[Pillar logo omitted]
The Pillar Funds
YOUR INVESTMENT FOUNDATION
[PILLAR GRAPHIC OMITTED]
ANNUAL
REPORT
To Shareholders
December 31, 1997
<PAGE>
TABLE OF CONTENTS
Letter to Shareholders ............................. 1
Manager's Discussion & Analysis .................... 3
Statement of NetAssets ............................. 16
Statement of Operations ............................ 53
Statements of Changes in Net Assets ................ 56
Financial Highlights ............................... 62
Notes to Financial Statements ...................... 68
Report of Independent
Public Accountants .............................. 74
Notice to Shareholders ............................. 75
----------------------------
NOT
FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
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DECEMBER 31, 1997
Letter to Shareholders
The major stock averages made very little or negative progress in the
fourth quarter. Against a backdrop of falling interest rates, this investment
performance primarily reflected concern over events in Asian economies and
financial markets and the implications for our economy. The full year, however,
was another stellar one for stock returns with gains for a record third year in
a row exceeding twenty percent. All signs point to 1998 as being a much more
modest year for the stock market. Valuations are full and earnings gains are
decelerating. It remains to be seen how the individual investor, whose
expectations are so high for future returns, will deal with a more difficult and
realistic environment.
Lower growth. Lower inflation. No observer of the economic scene would
quarrel with that capsule summary of the outlook for the United States. The
arguments would all be over the magnitude of the change. To understand where we
might be heading, it is important to get a fix on the causes of Asia's current
financial troubles. Some would maintain that they have brought these
difficulties down on themselves with lax central banking policies, poor
regulation of bank lending and corrupt relationships between government and
business. While these factors may have indeed contributed to and exacerbated
these countries' current problems, our view is that we must look farther afield
for a better explanation of the present condition.
For almost two years, the price of gold has been dropping and in 1997 alone
declined by over twenty percent. Commodity prices too have had a downward bias.
These price signals are clear indications that dollar liquidity is overly
restrictive and has unleashed deflationary forces around the world. Thus far,
our Federal Reserve has been fixated on domestic inflation and thus unwilling to
trust the "unseen hand" of these market forces to provide policy direction.
Consumer economies in Southeast Asia and Korea have been devastated by the
combination of the precipitous decline in their currencies' exchange rate versus
the dollar and the restrictive financial criteria imposed by the International
Monetary Fund. It will be years before they recover. So this region's
attractiveness as an export market for the industrial nations has been greatly
diminished -- hence the forecast of slower growth. And the goods that would have
reached these markets, as well as those produced in Asia and desperately needed
to produce foreign exchange, will flood the healthy economies -- hence the
forecast of lower inflation. Under these circumstances, it seems likely that the
risks lie disproportionately on the downside, that is, that it is much more
likely that the eventual outcome will be worse than currently expected rather
than the reverse.
However, we cannot lose sight of the fact that the United States is
somewhat insulated from these events. Exports, particularly those to Southeast
Asia, constitute only a small segment of our economy. And the sources of our
current growth are well grounded in a healthy combination of productivity and
income creation together with technological prowess in most of the growth
markets. Nevertheless, slower growth
(CONTINUED NEXT PAGE)
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1
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and lower inflation are difficult ingredients when trying to manufacture
profits. While American business will no doubt continue its relentless focus on
efficiency, the current conditions may not allow any further improvement in
profit margins despite record levels of productivity-enhancing capital spending.
Profit growth in 1998 will at best be well below that of the last several years.
There is no reason to expect interest rates to reverse their current
downtrend. The outlook for inflation is very positive. Our fiscal position, both
at the federal and state level, is the best in many years. High quality U.S.
bonds remain the most desirable haven for nervous investors. And real interest
rates remain high by historical standards. The magnitude of any further decline
in rates will in large measure depend upon Federal Reserve policy. As of this
writing, only the narrowest of gaps separates Treasury bill rates from
thirty-year government bonds. In the past, this confluence has only occurred
when monetary tightening was taking place and interest rates were rising. So we
are in unfamiliar territory. Our most likely scenario is that it will be
resolved by the Federal Reserve recognizing the need to supply liquidity to the
world stage by beginning a process of lowering short term rates.
For the equity investor, this is a time for vigilance. Not every company
will be able to achieve its forecast. We have continued our focus on those
sectors of the economy promising the best unit growth. There is no substitute
for expanding demand in creating sustainable growth in sales and profits. The
elasticity of demand associated with declining prices makes the technology
sector a premier example of true growth. We also continue to favor financial
services and health care as benefiting from positive demographic trends. But
regardless of the good underlying characteristics of these businesses,
competition remains ferocious and requires that we carefully select only those
companies that can demonstrate the rare combination of traits necessary for long
term growth.
Sincerely,
/S/Signature /S/Signature
David G. Lee Hilton M. Jervey, CFA
President and CEO Senior Vice President
The Pillar Funds Chief Investment Officer
Summit Bank
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2
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DECEMBER 31, 1997
Manager's Discussion & Analysis
U.S. TREASURY SECURITIES MONEY MARKET FUND,
PRIME OBLIGATION MONEY MARKET FUND,
U.S. TREASURY SECURITIES PLUS MONEY
MARKET FUND,
INSTITUTIONAL SELECT MONEY MARKET FUND
As expected, the Federal Reserve increased short term interest rates by 25
basis points during the first quarter of 1997. Short term rates remained around
the 5.5% benchmark established by this action for the balance of the year.
The economy continued to support strong growth and low unemployment without
a corresponding rise in inflation. As it became clear that the Fed would remain
"on hold", the maturities in all of the Pillar Money Market Funds were extended.
Going forward, we continue to expect moderate economic growth with low
inflation. The Fed will continue to be on hold during the first quarter. The
possibility of a Fed ease during 1998 has increased. In light of this, we
continue to extend the maturities of the Pillar Money Market Funds.
TAX-EXEMPT MONEY MARKET FUND
Yields on short term tax exempt instruments traded in a narrow range
throughout 1997, fluctuating approximately 15 basis points on issues maturing
in twelve months. The average weighted maturity for the Pillar Tax Exempt Money
Market Fund as of year end was approximately 81 days versus a national average
of 48 days. Once again, our economic outlook going forward calls for moderate
economic growth coupled with low inflation, particularly given recent events in
Asia. Thus, we expect little variance or upside pressure and some likelihood
that rates in this arena may decline further. This view of 1998 explains our
strategy of extending the average life of the portfolio.
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3
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Manager's Discussion & Analysis (CONTINUED)
SHORT-TERM INVESTMENT FUND
Total return for the Pillar Short-Term Investment Fund's Class I shares was
5.1% for the full year 1997. The Fund is currently invested solely in U.S.
Treasuries and U.S. Government Agencies. The yield spread between Treasuries or
Agencies and corporate bonds is too narrow to warrant the additional risk in
owning the latter in 1998. We expect rates to trade in a narrow range but
working slightly lower for the near term so our average life is longer, but well
within the historical one year limitation for the Fund.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Short-Term Pillar Short-Term Salomon 1-Year Salomon 1-3 Year
Investment Fund (CLASS I) Investment Fund (CLASS A) Treasury Benchmark On-the-Run Treasury Bill Index
<S> <C> <C> <C> <C>
4/30/92 10,000 9,900 10,000 10,000
12/92 10,250 10,130 10,344 10,518
12/93 10,553 10,425 10,739 11,085
12/94 10,892 10,722 11,022 11,144
12/95 11,566 11,379 11,914 12,342
12/96 12,128 11,879 12,588 12,970
12/97 12,750 12,432 13,356 13,834
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 5.13% 5.39% 4.46% 4.33%
- --------------------------------------------------------------------------------
CLASS A 4.66% 5.06% 4.18% 4.06%
- --------------------------------------------------------------------------------
CLASS A* (with load) 3.62% 4.71% 3.97% 3.88%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 1.00% SALES CHARGE.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I
(FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED OPERATIONS
ON APRIL 1, 1992.
PREVIOUSLY, THE SHORT-TERM INVESTMENT FUND USED THE SALOMON 1-YEAR TREASURY
BENCHMARK ON-THE-RUN INDEX AS A BENCHMARK. GOING FORWARD, THE FUND WILL USE THE
SALOMON 1-3 YEAR TREASURY BILL INDEX AS A COMPARISON BECAUSE IT IS BETTER
SUITED TO THE FUND'S OBJECTIVE.
FIXED INCOME FUND
The past twelve months proved to be a chaotic and yet relatively successful
year for taxable fixed income investments. The yield on the five year U.S.
Treasury Note, for example, began the year at about 6.21%, then rose to a high
of 6.85% in April and closed at a rate of 5.71%. This volatility resulted from a
unique combination of circumstances which sent conflicting signals to the market
throughout the year. Stronger than expected economic growth in the first half of
1997, combined with falling rates of unemployment, fueled expectations that the
Federal Reserve would increase interest rates to stem inflationary pressures.
And indeed, a modest tightening of monetary policy took place in March. Then,
eruption of the Asian financial crisis in the fall created a somewhat
deflationary psychology which drove interest rates down. Constant throughout the
year, however, was the decline in the rate of inflation at all levels of
consumption.
Within this erratic environment, the Pillar Fixed Income Fund posted
attractive results with the Class I shares generating a total return of 7.8%. In
the process of achieving these results, the Fixed Income Fund maintained an
exceptionally high level of credit quality which is consistent with our primary
objective of capital preservation. As of year end, 77% of the invest-
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4
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DECEMBER 31, 1997
ments were rated AAA, 12% rated AA, 7% A and 4% other. In addition to minimizing
credit risk, the Fund strives to manage the level of interest rate risk to which
it is subjected. This is achieved by emphasizing fixed income investments which
have stated or functional maturities of two to ten years. As of year end 1997,
55% of the bonds in the portfolio had effective maturities of five years or
less. The Pillar Fixed Income Fund also attempts to minimize risk by maintaining
a diverse portfolio of bonds in terms of issuers and structure. At this time,
Treasury, Government Agency, corporate, mortgage backed and taxable municipal
issues are represented in the portfolio.
Looking ahead, we anticipate bond yields will trend lower as a result of a
slow down in worldwide economic growth, weak commodity prices and positive
trends in our domestic fiscal policy. This should create a very attractive
environment for fixed income investments. To take advantage of these expected
trends, the average maturity and average effective duration of the Fund have
been lengthened beyond those of the Lehman Intermediate Government/Corporate
Index. In addition, new purchases have been concentrated in sectors of the
market and in bond structures which will provide the greatest total return
potential at lower interest rate levels.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Fixed Income Pillar Fixed Income Lehman Intermediate
Fund (CLASS I) Fund (CLASS A) Government/Corporate Index
<S> <C> <C> <C>
4/30/92 10,000 9,575 10,000
12/92 10,867 10,389 10,721
12/93 12,069 11,508 11,663
12/94 11,386 10,829 11,438
12/95 13,408 12,709 13,189
12/96 13,802 13,050 13,724
12/97 14,876 14,017 14,804
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 7.78% 9.32% 6.48% 7.15%
- --------------------------------------------------------------------------------
CLASS A 7.41% 8.98% 6.17% 6.85%
- --------------------------------------------------------------------------------
CLASS A* (with load) 2.87% 7.41% 5.26% 6.06%
- --------------------------------------------------------------------------------
CLASS B N/A N/A N/A 9.61%
- --------------------------------------------------------------------------------
CLASS B** (with load) N/A N/A N/A 0.68%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.25% SALES CHARGE.
**RETURN FIGURES REFLECT THE IMPACT OF PAYING THE MAXIMUM CONTINGENT DEFERRED
SALES CHARGE (CDSC) OF 5.50%.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I
(FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED OPERATIONS
ON APRIL 1, 1992 AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 16, 1997.
================================================================================
5
<PAGE>
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Manager's Discussion & Analysis (CONTINUED)
NEW JERSEY MUNICIPAL SECURITIES FUND
Strong domestic economic growth coupled with low inflation indicators saw
bond prices rise and interest rates decline throughout 1997. Fears of inflation
remained overblown throughout the year. Percentage wise, ten year triple A
municipal averaged 80% of comparable Treasury issues while fifteen year triple A
municipal averaged 75%. These relationships continue to make municipal
securities very attractive to New Jersey investors with a high incremental tax
rate.
Quality spreads virtually disappeared as 60% of new issues which came to
market during the year were insured. As interest rates declined, we also saw a
flattening of the yield curve. Spreads between two year and thirty year high
grade general obligation bonds narrowed from approximately 155 basis points at
the start of the year to 120 basis points by year end.
Several events impacted the New Jersey market. The major highlight was the
issuance of $2.8 billion of insured pension bonds by the state. Although not
bought by typical tax exempt investors, yield hungry retail investors, taxable
portfolios and insurance companies gave the issue a warm reception. These
monies, along with surplus pension funds have allowed the state to cover a $4.2
billion unfunded pension liability. Other happenings in the state were several
regional mergers of individual hospitals and health service providers, allowance
of municipal issuance for assisted living facilities, and a Supreme Court
rejection of an appeal of an earlier decision regarding solid waste facilities
and tipping fees.
The Pillar New Jersey Municipal Securities Fund, Class I Shares posted a
total return of 6.8% for the year ended December 31, 1997 while the Lehman 5
Year Municipal Index returned 6.4%. The Fund's average weighted maturity as of
year end was approximately 7.5 years, much shorter than many tax exempt funds.
This positioning is deliberate as it allows us to capture most of the yield
available in the market place while reducing the Fund's volatility in
unfavorable markets.
Supply/demand factors will dictate market performance in 1998, and we
believe New Jersey issues will continue to demand a premium over general market
issuers. We further expect a decline in new issuance as taxpayers seem to have
little appetite for bond referendum approvals. Hence, we expect hospital/health
care providers and solid waste issuers to be the sectors most active as market
participants.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar New Jersey Municipal Pillar New Jersey Municipal Lehman 7-Year Municipal Lehman 5-Year General
Securities Fund (CLASS I) Securities Fund (CLASS A) Bond Index Obligation Bond Index
<S> <C> <C> <C> <C>
5/92 10,000 9,700 10,000 10,000
12/92 10,505 10,176 10,610 10,557
12/93 11,605 11,203 11,716 11,460
12/94 11,127 10,716 11,392 11,302
12/95 12,627 12,141 13,006 12,615
12/96 13,069 12,515 13,576 13,198
12/97 13,953 13,305 14,620 14,053
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 6.76% 7.84% 5.85% 6.21%
- --------------------------------------------------------------------------------
CLASS A 6.31% 7.48% 5.50% 5.83%
- --------------------------------------------------------------------------------
CLASS A*(with load) 3.13% 6.38% 4.86% 5.26%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 3.00% SALES CHARGE.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I (FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B)
SHARES COMMENCED OPERATIONS ON MAY 4, 1992.
