny, School District,
Series A (GO) (AMBAC)
5.850%, 11/01/02 150 159
Northeastern Pennsylvania, Hospital
and Education Authority (RB) (FSA)
5.625%, 10/01/18 25 25
Pennsylvania State, Convention
Center Authority, Series A
(RB) (FSA)
6.250%, 09/01/04 150 164
Pennsylvania State, Intergovernmental
Co-op Authority (RB) (FGIC)
4.900%, 06/15/03 50 51
Pittsburgh, Urban Redevelopment
Authority (RB)
5.750%, 10/01/14 100 101
Pittsburgh, Water and Sewer
Authority, Series A (RB) (FGIC)
5.000%, 09/01/08 125 123
Southern York County, School
District Authority (GO) (FSA)
5.000%, 09/01/12 105 99
State, Brookville Area School
District Project, Series G
(RB) (MBIA)
4.850%, 11/15/02 150 151
State, Higher Education Authority,
Series I (RB) (AMBAC)
5.000%, 06/15/03 100 101
State, Higher Education Authority,
Thomas Jefferson University,
Series A (RB)
6.625%, 08/15/09 50 55
State, Higher Education Authority,
University of Pennsylvania,
Series A (RB)
5.600%, 01/01/10 150 153
State, Refunding and Projects
Authority, Series 1 (GO)
5.000%, 04/15/07 130 128
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
State, School Building Authority,
Delaware County Community
College (RB) (MBIA)
5.200%, 04/01/08 $250 $ 249
State, Second Series (GO)
5.500%, 07/01/01 150 156
Swarthmore College (RB)
7.375%, 09/15/18 50 53
Wattsburg, School District (GO)
(AMBAC)
5.700%, 04/01/04 75 78
Wayne County, Hospital and
Health Authority, Wayne
Memorial Hospital (GO) (MBIA)
5.375%, 07/01/12 100 99
Westmoreland County, Series C
(GO) (MBIA)
4.400%, 10/01/00 150 150
York County, Southwestern School
District Authority (GO) (FGIC)
5.000%, 06/15/09 100 98
--------
3,745
--------
GUAM--3.9%
Guam, Power Authority (RB)
(AMBAC)
6.000%, 10/01/09 150 158
--------
Total Municipal Bonds
(Cost $3,831) 3,903
--------
CASH EQUIVALENT--1.6%
Compass Pennsylvania Tax-Free
Money Market Fund 65 65
--------
Total Cash Equivalent
(Cost $65) 65
--------
Total Investments--98.9%
(Cost $3,896) 3,968
--------
OTHER ASSETS AND LIABILITIES--1.1%
Other Assets and Liabilities, Net 41
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 360,413
outstanding shares of
beneficial interest 3,604
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 33,863
outstanding shares of
beneficial interest 345
24
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments $ (12)
Net unrealized appreciation on investments 72
--------
Total Net Assets--100.0% $ 4,009
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 10.17
========
Net Asset Value and Redemption Price
Per Share -- Class B $ 10.17
========
Maximum Offering Price Per Share --
Class B ($10.17 / 99%) $ 10.27
=========
GO -- GENERAL OBLIGATION
RB -- REVENUE BOND
THE FOLLOWING ORGANIZATIONS HAVE PROVIDED UNDERLYING CREDIT SUPPORT FOR CERTAIN
SECURITIES AS DEFINED IN THE STATEMENT OF NET ASSETS:
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FSA -- FINANCIAL SECURITY ASSURANCE
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
GNMA FUND
- --------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED BONDS--96.5%
Government National
Mortgage Association
8.000%, 04/15/23 $ 48 49
8.000%, 05/15/23 325 332
7.000%, 06/15/23 138 136
6.000%, 10/15/23 177 165
6.000%, 11/15/23 893 829
6.500%, 11/15/23 815 778
7.000%, 11/15/23 76 74
6.000%, 12/15/23 1,321 1,225
6.500%, 12/15/23 402 385
7.000%, 12/15/23 823 805
6.000%, 01/15/24 184 171
6.000%, 01/20/24 872 805
8.000%, 08/15/24 436 445
8.000%, 09/15/24 1,200 1,226
7.500%, 08/15/25 293 294
--------
Total U.S. Agency Mortgage-
Backed Bonds
(Cost $7,868) 7,719
--------
U.S. TREASURY OBLIGATION--2.4%
U.S. Treasury Bond
13.125%, 05/15/01 150 189
--------
Total U.S. Treasury Obligation
(Cost $191) 189
--------
- --------------------------------------------------------------------------------
FACE AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.4%
SEI Liquid Asset Trust --
Government Portfolio $30 $ 30
--------
Total Cash Equivalent
(Cost $30) 30
--------
Total Investments--99.3%
(Cost $8,089) 7,938
--------
OTHER ASSETS AND LIABILITIES--0.7%
Other Assets and Liabilities, Net 58
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 682,033
outstanding shares of
beneficial interest 7,318
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 148,426
outstanding shares of
beneficial interest 1,622
Accumulated net realized loss on investments (793)
Net unrealized depreciation on inve (151)
--------
Total Net Assets--100.0% $ 7,996
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 9.63
========
Net Asset Value and Redemption Price
Per Share -- Class B $ 9.61
========
Maximum Offering Price Per Share --
Class B ($9.61 / 97%) $ 9.91
========
EQUITY VALUE FUND
- --------------------------------------------------------------------------------
COMMON STOCKS--92.9%
AIRCRAFT--3.2%
Boeing 20,000 2,127
United Technologies 30,000 1,980
--------
4,107
--------
AUTOMOTIVE--1.6%
Chrysler 60,000 1,980
--------
BANKS--8.9%
Bank of New York 60,000 2,025
Boatmen's Bancshares 40,000 2,580
Citicorp 20,000 2,060
J.P. Morgan 25,000 2,441
Norwest 50,000 2,175
--------
11,281
--------
25
<PAGE>
STATEMENT OF NET ASSETS
EQUITY VALUE FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
CHEMICALS--1.7%
Monsanto 55,000 $ 2,138
--------
COMPUTERS & SERVICES--7.2%
3Com* 30,000 2,201
Compaq Computer* 30,000 2,227
Hewlett Packard 45,000 2,261
Microsoft* 30,000 2,479
--------
9,168
--------
CONTAINERS & PACKAGING--1.9%
Crown Cork & Seal 45,000 2,447
--------
DRUGS--7.4%
Bristol-Myers Squibb 20,000 2,175
Merck 30,000 2,378
Pfizer 25,500 2,113
SmithKline Beecham 40,100 2,727
--------
9,393
--------
ELECTRICAL & ELECTRONIC PRODUCTS--3.9%
Emerson Electric 25,000 2,419
General Electric 25,000 2,472
--------
4,891
--------
ELECTRICAL UTILITIES--1.5%
FPL Group 40,000 1,840
--------
FINANCIAL SERVICES--1.8%
Federal National Mortgage
Association 60,000 2,235
--------
FOOD, BEVERAGE & TOBACCO--6.1%
Anheuser Busch 50,000 2,000
CPC International 30,000 2,325
Nestle S.A., (ADR) 30,000 1,598
Sara Lee 50,000 1,863
--------
7,786
--------
GAS/NATURAL GAS--3.4%
Consolidated Natural Gas 40,000 2,210
Enron 50,000 2,156
--------
4,366
--------
GLASS PRODUCTS--1.5%
PPG Industries 35,000 1,964
--------
HOUSEHOLD PRODUCTS--3.5%
Colgate-Palmolive 25,000 2,306
Procter & Gamble 20,000 2,150
--------
4,456
--------
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
INSURANCE--3.9%
American International Group 20,000 $ 2,165
CIGNA 20,000 2,733
--------
4,898
--------
LEISURE PRODUCTS--1.3%
Mattel 60,000 1,665
--------
MACHINERY--1.6%
Deere 50,000 2,031
--------
MANUFACTURING--2.0%
Minnesota Mining &
Manufacturing 30,000 2,486
--------
MEDICAL PRODUCTS & SERVICES--1.7%
Columbia/HCA Healthcare 52,500 2,139
--------
PETROLEUM & FUEL PRODUCTS--1.3%
Union Pacific Resources Group 55,000 1,609
--------
PETROLEUM REFINING--7.8%
Amoco 30,000 2,415
Exxon 25,000 2,450
Mobil 20,000 2,445
Royal Dutch Petroleum 15,000 2,561
--------
9,871
--------
PRINTING & PUBLISHING--3.1%
Gannett 30,000 2,246
Time Warner 45,000 1,688
--------
3,934
--------
RAILROADS--3.6%
Burlington Northern Santa Fe 25,000 2,159
Union Pacific 41,000 2,465
--------
4,624
--------
RETAIL--3.0%
J.C. Penney 35,000 1,706
Sears Roebuck 45,000 2,076
--------
3,782
--------
SEMI-CONDUCTORS/INSTRUMENTS--2.1%
Intel 20,000 2,619
--------
TELEPHONES & TELECOMMUNICATION--6.3%
Ameritech 30,000 1,819
AT&T 35,000 1,523
Bellsouth 40,000 1,615
Lucent Technologies 25,000 1,156
SBC Communications 35,000 1,811
--------
7,924
--------
[LOGO OMITTED]
DECEMBER 31, 1996
26
<PAGE>
- --------------------------------------------------------------------------------
SHARES/FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
WHOLESALE--1.6%
Alco Standard 40,000 $ 2,065
--------
Total Common Stocks
(Cost $98,190) 117,699
--------
CASH EQUIVALENTS--6.9%
SEI Liquid Asset Trust --
Government Portfolio $5,623 5,623
SEI Liquid Asset Trust--
Treasury Portfolio 3,181 3,181
--------
Total Cash Equivalents
(Cost $8,804) 8,804
--------
Total Investments--99.8%
(Cost $106,994) 126,503
--------
OTHER ASSETS AND LIABILITIES--0.2%
Other Assets and Liabilities, Net 212
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 8,745,281
outstanding shares of
beneficial interest 97,496
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 748,765
outstanding shares of
beneficial interest 8,885
Accumulated net realized gain on investments 825
Net unrealized appreciation on investments 19,509
--------
Total Net Assets--100.0% $126,715
========
Net Asset Value, Offering and
Redemption Price Per Share -- Class A $ 13.35
=======
Net Asset Value and Redemption Price
Per Share -- Class B $ 13.35
=======
Maximum Offering Price Per Share --
Class B ($13.35 / 96%) $ 13.91
=======
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
COMMON STOCKS--85.9%
AIRCRAFT--1.3%
Textron 10,000 942
--------
AUTOMOTIVE--1.4%
Chrysler 30,000 990
--------
BANKS--11.4%
Bank of New York 54,000 1,822
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
Bankers Trust New York 14,000 $ 1,207
Chase Manhattan Bank 12,000 1,071
J.P. Morgan 13,000 1,269
Norwest 35,000 1,522
Wachovia 20,000 1,130
--------
8,021
--------
CHEMICALS--1.2%
E.I. DuPont de Nemours 9,000 849
--------
DRUGS--6.9%
Bristol-Myers Squibb 16,000 1,740
Merck 22,000 1,743
SmithKline Beecham 20,000 1,360
--------
4,843
--------
ELECTRICAL & ELECTRONIC PRODUCTS--5.3%
Emerson Electric 12,000 1,161
General Electric 13,000 1,285
Houston Industries 33,000 747
WPS Resources 20,000 570
--------
3,763
--------
FINANCIAL SERVICES--4.6%
Beneficial 10,000 634
Cali Realty 23,000 710
Equity Residential Properties Trust 15,000 619
Hospitality Properties Trust 23,000 667
Storage Trust Realty 23,000 621
--------
3,251
--------
FOOD, BEVERAGE & TOBACCO--3.8%
CPC International 18,000 1,395
Sara Lee 35,000 1,304
--------
2,699
--------
GAS/NATURAL GAS--7.6%
Consolidated Natural Gas 25,000 1,381
National Fuel & Gas 31,000 1,279
Sonat 35,000 1,802
Trans Canada Pipeline 50,000 875
--------
5,337
--------
GLASS PRODUCTS--4.2%
Corning 33,000 1,526
PPG Industries 25,000 1,403
--------
2,929
--------
HOUSEHOLD PRODUCTS--3.9%
Colgate-Palmolive 16,000 1,476
Hubbell, Class B 30,000 1,297
--------
2,773
--------
27
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED)
EQUITY INCOME FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
INSURANCE--3.2%
Aetna 20,000 $ 1,600
ITT Hartford Group 10,000 675
--------
2,275
--------
LUMBER & WOOD PRODUCTS--1.6%
Georgia-Pacific 16,000 1,152
--------
MACHINERY--1.4%
Deere 25,000 1,016
--------
MEDICAL PRODUCTS & SERVICES--1.8%
Baxter International 30,000 1,230
--------
PAPER & PAPER PRODUCTS--2.4%
Kimberly Clark 18,000 1,714
--------
PETROLEUM & FUEL PRODUCTS--0.8%
Occidental Petroleum 25,000 584
--------
PETROLEUM REFINING--7.5%
Amoco 16,000 1,288
Exxon 15,000 1,470
Mobil 11,000 1,345
Royal Dutch Petroleum 7,000 1,195
--------
5,298
--------
PRINTING & PUBLISHING--2.8%
Hollinger International 50,000 575
McGraw-Hill 30,000 1,384
--------
1,959
--------
RAILROADS--3.5%
Burlington Northern Santa Fe 12,000 1,036
Union Pacific 24,000 1,443
--------
2,479
--------
RETAIL--1.8%
J.C. Penney 26,000 1,268
--------
RUBBER & PLASTIC--0.5%
Rubbermaid 15,000 341
--------
SEMI-CONDUCTORS/INSTRUMENTS--1.0%
Thomas & Betts 15,000 666
--------
TELEPHONES & TELECOMMUNICATION--6.0%
AT&T 30,000 1,305
Bell Atlantic 14,000 907
Bellsouth 20,000 808
GTE 26,000 1,183
--------
4,203
--------
Total Common Stocks