PREVIOUSLY, THE NEW JERSEY MUNICIPAL SECURITIES FUND USED THE LEHMAN 7-YEAR
MUNICIPAL BOND INDEX AS A BENCHMARK. GOING FORWARD, THE FUND WILL USE THE
LEHMAN 5-YEAR GENERAL OBLIGATION BOND INDEX AS A COMPARISON BECAUSE IT IS
BETTER SUITED TO THE FUND'S OBJECTIVE.
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6
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DECEMBER 31, 1997
INTERMEDIATE-TERM GOVERNMENT FUND
At the beginning of the year, we were anticipating a decline in interest
rates. At that time we began to extend the maturities in the fund with the
purchase of longer term U.S. Treasury Note issues. In addition, U.S. Government
Agency callable bonds were added, locking in a 7% coupon while trying to provide
for call protection. During the year, rates on longer term bonds declined while
rates on shorter term issues remained relatively unchanged, creating a
significant flattening of the yield curve. A declining rate of inflation was an
important contributor to the change in rates but, with Federal Reserve policy
unchanged, short term yields had less elbow room. More recently, the situation
in Asia has resulted in a flight to quality and the purchase of U.S. Treasuries,
further pushing rates down. The Fund's Class I shares had a total return for the
year of 7% with an averaged weighted maturity of 3.9 years. At this time, we
expect interest rates will continue to decline. We will maintain our current
maturity structure and new investments will be made in U.S. Treasury Notes in
the five year maturity range.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Intermediate-Term Pillar Intermediate-Term Lehman Intermediate
Government Securities Fund (CLASS I) Government Securities Fund (CLASS A) Government/Corporate Bond Index
<S> <C> <C> <C>
4/30/92 10,000 9,600 10,000
12/92 10,540 10,112 10,721
12/93 11,417 10,915 11,663
12/94 10,863 10,360 11,438
12/95 12,493 11,884 13,189
12/96 12,900 12,241 13,724
12/97 13,798 13,049 14,804
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 6.96% 8.30% 5.53% 5.85%
- --------------------------------------------------------------------------------
CLASS A 6.60% 7.99% 5.23% 5.58%
- --------------------------------------------------------------------------------
CLASS A* (with load) 2.36% 6.52% 4.37% 4.82%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 FUND CLASS I (FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B)
SHARES COMMENCED OPERATIONS ON APRIL 2, 1992.
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7
<PAGE>
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Manager's Discussion & Analysis (CONTINUED)
PENNSYLVANIA MUNICIPAL SECURITIES FUND
Market yields continued to decline during 1997. We started the year with
rates going a little higher, which we forecast, and felt this was an opportunity
to extend maturities. Inflation after the first quarter of the year continued to
decline as we saw inflationary rates in the country drop to lows that we have
not seen in several decades. During the course of the year, we made some
adjustments to the Fund by raising both the average coupon yield and the average
maturity. We finished the year with a total return of 7.2% which compares to the
Lipper Intermediate Municipal average of 7.2%. We continue to forecast a subdued
inflation picture for the first part of 1998 and we would expect the fund to
perform in line with the general market.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Pennsylvania Municipal Pillar Pennsylvania Municipal Lehman 5-Year
Securities Fund (CLASS I) Securities Fund (CLASS A) Municipal Bond Index
<S> <C> <C> <C>
5/93 10,000 9,700 10,000
12/93 10,417 10,101 10,501
12/94 10,149 9,815 10,338
12/95 11,319 10,910 11,541
12/96 11,759 11,318 12,030
12/97 12,603 12,068 12,798
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 7.18% 7.49% 5.04%
- --------------------------------------------------------------------------------
CLASS A 6.63% 7.13% 4.79%
- --------------------------------------------------------------------------------
CLASS A* (with load) 3.48% 6.03% 4.10%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 3.00% SALES CHARGE.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I (FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B)
SHARES COMMENCED OPERATIONS ON MAY 3, 1993 AND MAY 13, 1993, RESPECTIVELY.
GNMA FUND
The Pillar GNMA Fund's Class I shares had a total return of 9.9% for 1997,
and according to Lipper Analytical Services, Inc. was ranked third in
the country among all GNMA funds. That was achieved by investing mostly in
discount mortgage pools so that refinancing would not diminish the return. As a
result, our paydown experience was far less than the national average. With our
expectation for a continued decline in rates during 1998, we believe that the
current strategy will continue to serve us well this year.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar GNMA Fund (CLASS I) Pillar GNMA Fund (CLASS A) Salomon Mortgage Bond Index
<S> <C> <C> <C>
5/93 10,000 9,597 10,000
12/93 10,162 9,746 10,281
12/94 9,684 9,254 10,135
12/95 11,574 11,035 11,835
12/96 11,931 11,336 12,470
12/97 13,110 12,413 13,625
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 9.88% 10.63% 6.03%
- --------------------------------------------------------------------------------
CLASS A 9.50% 10.28% 5.67%
- --------------------------------------------------------------------------------
CLASS A* (with load) 6.19% 9.18% 4.98%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 3.00% SALES CHARGE.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I (FORMERLY
CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED OPERATIONS ON MAY 3,
1993 AND MAY 5, 1993, RESPECTIVELY.
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8
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DECEMBER 31, 1997
EQUITY GROWTH FUND
In its initial year of existence, the Pillar Equity Growth Fund experienced
strong absolute results but underperformed the major stock market indices. The
overall performance of U.S. stocks was once again outstanding, especially in
light of the gains achieved in 1995 and 1996. The latest three year period
stands amongst the best in the history of the U.S. stock market. Certainly the
environment for equity investments has rarely been better. Very low levels of
inflation, declining interest rates and strong corporate profits have been the
driving forces behind this spectacular performance.
In attempting to achieve the Fund's objective of long-term growth of
capital, the assets are positioned in economic sectors which we believe are
likely to grow more rapidly and consistently than average. In this regard, heavy
emphasis is placed upon the technology, healthcare, financial services and
global consumer sectors. Sectors which are de-emphasized or not represented
include basic materials, energy and utilities. Philosophically, this approach
finds it basis in the fact that, over long periods of time, stock performance
correlates very closely with relative earnings growth. If, the consensus view of
slowing U.S. economic activity is true in 1998, companies which can produce
above average earnings growth should become more valuable. We believe the Fund
is well positioned for this type of an environment.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Equity Growth Fund (CLASS I) Pillar Equity Growth Fund (CLASS A) S&P 500 Composite Index
<S> <C> <C> <C>
1/97 10,000 9,450 10,000
12/97 11,290 10,664 12,551
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Cumulative Total Return1
- --------------------------------------------------------------------------------
Since Inception
- --------------------------------------------------------------------------------
CLASS I 12.89%
- --------------------------------------------------------------------------------
CLASS A 12.85%
- --------------------------------------------------------------------------------
CLASS A* (with load) 6.67%
- --------------------------------------------------------------------------------
CLASS B 8.02%
- --------------------------------------------------------------------------------
CLASS B** (with load) 3.15%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 5.50% SALES CHARGE.
**RETURN FIGURES REFLECT THE IMPACT OF PAYING THE MAXIMUM CONTINGENT DEFERRED
SALES CHARGE (CDSC) OF 5.50%.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 GROWTH FUND CLASS I
(FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED OPERATIONS
ON FEBRUARY 3, 1997 AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 21, 1997.
================================================================================
9
<PAGE>
================================================================================
Manager's Discussion & Analysis (CONTINUED)
EQUITY VALUE FUND
The Pillar Equity Value Fund posted good performance for the year ended
December 31, 1997 with the Class I shares rising a total of 25.7% vs. the Lipper
Growth and Income Average return of 27% and the S&P 500 Composite Index total
return of just over 33%. Because of the sharp rotation and volatility that were
evidenced during the year, the Fund maintained a more or less neutral posture
with respect to economic sector exposure in an effort to limit overall risk.
Additionally, individual company selections were primarily focused on larger
capitalization names retaining a leadership position in their respective
industries. The pharmaceutical and financial sectors provided much of the
leadership during the year, while in the latter half, utilities and consumer
staples offset some negative volatility in the Technology sector. The Asian
situation detracted somewhat from earnings growth projections during the fourth
quarter, weighing heavily on the equity market towards year end. Despite this,
however, shareholders benefited from a third straight year of substantial
returns driven by a very positive macroeconomic climate and continuing positive
cash flows into the equity market.
As the effect of the Asian crisis begins to impact the U.S. economy, we are
expecting the overall growth rate of the U.S. economy to slow somewhat,
resulting in a slowing growth rate for U.S. corporate earnings. While growth
accelerated during 1997, the inflation rate declined and provided a favorable
setting for declining interest rates. This scenario should carry over into 1998
and, despite a more subdued profit outlook, provide a moderately favorable
backdrop for the stock market. We expect to find the best performance from
industries and sectors which evidence continued "top line" growth and market
share increases versus those where pricing power is important. These include,
but are not limited to, pharmaceutical, financial services, and selected
technology companies. Companies exhibiting inexpensive relative valuations where
potential catalysts for change exist are also ideal candidates for the Equity
Value Fund in the coming year. Again, given the potential uncertainties inherent
in this environment, we expect to maintain a fairly neutral posture with respect
to the overall market sector breakdown.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Equity Value Fund (CLASS I) Pillar Equity Value Fund (CLASS A) S&P 500 Composite Index
<S> <C> <C> <C>
4/30/92 10,000 9,450 10,000
12/92 10,668 10,071 10,726
12/93 11,321 10,660 11,802
12/94 10,686 10,039 11,957
12/95 14,608 13,689 16,446
12/96 17,777 16,584 20,218
12/97 22,347 20,814 26,963
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 25.71% 27.88% 15.94% 15.23%
- --------------------------------------------------------------------------------
CLASS A 25.51% 27.51% 15.62% 14.93%
- --------------------------------------------------------------------------------
CLASS A* (with load) 18.58% 25.15% 14.32% 13.81%
- --------------------------------------------------------------------------------
CLASS B N/A N/A N/A 19.91%
- --------------------------------------------------------------------------------
CLASS B** (with load) N/A N/A N/A 12.01%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 5.50% SALES CHARGE.
**RETURN FIGURES REFLECT THE IMPACT OF PAYING THE MAXIMUM CONTINGENT DEFERRED
SALES CHARGE (CDSC) OF 5.50%.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I
(FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED OPERATIONS
ON APRIL 1, 1992 AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 12, 1997.
================================================================================
10
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
EQUITY INCOME FUND
U.S. stocks continued to provide extraordinary returns in 1997. The S&P 500
Composite Index rose 33.4% bringing the three year gain to more than 90%, a
record for any three year period. Better than expected corporate profits
combined with low interest rates set the stage for this outstanding gain. The
Fund's Class I shares advanced by 25% for the year ended December 31, 1997 led
by strong gains in pharmaceuticals and telephone companies.
As 1998 begins, some uncertainties exist. The turmoil in Southeast Asia is
likely to exert some downward pressure on the growth prospects of many
companies. However, inflation seems well contained as the rise in the consumer
price index in 1997 was 1.7%, nearly 50% less than the previous year. Therefore,
rising interest rates should not be an inhibiting factor in the market's
advance. This should allow the Fund to continue to search out investments which
provide growth of capital consistent with an emphasis on current income.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Equity Income Fund (CLASS I) Pillar Equity Income Fund (CLASS A) S&P 500 Composite Index
<S> <C> <C> <C>
4/30/92 10,000 9,450 10,000
12/92 10,662 10,055 10,726
12/93 11,757 11,055 11,802
12/94 11,238 10,551 11,957
12/95 15,233 14,265 16,446
12/96 18,434 17,218 20,218
12/97 23,049 21,468 26,963
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 25.04% 27.06% 16.67% 16.17%
- --------------------------------------------------------------------------------
CLASS A 24.68% 26.72% 16.38% 15.88%
- --------------------------------------------------------------------------------
CLASS A* (with load) 17.80% 24.34% 15.08% 14.75%
- --------------------------------------------------------------------------------
CLASS B N/A N/A N/A 23.86%
- --------------------------------------------------------------------------------
CLASS B** (with load) N/A N/A N/A 15.58%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 5.50% SALES CHARGE.
**RETURN FIGURES REFLECT THE IMPACT OF PAYING THE MAXIMUM CONTINGENT DEFERRED
SALES CHARGE (CDSC) OF 5.50%.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I
(FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED OPERATIONS
ON APRIL 1, 1992 AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 8, 1997.
================================================================================
11
<PAGE>
Manager's Discussion & Analysis (CONTINUED)
MID-CAP FUND
Last year continued to be a year of change for the Pillar Mid Cap Fund. The
first half of the year was difficult with returns being negative through the
first four months of the year, but the Fund's Class I shares finished 1997 with
a gain of 20.5% which was above the Lipper Mid Cap Average of 19.7%. The
improved relative performance was partly attributable to the changing emphasis
on larger capitalized securities and away from the very liquid and smaller
capitalized stocks that were present in the portfolio a year ago. We have also
raised our three year average return in the Mid Cap Fund's Class I shares to
17.8%. Our challenge for the coming year is to be closer to the S&P 400 Mid Cap
index, which we still trailed in 1997. We feel this is an attainable goal for
1998.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Mid-Cap Fund (CLASS I) Pillar Mid-Cap Fund (CLASS A) S&P 400 Mid-Cap Index
<S> <C> <C> <C>
4/30/92 10,000 9,600 10,000
12/92 11,037 10,589 11,385
12/93 12,496 11,953 12,968
12/94 11,329 10,813 12,502
12/95 13,537 12,881 16,368
12/96 15,372 14,597 19,514
12/97 18,522 17,540 25,803
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 20.49% 17.80% 10.91% 11.37%
- --------------------------------------------------------------------------------
CLASS A 20.16% 17.50% 10.62% 11.09%
- --------------------------------------------------------------------------------
CLASS A* (with load) 15.39% 15.91% 9.72% 10.30%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 4.00% SALES CHARGE.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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
CLASS I (FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED
OPERATIONS ON APRIL 1, 1992.
================================================================================
12
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
BALANCED FUND
The U.S. equity market continued its strong performance in 1997,
outperforming the fixed income markets by a wide margin. What was different in
1997 though, was a very strong absolute performance in the bond market. The
Lehman Intermediate Government/Corporate index returned 7.9% during the year
while the S&P 500 Composite Index returned 33.4%. The Pillar Balanced Fund's
Class I shares returned 19.7% during 1997, which was slightly above the Lipper
Balanced Fund Index Average of 19.3%. The asset allocation of the Fund at year
end was 70% stocks and 30% fixed income securities.
Our outlook in 1998 is for a more difficult operating environment for
corporate profits, somewhat offset by lower bond yields and strong cash flows
into equity mutual funds. As such, we have already shifted to a more neutral
position of 60% stocks and 40% bonds. Our equity strategy continues to emphasize
investing in companies that are leaders in their industries and that we think
may be more immune to the slower operating profit environment. Our bond position
emphasizes high quality, noncallable obligations that will benefit in the lower
interest rate environment that we believe is in the cards for this year.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar Balanced Fund(CLASS I) Pillar Balanced Fund(CLASS A) S&P 500 Composite Index Lehman Intermediate Government/
Corporate Index
<S> <C> <C> <C> <C>
4/30/92 10,000 9,450 10,000 10,000
12/92 10,533 9,934 10,726 10,721
12/93 11,364 10,691 11,802 11,663
12/94 10,840 10,171 11,957 11,438
12/95 13,849 12,971 16,446 13,189
12/96 15,756 14,708 20,218 13,724
12/97 18,857 17,570 26,963 14,804
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 19.68% 20.27% 12.36% 11.86%
- --------------------------------------------------------------------------------
CLASS A 19.46% 19.98% 12.08% 11.56%
- --------------------------------------------------------------------------------
CLASS A* (with load) 12.92% 17.73% 10.82% 10.48%
- --------------------------------------------------------------------------------
CLASS B N/A N/A N/A 20.18%
- --------------------------------------------------------------------------------
CLASS B** (with load) N/A N/A N/A 11.26%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 5.50% SALES CHARGE.
**RETURN FIGURES REFLECT THE IMPACT OF PAYING THE MAXIMUM CONTINGENT DEFERRED
SALES CHARGE (CDSC) OF 5.50%.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I
(FORMERLY CLASS A) AND CLASS A (FORMERLY CLASS B) SHARES COMMENCED OPERATIONS
ON APRIL 1, 1992 AND CLASS B SHARES COMMENCED OPERATIONS ON MAY 8, 1997.
================================================================================
13
<PAGE>
================================================================================
Manager's Discussion & Analysis (CONTINUED)
INTERNATIONAL GROWTH FUND
For the year ended December 31, 1997, the Pillar International Growth
Fund's Class I shares provided a net return to shareholders of 0.25%. The Fund
ended the year behind its benchmark, the Morgan Stanley Capital
International--Europe, Australia, Far East (MSCI EAFE) Index, which returned
1.78% during the year.
World stock markets were mixed in 1997. Some regions of the world were
strong (such as North America, Europe and Latin America) while Asian securities
generally declined significantly. The major cause of the Fund's shortfall
relative to Lipper in 1997 was a small commitment to investments in Southeast
Asia as well as a higher than average exposure to Japan and its ailing economy.
Stocks in both Japan and Southeast Asia declined significantly during the year.
In contrast, benefiting Fund returns were investments in Europe.
As of December 31, 1997, almost 61% of the Fund was invested in Europe. We
view the economic and stock market dynamics in Europe as among the most positive
in the world at this time. On a company basis, we find European managements
increasingly focused on the bottom line. Global competition and the move to
monetary union is accelerating this process, which in turn is increasing merger
and acquisition activity, thus supporting equity prices. While European profits
may be impacted somewhat by the Asian turmoil, the European economy has less
exposure to Southeast Asia than is true for most other major regions of the
world. Therefore, company profits in Europe should increase significantly in
1998 as economic growth continues to improve and currencies remain highly
competitive. Meanwhile, tight fiscal policies and still relatively high
unemployment will keep inflation and interest rates in check. The Fund is
participating in these positive stock market dynamics through investments in
some of the world's major drug companies, such as Bayer, Phone-Poulenc and Roche
Holdings: financial services companies such as Unidanmark, ING Group and
Nordbanken; as well as consumer staple companies like Nestle and Bass PLC.
Investments in the Japanese stock market only account for 16.4% of the
Fund's net assets as of December 31, 1997. This low level of investment
(relative to the benchmark MSCI EAFE Index) is reflective of our cautious view
of the economic health of Japan over the near term. We do not yet see a catalyst
for a broad based rally in Japan. For that to happen, the government must put in
place meaningful measures to stimulate private consumption growth through a
permanent income tax cut. We also need to see an environment where further
changes in both the regulatory framework and company management attitudes allow
for the efficient use of capital through an unwinding of cross share holdings
and a real possibility of increased merger and acquisition activity. December's
announcement of plans to help recapitalize their financial system was a step
(albeit small) in the right direction. The Fund's strategy in Japan is twofold;
First, to add defensive stocks by adding to particular well positioned exporters
such as Rohm, the electrical components maker, and Sony, the consumer
electronics giant; and
================================================================================
14
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
also domestic stocks with significant restructuring potential such as NTT, the
giant telecommunications company. Second, in recognition of the long-term
opportunity from some well-positioned domestic companies, the Fund maintains a
reduced commitment to companies sensitive to the domestic economy. While better
growth will take some time to materialize, these securities are available at
extremely attractive valuations and have significant upside from here.
Investments in the remaining developed markets of Asia (Australia, Hong Kong,
New Zealand and Singapore) represent 6.7% of the Funds' assets.
We have become increasingly conservative in our emerging markets stance
during 1997 as there remain many real problems to be solved, bankruptcies and
defaults to come, difficulties in policy implementation and uncertain politics.
At year end, emerging markets in aggregate accounted for only 6.6% of the Fund,
with only slightly over one percent in emerging Asian markets and the remainder
in Latin America. Although there is some further spill-over risk from Asian woes
into Latin America, we see stronger economic growth there, and few excesses,
with quite reasonable valuations.
Looking forward, 1998 is likely to be a year with significant regional
divergence -- as witnesses both in economic growth as well as in the strength of
each country's stock market. In this environment, we believe the Fund is well
positioned to benefit from the positive European dynamics we see unfolding,
while the Asian markets should do better later in the year once the worst of the
crisis is past.
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE
OF A $10,000 INVESTMENT
[line chart omitted -- plot points as follows:]
Pillar International Growth Fund (CLASS I) Pillar International Growth Fund (CLASS A) MSCI EAFE Index
<S> <C> <C> <C>
5/95 10,000 9,450 10,000
12/95 10,747 10,141 10,648
12/96 11,948 11,244 11,293
12/97 11,978 11,244 11,495
DOLLARS (000)
</TABLE>
INVESTMENT GROWTH ANALYSIS
- --------------------------------------------------------------------------------
Average Annual Total Return1
- --------------------------------------------------------------------------------
1 Year Since Inception
- --------------------------------------------------------------------------------
CLASS I 0.25% 7.12%
- --------------------------------------------------------------------------------
CLASS A 0.00% 6.85%
- --------------------------------------------------------------------------------
CLASS A* (with load) -5.47% 4.63%
- --------------------------------------------------------------------------------
CLASS B N/A -3.64%
- --------------------------------------------------------------------------------
CLASS B** (with load) N/A -11.03%
- --------------------------------------------------------------------------------
*RETURN FIGURES REFLECT THE IMPACT OF THE MAXIMUM 5.50% SALES CHARGE.
**RETURN FIGURES REFLECT THE IMPACT OF PAYING THE MAXIMUM CONTINGENT DEFERRED
SALES CHARGE (CDSC) OF 5.50%.
1FOR THE PERIOD ENDED DECEMBER 31, 1997. PAST PERFORMANCE OF THE PERIOD IS NOT
PREDICITIVE 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 I (FORMERLY CLASS A), CLASS A (FORMERLY CLASS B) AND CLASS B SHARES
COMMENCED OPERATIONS ON MAY 1, 1995, MAY 4, 1995 AND MAY 7, 1997 RESPECTIVELY.
================================================================================
15
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--76.6%
U.S. Treasury Bills (A)
4.910%, 01/15/98 $80,000 $ 79,845
5.190%, 01/22/98 55,000 54,832
5.090%, 01/29/98 30,000 29,882
5.130%, 02/05/98 90,000 89,553
5.240%, 02/26/98 30,000 29,755
5.100%, 03/05/98 20,000 19,821
5.250%, 03/26/98 35,000 34,574
5.260%, 04/02/98 40,000 39,468
U.S. Treasury Note
5.125%, 03/31/98 5,000 4,996
--------
Total U.S. Treasury Obligations
(Cost $382,726) 382,726
--------
REPURCHASE AGREEMENTS--23.8%
J.P. Morgan
5.70%, dated 12/31/97, matures
01/02/98, repurchase price
$40,012,493 (collateralized by
U.S. Treasury Securities, total
market value $40,800,996) (B) 40,000 40,000
J.P. Morgan
6.36%, dated 12/31/97, matures
01/02/98, repurchase price
$11,683,486 (collateralized by
U.S. Treasury Note, total
market value $11,974,833) (B) 11,679 11,679
J.P. Morgan
6.36%, dated 12/31/97, matures
01/02/98, repurchase price
$67,244,059 (collateralized by
U.S. Treasury Securities, total
market value $68,565,096) (B) 67,221 67,221
--------
Total Repurchase Agreements
(Cost $118,900) 118,900
--------
Total Investments--100.4%
(Cost $501,626) 501,626
--------
OTHER ASSETS AND LIABILITIES, NET--(0.4%) (1,938)
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 486,910,809 outstanding shares of
beneficial interest 486,911
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 12,490,855 outstanding shares of
beneficial interest 12,491
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Undistributed net investment income $ 200
Accumulated net realized gain on investments 86
--------
Total Net Assets--100.0% $499,688
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $1.00
========
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.
PRIME OBLIGATION MONEY MARKET FUND
- --------------------------------------------------------------
COMMERCIAL PAPER--66.6%
BANKING--17.0%
Abbey National Bank
5.530%, 01/14/98 $ 5,000 4,990
5.530%, 02/03/98 6,855 6,820
Banc One Funding
5.630%, 01/16/98 5,000 4,988
5.800%, 02/09/98 5,000 4,969
5.780%, 02/13/98 5,000 4,966
Bank of New York
5.900%, 01/08/98 3,300 3,296
6.000%, 01/15/98 9,000 8,979
BankAmerica
5.570%, 01/07/98 10,000 9,991
5.530%, 01/15/98 5,000 4,989
Banker's Trust
5.550%, 01/12/98 4,000 3,993
5.870%, 01/20/98 1,200 1,196
Norwest Financial
5.650%, 01/14/98 5,000 4,990
Toronto Dominion
5.550%, 01/02/98 5,000 4,999
5.660%, 02/19/98 7,000 6,946
--------
76,112
--------
FINANCIAL SERVICES--27.2%
American Express
5.800%, 01/12/98 10,000 9,982
Cargill
5.680%, 03/10/98 9,000 8,903
Centric Funding
5.750%, 01/05/98 4,000 3,997
5.620%, 01/20/98 1,000 997
5.730%, 04/08/98 10,000 9,846
Ford Motor Credit
5.710%, 03/23/98 7,000 6,910
================================================================================
16
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
General Electric Capital
5.530%, 01/12/98 $ 5,000 $ 4,992
5.600%, 01/13/98 5,000 4,991
5.690%, 01/20/98 5,000 4,985
5.630%, 04/10/98 5,000 4,923
International Lease
5.550%, 01/07/98 5,000 4,995
5.550%, 01/13/98 5,000 4,991
5.480%, 01/16/98 6,000 5,986
Merrill Lynch
5.770%, 02/12/98 5,000 4,966
5.720%, 03/13/98 5,000 4,944
5.690%, 04/16/98 5,000 4,917
5.550%, 01/07/98 5,000 4,995
Transamerica
5.650%, 01/23/98 10,000 9,965
USAA Capital
5.670%, 01/26/98 5,000 4,980
5.690%, 02/13/98 6,000 5,959
5.630%, 03/20/98 5,000 4,939
--------
122,163
--------
INDUSTRIAL--9.9%
American Home Products
5.740%, 02/13/98 10,000 9,931
Ciesco
5.700%, 01/13/98 10,000 9,981
Colonial Pipeline
5.530%, 02/17/98 3,900 3,872
5.650%, 06/10/98 6,500 6,337
PHH
5.850%, 02/18/98 4,300 4,266
5.680%, 03/30/98 5,000 4,931
Pitney Bowes
5.490%, 01/09/98 5,000 4,994
--------
44,312
--------
UTILITIES--12.5%
Bell Atlantic
5.900%, 01/20/98 10,000 9,969
5.800%, 01/21/98 7,000 6,977
BellSouth
5.900%, 01/27/98 9,500 9,460
5.700%, 02/09/98 3,500 3,478
Carolina Power & Light
5.700%, 02/27/98 1,900 1,883
FPL Fuels
5.780%, 02/05/98 10,000 9,944
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
National Rural Utilities Cooperative
5.690%, 03/20/98 $ 10,000 $ 9,877
5.690%, 04/28/98 4,500 4,417
--------
56,005
--------
Total Commercial Paper
(Cost $298,592) 298,592
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS--16.1%
Federal Farm Credit Bank
5.500%, 01/02/98 5,000 5,000
5.530%, 02/02/98 5,000 5,000
5.550%, 03/02/98 5,000 5,000
5.620%, 04/01/98 5,000 5,000
Federal Home Loan Bank
5.790%, 01/21/98 5,000 5,000
5.875%, 01/30/98 5,000 5,000
5.805%, 02/13/98 5,300 5,300
5.670%, 03/05/98 5,000 5,000
5.860%, 07/30/98 5,000 5,000
5.875%, 10/23/98 5,000 5,000
5.860%, 11/25/98 8,000 8,000
5.910%, 12/18/98 5,000 5,000
Federal Home Loan Mortgage
Corporation (A)
5.700%, 01/22/98 4,000 3,987
Federal National Mortgage
Association (A)
5.610%, 02/20/98 5,000 4,962
--------
Total U.S. Government Agency Obligations
(Cost $72,249) 72,249
--------
CORPORATE OBLIGATIONS--3.7%
Ford Capital
9.375%, 01/01/98 6,500 6,500
Ford Motor Credit
6.250%, 02/26/98 5,000 5,001
John Deere (MTN)
5.850%, 10/28/98 5,000 4,998
--------
Total Corporate Obligations
(Cost $16,499) 16,499
--------
CERTIFICATES OF DEPOSIT--2.2%
Banker's Trust
6.240%, 04/02/98 5,000 5,001
Morgan Guaranty
5.850%, 03/16/98 5,000 4,998
--------
Total Certificates of Deposit
(Cost $9,999) 9,999
--------
================================================================================
17
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
PRIME OBLIGATION MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
REPURCHASE AGREEMENTS--12.4%
Barclays
6.48%, dated 12/31/97, matures
01/02/98, repurchase price
$29,064,460 (collateralized by
U.S. Treasury Note, total
market value $29,635,647) (B) $29,054 $ 29,054
J.P. Morgan
6.48%, dated 12/31/97, matures
01/02/98, repurchase price
$16,209,396 (collateralized by
U.S. Treasury Note, total
market value $16,528,768) (B) 16,204 16,204
Lehman Brothers
6.48%, dated 12/31/97, matures
01/02/98, repurchase price
$10,505,850 (collateralized by
U.S. Treasury Bond, total
market value $10,709,792) (B) 10,502 10,502
--------
Total Repurchase Agreements
(Cost $55,760) 55,760
--------
Total Investments--101.0%
(Cost $453,099) 453,099
--------
OTHER ASSETS AND LIABILITIES, NET--(1.0%) (4,366)
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 400,707,591 outstanding shares of
beneficial interest 400,708
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 17,513,552 outstanding shares of
beneficial interest 17,514
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 10,075 outstanding shares of
beneficial interest 10
Portfolio Shares of Class S (unlimited
authorization -- no par value) based
on 30,519,982 outstanding shares of
beneficial interest 30,520
Undistributed net investment income 13
Accumulated net realized loss on investments (32)
--------
Total Net Assets--100.0% $448,733
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $1.00
========
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
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
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class S $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.