(Cost $51,023) 60,582
--------
- --------------------------------------------------------------------------------
SHARES/FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
PREFERRED STOCK--4.6%
Alco Standard 5,000 $ 478
Conseco Financial Trust* 15,000 383
Crown Cork and Seal* 20,000 1,040
Tyco Toys 20,000 203
SunAmerica* 12,000 507
Sun 25,000 628
--------
Total Preferred Stock
(Cost $3,050) 3,239
--------
CONVERTIBLE BONDS--0.5%
Platinum Technology
6.750%, 11/15/01 $100 122
U.S. Filter
4.500%, 12/15/01 200 202
--------
Total Convertible Bonds
(Cost $302) 324
--------
U.S. GOVERNMENT AGENCY OBLIGATION--0.3%
Federal Home Loan Bank
6.515%, 08/07/98 200 200
--------
Total U.S. Government Agency Obligation
(Cost $200) 200
--------
CASH EQUIVALENTS--8.3%
SEI Liquid Asset Trust --
Government Portfolio 3,316 3,316
SEI Liquid Asset Trust--
Treasury Portfolio 2,531 2,531
--------
Total Cash Equivalents
(Cost $5,847) 5,847
--------
Total Investments--99.6%
(Cost $60,422) 70,192
--------
OTHER ASSETS AND LIABILITIES--0.4%
Other Assets and Liabilities, Net 287
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 4,356,923
outstanding shares of
beneficial interest 47,878
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 931,789
outstanding shares of
beneficial interest 11,003
Distributions in excess of net investment
income (220)
Accumulated net realized gain on investments 2,048
28
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments $ 9,770
--------
Total Net Assets--100.0% $ 70,479
========
Net Asset Value, Offering and Redemption
Price Per Share-- Class A $ 13.32
========
Net Asset Value and Redemption Price
Per Share-- Class B $ 13.35
========
Maximum Offering Price Per Share --
Class B ($13.35 / 96%) $ 13.91
========
* NON-INCOME PRODUCING SECURITY
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
COMMON STOCKS--94.7%
AEROSPACE & DEFENSE--1.3%
Sci Systems* 15,000 669
--------
APPAREL/TEXTILES--2.0%
Albany International 45,000 1,041
--------
AUTOMOTIVE--7.6%
A.O. Smith 28,800 860
Cooper* 45,000 776
Federal Signal 45,000 1,164
Regal Beloit 57,400 1,126
--------
3,926
--------
BANKS--9.4%
Associated Bancorp 15,000 637
Dauphin Deposit Bank & Trust 12,000 396
First Bank of Puerto Rico 25,000 650
First Tennessee National 32,000 1,200
Merchantile Bancorp 12,000 616
Wilmington Trust 20,000 790
Zions Bancorp 5,000 520
--------
4,809
--------
BUILDING & CONSTRUCTION--5.0%
Foster Wheeler 30,000 1,114
Jacobs Engineering Group* 40,000 945
Pitt Des Moines 12,800 531
--------
2,590
--------
CHEMICALS--7.0%
Cytec Industries* 35,000 1,422
Olin 18,000 677
Praxair 32,500 1,499
--------
3,598
--------
COMMUNICATIONS EQUIPMENT--4.3%
Act Manufacturing* 25,000 659
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
Glenayre Technologies* 15,000 $ 323
Picturetel* 10,000 260
Vishay Intertechnology* 42,000 982
--------
2,224
--------
COMPUTERS & SERVICES--2.6%
Digex* 10,000 104
In Focus Systems* 30,000 649
Network Peripherals* 25,000 444
Visioneer* 30,000 135
--------
1,332
--------
DRUGS--4.2%
Ivax 40,000 410
Loctite 12,500 761
Watson Pharmaceuticals* 22,500 1,011
--------
2,182
--------
ELECTRICAL TECHNOLOGY--3.1%
Ampex Corp* 20,000 187
Anixter International* 60,000 967
Sensormatic Electronics 25,000 419
--------
1,573
--------
ENERGY & POWER--1.0%
Calenergy* 15,000 504
--------
FINANCIAL SERVICES--1.6%
Franklin Resources 10,000 684
MLC Holdings* 15,000 143
--------
827
--------
HOUSEHOLD PRODUCTS--2.5%
Valspar 22,500 1,274
--------
INSURANCE--3.4%
Cincinnati Financial 15,000 973
Delphi Financial Group* 18,000 531
UnionAmerica 15,000 266
--------
1,770
--------
MACHINERY--4.9%
Baldor Electric 40,000 985
Lindsay Manufacturing 29,500 1,379
Submicron Systems* 40,000 165
--------
2,529
--------
MEASURING DEVICES--1.8%
Oak Industries* 40,000 920
--------
MEDICAL PRODUCTS & SERVICES--2.9%
Coherent* 20,000 845
Maxicare Health Plans* 30,000 668
--------
1,513
--------
29
<PAGE>
STATEMENT OF NET ASSETS
MID-CAP VALUE FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES--1.2%
Genesis Health Ventures* 20,000 $ 623
--------
METALS & MINING--1.3%
Cleveland Cliffs 15,000 681
--------
MISCELLANEOUS BUSINESS SERVICES--0.6%
Electronic Arts* 10,000 299
--------
MISCELLANEOUS MANUFACTURING--1.4%
Wolverine Tube* 20,000 705
--------
PAPER & PAPER PRODUCTS--4.3%
Bemis 42,500 1,567
Wausau Paper Mills 35,000 648
--------
2,215
--------
PETROLEUM REFINING--2.3%
Saga Petroleum, Class B 75,000 1,181
--------
RETAIL--4.2%
Bed Bath and Beyond* 15,000 364
Intimate Brands 20,000 340
Piercing Pagoda* 45,000 1,091
Rainforest Cafe* 15,000 353
--------
2,148
--------
RUBBER & PLASTIC--1.8%
Sonoco Products 35,000 906
--------
SEMI-CONDUCTORS/INSTRUMENTS--5.9%
Cypress Semiconductor* 50,000 706
Memc Electronic Materials* 25,000 563
Microsemi* 50,000 713
Xicor * 100,000 1,025
--------
3,007
--------
STEEL & STEEL WORKS--1.2%
Schnitzer Steel Industries, Class A 25,000 641
--------
TELEPHONES & TELECOMMUNICATION--1.2%
Aliant Communications 35,000 595
--------
TESTING LABORATORIES--0.2%
Ramtron International* 15,000 90
--------
TRUCKING--0.9%
Kenan Transport 25,479 484
--------
WHOLESALE--3.6%
Chronimed* 30,000 409
Intelligent Electronics* 100,000 800
Neopath* 35,000 639
--------
1,848
--------
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Total Common Stocks
(Cost $39,778) $ 48,704
--------
CASH EQUIVALENTS--4.2%
SEI Liquid Asset Trust --
Government Portfolio $ 1,129 1,129
SEI Liquid Asset Trust--
Treasury Portfolio 1,019 1,019
--------
Total Cash Equivalents
(Cost $2,148) 2,148
--------
Total Investments--98.9%
(Cost $41,926) 50,852
--------
OTHER ASSETS AND LIABILITIES--1.1%
Other Assets and Liabilities, Net 550
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 3,417,491
outstanding shares of
beneficial interest 35,902
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 439,398
outstanding shares of
beneficial interest 5,024
Accumulated net realized gain on investments 1,550
Net unrealized appreciation on investments 8,926
--------
Total Net Assets--100.0% $ 51,402
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 13.33
========
Net Asset Value and Redemption Price
Per Share -- Class B $ 13.31
========
Maximum Offering Price Per Share --
Class B ($13.31 / 96%) $ 13.86
========
* NON-INCOME PRODUCING SECURITY
30
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
BALANCED GROWTH FUND
- --------------------------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--7.3%
U.S. Treasury Notes
6.875%, 02/28/97 $250 $ 251
7.000%, 04/15/99 500 511
7.750%, 11/30/99 500 522
5.875%, 06/30/00 250 248
7.500%, 11/15/01 500 526
--------
Total U.S. Treasury Obligations
(Cost $2,010) 2,058
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS--30.3%
Federal Farm Credit Bank
7.950%, 04/01/02 500 502
Federal Home Loan Bank
8.125%, 11/07/11 500 495
Federal Home Loan
Mortgage Corporation
6.550%, 01/04/00 500 504
7.300%, 11/07/11 500 498
Federal National Mortgage Association
7.680%, 12/01/97 300 305
8.350%, 11/10/99 500 529
8.500%, 01/13/00 500 500
6.100%, 02/10/00 500 498
6.900%, 10/09/01 500 498
6.720%, 02/25/03 500 494
5.800%, 12/10/03 500 481
8.625%, 11/10/04 500 521
8.550%, 12/10/04 750 762
8.000%, 04/13/05 500 503
7.760%, 08/02/06 500 508
Tennessee Valley Authority
7.450%, 10/15/01 500 509
6.375%, 06/15/05 500 491
--------
Total U.S. Government Agency Obligations
(Cost $8,546) 8,598
--------
CORPORATE BONDS--5.7%
American Express Credit
6.750%, 06/01/01 500 504
E.I. duPont de Nemours
6.750%, 10/15/02 500 505
Philip Morris
9.250%, 02/15/00 100 107
Southern California Edison
6.750%, 01/15/00 500 504
--------
Total Corporate Bonds
(Cost $1,598) 1,620
--------
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
COMMON STOCKS--53.4%
AIRCRAFT--2.1%
Boeing 3,000 $ 319
United Technologies 4,000 264
--------
583
--------
AUTOMOTIVE--1.2%
Chrysler 10,000 330
--------
BANKS--5.2%
Bank of New York 5,500 186
Boatmen's Bancshares 5,000 322
Citicorp 3,000 309
J.P. Morgan 3,500 342
Norwest 7,000 304
--------
1,463
--------
BEAUTY PRODUCTS--1.0%
Colgate-Palmolive 3,000 277
--------
CHEMICALS--2.1%
Monsanto 8,000 311
PPG Industries 5,000 281
--------
592
--------
COMPUTERS & SERVICES--4.2%
3Com* 3,700 271
Compaq Computer* 4,000 297
Hewlett Packard 6,000 301
Minnesota Mining &
Manufacturing 4,000 331
--------
1,200
--------
CONTAINERS & PACKAGING--1.0%
Crown Cork & Seal 5,000 272
--------
DRUGS--4.2%
Bristol-Myers Squibb 3,000 326
Merck 4,000 317
Pfizer 3,300 273
SmithKline Beecham 4,000 272
--------
1,188
--------
ELECTRICAL UTILITIES--0.8%
FPL Group 5,000 230
--------
FINANCIAL SERVICES--1.0%
Federal NationAl Mortgage Association 8,000 298
--------
FOOD, BEVERAGE & TOBACCO--4.2%
Anheuser Busch 8,000 320
CPC International 4,000 310
Nestle S.A., (ADR) 5,000 266
Sara Lee 8,000 298
--------
1,194
--------
31
<PAGE>
STATEMENT OF NET ASSETS
BALANCED GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
GAS/NATURAL GAS--1.8%
Consolidated Natural Gas 4,300 $ 238
Enron 6,000 259
--------
497
--------
INSURANCE--1.9%
American International Group 2,500 271
Cigna 2,000 273
--------
544
--------
LEISURE PRODUCTS--0.9%
Mattel 9,000 250
--------
MACHINERY--2.7%
Deere 4,500 183
Emerson Electric 3,000 290
General Electric 3,000 297
--------
770
--------
MEDICAL PRODUCTS & SERVICES--1.1%
Columbia/HCA Healthcare 7,800 318
--------
MISCELLANEOUS BUSINESS SERVICES--1.2%
Microsoft* 4,000 330
--------
PETROLEUM & FUEL PRODUCTS--0.8%
Union Pacific Resources Group 7,700 225
--------
PETROLEUM REFINING--4.2%
Amoco 4,000 322
Exxon 3,000 294
Mobil 2,000 245
Royal Dutch Petroleum 2,000 342
--------
1,203
--------
PRINTING & PUBLISHING--1.7%
Gannett 4,000 300
Time Warner 5,000 188
--------
488
--------
RAILROADS--1.8%
Burlington Northern Santa Fe 3,000 259
Union Pacific 4,000 241
--------
500
--------
RETAIL--1.9%
J.C. Penney 6,000 293
Sears Roebuck 5,500 254
--------
547
--------
SEMI-CONDUCTORS/INSTRUMENTS--1.1%
Intel 2,500 327
--------
- --------------------------------------------------------------------------------
SHARES/FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATION--4.2%
Ameritech 4,500 $ 273
AT&T 5,500 239
Bellsouth 6,000 242
Lucent Technologies 5,000 231
SBC Communications 4,000 207
--------
1,192
--------
WHOLESALE--1.1%
Alco Standard 6,000 310
--------
Total Common Stocks
(Cost $11,164) 15,128
--------
CASH EQUIVALENTS--2.8%
SEI Liquid Asset Trust --
Government Portfolio $ 629 629
SEI Liquid Asset Trust--
Treasury Portfolio 173 173
--------
Total Cash Equivalents
(Cost $802) 802
--------
Total Investments--99.5%
(Cost $24,120) 28,206
--------
OTHER ASSETS AND LIABILITIES--0.5%
Other Assets and Liabilities, Net 132
--------
NET ASSETS:
Portfolio Shares of Class A
(unlimited authorization -- no
par value) based on 1,690,045
outstanding shares of
beneficial interest 15,328
Portfolio Shares of Class B
(unlimited authorization -- no
par value) based on 797,474
outstanding shares of
beneficial interest 8,579
Accumulated net realized gain on investments 345
Net unrealized appreciation on investments 4,086
--------
Total Net Assets--100.0% $ 28,338
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 11.39
========
Net Asset Value and Redemption Price
Per Shar -- Class B $ 11.40
========
Maximum Offering Price Per Share --
Class B ($11.40 / 96%) $ 11.88
========
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
32
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