MTN -- MEDIUM TERM NOTE
TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------
MUNICIPAL BONDS--95.6%
ALABAMA--1.8%
State, Public School &
College Authority (RB)
4.500%, 11/01/98 $1,490 1,498
--------
ARIZONA--6.0%
Avondale, Industrial
Development (RB) (B)
3.750%, 01/07/98 1,500 1,500
Salt River Project, Agriculture
and Improvement (CP)
3.755%, 05/15/98 2,500 2,500
State, Transportation Board
(RB) (MBIA)
6.800%, 07/01/98 1,000 1,015
--------
5,015
--------
FLORIDA--0.8%
Alachua County, Industrial
Development (RB) (A) (B) (C)
3.800%, 01/01/98 700 700
--------
GEORGIA--2.4%
Marietta, Housing Authority,
Bells Ferry (RB) (A) (C)
3.650%, 07/15/98 2,000 2,000
--------
ILLINOIS--4.6%
State, Development Finance Authority,
Illinois Power Project, Series B
(RB) (A) (B) (C)
3.700%, 01/07/98 2,000 2,000
State, Health Facilities Authority,
Sisters Hospital Service, Series E
(RB) (MBIA) (A) (B) (C)
3.700%, 01/07/98 1,300 1,300
================================================================================
18
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State (GO)
4.500%, 06/01/98 $ 500 $ 502
--------
3,802
--------
KENTUCKY--1.8%
State, Rural Water Finance Corporation,
Rural Water Public Projects
4.375%, 04/01/98 1,500 1,502
--------
LOUISIANA--11.2%
New Orleans, Aviation Board, Series A
(RB) (MBIA) (A) (B) (C)
3.800%, 01/07/98 2,000 2,000
New Orleans, Aviation Board, Series B
(RB) (MBIA) (A) (B) (C)
3.800%, 01/07/98 3,000 3,000
New Orleans, Aviation Board, Series C
(GO) (MBIA) (A) (B) (C)
3.800%, 01/07/98 1,400 1,400
State, Public Facilities Authority,
Willis-Knighton Medical Center
(RB) (AMBAC) (A) (B) (C)
3.700%, 01/07/98 3,000 3,000
--------
9,400
--------
MARYLAND--4.4%
Howard County, Multi-Family
Housing Authority, Sherwood
Crossing Project (RB) (A) (B)
3.950%, 01/01/98 1,600 1,600
Montgomery County, Draper
Lane Apartments (RB) (FGIC) (B)
3.950%, 01/07/98 1,000 1,000
Montgomery County (GO)
6.300%, 04/01/98 550 554
State, Department of
Transportation (RB)
6.400%, 07/15/98 500 507
--------
3,661
--------
MICHIGAN--1.4%
State, Hospital Financing Authority,
Hospital Equipment Program
(RB) (A) (B) (C)
3.800%, 01/07/98 1,200 1,200
--------
MINNESOTA--1.7%
New Brighton, Industrial
Development Authority,
Unicare Nursing Homes
Project (A) (B) (C)
4.350%, 01/07/98 1,400 1,400
--------
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
MISSOURI--1.9%
Springfield, Industrial Development
Authority, Pebblecreek
Apartments (RB) (A) (B) (C)
3.750%, 01/07/98 $1,200 $ 1,200
West Plains, Industrial Development
Authority, West Plains
Manor Project (RB) (A)
4.500%, 01/01/98 400 400
--------
1,600
--------
NEVADA--1.2%
Las Vegas, Nevada Convention &
Visitors Authority (GO) (MBIA)
5.400%, 07/01/98 1,000 1,008
--------
NEW JERSEY--23.4%
Borough of Paramus (BAN)
3.820%, 08/13/98 1,500 1,501
Essex County, Series A (BAN)
4.250%, 08/07/98 1,700 1,704
Fort Lee (BAN)
4.200%, 02/02/98 1,500 1,500
Hackensack (BAN)
4.000%, 12/17/98 1,500 1,503
Madison Borough (BAN)
3.830%, 03/20/98 1,525 1,525
North Arlington (BAN)
4.250%, 07/22/98 1,000 1,001
Northvale (BAN)
3.990%, 06/09/98 1,000 1,000
Passaic County, Series 97b (MBIA)
3.900%, 08/04/98 1,000 1,000
State (CP)
3.700%, 01/13/98 2,000 2,000
State (GO) (MBIA)
9.400%, 04/01/98 2,000 2,027
State, Economic Development
Authority, Peddie School Project
(RB) (A) (B) (C)
4.050%, 01/01/98 1,350 1,350
State, Education Facilities Authority,
Drew University, Series B
(RB) (AMBAC)
4.000%, 03/01/98 270 270
Summit (BAN)
4.000%, 07/21/98 300 300
4.000%, 12/17/98 900 902
Westwood (GO)
4.250%, 08/17/98 2,000 2,005
--------
19,588
--------
================================================================================
19
<PAGE>
================================================================================
Statement of Net Assets
TAX-EXEMPT MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
NEW YORK--2.4%
New York City, Water Authority (CP)
3.800%, 03/10/98 $2,000 $ 2,000
--------
NORTH CAROLINA--1.3%
Wake County, Carolina Power &
Light Company (RB) (A) (B) (C)
3.700%, 01/07/98 1,100 1,100
--------
PENNSYLVANIA--3.0%
Washington County, State Authority
Lease Revenue, Higher Education
Pooled Equipment Lease (RB) (A)
3.850%, 01/07/98 2,500 2,500
--------
SOUTH CAROLINA--4.5%
Lexington & Richland Counties,
School District Number 005 (GO)
4.250%, 03/01/98 1,000 1,001
State, Columbia Mill Building
Project (RB) (MBIA)
5.850%, 02/01/98 1,775 1,778
York County, Pollution Control
Revenue (RB) (A)
3.700%, 03/15/98 1,000 1,000
--------
3,779
--------
TENNESSEE--4.8%
Morristown, Industrial Development
Board, Williamhouse Regency
(RB) (B)
3.950%, 01/01/98 2,000 2,000
Nashville & Davidson Counties,
Old Hickory Towers,
Series A (RB) (A) (B) (C)
3.950%, 01/07/98 2,000 2,000
--------
4,000
--------
TEXAS--8.1%
Austin, Utility Authority (CP)
3.750%, 05/11/98 1,000 1,000
Dallas, Denton & Collin
County (GO)
4.200%, 02/15/98 1,000 1,001
Harris County (GO)
5.750%, 10/01/98 2,000 2,029
Hunt County, Industrial
Development Authority,
Trico Industries (A) (B) (C)
3.800%, 01/06/98 2,700 2,700
--------
6,730
--------
- --------------------------------------------------------------
FACE AMOUNT
DESCRIPTION (000)/SHARES VALUE (000)
- --------------------------------------------------------------
VIRGINIA--4.6%
Franklin County (GO)
5.600%, 07/15/98 $ 825 $ 833
Harrisonburg, Multi-Family
Housing Authority, Rolling
Brook Village Apartments,
Series A (RB) (B) (C)
2.800%, 02/01/98 3,000 3,000
--------
3,833
--------
WASHINGTON--2.6%
Chelan County, Public Utility
District, Chelan Hydro Project,
Series A (RB) (MBIA) (A)
3.700%, 01/07/98 2,200 2,200
--------
WISCONSIN--1.7%
State, Transportation (RB)
4.600%, 07/01/98 1,400 1,405
--------
Total Municipal Bonds
(Cost $79,921) 79,921
--------
CASH EQUIVALENTS--3.7%
Goldman Sachs Tax-Free
Money Market 823 823
SEI Institutional Tax-Free Portfolio 2,286 2,286
--------
Total Cash Equivalents
(Cost $3,109) 3,109
--------
Total Investments--99.3%
(Cost $83,030) 83,030
--------
OTHER ASSETS AND LIABILITIES, NET--0.7% 576
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 75,105,695 outstanding shares of
beneficial interest 75,106
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 8,507,623 outstanding shares of
beneficial interest 8,507
Undistributed net investment income 1
Accumulated net realized loss on investments (8)
--------
Total Net Assets--100.0% $83,606
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $1.00
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $1.00
========
================================================================================
20
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
(A) FLOATING RATE INSTRUMENT WITH DEMAND FEATURES. THE RATE REFLECTED ON THE
STATEMENT OF NET ASSETS IS THE RATE IN EFFECT ON DECEMBER 31, 1997. THE DATE
SHOWN IS THE LONGER OF THE RESET OR DEMAND DATE.
(B) PUT OR DEMAND FEATURE EXISTS REQUIRING THE ISSUER TO REPURCHASE THE
INSTRUMENT PRIOR TO MATURITY.
(C) SECURITIES ARE HELD IN CONNECTION WITH A LETTER OF CREDIT OR OTHER
CREDIT SUPPORT.
BAN -- BOND ANTICIPATION NOTE
CP -- COMMERCIAL PAPER
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 CORPORATION
FGIC -- FEDERAL GUARANTY INSURANCE COMPANY
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
U.S. TREASURY SECURITIES PLUS MONEY
MARKET FUND
- --------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--65.4%
U.S. Treasury Bills (A)
5.323%, 01/08/98 $ 5,000 $ 4,995
4.940%, 01/15/98 5,000 4,990
5.190%, 01/22/98 10,000 9,970
5.150%, 01/29/98 5,000 4,980
5.170%, 02/05/98 10,000 9,950
U.S. Treasury Notes
5.000%, 01/31/98 5,000 4,998
5.125%, 03/31/98 5,000 4,996
--------
Total U.S. Treasury Obligations
(Cost $44,879) 44,879
--------
REPURCHASE AGREEMENTS--33.2%
Barclays
6.49%, dated 12/31/97, matures
01/02/98, repurchase price
$11,803,325 (collateralized by
U.S. Treasury Bond, total
market value $12,036,026) (B) 11,799 11,799
J.P. Morgan
6.49%, dated 12/31/97, matures
01/02/98, repurchase price
$9,306,170 (collateralized by
U.S. Treasury Note, total
market value $9,489,953) (B) 9,303 9,303
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Lehman Brothers
6.49%, dated 12/31/97, matures
01/02/98, repurchase price
$1,725,268 (collateralized by
U.S. Treasury Note, total
market value $1,781,663) (B) $1,725 $ 1,725
--------
Total Repurchase Agreements
(Cost $22,827) 22,827
--------
Total Investments--98.6%
(Cost $67,706) 67,706
--------
OTHER ASSETS AND LIABILITIES, NET--1.4% 952
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 68,676,871 outstanding shares of
beneficial interest 68,677
Accumulated net realized loss on investments (19)
--------
Total Net Assets--100.0% $68,658
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $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.
INSTITUTIONAL SELECT MONEY MARKET FUND
- --------------------------------------------------------------
COMMERCIAL PAPER--56.7%
BANKS--14.6%
Abbey National Bank
5.530%, 01/14/98 1,000 998
Banc One Funding
5.730%, 01/16/98 500 499
5.750%, 02/13/98 1,000 993
BankAmerica
5.530%, 01/15/98 1,000 998
Bank of New York
6.000%, 01/15/98 1,000 998
Banker's Trust
5.550%, 01/12/98 1,000 998
5.750%, 03/30/98 1,000 986
Norwest Financial
5.650%, 01/14/98 1,000 998
================================================================================
21
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
INSTITUTIONAL SELECT MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE
- --------------------------------------------------------------
Toronto Dominion
5.550%, 01/02/98 $ 500 $ 500
5.660%, 02/19/98 1,000 992
--------
8,960
--------
FINANCIAL SERVICES--23.7%
American Express
5.800%, 01/12/98 1,000 998
Cargill
5.680%, 03/10/98 1,000 989
Centric Funding
5.750%, 01/05/98 400 400
5.730%, 04/08/98 1,000 985
Ford Motor Credit
5.670%, 01/05/98 1,000 999
General Electric Capital
5.750%, 01/06/98 500 500
5.700%, 01/13/98 1,000 998
5.600%, 01/14/98 500 499
International Lease
5.550%, 01/13/98 1,000 998
Merrill Lynch
5.620%, 01/16/98 1,000 998
5.710%, 01/22/98 500 498
5.720%, 03/13/98 500 494
National Rural
5.690%, 03/20/98 1,000 988
5.690%, 04/28/98 500 491
Transamerica
5.850%, 01/07/98 966 965
5.650%, 01/23/98 1,000 997
USAA Capital
5.560%, 01/05/98 800 799
5.630%, 03/20/98 1,000 988
--------
14,584
--------
INDUSTRIAL--12.7%
AHP
5.740%, 02/13/98 1,000 993
Ciesco
5.700%, 01/13/98 1,500 1,497
Colonial Pipeline
5.800%, 01/09/98 1,250 1,248
5.650%, 06/10/98 500 487
FPL Fuels
5.780%, 02/05/98 1,000 994
ILFC
5.750%, 01/16/98 1,000 998
PHH
5.650%, 01/30/98 630 627
5.700%, 03/27/98 1,000 987
--------
7,831
--------
- --------------------------------------------------------------
FACE
DESCRIPTION AMOUNT (000) VALUE
- --------------------------------------------------------------
UTILITIES--5.7%
Bell Atlantic
5.900%, 01/20/98 $1,000 $ 997
5.800%, 01/21/98 1,000 997
BellSouth
5.900%, 01/27/98 500 498
5.700%, 02/09/98 1,000 994
--------
3,486
--------
Total Commercial Paper
(Cost $34,861) 34,861
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS--14.2%
Federal Home Loan Bank (A)
5.520%, 01/23/98 1,368 1,363
5.860%, 07/30/98 1,000 1,000
5.780%, 08/13/98 1,000 1,000
5.900%, 09/16/98 500 500
5.875%, 10/23/98 1,000 1,000
5.860%, 11/25/98 1,000 1,000
5.910%, 12/18/98 1,000 1,000
Federal Home Loan Mortgage
Corporation
5.700%, 01/22/98 846 843
Federal National Mortgage Association
5.610%, 02/20/98 1,000 992
--------
Total U.S. Government Agency Obligations
(Cost $8,698) 8,698
--------
CORPORATE OBLIGATIONS--2.4%
Ford Capital
9.375%, 01/01/98 1,000 1,000
John Deere (MTN)
5.850%, 10/28/98 500 500
--------
Total Corporate Obligations
(Cost $1,500) 1,500
--------
REPURCHASE AGREEMENTS--28.2%
Barclays
6.46%, dated 12/31/97, matures
01/02/98, repurchase price
$8,604,800 (collateralized by
U.S. Treasury Note, total
market value $8,774,677) (B) 8,602 8,602
J.P. Morgan
6.46%, dated 12/31/97, matures
01/02/98, repurchase price
$8,764,223 (collateralized by
U.S. Treasury Bond, total
market value $8,937,099) (B) 8,761 8,761
--------
================================================================================
22
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
FACE AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
- --------------------------------------------------------------
Total Repurchase Agreements
(Cost $17,363) $ 17,363
--------
Total Investments--101.5%
(Cost $62,422) 62,422
--------
OTHER ASSETS AND LIABILITIES, NET--(1.5%) (900)
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 61,520,901 outstanding shares of
beneficial interest 61,521
Accumulated net realized gain on investments 1
--------
Total Net Assets--100.0% $61,522
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $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.
MTN--MEDIUM TERM NOTE
SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--83.5%
U.S. Treasury Bills (A)
5.340%, 06/25/98 $1,400 1,365
5.335%, 08/20/98 2,000 1,933
--------
Total U.S. Treasury Obligations
(Cost $3,296) 3,298
--------
U.S. GOVERNMENT AGENCY OBLIGATION--12.6%
Federal Home Loan Bank (MTN)
5.970%, 03/11/98 500 500
--------
Total U.S. Government Agency Obligation
(Cost $500) 500
--------
CASH EQUIVALENTS--3.8%
SEI Liquid Asset Trust--
Government Portfolio 51 51
SEI Liquid Asset Trust--
Treasury Portfolio 99 99
--------
Total Cash Equivalents
(Cost $150) 150
--------
Total Investments--99.9%
(Cost $3,946) 3,948
--------
OTHER ASSETS AND LIABILITIES, NET--0.1% 3
--------
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 345,801 outstanding shares of
beneficial interest $3,512
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 47,759 outstanding shares of
beneficial interest 480
Accumulated net realized loss on investments (43)
Net unrealized appreciation on investments 2
--------
Total Net Assets--100.0% $3,951
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $10.04
========
Net Asset Value and Redemption Price
Per Share -- Class A $10.03
========
Maximum Offering Price Per Share --
Class A ($10.03 / 99%) $10.13
========
(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. GOVERNMENT AGENCY OBLIGATIONS--53.9%
Federal Farm Credit Bank
6.560%, 12/23/99 $ 60 61
6.920%, 09/09/03 1,000 1,042
Federal Home Loan Bank
7.780%, 10/19/01 2,000 2,122
6.620%, 06/25/02 5,000 5,094
6.250%, 11/06/02 5,000 5,004
6.520%, 04/07/03 5,000 5,026
6.380%, 04/29/03 1,000 1,000
6.730%, 09/24/03 5,000 5,105
7.000%, 03/06/06 1,000 1,000
7.230%, 12/18/06 500 500
7.000%, 10/29/07 5,000 4,999
7.250%, 12/15/10 25 25
7.200%, 10/30/12 5,000 5,173
Federal Home Loan
Mortgage Corporation
5.875%, 03/22/00 1,000 1,002
6.970%, 09/05/01 1,300 1,321
7.125%, 09/24/03 1,000 1,005
7.040%, 10/22/03 750 750
6.375%, 12/23/03 1,000 998
7.030%, 04/05/04 1,000 1,010
6.130%, 02/27/06 1,600 1,606
7.550%, 08/23/06 1,000 1,018
7.585%, 09/19/06 1,000 1,042
7.340%, 11/03/06 2,000 2,026
================================================================================
23
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
FIXED INCOME FUND (CONTINUED)
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Federal National Mortgage
Association
7.050%, 12/10/98 $1,000 $ 1,010
8.700%, 06/10/99 1,000 1,039
7.500%, 02/11/02 1,300 1,372
6.800%, 01/10/03 1,500 1,559
6.625%, 04/10/03 1,000 1,000
6.450%, 06/10/03 4,750 4,750
6.200%, 07/10/03 3,000 2,989
6.250%, 08/12/03 2,960 2,952
5.930%, 09/26/03 1,750 1,721
6.900%, 03/10/04 1,000 1,000
6.850%, 09/12/05 1,000 1,009
7.560%, 06/12/06 900 934
7.760%, 08/02/06 2,000 2,051
7.500%, 08/11/06 2,500 2,541
7.060%, 11/29/06 3,250 3,248
6.990%, 07/09/07 5,000 5,162
Federal National Mortgage
Association (MTN)
6.850%, 05/08/02 5,000 5,079
6.360%, 10/23/02 5,000 5,032
6.420%, 02/25/04 1,100 1,098
6.490%, 01/19/06 1,000 1,001
6.760%, 07/16/07 5,000 5,142
6.210%, 11/07/07 5,000 5,022
6.560%, 12/10/07 5,000 5,019
6.810%, 12/18/07 5,000 5,019
--------
Total U.S. Government Agency Obligations
(Cost $112,872) 114,678
--------
CORPORATE BONDS--14.6%
FINANCIAL SERVICES--6.1%
Cit Group Holdings (MTN)
6.250%, 11/22/01 5,000 5,006
Ford Motor Credit
6.250%, 11/08/00 5,000 5,012
6.750%, 05/15/05 1,000 1,020
General Electric Capital
5.500%, 11/01/01 1,000 979
General Electric Capital (MTN)
6.875%, 04/15/00 1,000 1,019
--------
13,036
--------
INDUSTRIAL--6.0%
Anheuser Busch
6.750%, 06/01/05 1,000 1,011
E.I. DuPont de Nemours
6.000%, 12/01/01 2,000 1,993
6.750%, 10/15/02 1,000 1,023
Eli Lilly
6.250%, 03/15/03 2,000 2,010
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Exxon Capital
6.500%, 07/15/99 $1,500 $ 1,513
Sears Roebuck
6.690%, 04/30/01 3,000 3,038
SmithKline Beecham (MTN)
6.625%, 10/01/05 2,000 2,033
--------
12,621
--------
UTILITIES--2.5%
AT&T
7.500%, 06/01/06 1,000 1,075
Duke Power
7.000%, 09/01/05 1,300 1,337
U.S. West Communications
6.125%, 11/15/05 2,000 1,968
Union Pacific
6.125%, 01/15/04 1,000 981
--------
5,361
--------
Total Corporate Bonds
(Cost $30,495) 31,018
--------
MUNICIPAL BONDS--16.5%
Alabama State, Housing Finance
Authority (RB)
7.625%, 08/01/10 835 866
Arkansas State, Development
Finance Authority (RB)
9.750%, 11/15/05 640 736
Baltimore, Maryland, City Parking,
Series B (RB) (FGIC)
7.950%, 07/01/03 510 547
Buffalo, New York, Pens System,
Series D (GO) (FGIC)
8.500%, 08/15/03 360 397
Camden County, New Jersey
Improvement Authority,
Series A (RB)
7.200%, 01/01/04 2,200 2,283
Collier County, Florida, Water and
Sewer Authority, Series A
(RB) (FGIC)
6.300%, 07/01/04 450 450
6.750%, 07/01/08 790 802
Colorado State, Housing Finance
Authority, Single Family Program,
Series B-1 (RB)
10.400%, 08/01/03 145 152
Fort Myers, Florida, Improvement
Authority, Series B (RB) (AMBAC)
8.450%, 12/01/03 645 707
================================================================================
24
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DECEMBER 31, 1997
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Gillette, Wyoming, Community
Program (SOB)
10.250%, 01/01/11 $1,095 $ 1,241
Houston, Texas, Airport
Systems (RB) (FGIC)
6.100%, 07/01/01 1,260 1,258
Metropolitan Washington D.C. &
Virginia Airport Authority
(RB) (MBIA)
6.900%, 10/01/08 1,980 2,027
Michigan State, Higher Education
Student Loan Authority,
Series XV-C (RB)
7.250%, 09/01/02 775 790
Minneapolis and St. Paul, Minnesota,
Metropolitan Airport Authority,
Series 9 (GO)
8.600%, 01/01/10 900 1,000
Missouri State, Economic
Development & Infrastructure
Board Health Services,
Series A (RB) (MBIA)
8.400%, 06/01/04 1,350 1,495
Monrovia, California Redevelopment
Agency (AMBAC)
8.100%, 05/01/01 650 686
New Hampshire State, Business
Finance Authority, Series A (RB)
8.600%, 11/01/12 2,165 2,387
New Hampshire State, Pease
Development Authority (GO)
7.050%, 07/01/06 410 425
New Jersey State (COP)
8.000%, 12/15/02 1,035 1,100
New Jersey State, Economic
Development Authority (RB)
7.800%, 03/15/07 1,645 1,754
New York State, Mortgage
Agency, Series 15 (RB)
7.375%, 10/01/12 2,095 2,153
Oklahoma City, Oklahoma
Airport Trust, Junior Lien,
Series 21 (RB) (MBIA)
6.750%, 07/01/05 1,010 1,028
Oklahoma City, Oklahoma Airport
Trust, Senior Lien, Series 15 (RB)
9.500%, 01/01/06 340 357
Oklahoma City, Oklahoma Airport
Trust, Senior Lien, Series 16 (RB)
9.875%, 07/01/12 765 804
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Oklahoma City, Oklahoma Airport
Trust, Senior Lien, Series 17 (RB)
8.300%, 10/01/12 $2,015 $ 2,146
Oklahoma State, Single Family
Housing Finance Agency
(RB) (MBIA)
8.700%, 09/01/13 1,150 1,259
Palm Beach County, Florida,
Airport Systems Revenue
(RB) (MBIA)
9.500%, 10/01/10 1,325 1,423
Raleigh, North Carolina, North
Carolina State University
(RB) (MBIA)
7.700%, 12/15/07 1,175 1,254
Secaucus, New Jersey, Municipal
Utilities Authority (RB)
8.500%, 12/01/06 600 669
Utah State, Single Family Mortgage
Housing Finance Agency, Series A-1
9.550%, 07/01/05 160 168
Vero Beach, Florida, Water and
Sewer Authority, Series A (RB) (FGIC)
6.400%, 12/01/08 1,885 1,897
Virginia State, Housing Development
Authority, Multi-Family, Series G (RB)
6.500%, 11/01/07 740 738
--------
Total Municipal Bonds
(Cost $33,837) 34,999
--------
U.S. TREASURY OBLIGATIONS--7.1%
U.S. Treasury Note
6.375%, 08/15/02 11,000 11,281
U.S. Treasury (STRIPS)
5.920%, 02/15/03 5,000 3,746
--------
Total U.S. Treasury Obligations
(Cost $14,876) 15,027
--------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS--4.8%
Federal Home Loan Mortgage
7.500%, 10/15/01 972 989
8.000%, 06/25/04 500 510
9.500%, 10/01/04 109 115
9.500%, 07/01/06 58 63
8.000%, 06/01/07 185 191
9.000%, 08/01/08 100 105
10.000%, 02/01/09 60 65
9.250%, 05/01/09 405 431
9.500%, 08/01/09 40 43
8.750%, 09/01/09 55 58
10.000%, 04/01/10 27 30
================================================================================
25
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
FIXED INCOME FUND (CONTINUED)
- --------------------------------------------------------------
FACE AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
- --------------------------------------------------------------
8.750%, 09/01/10 $ 146 $ 154
9.500%, 09/01/10 138 149
9.750%, 11/01/10 128 137
10.250%, 11/01/10 13 14
9.500%, 03/01/11 42 45
9.500%, 04/01/11 99 105
10.000%, 05/01/11 151 163
10.000%, 12/01/13 54 59
8.750%, 07/01/15 31 33
7.500%, 07/15/15 750 761
9.250%, 08/01/15 215 230
9.000%, 10/01/15 90 96
6.500%, 04/15/16 588 583
9.500%, 09/01/16 26 28
9.000%, 10/01/16 55 59
9.500%, 11/01/16 52 56
8.500%, 07/01/17 56 59
9.000%, 10/01/19 199 212
7.500%, 12/15/19 69 70
7.000%, 05/15/20 1,000 1,003
Federal National Mortgage Association
6.500%, 06/15/04 479 481
7.000%, 05/25/05 200 201
6.950%, 05/25/06 982 989
8.000%, 03/01/07 148 153
7.000%, 04/01/07 130 131
9.000%, 03/01/09 59 63
8.500%, 08/01/17 80 84
6.700%, 09/25/18 910 917
8.000%, 01/25/19 450 462
Government National Mortgage
Association
9.000%, 03/15/08 23 25
9.000%, 11/15/08 145 156
9.500%, 10/15/20 100 109
--------
Total U.S. Government Mortgage-Backed Obligations
(Cost $10,181) 10,387
--------
ASSET-BACKED SECURITY--0.5%
Discover Card Master Trust
6.200%, 05/16/06 1,000 1,000
--------
Total Asset-Backed Security
(Cost $975) 1,000
--------
CASH EQUIVALENTS--1.7%
SEI Liquid Asset Trust--
Government Portfolio 2,512 2,512
SEI Liquid Asset Trust--
Treasury Portfolio 1,107 1,107
--------
Total Cash Equivalents
(Cost $3,619) 3,619
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION VALUE (000)
- --------------------------------------------------------------
Total Investments--99.1%
(Cost $206,855) $210,728
--------
OTHER ASSETS AND LIABILITIES, NET--0.9% 1,876
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 19,927,366 outstanding shares of
beneficial interest 203,137
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 436,795 outstanding shares of
beneficial interest 4,986
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 122,093 outstanding shares of
beneficial interest 1,263
Overdistribution of net investment income (12)
Accumulated net realized loss on investments (381)
Net unrealized appreciation on investments 3,611
--------
Total Net Assets--100.0% $212,604
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $10.38
========
Net Asset Value and Redemption Price
Per Share -- Class A $10.36
========
Maximum Offering Price Per Share --
Class A ($10.36 / 95.75%) $10.82
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class B (1) $10.39
========
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE.
COP -- CERTIFICATE OF PARTICIPATION
GO -- GENERAL OBLIGATION
MTN -- MEDIUM TERM NOTE
RB -- REVENUE BOND
SOB -- SPECIAL OBLIGATION BOND
STRIPS -- SEPARATE TRADING OF REGISTERED INTEREST AND PRINCIPAL SECURITIES.
THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS REPRESENTS THE SECURITY'S
EFFECTIVE YIELD AT PURCHASE. THE FOLLOWING ORGANIZATIONS HAVE PROVIDED
UNDERLYING CREDIT SUPPORT FOR CERTAIN SECURITIES AS DEFINED IN THE STATEMENT
OF NET ASSETS:
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC -- FEDERAL GUARANTY INSURANCE COMPANY
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
================================================================================
26
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DECEMBER 31, 1997
NEW JERSEY MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
MUNICIPAL BONDS--98.8%
COLORADO--0.1%
State, Housing Finance Authority,
Single Family Program Project,
Series-A-3 (RB)
6.500%, 11/01/23 $200 $ 211
--------
FLORIDA--0.4%
Dade County, Education Facilities
Authority, University of Miami
Project (RB) (MBIA)
7.650%, 04/01/10 500 547
--------
GUAM--0.4%
Guam Government, Water System (RB)
6.850%, 07/01/99 375 391
6.950%, 07/01/00 250 268
--------
659
--------
HAWAII--0.1%
State, Housing Finance and
Development (RB)
6.750%, 07/01/20 170 179
--------
ILLINOIS--0.1%
State, Housing Development
Authority, Residential Mortgage (RB)
6.950%, 08/01/22 115 122
--------
MASSACHUSETTS--1.2%
New England, Education Loan
Marketing (RB)
5.800%, 03/01/02 890 940
State, Housing Finance Agency,
Residential Development
Authority (RB)
6.250%, 11/15/02 430 455
State, Housing Finance Agency
Single Family Home
Project, Series 17 (AMT)
7.000%, 12/01/23 245 252
State, Housing Finance Agency
Single Family Home
Project, Series 21 (AMT)
6.500%, 12/01/10 95 102
--------
1,749
--------
NEW JERSEY--90.2%
Atlantic County (GO) (MBIA)
5.400%, 12/01/04 200 213
5.400%, 12/01/05 400 424
Atlantic County, Improvement
Authority, Convention Center
Project (RB) (MBIA)
7.375%, 07/01/10 400 488
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Bayonne (GO) (AMBAC)
6.200%, 07/15/01 $300 $321
Bayonne (GO) (FGIC)
5.900%, 05/01/05 150 163
Bayonne, Municipal Authority,
Water Systems (RB) (MBIA)
5.000%, 01/01/12 500 500
Bergen County (GO)
6.350%, 01/15/99 250 256
5.125%, 06/15/05 250 265
Bergen County, General
Improvement Bonds (GO)
5.250%, 08/15/00 300 310
4.700%, 07/15/02 400 410
Bergen County, Utility Authority,
Series A (RB) (FGIC)
6.100%, 06/15/04 500 554
Black Horse Pike, Regal School
District (COP) (MBIA)
7.150%, 06/15/98 275 279
Brick Township, Municipal
Utility Authority (RB) (FGIC)
4.000%, 12/01/98 300 301
Bridgeton (GO) (AMBAC)
5.000%, 01/01/05 300 306
Bridgewater & Raritan (GO)
6.125%, 05/01/05 200 217
6.125%, 05/01/06 100 108
Burlington County (GO)
5.200%, 10/01/07 700 725
Camden County, Board of Education
(GO) (FSA)
5.000%, 10/01/05 310 323
Camden County (GO) (AMBAC)
7.750%, 08/01/99 200 211
Camden County (GO) (FGIC)
5.000%, 02/01/04 200 208
5.000%, 02/01/08 500 515
Camden County (GO) (FSA)
4.300%, 10/01/00 300 303
Camden County (GO) (MBIA)
5.000%, 06/01/99 100 101
5.600%, 06/01/03 200 212
Cape May County (GO) (FGIC)
6.950%, 10/15/98 250 256
Cape May County, Municipal
Utility Authority (RB) (AMBAC)
5.000%, 08/01/03 800 836
Cape May County, Municipal
Utility Authority, Series B
(RB) (FGIC)
4.500%, 01/01/03 800 813
================================================================================
27
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Clifton (GO) (AMBAC)
6.800%, 10/01/98 $ 250 $ 252
Clinton Township (GO)
7.350%, 08/01/01 300 331
Clinton Township (GO) (FGIC)
5.000%, 02/15/11 250 253
Cranford Township (GO)
8.000%, 05/01/98 150 152
Delaware River & Bay Authority
(RB) (FGIC)
5.350%, 01/01/14 1,000 1,029
Delaware River, Pennsylvania &
New Jersey Port Authority
(RB) (FGIC)
5.450%, 01/01/12 250 261
5.400%, 01/01/13 1,000 1,035
Dover Township (GO) (AMBAC)
6.000%, 10/15/03 200 219
Edgewater Borough (GO) (MBIA)
5.100%, 09/15/00 300 309
Edison Township (GO)
4.700%, 06/01/98 250 251
5.700%, 12/01/99 100 103
6.500%, 06/01/00 500 529
5.400%, 06/01/02 250 262
Edison Township (GO) (AMBAC)
4.500%, 01/01/02 500 507
4.800%, 01/01/05 300 307
Elizabeth (GO) (FGIC)
4.300%, 07/15/99 100 101
7.900%, 12/01/99 240 257
4.625%, 07/15/03 200 205
Elizabeth, Additional School
Building Aid (GO)
9.000%, 03/01/01 150 172
Elizabeth, School Board
(GO) (MBIA)
7.000%, 03/15/04 250 287
Essex County (GO) (FSA)
6.300%, 12/01/03 300 326
Essex County (GO) (MBIA)
4.750%, 07/15/07 200 204
Essex County, Improvement
Authority (RB) (AMBAC)
4.875%, 12/01/02 300 310
5.000%, 12/01/08 250 260
Essex County, Jail and
Youth Housing (RB)
6.500%, 12/01/06 345 395
Essex County, Orange
School District (RB)
5.550%, 12/01/04 150 162
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Essex County, Pre-Refunded
@ 101 (GO) (AMBAC) (A)
6.050%, 02/01/99 $ 145 $ 150
Essex County, Property and
Equipment (RB)
5.850%, 12/01/03 300 318
Essex County, Series A (GO) (MBIA)
4.600%, 10/01/03 200 203
Essex County, Series B (GO)
6.850%, 12/15/98 215 217
Essex County, Utility Authority,
Solid Waste Revenue (RB) (FSA)
5.000%, 04/01/04 250 260
Evesham Township (GO) (FGIC)
5.000%, 09/15/12 500 505
Fair Lawn (GO)
6.500%, 04/01/99 200 206
Fair Lawn, Water Revenue (RB)
6.500%, 04/01/99 200 206
Fort Lee (GO)
4.850%, 02/01/02 250 257
Franklin Township (GO)
5.600%, 11/01/05 400 428
Galloway Township (GO) (AMBAC)
5.000%, 12/15/09 350 360
Gloucester County, General
Improvement, Series A
(GO) (AMBAC)
4.500%, 01/01/03 200 201
Gloucester County (GO)
7.000%, 07/01/98 250 254
Gloucester County (GO) (AMBAC)
5.000%, 09/01/03 500 511
Gloucester County, Improvement
Authority, Landfill Project,
Series A (RB)
6.000%, 09/01/06 300 320
Gloucester County, Solid
Waste Resource Revenue (AMT)
8.375%, 07/01/10 1,175 1,198
Gloucester County, Utility
Authority (RB)
5.500%, 01/01/99 140 142
Gloucester County, Utility
Authority (RB) (AMBAC)
4.800%, 03/01/02 300 308
Hackensack (GO)
6.100%, 06/01/05 250 268
6.100%, 06/01/07 250 267
Hackensack Meadowlands (RB)
7.125%, 06/01/02 500 536
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28
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DECEMBER 31, 1997
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Hackettstown, Municipal Utilities
Authority, Series F (RB) (FGIC)
5.050%, 10/01/04 $ 500 $ 523
Harrington Park (RB)
6.000%, 04/01/99 100 102
Hillsborough Township, Board of
Education (COP) (FSA)
5.500%, 12/15/99 250 258
Hudson County (GO) (FGIC)
6.250%, 11/01/99 200 207
Hudson County, New Jersey
College, Series C (GO)
4.600%, 10/01/01 180 184
Hudson County, Utility
Authority (RB)
11.875%, 07/01/06 285 358
Jersey City (GO)
6.500%, 02/15/03 370 407
5.500%, 03/15/14 1,000 1,051
Jersey City, Redevelopment
Authority, Dixon Mill
Apartments (RB)
6.100%, 05/01/12 65 68
Jersey City, Water Utility (RB)
7.250%, 01/01/99 400 413
Kearny (GO) (FGIC)
4.300%, 02/15/01 500 502
5.250%, 02/15/08 1,000 1,059
Lincoln Park (RB)
7.000%, 07/15/03 100 113
Livingston Township, Board
of Education
6.375%, 11/01/99 100 104
6.375%, 11/01/00 100 106
Long Branch, Sewer
Authority (RB) (FGIC)
4.900%, 06/01/02 300 309
5.200%, 06/01/05 500 527
5.250%, 06/01/06 200 211
Madison (RB)
7.125%, 08/01/98 250 255
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%, 06/01/01 200 209
4.900%, 12/15/05 150 156
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Mercer County, Improvement
Authority (RB)
4.250%, 12/01/00 $ 500 $ 504
Mercer County, Improvement
Authority (RB) (MBIA)
6.000%, 06/01/04 250 267
Mercer County, Sewer Improvement
Authority, Regional Sludge
Project (FGIC)
6.550%, 12/15/98 500 513
Middlesex County (GO)
4.200%, 07/15/99 150 151
4.500%, 07/15/01 500 509
Middlesex County, Improvement
Authority (RB)
4.375%, 07/01/03 250 249
Middlesex County, Property Tax (GO)
5.800%, 10/01/10 500 531
Middlesex County, Utility
Authority (RB) (FGIC)
5.000%, 12/01/12 400 400
6.100%, 03/15/00 200 209
Middletown Township, Sewer
Authority, Series A (RB) (FGIC)
4.900%, 01/01/05 800 825
Monmouth County (GO)
4.400%, 09/01/03 200 202
Monmouth County, Improvement
Authority, Government Loan
Project (RB) (MBIA)
4.350%, 12/01/01 500 506
Monmouth County, Improvement
Authority, Howell Township
Education Project (RB)
5.750%, 07/01/01 540 572
Monmouth County (RB)
4.500%, 10/01/98 500 503
4.750%, 07/15/03 200 206
Monmouth County, Improvement
Authority (RB) (FSA)
5.450%, 07/15/13 850 886
Monmouth County, Improvement
Authority (RB) (MBIA)
4.400%, 12/01/02 250 253
5.000%, 12/01/08 250 262
5.125%, 12/01/16 500 504
Moorestown Township
(GO) (AMBAC)
6.000%, 09/01/07 300 324
Moorestown Township (GO)
5.000%, 02/01/12 150 151
5.000%, 02/01/15 150 151
================================================================================
29
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Morris County (GO)
5.000%, 07/15/13 $ 800 $ 806
Morris Plains (GO)
5.000%, 07/01/04 200 208
Morristown (GO) (FSA)
5.500%, 08/01/01 100 104
Mount Laurel Township (GO)
4.650%, 08/01/05 500 504
New Brunswick (GO) (FGIC)
6.400%, 07/15/03 400 429
New Brunswick, Parking
Authority (RB) (FGIC)
4.300%, 09/01/99 300 303
New Jersey Environmental
Infrastructure Wastewater
Treatment (RB)
5.000%, 09/01/10 1,000 1,039
5.000%, 09/01/14 1,000 1,008
New Jersey Health Care (RB) (MBIA)
5.200%, 07/01/18 500 504
Newark, Board of Education
(GO) (MBIA)
5.875%, 12/15/11 370 399
Newark (GO) (AMBAC)
7.375%, 10/01/00 250 269
Newark, Housing Finance, Fairview
and Lock Street Project (RB)
6.150%, 02/01/13 495 527
Newark, Qualified Bond Act
(GO) (MBIA)
5.300%, 09/01/14 500 512
Newark, Water Utility (GO) (MBIA)
5.500%, 10/01/14 475 493
North Arlington, Public
Improvements Authority (GO)
7.000%, 05/15/98 100 100
North Bergen Township (GO) (MBIA)
4.400%, 08/01/01 500 502
North Bergen Township, Municipal
Utility Authority (RB) (FGIC)
4.800%, 12/15/03 300 309
North Bergen Township, Utility
Authority (RB) (FGIC)
4.700%, 12/15/02 300 307
North Brunswick Township (GO)
5.000%, 05/15/12 1,000 1,005
North Brunswick Township
(GO) (FGIC)
5.000%, 02/01/10 750 765
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
North Jersey District, Water Supply,
Wanaque North Project, Series A
(RB) (MBIA)
4.875%, 11/15/09 $ 250 $ 253
5.000%, 11/15/10 500 506
North Jersey District, Water Supply,
Wanaque North Project, Series B
(RB) (MBIA)
5.600%, 11/15/98 300 305
North Jersey District, Water Supply,
Wanaque South Project
(RB) (MBIA)
5.400%, 07/01/02 300 316
5.500%, 07/01/03 200 213
Ocean City (GO)
6.750%, 07/13/99 500 521
8.700%, 05/15/00 250 276
Ocean County (GO)
7.000%, 08/15/00 100 107
4.600%, 11/01/03 500 509
5.800%, 09/01/10 500 532
Ocean Township (GO) (MBIA)
5.400%, 06/01/15 250 256
Parsippany Troy Hills Township (GO)
4.500%, 02/01/01 800 812
4.600%, 02/01/02 100 102
4.700%, 12/01/03 500 513
4.700%, 12/01/04 400 409
Parsippany Troy Hills Township
(GO) (MBIA)
5.000%, 12/01/15 500 499
Passaic County, Board of
Education (GO)
9.400%, 09/01/02 150 183
Passaic County, Cash Flow
Management Project (GO)
6.400%, 11/15/01 300 323
Passaic County (GO)
4.700%, 09/01/03 250 257
Passaic County (GO) (FGIC)
4.750%, 09/01/04 500 513
5.550%, 04/01/09 250 264
5.125%, 09/01/13 500 506
Passaic County (GO) (MBIA)
4.350%, 05/01/03 200 201
4.450%, 05/01/04 200 201
Paterson (GO)
6.350%, 02/15/03 235 256
Paterson, School Board (GO)
7.400%, 08/01/00 250 271
================================================================================
30
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DECEMBER 31, 1997
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Pequannock-Lincoln Park, Sewer
Authority (RB) (MBIA)
4.400%, 12/01/02 $ 500 $ 508
Perth Amboy (GO) (FSA)
6.200%, 09/01/00 300 316
6.400%, 09/01/02 300 329
Point Pleasant (GO) (MBIA)
5.450%, 12/01/00 200 207
Port Authority of New York &
New Jersey (RB)
5.300%, 08/01/03 300 314
Princeton (GO)
4.400%, 09/01/01 300 304
Rahway (GO)
9.300%, 02/01/01 150 172
Rahway Valley, Sewer Authority (RB)
6.200%, 04/01/01 210 211
Roselle (GO) (MBIA)
4.750%, 10/15/04 700 720
Roxbury (COP)
5.000%, 10/15/00 250 255
Rutgers State University,
Series A (RB)
4.375%, 05/01/01 500 507
Rutgers State University,
Series S (RB)
5.000%, 05/01/04 500 522
Rutgers State University,
Pre-Refunded @ 102 (RB) (A)
7.100%, 05/01/98 200 206
Rutgers University, Series U (RB)
5.000%, 05/01/14 500 503
Sayreville (GO) (MBIA)
10.125%, 12/01/00 250 290
Secaucus, Municipal Utility Authority,
Sewer Project, Series A (RB)
5.650%, 12/01/04 200 218
5.750%, 12/01/05 385 424
Somerset County (GO)
4.450%, 12/01/01 170 173
5.000%, 10/01/02 200 208
4.450%, 12/01/02 500 508
4.350%, 12/01/04 600 596
Somerset Raritan Valley, Sewer
Improvement Authority,
Series H (RB)
5.150%, 07/01/01 300 312
South Brunswick Township (GO)
7.125%, 07/15/98 100 102
6.300%, 04/01/04 250 274
South Jersey, Port Authority,
Marine Terminal Project,
Series C (RB)
5.900%, 01/01/98 200 200
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
South Jersey, Transportation
Authority, Transportation
Systems, Series B (RB) (MBIA)
5.500%, 11/01/02 $ 250 $ 264
State, Building Authority (RB)
9.625%, 02/01/03 230 275
4.400%, 06/15/03 500 506
4.500%, 06/15/04 500 505
4.700%, 06/15/06 250 255
5.000%, 06/15/11 300 305
State, Casino Reinvestment
Development Authority (RB) (FSA)
5.000%, 10/01/04 1,000 1,035
5.250%, 10/01/09 1,000 1,036