FOREIGN COMMON STOCKS--93.7%
ARGENTINA--1.0%
Perez Companc 7,500 $ 53
Quilmes Industrial (ADR) 3,600 33
YPF Sociedad Anonima (ADR) 3,000 76
--------
162
--------
AUSTRALIA--4.3%
Amcor 13,100 84
Boral 46,390 132
Broken Hill Proprietary 11,047 157
Goodman Fielder 94,084 117
Pioneer International 30,000 89
Qantas Air (ADR) 5,350 87
--------
666
--------
AUSTRIA--0.9%
OMV 1,200 135
--------
BELGIUM--0.8%
Credit Communal de Belgique* 1,300 119
--------
BRAZIL--1.0%
Electrobras 80,000 29
Electrobras (ADR) 4,300 77
Telecomunicacoes Brasileiras 670,000 48
--------
154
--------
CANADA--1.6%
Canada Pacific (ADR) 7,500 198
Canwest Global Communication 4,800 50
--------
248
--------
CHILE--0.7%
Enersis (ADR) 3,900 108
--------
DENMARK--2.6%
Tele Denmark (ADS) 4,750 129
Unidanmark Series A 5,350 277
--------
406
--------
FINLAND--2.0%
Merita Bank Series A* 18,000 56
Metsa Serla Series B 10,500 79
Nokia Series A (ADR) 1,600 92
Rauma Oy 4,000 84
--------
311
--------
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
FRANCE--8.6%
Accor 815 $ 103
Assurances Generales de France 5,000 161
Banque National Paris Series A 3,750 145
Cie de Saint Gobain 600 85
Credit Commerce France 2,000 93
Havas 2,265 159
Peugeot 300 34
Remy Cointreau 2,000 57
Rhone Poulenc 4,930 168
Societe Generale 873 94
Societe Nationale Elf Aquitaine 1,900 173
Total Series B 829 67
--------
1,339
--------
GERMANY--4.8%
Daimler Benz* 3,500 240
Degussa 345 157
Karstadt 290 96
Mannesmann 120 52
Metallgesellschaft* 10,000 204
--------
749
--------
HONG KONG--4.1%
Citic Pacific 10,000 58
Hutchison Whampoa 23,000 181
Lai Sun Development 16,000 24
New World Development 4,000 27
Sung Hung Kai Properties 14,000 171
Swire Pacific Series A 15,000 143
Tingyi (Cayman Island)* 140,000 37
--------
641
--------
INDIA--0.4%
State Bank of India (GDR)* 3,500 61
--------
INDONESIA--1.0%
Bank BNI 77,000 42
Jaya Real Property 30,000 42
Kalbe Farma 38,000 43
PT Indosat (ADR) 1,000 27
--------
154
--------
IRELAND--0.7%
Allied Irish Bank 2,811 19
Jefferson Smurf (GBP) 30,000 92
--------
111
--------
33
<PAGE>
STATEMENT OF NET ASSETS
INTERNATIONAL GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
ITALY--3.2%
Arnaldo Mondadori 13,000 $ 106
Banca Commerciale Italiana 40,000 73
Fiat 20,000 60
Finanziaria Autogrill* 30,000 29
Stet Societa Finanziaria Telefonica 35,000 159
Telecom Italia 25,000 65
--------
492
--------
JAPAN--18.5%
Asahi Organic Chemical 8,000 47
Canon Sales 3,300 73
Chudenko 1,000 29
Chugai Pharmaceutical 14,000 117
Cosel 1,000 16
Dai Nippon Printing 7,000 123
Danto 1,000 10
Eisai 4,000 79
Fuji Machine Manufacturing 3,000 80
JGC 10,000 75
Kyudenko 3,000 31
Mabuchi Motor 3,000 151
Maruichi Steel Tube 6,000 104
Matsushita Electric 8,000 131
Mitsubishi Heavy Industries 14,000 111
Murata Manufacturing 3,000 100
NGK Spark Plugs 13,000 143
Nippon Express 8,000 55
Nippon Television Network 550 166
Nomura Securities 6,000 90
Onward Kashiyama 13,000 183
Sakura Bank 9,000 64
Sanwa Bank 5,000 68
Seventy-Seven Bank 7,000 57
Sony 1,000 66
Sumitomo Realty & Development 16,000 101
Sumitomo Trust & Banking 2,000 20
Toda Construction 6,000 46
Tokio Marine & Fire Insurance 9,000 85
Toyo Ink 26,000 107
Toyota Motor 5,000 144
World 2,100 87
Yamato Kogyo 12,000 111
Yamazaki Baking 1,000 16
--------
2,886
--------
KOREA--1.7%
Hanil Bank 3,000 21
Hanwha Chemical 2,000 15
Cho Sun Breweries* 3,020 77
Daewoo Securities* 2,000 26
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
Korea Electric Power 1,000 $ 29
Korean Air Lines 1,450 22
Pohang Iron & Steel (ADR) 3,000 61
Shinsegae Department Store* 200 8
--------
259
--------
MALAYSIA--1.9%
Land & General 30,000 72
MBF Capital 16,000 26
Resorts World 13,000 59
Sime Darby 36,000 142
--------
299
--------
MEXICO--1.9%
Cemex CPO 4,800 17
Cemex SA de CV Series A 10,200 37
Femsa Series B 20,000 68
Grupo Carso* 22,000 117
Grupo Financiero
Bancomer Rights* 140,000 --
Bancomer Series B* 140,000 56
Trans Maritima Series A (ADR) 2,350 11
--------
306
--------
NETHERLANDS--3.2%
Akzo Nobel 400 55
International Nederland 5,000 180
KLM 4,107 115
Polygram 3,000 153
--------
503
--------
NEW ZEALAND--0.9%
Air New Zealand Series B 28,127 76
Carter Holt Harvey 30,000 68
--------
144
--------
NORWAY--1.5%
Fokus Bank 13,600 94
Nycomed ASA Series A* 6,800 104
Saga Petroleum AS Series A 2,800 47
--------
245
--------
PHILIPPINES--0.5%
Philippine Long Distance
Telephone (ADR)* 1,000 51
Phillipino Telephone 30,000 25
--------
76
--------
PORTUGAL--0.1%
Telecel Comunicacoes Pessoai* 200 13
--------
34
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
SINGAPORE--3.6%
Development Bank of Singapore 11,000 $ 149
Far East Levingston Shipbuilding 20,000 104
Keppel 15,000 117
Straits Steamship Land 20,000 64
United Overseas Bank 12,000 134
--------
568
--------
SPAIN--2.7%
Acerinox S.A. 650 94
Empresa Nacional de Electricidad 1,600 114
Empresa Nacional de
Electricidad (ADR) 2,000 140
Telefonica de Espana 3,500 81
--------
429
--------
SWEDEN--1.2%
BT Industries* 1,650 31
Pharmacia & Upjohn 4,000 164
--------
195
--------
SWITZERLAND--3.1%
Compagnie Financiere Richemont 50 70
Nestle SA 120 129
Sulzer AG 100 58
Sulzer Gerbruder 265 142
Swissair Registered 100 81
--------
480
--------
THAILAND--1.0%
Bangkok Metro Bank 165,609 65
Land & House 2,700 20
Siam City Cement 2,000 10
Siam Commercial Bank 8,000 58
--------
153
--------
UNITED KINGDOM--13.9%
Amersham International 2,000 39
Associated British Foods 14,000 116
Bank of Scotland 30,000 158
BOC Group 7,000 105
Boots 10,000 103
British Gas 30,000 115
British Telecommunications 18,750 127
BTR 25,000 121
Cookson Group 30,000 121
De La Rue 16,000 157
National Grid Group 20,000 67
Northern Foods 10,000 35
Powergen 12,903 126
Rank Organization 14,500 109
Reckitt & Coleman 10,450 129
- --------------------------------------------------------------------------------
SHARES/FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Royal Bank of Scotland 13,601 $ 131
Sainsbury (J) 30,457 202
Sun Alliance Group 11,919 91
Sun Life & Provincial Holdings* 20,000 89
United Biscuits 10,000 36
--------
2,177
--------
VENEZUELA--0.3%
CIA Anonima Tele (ADR) 1,500 42
--------
Total Foreign Common Stocks
(Cost $13,862) 14,631
--------
FOREIGN PREFERRED STOCKS--1.1%
BRAZIL--0.4%
Brahma 38,400 21
Petroleo Brasileiro* 250,000 40
--------
61
--------
GERMANY--0.7%
Hornbach 1,600 114
--------
Total Foreign Preferred Stocks
(Cost $164) 175
--------
REPURCHASE AGREEMENT--5.0%
J.P. Morgan
6.60%, dated 12/31/96,
matures 01/02/97, repurchase
price $774,284 (collateralized by
U.S. Treasury Note, par value
$586,000, 9.875%, due 11/15/15,
market value $790,700) $ 774 774
--------
Total Repurchase Agreement
(Cost $774) 774
--------
Total Investments--99.8%
(Cost $14,800) 15,580
--------
OTHER ASSETS AND LIABILITIES--0.2%
Other Assets and Liabilities, Net 30
--------
NET ASSETS:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 1,319,976
outstanding shares of
beneficial interest 13,855
Portfolio shares of Class B
(unlimited authorization -- no
par value) based on 70,138
outstanding shares of
beneficial interest 724
35
<PAGE>
STATEMENT OF NET ASSETS
INTERNATIONAL GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
DESCRIPTION VALUE (000)
- --------------------------------------------------------------------------------
Undistributed net investment income $ 48
Accumulated net realized gain
on investments 202
Net unrealized appreciation on
foreign currency contracts and translation
of other assets and liabilities denominated
in foreign currency 1
Net unrealized appreciation on investment 780
--------
Total Net Assets--100.0% $ 15,610
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $ 11.23
========
Net Asset Value and Redemption
Price Per Share -- Class B $ 11.22
========
Maximum Public Offering Price
Per Share--Class B ($11.22 / 96%) $ 11.69
========
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
ADS -- AMERICAN DEPOSITORY SHARES
GBP -- GREAT BRITISH POUNDS
GDR -- GLOBAL DEPOSITORY RECEIPT
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
<TABLE>
STATEMENT OF OPERATIONS (000)
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
----------------------------------------------------------------------------------
U.S. TREASURY PRIME U.S. TREASURY
SECURITIES OBLIGATION TAX-EXEMPT SECURITIES
MONEY MONEY MONEY PLUS MONEY
MARKET MARKET MARKET MARKET
FUND FUND FUND FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME: $21,779 $20,106 $2,594 $3,560
----------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 1,497 1,309 256 101
Less investment advisory fee waived (14) (59) (20) (66)
Administration fee 855 747 146 236
Custodian fee 107 90 18 19
Transfer agent fee 118 102 34 27
Professional fees 129 113 22 16
Registration fees 13 58 3 3
Distribution fees (1) 9 21 10 18
Printing expense 56 51 10 8
Amortization of deferred organizational costs 4 4 4 6
Insurance and other expenses 15 16 3 4
----------------------------------------------------------------------------------
Total expenses 2,789 2,452 486 372
----------------------------------------------------------------------------------
NET INVESTMENT INCOME 18,990 17,654 2,108 3,188
Net realized gain (loss)
on investments 40 (32) (1) --
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $19,030 $17,622 $2,107 $3,188
----------------------------------------------------------------------------------
<FN>
(1) ALL DISTRIBUTION FEES ARE INCURRED AT THE CLASS B LEVEL EXCEPT FOR U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
37
<PAGE>
STATEMENT OF OPERATIONS (000)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
INTERMEDIATE-
NEW JERSEY TERM
SHORT-TERM FIXED MUNICIPAL GOVERNMENT
INVESTMENT INCOME SECURITIES SECURITIES
FUND FUND FUND FUND
--------------------------------------------------------------------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C>
Dividend income -- -- -- --
Interest income $1,914 $7,263 $2,295 $1,875
Less: Foreign taxes withheld -- -- -- --
--------------------------------------------------------------------------
Total income 1,914 7,263 2,295 1,875
--------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 203 682 287 185
Less investment advisory fee waived (56) (133) (117) (21)
Administration fee 68 227 96 62
Less administration fee waived -- -- (9) --
Custodian fee 8 28 12 8
Transfer agent fee 26 43 34 16
Professional fees 9 31 12 --
Registration fees 1 1 (3) (2)
Distribution fees (1) 4 15 58 8
Printing expense 3 12 3 1
Amortization of deferred organizational costs 5 5 4 4
Insurance and other expenses 4 13 3 --
--------------------------------------------------------------------------
Total expenses, net of waivers 275 924 380 261
--------------------------------------------------------------------------
NET INVESTMENT INCOME 1,639 6,339 1,915 1,614
Net realized gain (loss)
on investments (29) (8) (71) (172)
Net realized loss on foreign currency
transactions and foreign currency contracts -- -- -- --
Net change in unrealized appreciation on
foreign currency and translation of other
assets and liabilities denominated in
foreign currency -- -- -- --
Net unrealized appreciation (deprecation)
of investment securities (36) (3,461) (483) (533)
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,574 $2,870 $1,361 $909
--------------------------------------------------------------------------
<FN>
(1) ALL DISTRIBUTION FEES ARE INCURRED AT THE CLASS B LEVEL.
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.
38
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA
MUNICIPAL EQUITY EQUITY MID CAP BALANCED INTERNATIONAL
SECURITIES GNMA VALUE INCOME VALUE GROWTH GROWTH
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-- -- $ 2,190 $ 1,820 $685 $401 $310
$202 $624 454 258 52 1,223 39
-- -- -- -- -- -- (32)
- ------------------------------------------------------------------------------------------------------------------------------------
202 624 2,644 2,078 737 1,624 317
- ------------------------------------------------------------------------------------------------------------------------------------
24 53 803 464 377 272 134
(24) (31) (300) (181) (149) (111) (31)
8 18 214 124 101 73 27
(8) -- -- -- -- -- --
1 2 27 15 12 9 23
24 23 44 33 30 27 22
-- 3 31 16 14 10 3
-- -- 13 7 2 (2) 6
1 4 22 29 15 22 2
-- 1 13 7 5 4 2
1 2 5 5 5 5 3
1 1 9 6 5 4 13
- ------------------------------------------------------------------------------------------------------------------------------------
28 76 881 525 417 313 204
- ------------------------------------------------------------------------------------------------------------------------------------
174 548 1,763 1,553 320 1,311 113
(3) 13 17,503 10,647 4,218 4,293 1,013
-- -- -- -- -- -- (9)
-- -- -- -- -- -- 1
(17) (317) 2,402 32 1,825 (1,625) 307
- ------------------------------------------------------------------------------------------------------------------------------------
$154 $244 $21,668 $12,232 $6,363 $3,979 $1,425
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS ENDED DECEMBER 31,
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
U.S. TREASURY PRIME OBLIGATION
SECURITIES MONEY MARKET
MONEY MARKET FUND FUND
---------------------------------------------------------------------------
1996 1995 1996 1995
---------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income $ 18,990 $ 19,550 $ 17,654 $ 11,821
Net realized gain (loss) on securities sold 40 110 (32) 44
---------------------------------------------------------------------------
Net increase in net assets resulting
from operations 19,030 19,660 17,622 11,865
---------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (18,841) (19,473) (17,270) (11,601)
Class B (149) (77) (384) (220)
Realized capital gains:
Class A -- -- -- --
Class B -- -- -- --
---------------------------------------------------------------------------
Total distributions (18,990) (19,550) (17,654) (11,821)
---------------------------------------------------------------------------
SHARE TRANSACTIONS (ALL AT $1.00 PER SHARE):
Class A:
Shares issued 1,120,245 1,066,121 802,073 610,748
Shares issued in lieu of cash distributions 90 1 973 --
Shares redeemed (1,079,179) (1,067,826) (661,258) (508,503)
---------------------------------------------------------------------------
Net Class A share transactions 41,156 (1,704) 141,788 102,245
---------------------------------------------------------------------------
Class B:
Shares issued 4,115 6,412 20,093 9,612
Shares issued in lieu of cash distributions 137 65 363 199
Shares redeemed (4,279) (3,578) (16,034) (6,167)
---------------------------------------------------------------------------
Net Class B share transactions (27) 2,899 4,422 3,644
---------------------------------------------------------------------------
Increase in net assets from
share transactions 41,129 1,195 146,210 105,889
---------------------------------------------------------------------------
Total increase in net assets 41,169 1,305 146,178 105,933
---------------------------------------------------------------------------
NET ASSETS:
Beginning of period 467,063 465,758 266,592 160,659
---------------------------------------------------------------------------
NET ASSETS:
End of period $508,232 $467,063 $412,770 $266,592
---------------------------------------------------------------------------
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
</TABLE>
40
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
TAX-EXEMPT U.S. TREASURY
MONEY MARKET SECURITIES PLUS
FUND MONEY MARKET FUND
- --------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------
$ 2,108 $ 1,896 $ 3,188 $ 2,995
(1) (5) -- 4
- --------------------------------------------------------------------------------
2,107 1,891 3,188 2,999
- --------------------------------------------------------------------------------
(2,003) (1,764) (3,188) (2,995)
(105) (132) -- --
-- -- -- --
-- -- -- --
- --------------------------------------------------------------------------------
(2,108) (1,896) (3,188) (2,995)
- --------------------------------------------------------------------------------
136,217 140,400 527,102 418,839
101 -- 3,035 2,350
(132,864) (114,513) (529,661) (402,797)
- --------------------------------------------------------------------------------
3,454 25,887 476 18,392
- --------------------------------------------------------------------------------
6,240 7,924 -- --
114 112 -- --
(7,739) (5,587) -- --
- --------------------------------------------------------------------------------
(1,385) 2,449 -- --
- --------------------------------------------------------------------------------
2,069 28,336 476 18,392
- --------------------------------------------------------------------------------
2,068 28,331 476 18,396
- --------------------------------------------------------------------------------
68,866 40,535 64,697 46,301
- --------------------------------------------------------------------------------
$ 70,934 $ 68,866 $ 65,173 $ 64,697
- --------------------------------------------------------------------------------
41
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS ENDED DECEMBER 31,
FIXED INCOME FUNDS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
SHORT-TERM FIXED
INVESTMENT INCOME
FUND FUND
-------------------------------------------------------------------------
1996 1995 1996 1995
-------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income $ 1,639 $ 1,741 $ 6,339 $ 6,455
Net realized gain (loss) on securities sold (29) 43 (8) (191)
Net unrealized appreciation (depreciation)
of investment securities (36) 134 (3,461) 11,725
-------------------------------------------------------------------------
Net increase in net assets resulting
from operations 1,574 1,918 2,870 17,989
-------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (1,571) (1,676) (6,017) (6,151)
Class B (69) (64) (322) (305)
Realized capital gains:
Class A -- -- (11) --
Class B -- -- -- --
-------------------------------------------------------------------------
Total distributions (1,640) (1,740) (6,350) (6,456)
-------------------------------------------------------------------------
SHARE TRANSACTIONS:
Class A:
Proceeds from shares issued 16,470 10,526 12,563 14,073
Reinvestment of cash distributions 1,504 1,642 6,010 5,297
Cost of shares redeemed (16,926) (10,885) (28,653) (13,377)
-------------------------------------------------------------------------
Net Class A share transactions 1,048 1,283 (10,080) 5,993
-------------------------------------------------------------------------
Class B:
Proceeds from shares issued 492 1,553 2,412 1,524
Reinvestment of cash distributions 62 58 274 197
Cost of shares redeemed (1,515) (343) (3,520) (1,977)
-------------------------------------------------------------------------
Net Class B share transactions (961) 1,268 (834) (256)
-------------------------------------------------------------------------
Increase (decrease) in net assets from
share transactions 87 2,551 (10,914) 5,737
-------------------------------------------------------------------------
Total increase (decrease) in net assets 21 2,729 (14,394) 17,270
-------------------------------------------------------------------------
NET ASSETS:
Beginning of period 32,685 29,956 119,353 102,083
-------------------------------------------------------------------------
NET ASSETS:
End of period $32,706 $32,685 $104,959 $119,353
SHARES ISSUED AND REDEEMED:
Class A shares:
Issued 1,647 1,050 1,208 1,399
Issued in lieu of cash distributions 150 164 609 526
Redeemed (1,693) (1,086) (2,829) (1,336)
-------------------------------------------------------------------------
Net Class A share transactions 104 128 (1,012) 589
-------------------------------------------------------------------------
Class B shares:
Issued 49 154 236 149
Issued in lieu of cash distributions 6 6 27 20
Redeemed (151) (34) (347) (197)
-------------------------------------------------------------------------
Net Class B share transactions (96) 126 (84) (28)
-------------------------------------------------------------------------
Net increase (decrease) in shares 8 254 (1,096) 561
-------------------------------------------------------------------------
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
</TABLE>
42
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY INTERMEDIATE- PENNSYLVANIA
MUNICIPAL TERM GOVERNMENT MUNICIPAL GNMA
SECURITIES FUND SECURITIES FUND SECURITIES FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,915 $ 2,036 $ 1,614 $ 1,683 $ 174 $ 133 $ 548 $ 581
(71) (59) (172) (624) (3) 16 13 1
(483) 3,802 (533) 3,243 (17) 205 (317) 1,054
- ------------------------------------------------------------------------------------------------------------------------------------
1,361 5,779 909 4,302 154 354 244 1,636
- ------------------------------------------------------------------------------------------------------------------------------------
(1,007) (1,069) (1,453) (1,545) (161) (123) (453) (472)
(907) (965) (161) (139) (13) (10) (95) (105)
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(1,914) (2,034) (1,614) (1,684) (174) (133) (548) (577)
- ------------------------------------------------------------------------------------------------------------------------------------
4,639 10,887 7,641 11,820 789 651 2,410 2,519
879 881 1,116 1,271 9 -- 337 325
(12,628) (5,551) (12,330) (12,889) (458) (242) (4,683) (1,935)
- ------------------------------------------------------------------------------------------------------------------------------------
(7,110) 6,217 (3,573) 202 340 409 (1,936) 909
- ------------------------------------------------------------------------------------------------------------------------------------
3,066 7,955 726 1,667 76 59 187 193
741 783 135 112 10 8 64 68
(9,242) (5,838) (1,868) (706) (11) (153) (526) (554)
- ------------------------------------------------------------------------------------------------------------------------------------
(5,435) 2,900 (1,007) 1,073 75 (86) (275) (293)
- ------------------------------------------------------------------------------------------------------------------------------------
(12,545) 9,117 (4,580) 1,275 415 323 (2,211) 616