5.250%, 10/01/13 500 506
5.250%, 10/01/14 1,000 1,007
State, Economic Development
Authority
5.600%, 10/01/12 500 501
5.700%, 10/01/17 1,000 1,006
State, Economic Development
Authority (RB)
4.900%, 08/15/04 200 209
7.400%, 12/01/09 200 203
State, Economic Development
Authority, Health Village 1996
Project (RB)
6.000%, 05/01/09 200 211
State, Economic Development
Authority, Saint Barnabas Project,
Series A (RB) (MBIA)
4.875%, 07/01/05 500 516
State, Economic Development
Authority, Series A (RB) (MBIA)
5.125%, 07/01/00 300 308
5.400%, 07/01/02 300 315
State, Economic Development
Authority, Series J (RB)
7.100%, 12/01/11 405 443
State, Economic Development
Authority, YWCA of New Jersey (RB)
7.750%, 05/01/09 200 205
State, Educational Facilities Authority,
Drew University Issue, Series B
Pre-Refunded @ 102 (RB) (A)
7.450%, 02/01/98 485 496
State, Education Facilities Authority,
Drew University Issue, Series B (RB)
5.750%, 07/01/02 360 382
State, Education Facilities Authority,
Glassboro State College (RB)
6.750%, 07/01/09 300 301
================================================================================
31
<PAGE>
================================================================================
Statement of Net Assets
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State, Educational Facilities
Authority, Medicine and
Dentistry, Series B (RB) (AMBAC)
5.000%, 12/01/07 $ 250 $ 261
State, Education Facilities
Authority, Rowan College
(RB) (MBIA)
5.050%, 07/01/03 300 312
State, Educational Facilities
Authority, Rowan College,
Series C (RB) (MBIA)
5.250%, 07/01/05 300 317
State, Educational Facilities
Authority, Series A (RB) (AMBAC)
5.125%, 09/01/06 300 316
State, Educational Facilities Authority,
Stockton State College,
Series B (RB) (AMBAC)
6.200%, 07/01/04 300 330
State, Equipment Series A (COP)
6.000%, 10/01/00 300 314
State (GO)
5.100%, 02/15/00 1,200 1,229
5.300%, 02/15/02 850 889
7.000%, 04/01/02 250 273
6.400%, 09/15/02 250 270
5.400%, 02/15/03 300 317
State, Health Care Facilities
Authority, Atlantic City
Medical Center (RB) (AMBAC)
5.000%, 07/01/02 300 311
State, Health Care Facilities
Authority, Chilton Memorial
Hospital (RB)
6.550%, 07/01/03 300 326
State, Health Care Facilities
Authority, Hackensack Medical
Center (RB) (MBIA)
5.100%, 07/01/03 500 522
State, Health Care Facilities
Authority, JFK Health Systems
(RB) (FGIC)
4.600%, 07/01/05 250 253
State, Health Care Facilities
Authority, Mountain Side
Hospital (RB) (FGIC)
6.000%, 07/01/00 300 314
State, Health Care Facilities
Authority, Shore Memorial
Healthcare Systems (RB) (FGIC)
4.800%, 07/01/03 200 206
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State, Health Care Facilities
Financing Authority, Atlantic
County Medical Center,
Series A (RB)
8.375%, 08/01/00 $1,000 $1,022
State, Health Care Facilities
Financing Authority,
Cathedral Health, Series A (RB)
6.650%, 02/15/98 330 331
State, Health Care Facilities
Financing Authority,
Pre-Refunded @ 102 (RB) (A)
6.800%, 02/01/01 425 466
State, Health Care Facilities
Financing Authority (RB)
6.800%, 08/01/19 3,380 3,642
State, Health Care Facilities
Memorial, Health Alliance,
Series A (RB) (FGIC)
6.600%, 07/01/99 145 151
State, Health Care Facilities,
St. Peters Medical Center,
Series F (RB) (MBIA)
5.000%, 07/01/13 100 100
State, Health Care Facilities,
Shore Memorial Hospital
(RB) (MBIA)
7.100%, 07/01/98 100 102
State, Health Care Facilities,
Society of Vy, Hospital
Revenue (RB) (MBIA)
6.500%, 07/01/98 250 253
State, Higher Education Assistance
Authority, Series A (RB)
6.850%, 01/01/01 125 132
6.900%, 01/01/02 560 601
5.800%, 01/01/03 260 271
5.950%, 07/01/05 760 802
5.550%, 07/01/06 465 488
5.800%, 07/01/08 365 384
5.900%, 01/01/09 585 615
5.900%, 07/01/09 370 389
State, Highway Authority,
Garden State Parkway (RB)
5.300%, 01/01/99 250 254
6.750%, 01/01/99 100 102
6.600%, 01/01/11 975 1,105
State, Hillcrest Health Project
(RB) (AMBAC)
4.600%, 01/01/02 200 203
5.000%, 01/01/07 300 311
================================================================================
32
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DECEMBER 31, 1997
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State, Housing and Manufacturing
Agency, Series A (RB) (MBIA)
7.100%, 10/01/98 $ 100 $ 102
6.400%, 05/01/02 520 554
State, Housing and Mortgage
Authority (RB)
6.300%, 05/01/02 470 501
State, Housing and Mortgage
Finance Agency, Home Buyer,
Series N (RB) (MBIA)
4.950%, 04/01/04 110 114
5.200%, 04/01/06 500 535
5.800%, 10/01/20 910 936
State, Housing and Mortgage
Finance Agency, Home Mortgage,
Series A (RB) (MBIA)
7.200%, 10/01/99 300 310
State, Housing & Mortgage
Finance Agency (RB) (AMBAC)
5.300%, 05/01/06 325 343
State, Housing & Mortgage
Finance Agency, Section 8 (RB)
6.000%, 11/01/02 760 805
State, Housing Finance
Authority (RB)
5.100%, 11/01/00 500 502
State, Montclair State University,
Series C (RB) (AMBAC)
5.375%, 07/01/08 1,285 1,373
State, New York and New Jersey
Port Authority (RB)
6.800%, 07/15/08 250 268
State, Raritan Overpass Project (RB)
4.300%, 08/01/01 1,000 1,014
State, Series A (COP)
6.100%, 10/01/01 1,165 1,242
State, Series D (GO)
5.625%, 02/15/05 150 162
State, Series E (GO)
5.000%, 07/15/04 100 104
State, South Orange & Maplewood
School District (GO)
6.125%, 11/01/01 150 161
State, Sports & Exposition
Authority, Convention
Center (RB) (MBIA)
5.900%, 07/01/03 300 328
State, Sports & Exposition
State Guaranteed (RB)
6.000%, 01/01/98 100 100
8.300%, 01/01/03 380 449
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State, Sports & Exposition Authority,
Series A (RB)
5.000%, 09/01/06 $ 515 $ 532
State, Sports & Exposition Authority,
Convention Center Luxury Tax,
Series A (RB) (MBIA)
5.600%, 07/01/01 175 183
State, Stateon Willingboro
Township (GO) (MBIA)
6.300%, 07/01/99 400 414
State, Transportation
Authority (RB) (MBIA)
5.000%, 06/15/15 1,000 995
State, Transportation Authority,
Series A (RB)
4.625%, 06/15/02 300 305
State, Transportation Authority,
Series A (RB) (FSA)
5.300%, 12/15/01 200 209
State, Transportation Authority,
Series A (RB) (MBIA)
4.500%, 12/15/02 450 456
5.500%, 06/15/11 750 791
State, Transportation Authority,
Series B (RB) (MBIA)
5.200%, 06/15/06 1,850 1,966
State, Transportation System,
Series A (RB) (AMBAC)
5.200%, 12/15/00 200 206
State, Transportation Trust Authority,
Transportation System, Series A (RB)
5.600%, 06/15/98 200 202
4.600%, 06/15/01 500 509
State, Transportation Trust Authority,
Transportation System, Series A
(RB) (MBIA)
4.625%, 06/15/02 500 509
5.500%, 06/15/13 500 522
State, Turnpike Authority (RB)
6.400%, 01/01/02 300 322
10.375%, 01/01/03 555 649
State, Turnpike Authority,
Series A (RB) (AMBAC)
5.900%, 01/01/04 500 530
6.400%, 01/01/07 1,485 1,593
State, University Medicine and
Dentistry, Series E (RB)
6.200%, 12/01/03 500 545
State, Warren County, Pollution
Control Finance Authority
(RB) (MBIA)
6.550%, 12/01/06 300 333
================================================================================
33
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State, Washington Township,
Board of Education (GO) (MBIA)
5.000%, 02/01/03 $ 500 $ 523
State, Wastewater Treatment
Authority (RB) (AMBAC)
4.250%, 03/01/00 500 503
4.400%, 03/01/04 200 202
State, Wastewater Treatment
Trust (RB)
6.400%, 06/15/98 250 253
6.600%, 06/15/00 250 264
6.875%, 06/15/04 300 322
6.000%, 07/01/10 965 1,022
6.400%, 07/01/06 2,215 2,403
State, Wastewater Treatment Trust,
Series A (RB)
5.000%, 09/01/06 450 469
State, Wastewater Treatment
Trust (RB) (AMBAC)
4.600%, 03/01/07 450 453
State, West New York Municipal
Utility (RB) (FGIC) (B)
8.890%, 12/15/02 300 244
State, Westfield School District (GO)
6.650%, 08/01/98 400 406
Stony Brook, Sewer Authority (RB)
4.500%, 12/01/00 500 508
Union County, Environmental
Improvement Authority (RB)
4.900%, 04/01/02 350 361
5.150%, 04/01/05 500 523
Union County (GO)
4.400%, 09/01/01 500 508
4.400%, 10/01/04 500 504
4.400%, 10/01/05 500 503
5.750%, 02/01/05 100 107
Union County, Improvement
Authority Revenue, County Granted
Capital Equipment Lease (RB)
4.375%, 11/01/02 200 202
Union County, Improvement
Authority (RB)
4.350%, 03/01/01 125 127
4.700%, 11/01/05 250 258
5.050%, 03/01/08 125 131
Vineland, Additional State
School Building Aid (GO)
8.500%, 05/01/01 100 113
Wanaque Valley, Sewer Authority,
Series B (RB) (AMBAC)
5.100%, 09/01/03 300 313
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Warren County, Municipal
Utility Authority, Wastewater
Treatment Project (RB)
5.050%, 12/01/04 $ 225 $ 231
Warren County, Pollution Control
Finance Authority, Resource
Recovery Project (RB) (MBIA)
6.150%, 12/01/02 210 227
Warren County, Pollution Control
Finance Authority, Series B
(RB) (MBIA)
5.700%, 12/01/03 300 325
Warren Hills, Regional School
District Authority, Pre-Refunded
@ 100 (COP) (A)
7.100%, 06/15/99 230 240
Washington Township, Board of
Education Authority (MBIA)
7.500%, 09/01/00 500 544
Washington Township, Fire
District Authority (GO) (FGIC)
4.700%, 01/01/06 300 309
Washington Township (GO) (MBIA)
5.000%, 02/01/06 250 263
Wayne Township (GO)
5.450%, 10/01/04 250 259
West Morris, Regional High
School District Authority (COP)
7.450%, 03/15/00 195 200
West Windsor Township (GO)
6.000%, 10/15/05 200 210
Woodbridge Township,
Pre-Refunded @ 101 (RB) (A)
6.800%, 08/01/00 250 269
Woodbridge Township,
Series A (GO)
4.650%, 09/15/05 100 101
Woodbridge Township,
Series C (GO)
4.650%, 09/15/05 100 101
Woodbridge Township, Sewer
Utility, Series B (GO)
5.000%, 09/15/10 250 252
Woodbridge Township, Sewer
Utility Authority, Series B (GO)
4.250%, 09/15/01 250 252
--------
135,017
--------
================================================================================
34
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DECEMBER 31, 1997
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
NEW MEXICO--0.3%
State, Educational Assistance
Bonds, Series A (RB) (AMBAC)
6.700%, 04/01/02 $ 200 $ 212
State, Mortgage Finance
Authority (RB)
7.250%, 09/01/22 175 187
--------
399
--------
NORTH DAKOTA--0.1%
State, Housing Finance Agency (RB)
6.000%, 07/01/18 190 196
--------
OHIO--0.1%
State, Housing Finance Agency,
Single Family Mortgage (RB)
6.600%, 09/01/01 155 164
--------
OKLAHOMA--0.0%
State, Housing Finance Agency,
Single Family, Class A (RB)
7.997%, 08/01/18 60 65
--------
PUERTO RICO--3.7%
Puerto Rico, Commonwealth
Aqueduct and Sewer Authority
(RB) (FSA)
9.000%, 07/01/09 505 645
Puerto Rico, Electric Power
Authority (RB) (MBIA)
4.900%, 07/01/05 1,000 1,036
Puerto Rico, Electric Power
Authority, Series V (RB)
5.600%, 07/01/03 80 86
Puerto Rico, Electric Power
Authority, Series Y (RB) (MBIA)
6.500%, 07/01/06 500 578
Puerto Rico, Housing Banking
and Finance Agency, Single
Family Mortgage Project (RB)
7.100%, 12/01/99 220 224
Puerto Rico, Housing Revenue (RB)
7.100%, 06/01/99 65 66
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Puerto Rico, Public Buildings
Authority, Series A (RB) (AMBAC)
4.500%, 07/01/01 $ 200 $ 204
Puerto Rico, Telephone Authority,
Series M (RB)
5.000%, 01/01/02 500 517
5.400%, 01/01/08 260 272
Puerto Rico, Telephone Authority,
Series M (RB) (AMBAC)
5.050%, 01/01/04 590 617
Puerto Rico, Telephone Authority,
Series M (RB) (MBIA)
4.400%, 01/01/99 300 301
Puerto Rico, Telephone Authority,
Series N (RB)
5.100%, 01/01/04 395 414
Puerto Rico, Tourist and
Environmental (RB)
5.250%, 08/01/06 200 211
University of Puerto Rico,
University Revenue Refunding,
Series K, Pre-Refunded
@ 100 (RB) (A)
6.500%, 06/01/98 300 303
--------
5,474
--------
RHODE ISLAND--0.4%
State, Housing and Mortgage
Finance, Homeownership
Opportunity Project (RB)
7.250%, 10/01/21 115 122
6.800%, 10/01/23 430 446
--------
568
--------
TEXAS--0.7%
Abilene, Higher Education
Authority, Series B (RB)
5.600%, 07/01/04 500 526
Brazos, Higher Education
Authority, Series C-1 (RB)
5.700%, 06/01/04 450 475
--------
1,001
--------
VIRGIN ISLANDS--0.4%
Virgin Islands, Public Finance
Authority, Series A,
Pre-Refunded @ 101 (RB) (A)
7.300%, 10/01/00 500 548
--------
================================================================================
35
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
WISCONSIN--0.6%
State, Housing and Economic
Development Authority, Home
Ownership Project (RB)
5.850%, 03/01/18 $160 $ 170
6.500%, 09/01/22 690 726
--------
896
--------
Total Municipal Bonds
(Cost $142,116) 147,795
--------
Total Investments--98.8%
(Cost $142,116) 147,795
--------
OTHER ASSETS AND LIABILITIES, NET--1.2% 1,858
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 12,001,567 outstanding shares of
beneficial interest 125,851
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 1,713,216 outstanding shares of
beneficial interest 18,355
Accumulated net realized loss on investments (232)
Net unrealized appreciation on investments ` 5,679
--------
Total Net Assets--100.0% $149,653
========
Price Per Share -- Class I $10.92
========
Net Asset Value and Redemption Price
Per Share -- Class A $10.89
========
Maximum Offering Price Per Share --
Class A ($10.89 / 97%) $11.23
========
(A) PRE-REFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE.