- ------------------------------------------------------------------------------------------------------------------------------------
(13,098) 12,862 (5,285) 3,893 395 544 (2,515) 1,675
- ------------------------------------------------------------------------------------------------------------------------------------
54,034 41,172 32,542 28,649 3,614 3,070 10,511 8,836
- ------------------------------------------------------------------------------------------------------------------------------------
$40,936 $54,034 $27,257 $32,542 $4,009 $3,614 $7,996 $10,511
- ------------------------------------------------------------------------------------------------------------------------------------
434 1,033 750 1,176 78 65 252 262
83 84 110 126 1 -- 35 34
(1,187) (528) (1,215) (1,280) (46) (24) (485) (205)
- ------------------------------------------------------------------------------------------------------------------------------------
(670) 589 (355) 22 33 41 (198) 91
- ------------------------------------------------------------------------------------------------------------------------------------
287 754 71 164 8 6 19 19
70 75 14 11 1 1 7 7
(871) (559) (184) (71) (1) (16) (55) (59)
- ------------------------------------------------------------------------------------------------------------------------------------
(514) 270 (99) 104 8 (9) (29) (33)
- ------------------------------------------------------------------------------------------------------------------------------------
(1,184) 859 (454) 126 41 32 (227) 58
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS ENDED DECEMBER 31,
EQUITY FUNDS
<TABLE>
<CAPTION>
---------------------------------------------------------------------
EQUITY VALUE EQUITY INCOME
FUND FUND
---------------------------------------------------------------------
1996 1995 1996 1995
---------------------------------------------------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income $ 1,763 $ 1,586 $ 1,553 $ 1,178
Net realized gain on securities sold 17,503 6,540 10,647 2,837
Net realized loss on foreign currency transactions -- -- -- --
Net unrealized appreciation on foreign currency and
translation of other assets and liabilities in
foreign currency -- -- -- --
Net unrealized appreciation (depreciation)
of investment securities 2,402 15,433 32 9,914
---------------------------------------------------------------------
Net increase in net assets resulting
from operations 21,668 23,559 12,232 13,929
---------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A (1,641) (1,491) (1,301) (1,011)
Class B (122) (95) (252) (174)
Realized capital gains:
Class A (15,212) (5,108) (7,946) (1,576)
Class B (1,302) (471) (1,706) (336)
---------------------------------------------------------------------
Total distributions (18,277) (7,165) (11,205) (3,097)
---------------------------------------------------------------------
SHARE TRANSACTIONS:
Class A:
Proceeds from shares issued 33,908 11,043 16,356 4,217
Reinvestment of cash distributions 16,529 6,427 8,601 2,481
Cost of shares redeemed (19,461) (11,758) (11,867) (6,188)
---------------------------------------------------------------------
Net Class A share transactions 30,976 5,712 13,090 510
---------------------------------------------------------------------
Class B:
Proceeds from shares issued 2,210 3,923 5,660 3,547
Reinvestment of cash distributions 1,421 489 1,928 497
Cost of shares redeemed (1,604) (635) (5,040) (1,743)
---------------------------------------------------------------------
Net Class B share transactions 2,027 3,777 2,548 2,301
---------------------------------------------------------------------
Increase (decrease) in net assets from
share transactions 33,003 9,489 15,638 2,811
---------------------------------------------------------------------
Total increase (decrease) in net assets 36,394 25,883 16,665 13,643
---------------------------------------------------------------------
NET ASSETS:
Beginning of period 90,321 64,438 53,814 40,171
---------------------------------------------------------------------
NET ASSETS:
End of period $126,715 $90,321 $70,479 $53,814
---------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
Class A shares:
Issued 2,485 912 1,181 355
Issued in lieu of cash distributions 1,226 508 640 197
Redeemed (1,418) (993) (847) (533)
---------------------------------------------------------------------
Net Class A share transactions 2,293 427 974 19
---------------------------------------------------------------------
Class B shares:
Issued 160 313 414 289
Issued in lieu of cash distributions 109 38 143 39
Redeemed (116) (52) (360) (144)
---------------------------------------------------------------------
Net Class B share transactions 153 299 197 184
---------------------------------------------------------------------
Net increase (decrease) in shares 2,446 726 1,171 203
---------------------------------------------------------------------
<FN>
(1) THE INTERNATIONAL GROWTH FUND COMMENCED OPERATIONS ON MAY 1, 1995. THE
INFORMATION PRESENTED IS FOR THE PERIOD ENDED DECEMBER 31, 1995.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
[LOGO OMITTED]
DECEMBER 31, 1996
MID CAP VALUE BALANCED GROWTH INTERNATIONAL GROWTH
FUND FUND FUND (1)
1996 1995 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 320 $ 535 $ 1,311 $ 1,446 $ 113 $ 32
4,218 764 4,293 1,009 1,013 81
-- -- -- -- (9) (16)
-- -- -- -- 1 --
1,825 6,078 (1,625) 6,664 307 473
- ----------------------------------------------------------------------------------------------------
6,363 7,377 3,979 9,119 1,425 570
- ----------------------------------------------------------------------------------------------------
(295) (484) (995) (1,174) (100) (19)
(25) (55) (316) (275) (3) (1)
(2,642) (740) (2,650) (358) (779) (19)
(341) (101) (1,256) (92) (42) (1)
- ----------------------------------------------------------------------------------------------------
(3,303) (1,380) (5,217) (1,899) (924) (40)
- ----------------------------------------------------------------------------------------------------
4,772 5,976 5,420 3,566 5,647 9,881
2,816 1,187 3,290 1,457 521 21
(7,122) (3,497) (20,821) (5,599) (1,804) (411)
- ----------------------------------------------------------------------------------------------------
466 3,666 (12,111) (576) 4,364 9,491
- ----------------------------------------------------------------------------------------------------
665 1,272 1,186 1,472 1,040 604
363 154 1,535 357 45 2
(1,180) (1,076) (1,631) (1,534) (951) (16)
- ----------------------------------------------------------------------------------------------------
(152) 350 1,090 295 134 590
- ----------------------------------------------------------------------------------------------------
314 4,016 (11,021) (281) 4,498 10,081
- ----------------------------------------------------------------------------------------------------
3,374 10,013 (12,259) 6,939 4,999 10,611
- ----------------------------------------------------------------------------------------------------
48,028 38,015 40,597 33,658 10,611 --
- ----------------------------------------------------------------------------------------------------
$51,402 $48,028 $28,338 $40,597 $15,610 $10,611
- ----------------------------------------------------------------------------------------------------
365 491 439 315 503 969
214 96 281 126 47 2
(539) (296) (1,697) (491) (161) (41)
- ----------------------------------------------------------------------------------------------------
40 291 (977) (50) 389 930
- ----------------------------------------------------------------------------------------------------
50 106 95 132 93 59
28 12 132 31 4 --
(90) (89) (130) (141) (84) (1)
- ----------------------------------------------------------------------------------------------------
(12) 29 97 22 13 58
- ----------------------------------------------------------------------------------------------------
28 320 (880) (28) 402 988
- ----------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO OF
RATIO OF EXPENSES NET INCOME
NET ASSET DISTRIBUTIONS RATIO OF RATIO OF TO AVERAGE TO AVERAGE
VALUE NET FROM NET NET ASSET NET ASSETS EXPENSES NET INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL END OF TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INCOME OF PERIOD RETURN PERIOD(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.04 $(0.04) $1.00 4.53% $504,729 0.65% 4.44% 0.65% 4.44%
1995 1.00 0.05 (0.05) 1.00 5.05 463,531 0.65 4.92 0.65 4.92
1994 1.00 0.03 (0.03) 1.00 3.44 465,125 0.62 3.39 0.62 3.39
1993 1.00 0.02 (0.02) 1.00 2.46 420,947 0.64 2.42 0.64 2.42
1992(1)
1996 $1.00 $0.04 $(0.04) $1.00 4.27% $3,503 0.90% 4.19% 0.90% 4.19%
1995 1.00 0.05 (0.05) 1.00 4.80 3,532 0.90 4.66 0.90 4.66
1994 1.00 0.03 (0.03) 1.00 3.17 633 0.87 3.07 0.87 3.07
1993 1.00 0.02 (0.02) 1.00 2.21 834 0.89 2.17 0.89 2.17
1992(1) 1.00 0.02 (0.02) 1.00 2.56* 436 0.90 2.27 0.95 2.22
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATION MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $1.00 $0.05 $(0.05) $1.00 4.83% $401,423 0.65% 4.73% 0.67% 4.71%
1995 1.00 0.05 (0.05) 1.00 5.40 259,667 0.65 5.26 0.66 5.25
1994 1.00 0.04 (0.04) 1.00 3.67 157,378 0.62 3.68 0.62 3.68
1993 1.00 0.03 (0.03) 1.00 2.65 129,780 0.64 2.63 0.64 2.63
1992(1) 1.00 0.02 (0.02) 1.00 2.85* 124,811 0.65 2.63 0.77 2.51
CLASSB
1996 $1.00 $0.04 $(0.04) $1.00 4.58% $ 11,347 0.90% 4.48% 0.92% 4.46%
1995 1.00 0.05 (0.05) 1.00 5.14 6,925 0.90 5.01 0.91 5.00
1994 1.00 0.03 (0.03) 1.00 3.40 3,281 0.87 3.89 0.87 3.89
1993 1.00 0.02 (0.02) 1.00 2.40 377 0.89 2.38 0.89 2.38
1992(1) 1.00 0.02 (0.02) 1.00 2.60* 243 0.89 2.43 1.01 2.31
- ------------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $1.00 $0.03 $(0.03) $1.00 2.94% $67,082 0.65% 2.90% 0.68% 2.87%
1995 1.00 0.03 (0.03) 1.00 3.42 63,628 0.65 3.37 0.72 3.30
1994 1.00 0.02 (0.02) 1.00 2.27 37,745 0.65 2.27 0.68 2.24
1993 1.00 0.02 (0.02) 1.00 1.99 32,994 0.65 1.97 0.69 1.93
1992(2) 1.00 0.02 (0.02) 1.00 2.42* 22,963 0.65 2.39 0.79 2.25
CLASSB
1996 $1.00 $0.03 $(0.03) $1.00 2.70% $ 3,852 0.90% 2.65% 0.93% 2.62%
1995 1.00 0.03 (0.03) 1.00 3.17 5,238 0.90 3.14 0.96 3.08
1994 1.00 0.02 (0.02) 1.00 2.02 2,790 0.90 1.97 0.92 1.95
1993 1.00 0.02 (0.02) 1.00 1.74 3,866 0.90 1.72 0.94 1.68
1992(2) 1.00 0.02 (0.02) 1.00 2.17* 2,273 0.90 2.07 1.04 1.93
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $1.00 $0.05 $(0.05) $1.00 4.82% $65,173 0.55% 4.72% 0.65% 4.62%
1995 1.00 0.05 (0.05) 1.00 5.40 64,697 0.55 5.26 0.62 5.19
1994 1.00 0.04 (0.04) 1.00 3.60 46,301 0.55 3.42 0.63 3.34
1993(3) 1.00 0.02 (0.02) 1.00 2.66* 89,278 0.55 2.62 0.68 2.49
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*ANNUALIZED
(1) THE U.S. TREASURY SECURITIES MONEY MARKET AND THE PRIME OBLIGATION MONEY MARKET FUNDS COMMENCED OPERATIONS ON APRIL 1, 1992.
RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) THE TAX-EXEMPT MONEY MARKET FUND COMMENCED OPERATIONS ON APRIL 6, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(3) THE U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND COMMENCED OPERATIONS ON MAY 3, 1993. RATIOS FOR THIS PERIOD HAVE
BEEN ANNUALIZED.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
46
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF RATIO OF
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES INCOME
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF TO AVERAGE TO AVERAGE
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000) NET ASSETS NET ASSETS
RATE
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $10.02 $0.48 $(0.01) $(0.48) -- $10.01 4.86% $31,630 0.80% 4.85%
1995 9.97 0.55 0.05 (0.55) -- 10.02 6.19 30,642 0.80 5.52
1994 10.01 0.35 (0.04) (0.35) -- 9.97 3.21 29,187 0.80 3.51
1993 10.01 0.29 -- (0.29) -- 10.01 2.96 31,337 0.80 2.94
1992(1) 10.00 0.27 0.03 (0.27) $(0.02) 10.01 3.47* 30,998 0.80 3.50
CLASSB
1996 $10.05 $0.45 $(0.02) $(0.46) -- $10.02 4.39% $1,076 1.05% 4.60%
1995 9.98 0.53 0.07 (0.53) -- 10.05 6.13 2,043 1.05 5.27
1994 10.03 0.33 (0.05) (0.33) -- 9.98 2.85 769 1.05 3.50
1993 10.01 0.28 0.01 (0.27) -- 10.03 2.90 205 1.05 2.09
1992(1) 10.00 0.25 0.03 (0.25) $(0.02) 10.01 3.23* 193 1.05 3.14
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $10.49 $0.57 $(0.28) $(0.57) -- $10.21 2.94% $100,129 0.80% 5.60%
1995 9.44 0.59 1.05 (0.59) -- 10.49 17.76 113,509 0.80 5.83
1994 10.68 0.59 (1.18) (0.59) $(0.06) 9.44 (5.66) 96,558 0.80 5.91
1993 10.38 0.61 0.52 (0.61) (0.22) 10.68 11.05 113,892 0.80 5.59
1992(1) 10.00 0.49 0.44 (0.49) (0.06) 10.38 11.60* 89,701 0.80 6.24
CLASSB
1996 $10.48 $0.55 $(0.28) $(0.55) -- $10.20 2.68% $4,830 1.05% 5.35%
1995 9.44 0.56 1.04 (0.56) -- 10.48 17.36 5,844 1.05 5.58
1994 10.68 0.56 (1.18) (0.56) $(0.06) 9.44 (5.90) 5,525 1.05 5.65
1993 10.38 0.58 0.52 (0.58) (0.22) 10.68 10.76 6,519 1.05 5.24
1992(1) 10.00 0.47 0.44 (0.47) (0.06) 10.38 11.39* 1,214 1.05 5.93
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY MUNICIPAL FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $10.79 $0.44 $(0.08) $(0.44) -- $10.71 3.42% $20,689 0.67% 4.13%
1995 9.93 0.47 0.86 (0.47) -- 10.79 13.57 28,080 0.41 4.43
1994 10.85 0.48 (0.92) (0.48) -- 9.93 (4.12) 19,977 0.27 4.65
1993 10.29 0.50 0.56 (0.50) -- 10.85 10.48 27,064 0.20 4.57
1992(2) 10.00 0.30 0.29 (0.30) -- 10.29 9.01* 9,395 0.46 4.56
CLASSB
1996 $10.79 $0.41 $(0.09) $(0.41) -- $10.70 3.08% $20,247 0.92% 3.88%
1995 9.93 0.44 0.86 (0.44) -- 10.79 13.30 25,954 0.66 4.18
1994 10.85 0.45 (0.92) (0.45) -- 9.93 (4.35) 21,195 0.52 4.40
1993 10.29 0.46 0.56 (0.46) -- 10.85 10.09 22,061 0.45 4.34
1992(2) 10.00 0.29 0.29 (0.29) -- 10.29 8.29* 5,424 0.62 4.44
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATIO OF RATIO OF
EXPENSES NET INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS PORTFOLIO
(EXCLUDING (EXCLUDING TURNOVER
WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
<S> <C> <C> <C>
1996 0.96% 4.69% 33.83%
1995 0.97 5.35 64.85
1994 0.94 3.37 68.39
1993 0.95 2.79 81.92
1992(1) 1.01 3.29 68.15
CLASSB
1996 1.21% 4.44% 33.83%
1995 1.22 5.10 64.85
1994 1.20 3.35 68.39
1993 1.13 2.01 81.92
1992(1) 1.26 2.93 68.15
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 0.92% 5.48% 40.56%
1995 0.91 5.72 35.49
1994 0.90 5.81 15.24
1993 0.91 5.48 49.49
1992(1) 0.94 6.10 23.86
CLASSB
1996 1.17% 5.23% 40.56%
1995 1.16 5.47 35.49
1994 1.15 5.55 15.24
1993 1.13 5.16 49.49
1992(1) 1.20 5.78 23.86
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY MUNICIPAL FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 0.93% 3.87% 13.93%
1995 0.93 3.91 2.83
1994 0.93 3.99 16.81
1993 1.00 3.77 23.83
1992(2) 1.22 3.80 2.23
CLASSB
1996 1.18% 3.62% 13.93%
1995 1.18 3.66 2.83
1994 1.18 3.74 16.81
1993 1.23 3.54 23.83
1992(2) 1.39 3.67 2.23
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* ANNUALIZED
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS B SHARES.
(1) THE SHORT-TERM INVESTMENT FUND AND THE FIXED INCOME FUND COMMENCED
OPERATIONS ON APRIL 1, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) THE NEW JERSEY MUNICIPAL SECURITIES FUND COMMENCED OPERATIONS ON MAY 4, 1992. RATIOS FOR THIS PERIOD
HAVE BEEN ANNUALIZED.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
47
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF RATIO OF
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES INCOME
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF TO AVERAGE TO AVERAGE
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000) NET ASSETS NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $10.37 $0.53 $(0.21) $(0.53) -- $10.16 3.26% $24,679 0.80% 5.26%
1995 9.51 0.54 0.86 (0.54) -- 10.37 15.00 28,877 0.80 5.33
1994 10.53 0.51 (1.01) (0.51) $(0.01) 9.51 (4.85) 26,277 0.80 5.13
1993 10.23 0.52 0.32 (0.52) (0.02) 10.53 8.32 34,075 0.80 4.87
1992(1) 10.00 0.41 0.24 (0.41) (0.01) 10.23 7.95* 16,327 0.80 5.30
CLASSB
1996 $10.37 $0.52 $(0.22) $(0.51) -- $10.16 3.01% $2,578 1.05% 5.01%
1995 9.51 0.51 0.86 (0.51) -- 10.37 14.71 3,665 1.05 5.08
1994 10.53 0.49 (1.01) (0.49) $(0.01) 9.51 (5.09) 2,372 1.05 4.83
1993 10.24 0.49 0.31 (0.49) (0.02) 10.53 7.94 4,903 1.05 4.59
1992(1) 10.00 0.39 0.25 (0.39) (0.01) 10.24 7.86* 2,190 1.05 5.00
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $10.23 $0.44 $(0.06) $(0.44) -- $10.17 3.89% $3,665 0.69% 4.42%
1995 9.55 0.40 0.68 (0.40) -- 10.23 11.53 3,345 0.80 4.05
1994 10.17 0.36 (0.62) (0.36) -- 9.55 (2.58) 2,734 0.80 3.67
1993(2) 10.00 0.23 0.17 (0.23) -- 10.17 6.01 2,922 0.80 3.35
CLASSB
1996 $10.22 $0.42 $(0.05) $(0.42) -- $10.17 3.74% $344 0.94% 4.19%
1995 9.55 0.38 0.67 (0.38) -- 10.22 11.15 269 1.05 3.80
1994 10.17 0.33 (0.62) (0.33) -- 9.55 (2.83) 336 1.05 3.42
1993(3) 9.98 0.20 0.19 (0.20) -- 10.17 6.28* 289 1.05 3.24
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $9.94 $0.60 $(0.31) $(0.60) -- $9.63 3.09% $6,570 0.80% 6.23%
1995 8.85 0.60 1.09 (0.60) -- 9.94 19.52 8,750 0.80 6.29
1994 9.85 0.54 (1.00) (0.53) $(0.01) 8.85 (4.71) 6,983 0.80 5.72
1993(2) 10.00 0.34 (0.15) (0.34) -- 9.85 2.80* 10,900 0.80 4.48
CLASSB
1996 $9.93 $0.57 $(0.32) $(0.57) -- $9.61 2.73% $1,426 1.05% 5.98%
1995 8.84 0.58 1.08 (0.57) -- 9.93 19.24 1,761 1.05 6.05
1994 9.85 0.50 (1.00) (0.50) $(0.01) 8.84 (5.05) 1,853 1.05 5.47
1993(4) 10.01 0.31 (0.16) (0.31) -- 9.85 2.31* 2,633 1.05 4.70
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $12.81 $0.22 $2.54 $(0.22) $(2.00) $13.35 21.69% $116,715 0.80% 1.67%
1995 10.19 0.25 3.46 (0.25) (0.84) 12.81 36.71 82,677 0.80 2.08
1994 11.10 0.21 (0.83) (0.21) (0.08) 10.19 (5.61) 61,407 0.80 1.92
1993 10.64 0.18 0.46 (0.18) -- 11.10 6.12 67,383 0.80 1.74
1992(1) 10.00 0.14 0.64 (0.14) -- 10.64 10.51* 62,116 0.80 1.82
CLASSB
1996 $12.83 $0.19 $2.51 $(0.18) $(2.00) $13.35 21.15% $10,000 1.05% 1.42%
1995 10.21 0.21 3.47 (0.22) (0.84) 12.83 36.35 7,644 1.05 1.83
1994 11.12 0.18 (0.83) (0.18) (0.08) 10.21 (5.83) 3,031 1.05 1.67
1993 10.66 0.16 0.46 (0.16) -- 11.12 5.85 2,741 1.05 1.51
1992(1) 10.00 0.09 0.67 (0.10) -- 10.66 10.35* 1,562 1.05 1.64
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS PORTFOLIO AVERAGE
(EXCLUDING (EXCLUDING TURNOVER COMMISSION
WAIVERS) WAIVERS) RATE RATE++
- ------------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
<S> <C> <C> <C> <C>
1996 0.87% 5.19% 40.60% n/a
1995 1.05 5.08 68.29 n/a
1994 0.95 4.98 40.27 n/a
1993 1.00 4.67 31.69 n/a
1992(1) 1.11 4.99 12.38 n/a
CLASSB
1996 1.12% 4.94% 40.60% n/a
1995 1.30 4.83 68.29 n/a
1994 1.20 4.68 40.27 n/a
1993 1.23 4.41 31.69 n/a
1992(1) 1.36 4.69 12.38 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 1.49% 3.62% 25.88% n/a
1995 1.27 3.58 36.92 n/a
1994 1.61 2.86 38.20 n/a
1993(2) 1.48 2.67 16.51 n/a
CLASSB
1996 1.74% 3.39% 25.88% n/a
1995 1.55 3.30 36.92 n/a
1994 1.92 2.55 38.20 n/a
1993(3) 1.48 2.81 16.51 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 1.16% 5.87% 5.77% n/a
1995 1.13 5.96 9.69 n/a
1994 0.97 5.55 102.77 n/a
1993(2) 1.08 4.20 252.73 n/a
CLASSB
1996 1.41% 5.62% 5.77% n/a
1995 1.37 5.73 9.69 n/a
1994 1.22 5.30 102.77 n/a
1993(4) 1.29 4.46 252.73 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 1.08% 1.39% 85.30% $.0950
1995 1.07 1.81 61.88 n/a
1994 1.06 1.66 44.98 n/a
1993 1.07 1.47 89.91 n/a
1992(1) 1.10 1.52 45.68 n/a
CLASSB
1996 1.33% 1.14% 85.30% $.0950
1995 1.32 1.56 61.88 n/a
1994 1.31 1.41 44.98 n/a
1993 1.30 1.26 89.91 n/a
1992(1) 1.36 1.33 45.68 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* ANNUALIZED
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS B SHARES.
(++) AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS ONLY REQUIRED FOR THE FISCAL
YEARS BEGINNING AFTER SEPTEMBER 1, 1995.
(1) THE INTERMEDIATE-TERM GOVERNMENT SECURITIES AND THE EQUITY VALUE FUND
COMMENCED OPERATIONS ON APRIL 1, 1992. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED.
(2) THE PENNSYLVANIA MUNICIPAL--CLASS A FUND AND THE GNMA--CLASS A FUND
COMMENCED OPERATIONS ON MAY 3, 1993. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED.
(3) THE PENNSYLVANIA MUNICIPAL--CLASS B FUND COMMENCED OPERATIONS ON
MAY 13, 1993. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(4) THE GNMA--CLASS B FUND COMMENCED OPERATIONS ON MAY 5, 1993.
RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
48
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS RATIO OF RATIO OF
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES INCOME
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF TO AVERAGE TO AVERAGE
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000) NET ASSETS NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $13.07 $0.33 $2.35 $(0.34) $(2.09) $13.32 21.01% $58,035 0.80% 2.55%
1995 10.26 0.31 3.29 (0.31) (0.48) 13.07 35.55 44,202 0.80 2.61
1994 11.17 0.32 (0.81) (0.32) (0.10) 10.26 (4.42) 34,514 0.80 2.96
1993 10.72 0.29 0.80 (0.29) (0.35) 11.17 10.27 38,237 0.80 2.65
1992(1) 10.00 0.22 0.72 (0.22) -- 10.72 12.72* 32,538 0.80 2.88
CLASSB
1996 $13.08 $0.31 $2.34 $(0.29) $(2.09) $13.35 20.70% $12,444 1.05% 2.30%
1995 10.27 0.28 3.29 (0.28) (0.48) 13.08 35.21 9,612 1.05 2.36
1994 11.17 0.29 (0.80) (0.29) (0.10) 10.27 (4.56) 5,657 1.05 2.71
1993 10.73 0.28 0.78 (0.27) (0.35) 11.17 9.94 4,421 1.05 2.42
1992(1) 10.00 0.15 0.77 (0.19) -- 10.73 12.43* 585 1.05 2.54
- ------------------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $12.55 $0.09 $1.59 $(0.09) $(0.81) $13.33 13.56% $45,556 0.80% 0.66%
1995 10.83 0.15 1.95 (0.15) (0.23) 12.55 19.49 42,375 0.80 1.28
1994 12.32 0.12 (1.27) (0.12) (0.22) 10.83 (9.34) 33,448 0.80 1.06
1993 10.99 0.11 1.33 (0.11) -- 12.32 13.22 35,648 0.80 1.03
1992(1) 10.00 0.07 0.99 (0.07) -- 10.99 14.30* 29,507 0.80 0.98
CLASSB
1996 $12.53 $0.05 $1.59 $(0.05) $(0.81) $13.31 13.32% $5,846 1.05% 0.41%
1995 10.82 0.12 1.94 (0.12) (0.23) 12.53 19.13 5,653 1.05 1.03
1994 12.31 0.10 (1.27) (0.10) (0.22) 10.82 (9.54) 4,567 1.05 0.85
1993 10.99 0.09 1.32 (0.09) -- 12.31 12.88 2,720 1.05 0.83
1992(2) 10.00 0.05 1.00 (0.06) -- 10.99 14.08* 637 1.05 0.88
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCED GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $12.05 $0.48 $1.16 $(0.47) $(1.83) $11.39 13.77% $19,243 0.80% 3.68%
1995 9.91 0.44 2.27 (0.44) (0.13) 12.05 27.76 32,145 0.80 3.89
1994 10.78 0.37 (0.86) (0.38) -- 9.91 (4.61) 26,921 0.80 3.64
1993 10.35 0.38 0.43 (0.38) -- 10.78 7.89 25,712 0.80 3.75
1992(1) 10.00 0.29 0.34 (0.28) -- 10.35 8.53* 16,899 0.80 3.88
CLASSB
1996 $12.07 $0.43 $1.17 $(0.44) $(1.83) $11.40 13.39% $9,095 1.05% 3.43%
1995 9.92 0.42 2.28 (0.42) (0.13) 12.07 27.53 8,452 1.05 3.64
1994 10.79 0.35 (0.87) (0.35) -- 9.92 (4.87) 6,737 1.05 3.39
1993 10.36 0.37 0.42 (0.36) -- 10.79 7.62 8,122 1.05 3.47
1992(1) 10.00 0.20 0.40 (0.24) -- 10.36 8.15* 2,990 1.05 3.59
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 $10.74 $0.08 $1.11 $(0.08) $(0.62) $11.23 11.17% $14,822 1.50% 0.85%
1995(2) 10.00 0.03 0.75 (0.02) (0.02) 10.74 7.81 9,990 1.50* 0.79*
CLASSB
1996 $10.73 $0.09 $1.06 $(0.04) $(0.62) $11.22 10.88% $788 1.75% 0.70%
1995(3) 10.00 0.01 0.75 (0.01) (0.02) 10.73 7.64 621 1.75* 0.45*
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS PORTFOLIO AVERAGE
(EXCLUDING (EXCLUDING TURNOVER COMMISSION
WAIVERS) WAIVERS) RATE RATE++
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
<S> <C> <C> <C> <C>
1996 1.09% 2.26% 85.47% $.1095
1995 1.10 2.31 42.97 n/a
1994 1.08 2.68 37.76 n/a
1993 1.10 2.35 89.89 n/a
1992(1) 1.14 2.54 58.41 n/a
CLASSB
1996 1.34% 2.01% 85.47% $.1095
1995 1.35 2.06 42.97 n/a
1994 1.33 2.43 37.76 n/a
1993 1.35 2.12 89.89 n/a
1992(1) 1.40 2.19 58.41 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 1.10% 0.36% 41.41% $.1010
1995 1.10 0.98 32.96 n/a
1994 1.08 0.78 13.82 n/a
1993 1.10 0.73 24.49 n/a
1992(1) 1.15 0.63 9.29 n/a
CLASSB
1996 1.35% 0.11% 41.41% $.1010
1995 1.35 0.73 32.96 n/a
1994 1.33 0.57 13.82 n/a
1993 1.35 0.53 24.49 n/a
1992(2) 1.40 0.53 9.29 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCED GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 1.11% 3.37% 43.80% $.1165
1995 1.11 3.58 41.63 n/a
1994 1.09 3.35 27.15 n/a
1993 1.14 3.41 63.03 n/a
1992(1) 1.20 3.48 82.76 n/a
CLASSB
1996 1.36% 3.12% 43.80% $.1165
1995 1.36 3.33 41.63 n/a
1994 1.34 3.10 27.15 n/a
1993 1.38 3.14 63.03 n/a
1992(1) 1.45 3.19 82.76 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASSA
1996 1.73% 0.62% 67.03% $.0051
1995(2) 2.11* 0.18* 14.32 n/a
CLASSB
1996 1.98% 0.47% 67.03% $.0051
1995(3) 2.38* (0.18)* 14.32 n/a
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* ANNUALIZED
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS B SHARES.
(++) AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES DURING THE PERIOD. PRESENTATION OF THE RATE
IS ONLY REQUIRED FOR THE FISCAL YEARS BEGINNING AFTER SEPTEMBER 1, 1995.
(1) THE EQUITY INCOME FUND, THE MID CAP VALUE AND THE BALANCED GROWTH FUNDS COMMENCED OPERATIONS ON APRIL 1, 1992.
RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) THE INTERNATIONAL GROWTH FUND--CLASS A COMMENCED OPERATIONS ON MAY 1, 1995. RATIOS FOR THIS PERIOD
HAVE BEEN ANNUALIZED.
(3) THE INTERNATIONAL GROWTH FUND--CLASS B COMMENCED OPERATIONS ON MAY 4, 1995. RATIOS FOR THIS PERIOD
HAVE BEEN ANNUALIZED.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Pillar Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment company with
fifteen funds: the U.S. Treasury Securities Money Market Fund, the Prime
Obligation Money Market Fund, the Tax-Exempt Money Market Fund, the U.S.
Treasury Securities Plus Money Market Fund, (the "Money Market Funds") the
Short-Term Investment Fund, the Fixed Income Fund, the New Jersey Municipal
Securities Fund, the Intermediate-Term Government Securities Fund, the
Pennsylvania Municipal Securities Fund, the GNMA Fund, (the "Fixed Income
Funds") the Equity Value Fund (formerly known as the Equity Growth Fund), the
Equity Income Fund, the Mid Cap Value Fund (formerly known as the Equity
Aggressive Growth Fund), the International Growth Fund (the "Equity Funds") and
the Balanced Growth Fund. Each of the Funds is "diversified" for purposes of
the 1940 Act except for the New Jersey Municipal Securities Fund, the
Pennsylvania Municipal Securities Fund and the International Growth Fund, each
of which is a non-diversified Fund. Shares of the U.S. Treasury Securities Plus
Money Market Fund are offered exclusively to customers of the Money Desk of the
Bank Investment Division of Summit Bank. The minimum investment for this Fund is
$100,000. The financial statements included herein present information relating
to all of the Funds. The assets of each Fund are segregated and a shareholder's
interest is limited to the Fund in which shares are held. The Fund's prospectus
provides a description of each Fund's investment objectives, policies and
strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by
the Trust.
SECURITY VALUATION--The value of investment securities held by the Money
Market Funds 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.
Investment in equity securities that are traded on a national securities
exchange (or reported on the NASDAQ national market system) are stated at the
last quoted sales price if readily available for such equity securities on each
business day; other equity securities traded in the over-the-counter market and
listed equity securities for which no sale was reported on that date are stated
at the last quoted bid price. Debt obligations exceeding sixty days to maturity
for which market quotations are readily available are valued at the most
recently quoted bid price. Debt obligations with sixty days or less remaining
until maturity may be valued at their amortized cost. Restricted securities for
which quotations are not readily available are valued at fair value using
methods determined in good faith under general trustee supervision.
FEDERAL INCOME TAXES--It is each Fund's intention to qualify as a regulated
investment company for Federal income tax purposes and to distribute all of its
taxable income and net capital gains. Accordingly, no provisions for Federal
income taxes are required.
The International Growth Fund may be subject
to taxes imposed by countries in which it invests with respect to its
investments in issuers existing or operating in such countries. Such taxes are
generally based on either income earned or repatriated. The International
Growth Fund accrues such taxes when the related income is earned.
FOREIGN CURRENCY TRANSLATION--The books and records of the International
Growth Fund are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars on the following basis: (I) market value of
investment securities, other assets and liabilities at the current rate of
exchange; and (II) purchases and sales of investment securities, income and
expenses at the relevant rates of exchange prevailing on the respective dates of
such transactions.
The International Growth Fund does not isolate that portion of gains and
losses on investment securities that is due to changes in foreign exchange rates
from that which is due to changes in market prices of such securities.
50
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
The International Growth Fund reports gains and losses on foreign currency
related transactions as realized and unrealized gains and losses for financial
reporting purposes, whereas such gains and losses are treated as ordinary income
or loss for Federal income tax purposes.
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 procedures 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.
SECURITY TRANSACTIONS AND INVESTMENT INCOME--Security transactions are
accounted for on the date the security is purchased or sold (trade date). Costs
used in determining realized gains and losses on the sale of investment
securities are those of the specific securities sold adjusted for the accretion
and amortization of purchase discounts and premiums during the respective
holding periods. Interest income is recorded on the accrual basis; dividend
income is recorded on the ex-dividend date. Purchase discounts and premiums on
securities held by the Fixed Income Funds and the Balanced Growth Fund are
accreted and amortized to maturity using the scientific interest method, which
approximates the effective interest method.
DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net investment income for
the Money Market Funds and the Fixed Income Funds are declared daily and paid
monthly. The Equity Funds and the Balanced Growth Fund declare and pay
distributions from net investment income quarterly, except for the International
Growth Fund which declares and pays distributions periodically. Any net realized
capital gains will be distributed at least annually for all Funds.
EXPENSES--Expenses that are directly related to one of the Funds are
charged directly to that Fund. Other operating expenses of the Trust are
prorated to the Funds 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 and unrealized gains and losses of a Fund are allocated to
the respective classes on the basis of the relative net assets each day.
USE OF ESTIMATES--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from these estimates.
RECLASSIFICATION ON COMPONENTS OF NET ASSETS--In accordance with Statement
of Position 93-2, "Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distribution by
Investment Companies", $131,249, $12,977, $12,123, $4,456, and $219,989 relating
to differences attributable to the classification of short-term capital gains
and net investment income for tax distribution purposes of the U.S. Treasury
Securities Money Market, Prime Obligation Money Market, Fixed Income,
Intermediate-Term Government securities, and Equity Income Funds, respectively,
as of December 31, 1996 have been reclassified between the Fund's accumulated
net realized gains/losses and undistributed net income accounts, as appropriate.
These reclassifications had no effect on net asset value.
In addition, the International Growth Fund reclassified $50,506 from
accumulated net realized gain to undistributed net investment income and $8,866
from accumulated net realized loss on foreign currency to undistributed net
investment income. These permanent differences are attributable to gains on
sales of a passive foreign investment company and realized foreign exchange
gains and losses.
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES
The Trust incurred organization costs of approximately $202,000. Organizational
costs have been capitalized by the Funds and are being amortized over sixty
months commencing with operations. In the event any of the initial shares of the
Funds are redeemed by any holder thereof during the period that the Fund are
amortizing their organizational costs, the redemption proceeds payable to the
holder thereof will be reduced by the unamoritzed 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. These costs include legal
fees of approximately $47,000 for organizational work performed by a law firm of
which two officers of the Trust are partners.
Certain officers and /or Trustees of the Trust are also officers and/or
directors of SEI Fund Resources (the "Administrator"). The Trust pays each
unaffiliated Trustee an annual fee for attendance at quarterly, interim and
committee meetings. Compensation of officers and affiliated Trustees is paid by
the Administrator.
4. ADMINISTRATION AND DISTRIBUTION AGREEMENTS
The Trust and the Administrator are parties to an administration agreement (the
"Agreement"), under which the Administrator provides the Trust with
administrative services for an annual fee that is calculated daily and paid
monthly at an annual rate of 0.20% of the average daily net assets of each Fund
with the exception of the U.S. Treasury Securities Plus Money Market Fund with
an annual fee which is calculated daily and paid monthly at an annual rate of
0.35% of average daily net assets. The Administrator has voluntarily agreed to
waive all or a portion of its fee in order to limit the operating expenses of
certain Funds.