(B) ZERO COUPON BOND -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
REPRESENTS THE SECURITY'S EFFECTIVE YIELD AT PURCHASE.
AMT -- ALTERNATIVE MINIMUM TAX
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 CORPORATION
FGIC -- FEDERAL GUARANTY INSURANCE COMPANY
FSA -- FINANCIAL SECURITY ASSURANCE
MBIA -- MUNICIPAL BOND INVESTORS
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--51.5%
U.S. Treasury Notes
6.750%, 06/30/99 $1,000 $ 1,016
7.500%, 10/31/99 500 515
7.750%, 11/30/99 700 726
7.750%, 12/31/99 500 519
7.125%, 02/29/00 550 566
6.875%, 03/31/00 1,300 1,332
5.875%, 06/30/00 500 502
5.750%, 10/31/00 1,500 1,501
5.625%, 11/30/00 1,500 1,497
6.250%, 04/30/01 700 711
6.625%, 06/30/01 1,000 1,027
6.500%, 08/31/01 2,000 2,049
6.125%, 12/31/01 1,000 1,013
6.250%, 01/31/02 1,000 1,018
6.250%, 02/28/02 1,000 1,018
6.250%, 06/30/02 2,000 2,039
--------
Total U.S. Treasury Obligations
(Cost $16,691) 17,049
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS--44.2%
Federal Home Loan Bank
6.150%, 10/23/00 1,000 1,000
7.000%, 12/04/02 1,000 1,016
7.280%, 12/23/02 1,000 1,006
7.385%, 09/11/03 1,000 1,007
7.190%, 09/10/07 800 800
Federal Home Loan
Mortgage Corporation
6.130%, 08/19/99 500 502
7.195%, 07/30/01 1,000 1,008
7.055%, 08/02/01 1,000 1,018
7.125%, 09/24/03 1,000 1,005
7.100%, 02/20/04 1,000 1,001
Federal National
Mortgage Association
6.900%, 01/22/02 500 504
6.250%, 01/13/03 1,000 997
6.720%, 02/25/03 1,000 1,000
7.370%, 05/14/03 750 775
7.000%, 08/19/04 1,000 1,003
7.600%, 05/24/06 1,000 1,020
--------
Total U.S. Government Agency Obligations
(Cost $14,547) 14,662
--------
CASH EQUIVALENTS--3.5%
SEI Liquid Asset Trust--
Government Portfolio 893 893
SEI Liquid Asset Trust--
Treasury Portfolio 252 252
--------
Total Cash Equivalents
(Cost $1,145) 1,145
--------
================================================================================
36
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DECEMBER 31, 1997
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Total Investments--99.2%
(Cost $32,383) $ 32,856
--------
OTHER ASSETS AND LIABILITIES, NET--0.8% 280
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 3,090,850 outstanding shares of
beneficial interest 32,540
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 136,114 outstanding shares of
beneficial interest 1,636
Undistributed net investment income 5
Accumulated net realized loss on investments (1,518)
Net unrealized appreciation on investments 473
--------
Total Net Assets--100.0% $33,136
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $10.27
========
Net Asset Value and Redemption Price
Per Share -- Class A $10.26
========
Maximum Offering Price Per Share --
Class A ($10.26 / 96%) $10.69
========
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------
MUNICIPAL BONDS--98.5%
PENNSYLVANIA--96.8%
Allegheny County, Clarion Valley, School
District Revenue (GO) (FGIC)
5.200%, 03/15/17 $ 250 251
Allegheny County, Hospital
Development Authority (RB) (MBIA)
5.600%, 04/01/13 500 528
Allegheny County, Hospital
Development Authority,
Pittsburgh Mercy Health System
(RB) (AMBAC)
5.500%, 08/15/10 425 448
Allegheny County, International
Airport (RB) (MBIA)
5.000%, 01/01/17 750 741
Allegheny County, Series C-44
(GO) (FGIC)
5.200%, 06/01/08 150 156
Altoona, City Authority, Water
Revenue (RB) (FGIC)
5.050%, 11/01/11 500 507
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Altoona, Penn Area School
District (GO) (FGIC)
5.350%, 01/15/04 $ 200 $ 211
Annville, Cleona School District
(GO) (FGIC)
5.600%, 03/01/02 365 377
Beaver County (GO) (MBIA)
5.150%, 10/01/17 1,000 1,000
Beaver County, Series A
(GO) (FGIC)
4.750%, 10/01/03 100 103
Beaver County, Series A
(GO) (MBIA)
5.600%, 10/01/11 500 541
Bethlehem, Penn School
District (GO) (FGIC)
4.850%, 09/01/10 250 252
Bucks County, Water and Sewer
Authority (RB) (FGIC)
5.375%, 12/01/13 1,000 1,014
Butler County (GO) (FGIC)
6.000%, 07/15/12 300 315
Chester County (GO)
5.500%, 11/15/10 175 184
Chester County, Health and
Education Facilities Authority,
Main Line Health Systems,
Series A (RB)
5.400%, 05/15/09 500 517
Chester County, Upland
Authority (RB)
6.375%, 09/01/21 505 549
Conestoga Valley, School
District (GO) (FGIC)
7.000%, 05/01/06 250 272
Dauphin County, School
District (GO) (A)
5.750%, 06/02/98 450 481
Delaware Valley, School
District (GO) (FSA)
5.000%, 11/15/12 500 504
Doylestown, Hospital Authority
(RB) (AMBAC)
5.000%, 07/01/23 1,000 966
Erie County (GO) (FGIC)
5.250%, 09/01/12 95 96
Fairview, Penn School
District (GO) (FGIC)
5.050%, 02/15/11 260 263
Fort Cherry, School District
(GO) (AMBAC)
5.200%, 10/01/12 1,000 1,009
================================================================================
37
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Harrisburg (RB) (MBIA)
5.600%, 09/15/11 $ 575 $ 604
Hatboro-Horsham, School
District (GO) (FGIC)
4.900%, 09/15/10 500 505
Lackawanna County, Series A
(GO) (AMBAC)
5.300%, 09/15/13 150 154
Lancaster County, Cocalico School
District (GO) (MBIA)
6.000%, 02/15/15 200 214
Lancaster County, Higher Education
Authority, Franklin & Marshall
College (RB) (MBIA)
5.650%, 04/15/10 210 220
Lancaster County, Hospital
Authority, Lancaster General
Hospital Project (RB) (AMBAC)
6.300%, 07/01/05 585 629
Lancaster County, Hospital
Authority, Masonic Homes
Project (RB)
4.900%, 11/15/03 115 118
Lancaster County, Parking
Authority (RB)
5.750%, 01/01/12 275 298
Langhorne Manor Borough,
Higher Education and Health
Authority, Wood Services (RB)
6.400%, 11/15/06 150 167
Lycoming County, Hospital
Authority (RB)
5.375%, 11/15/10 500 521
Manheim Township, Central School
District (GO) (FGIC)
5.300%, 05/15/03 300 316
Moon Township, Municipal
Authority, Water and Sewer (RB)
3.875%, 12/01/02 98 95
North Allegheny, School District,
Series A (GO) (AMBAC)
6.000%, 11/01/03 250 269
Northeastern Pennsylvania, Hospital
and Educational Revenue
(RB) (AMBAC)
5.250%, 01/01/26 1,000 1,000
Philadelphia, Authority for
Industrial Development,
National Board of Medical
Examiners Project (RB)
6.500%, 05/01/05 325 352
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Philadelphia, Authority for
Industrial Development (RB)
5.500%, 07/01/10 $ 250 $ 262
5.250%, 07/01/17 1,250 1,253
Philadelphia, Gas Works
Authority, Series 14 (RB) (FSA)
6.375%, 07/01/14 750 830
Philadelphia (GO) (MBIA)
5.000%, 05/15/07 500 519
Philadelphia, Hospital and
Higher Education Facilities
Authority, Children's Hospital
Project, Series A (RB)
5.375%, 02/15/14 500 509
Philadelphia, Hospital Authority,
Saint Agnes Medical Center Project,
Series A (RB) (MBIA)
5.000%, 07/01/05 865 867
Philadelphia, Industrial Development,
Girard Estates (RB)
5.000%, 05/15/10 150 152
Pittsburgh, Urban Redevelopment
Authority (RB)
5.750%, 10/01/14 100 105
Pittsburgh, Water and Sewer Authority,
Series A (RB) (FGIC)
4.600%, 09/01/03 270 274
Pottsville, Hospital Authority
Revenue (RB)
5.000%, 08/15/12 1,250 1,248
Reading (GO) (AMBAC)
6.000%, 11/15/02 195 196
Schuylkill County, Municipal
Authority, Water Revenue
Bond (RB)
3.900%, 07/01/03 205 201
Scranton-Lackawanna, Health and
Welfare Authority (RB)
6.625%, 04/15/07 70 71
Southeastern Pennsylvania
Transportation Authority (RB)
6.100%, 06/01/02 500 538
Southmoreland, School District
(GO) (AMBAC)
5.200%, 10/01/12 300 305
State, Convention Center Authority,
(RB) (MBIA)
6.750%, 09/01/19 1,000 1,140
State, Convention Center Authority,
Series A (RB) (FSA)
6.250%, 09/01/04 550 610
================================================================================
38
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State, Delaware River Joint
Toll Bridge (RB) (FGIC)
6.000%, 07/01/18 $ 625 $ 651
State, First Series (GO)
6.375%, 09/15/12 300 323
State, Higher Education Authority,
College and University Revenue
(RB) (MBIA)
5.000%, 11/01/07 500 516
State, Higher Education Authority,
Series I (RB) (AMBAC)
5.000%, 06/15/03 100 103
State, Higher Education Authority,
Student Loan, Series A (RB) (FGIC)
6.800%, 12/01/00 995 1,065
State, Higher Education Authority,
Thomas Jefferson University,
Series A (RB)
6.625%, 08/15/09 600 665
State, Higher Education Authority,
University of Pennsylvania,
Series A (RB)
5.600%, 01/01/10 150 159
State, Higher Education Facilities,
Series G (RB) (AMBAC)
5.875%, 12/15/07 400 426
State, Hospital and Education
Authority (RB) (FSA)
5.625%, 10/01/18 500 517
State, Housing Finance Authority
5.600%, 10/01/09 300 321
State, Housing Finance Authority (RB)
5.550%, 04/01/07 100 105
5.450%, 10/01/14 500 507
State, Housing Finance
Authority, Series 49 (RB)
5.600%, 10/01/05 75 79
State, Intergovernmental Co-op
Authority (RB) (FGIC)
4.900%, 06/15/03 800 824
State, Public School Building
Authority, Hazleton Area
School District Project
(RB) (FGIC)
6.100%, 03/01/02 500 528
State, School Building Authority,
Delaware County Community
College (RB) (MBIA)
5.200%, 04/01/08 250 258
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
State, Second Series (GO)
5.500%, 07/01/01 $ 150 $ 157
5.250%, 06/15/09 1,000 1,039
5.000%, 10/15/15 1,250 1,244
State, Series A (COP) (AMBAC)
5.200%, 07/01/05 500 519
State, Third Series (GO)
6.000%, 11/15/02 1,000 1,081
State, Turnpike Commission
(RB) (MBIA)
5.500%, 12/01/17 1,000 1,019
State, Turnpike Commission,
Series L (AMBAC)
6.250%, 06/01/11 500 539
State, Turnpike Commission,
Series P (RB) (AMBAC)
5.900%, 12/01/08 1,000 1,080
Washington, School District,
Series 1993-A (GO) (FGIC)
5.700%, 09/01/06 900 929
West Chester, Area School
District (GO)
5.400%, 01/15/08 500 516
Wilkes Barre, School
District (GO) (FGIC)
5.050%, 04/01/11 185 188
--------
41,185
--------
GUAM--1.7%
Guam, Power Authority
(RB) (AMBAC)
6.000%, 10/01/09 650 714
--------
Total Municipal Bonds
(Cost $40,419) 41,899
--------
CASH EQUIVALENT--0.5%
PNC Tax-