SEI Financial Services Company (the "Distributor") acts as the distributor
of the Trust's shares. The Trust has adopted a Distribution Plan (the "Plan") on
behalf of the Class B shares pursuant to Rule 12b-1. The Plan provides for
payment to the Distributor at an annual rate of 0.25% of the Fund's Class B
average daily net assets. The Distributor receives no fees for its distribution
services under this Plan for Class A shares of any fund with the exception of
the U.S. Treasury Securities Plus Money Market Fund which pays a distribution
fee of 0.03% of average daily net assets.
5. INVESTMENT ADVISORY AND CUSTODIAN AGREEMENTS
The Trust and Summit Bank Investment Management Division, a Division of Summit
Bank, (the "adviser") are parties to an advisory agreement. Under the terms of
the agreement, the Adviser will receive a fee, that is calculated daily and paid
monthly, at an annual rate of 0.35% of the average daily net assets of the U.S.
Treasury Securities Money Market, Prime Obligation and Tax-Exempt Money Market
Funds, 0.15% of the average daily net assets of the U.S. Treasury Securities
Plus Money Market Fund, 0.60% of the average daily net assets of the Fixed
Income Funds and 0.75% of the average daily net assets of the Equity Funds and
the Balanced Growth Fund. The Trust and the Adviser are also parties to a second
advisory agreement relating only to the International Growth Fund. Under the
terms of the agreement, the Adviser will receive a fee, that is calculated daily
and paid monthly, at an annual rate of 1.00% of the average daily net assets of
the International Growth Fund. the Adviser has voluntarily agreed to waive all
or a portion of its fee in order to limit the operating expenses of the Funds.
Wellington Management Company LLP serves as the investment sub-advisor to
the International Growth Fund.
Summit Bank also acts as Custodian of securities for the Trust. The
Custodian plays no role in determining the investment policies of the Trust or
which securities are to be purchased or sold in the Funds. For its services, the
Custodian receives a fee, that is calculated daily and paid monthly, at an
annual rate of 0.025% of the average daily net assets of each domestic Fund and
an annual rate of 0.17% of the average daily net assets of the International
Growth Fund.
52
<PAGE>
[LOGO OMITTED]
DECEMBER 31, 1996
6. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than short term investments, during the period ended December 31, 1996
were as follows:
NEW
SHORT-TERM FIXED JERSEY INT.-TERM PA
INV. INCOME MUNI. GOV'T. MUNI. GNMA
---------- -------- -------- ---------- -------- --------
(000) (000) (000) (000) (000) (000)
Purchases
U.S. Gov't -- 39,945 -- 11,931 -- 500
Other 303 3,398 6,443 -- 1,466 --
Sales
U.S. Gov't -- 44,247 -- 17,241 -- 2,130
Other 3,340 9,565 15,986 -- 994 --
MID
EQUITY EQUITY CAP BALANCED INTERNATIONAL
VALUE INCOME VALUE GROWTH GROWTH
-------- -------- -------- ---------- --------------
(000) (000) (000) (000) (000)
Purchases
U.S. Gov't -- 200 -- 5,668 --
Other 98,614 48,394 20,343 8,830 10,989
Sales
U.S. Gov't -- 77 -- 12,159 --
Other 83,970 48,475 24,054 17,393 8,336
At December 31, 1996, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized gain or loss on securities at December 31, 1996, for each Fund
is as follows:
NEW
SHORT-TERM FIXED JERSEY INT.-TERM PA
INV. INCOME MUNI. GOV'T. MUNI. GNMA
-------- -------- -------- --------- -------- --------
(000) (000) (000) (000) (000) (000)
Aggregate gross
unrealized gain 23 607 728 142 84 87
Aggregate gross
unrealized loss (5) (1,108) (136) (237) (12) (238)
-------- -------- -------- --------- -------- --------
Net unrealized
gain (loss) 18 (501) 592 (95) 72 (151)
======== ======== ======== ========= ======== ========
MID
EQUITY EQUITY CAP BALANCED INTERNATIONAL
VALUE INCOME VALUE GROWTH GROWTH
-------- -------- -------- ---------- --------------
(000) (000) (000) (000) (000)
Aggregate gross
unrealized gain 20,092 10,147 11,374 4,180 1,599
Aggregate gross
unrealized loss (583) (377) (2,448) (94) (819)
-------- -------- -------- ---------- --------------
Net unrealized
gain (loss) 19,509 9,770 8,926 4,086 780
======== ======== ======== ========== ==============
7. CONCENTRATION OF CREDIT RISK
The money market funds invest primarily in a portfolio of money market
instruments maturing in one year or less whose ratings are within one of the two
highest ratings category assigned by a nationally recognized statistical rating
agency ("NRSRO") or, if not rated, are believed to be of comparable quality. The
ability of the issuers of the securities held by a Fund to meet their
obligations may be affected by economic developments in a specific industry,
state or region. The Fixed Income Funds invest in debt instruments and the
Balanced Growth Fund invests in a combination of equity, fixed income and money
market securities.
The taxable funds may invest in bank obligations. As a result of this
policy, these investments may be subject to greater risk than a fund that does
not invest in the banking industry. In particular, bank obligations may be
subject to the risks associated with interest rate volatility, changes in
federal and state laws and regulations governing banking and the inability of
borrowers to pay principal and interest when due. In addition, foreign banks
present the risk of investing in foreign securities and are not subject to the
same reserve requirements and other regulations as those of U.S. banks.
The New Jersey Municipal and the Pennsylvania Municipal Securities Funds
invest primarily in a diversified portfolio of municipal securities, including
municipal bonds and debentures, rated Baa or better by a NRSRO, or, if not
rated, determined by the Adviser to be of comparable quality. Although the Funds
maintain a diversified portfolio, the issuers' ability to meet their obligations
may be affected by
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
economic developments in a specific state or region. The following tables
present a summary of holdings in each of these portfolios:
TAX-
U.S. EXEMPT U.S.
TREASURY PRIME MONEY TREASURY
SECURITIES OBLIGATION MARKET SECURITIES PLUS
---------- ---------- ---------- --------------
U.S. Gov't. Securities 96.5% 52.3% -- 59.4%
Repurchase Agreements -- 8.9 -- 40.6
Municipal Securities -- -- 94.1% --
Commercial Paper -- 34.0 -- --
Other Short Term
Securities 3.5 4.8 5.9 --
SHORT-TERM FIXED NEW JERSEY INT.-TERM
INV. INCOME MUNI. GOVT.
---------- ---------- ---------- --------------
U.S. Gov't. Securities 37.3% 77.8% -- 97.6%
Repurchase Agreements -- -- -- --
AAA 3.9 .9 56.3% --
AA 13.6 11.9 33.4 --
A 35.8 7.7 3.8 --
BBB 5.0 .9 .6 --
BB -- -- -- --
NR .9 -- 5.9 --
All Other 3.5 .8 -- 2.4
BALANCED PA
GROWTH MUNI. GNMA
---------- ---------- --------------
U.S. Gov't. Securities 37.8% -- 99.6%
Repurchase Agreements -- -- --
AAA -- 76.3% --
AA 1.8 15.6 --
A 4.0 4.0 --
BBB -- -- --
BB -- -- --
NR -- 2.5 --
Common Stock 53.6 -- --
All Other 2.8 1.6 .4
8. CAPITAL LOSS CARRYFORWARDS
The Capital loss carryforwards at December 31, 1996, for Federal Income Tax
purposes are as follows:
EXPIRATION
AMOUNT DATE
------- --------
Prime Obligation
Money Market Fund $31,590 2004
Tax-Exempt Money
Market Fund 7,558 2000-2004
U.S. Treasury
Securities Plus 19,648 2001-2002
Short-Term
Investment 62,290 2002-2004
Fixed Income 235,953 2003
New Jersey Municipal
Securities 374,029 2001-2004
Intermediate-Term
Government Securities 1,314,347 2002-2004
Pennsylvania Municipal
Securities 12,173 2002-2004
GNMA 793,118 2002-2003
9. SUBSEQUENT EVENT
On February 1, 1997, fourteen common trust funds merged into the Trust in a
tax-free conversion (with the exception of the Summit Bank Employee Benefit Bond
Fund which did not qualify for tax-free treatment). As a result, assets of six
existing Funds increased and one new Fund, Growth Fund, was created. Total
assets of the Trust increased by approximately $673 million.
54
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of The Pillar Funds:
We have audited the accompanying statements of net assets of the U.S. Treasury
Securities Money Market, Prime Obligation Money Market, Tax-Exempt Money Market,
U.S. Treasury Securities Plus Money Market, Short-Term Investment, Fixed Income,
New Jersey Municipal Securities, Intermediate-Term Government Securities,
Pennsylvania Municipal Securities, GNMA, Equity Value, Equity Income, Mid Cap
Value, Balanced Growth, and International Growth Funds of The Pillar Funds (the
"Trust") as of December 31, 1996, and the related statements of operations,
statements of changes in net assets, and financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, 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
U.S. Treasury Securities Money Market, Prime Obligation Money Market, Tax-Exempt
Money Market, U.S. Treasury Securities Plus Money Market, Short-Term Investment,
Fixed Income, New Jersey Municipal Securities, Intermediate-Term Government
Securities, Pennsylvania Municipal Securities, GNMA, Equity Value, Equity
Income, Mid Cap Value, Balanced Growth, and International Growth Funds of The
Pillar Funds as of December 31, 1996, the results of their operations, changes
in their net assets, and financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
February 14, 1997
55
<PAGE>
NOTICE TO SHAREHOLDERS OF THE
PILLAR FUND (UNAUDITED)
Dear Pillar Shareholders:
For the fiscal year ended December 31, 1996, each Fund is designating long-term
capital gains, qualifying dividends and exempt income with regard to
distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A)
LONG-TERM (B)
CAPITAL ORDINARY (C) (E)
GAINS INCOME TOTAL (D) TAX-
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS QUALIFYING EXEMPT
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS) DIVIDENDS (1) INTEREST
- -------- -------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C>
U.S. Treasury Securities
MM Fund 0% 100% 100% 0% 0%
Prime Obligations MM Fund 0 100 100 0 0
Tax-Exempt MM Fund 0 100 100 0 98
U.S. Treasury Securities
Plus MM Fund 0 100 100 0 0
Short-Term Investment Fund 0 100 100 0 0
Fixed Income Fund 0 100 100 0 0
New Jersey Municipal
Securities Fund 0 100 100 0 99
Intermediate-Term Government
Securities Fund 0 100 100 0 0
Pennsylvania Municipal
Securities Fund 0 100 100 0 100
GNMA Fund 0 100 100 0 0
Equity Value Fund 81 19 100 100 0
Equity Income Fund 76 24 100 99 0
Mid Cap Value Fund 83 17 100 100 0
Balanced Growth Fund 73 27 100 28 0
International Growth Fund 15 85 100 0 0
<FN>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the fund's total
distributions.
** Items (D) and (E) are based on a percentage of ordinary income
distributions of the fund.
</FN>
</TABLE>
Please consult your tax adviser for proper treatment of this information.
*The U.S. Treasury Securities Money Market Fund satisfies CA, CT and NY's
statutory requirements to pass-through income from federal obligations.
Accordingly, the prorata portion of income from federal obligations may be
exempt for these respective state's income tax purposes. Income from federal
obligations in 96.37% of the total "Ordinary Income Distribution" in column B
above. No other fund within this complex qualifies in CA, CT, or NY to pass
through exempt interest dividends from U.S. obligations.
56
<PAGE>
THE PILLAR FUNDS
ANNUAL REPORT
December 31, 1996
INVESTMENT ADVISER
Summit Bank Investment Management Division
a division of Summit Bank
ADMINISTRATOR
SEI Financial Management Corporation
Oaks, PA 19456
DISTRIBUTOR
SEI Financial Services Company
THE PILLAR FUNDS IS A REGISTERED SERVICE MARK OF SUMMIT BANK. SUMMIT BANK IS A
SERVICE MARK OF SUMMIT BANCORP. THE PILLAR FUNDS ARE DISTRIBUTED BY SEI
FINANCIAL SERVICES COMPANY. SEI FINANCIAL SERVICES COMPANY IS NOT AFFILIATED
WITH SUMMIT BANK, SUMMIT BANCORP, OR THEIR AFFILIATES.
SUMMIT BANK INVESTMENT MANAGEMENT DIVISION SERVES AS INVESTMENT
ADVISER AND CUSTODIAN TO THE PILLAR FUNDS.
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
FOR MORE INFORMATION CALL, 1-800-932-7782.
READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PIL-F-015-06
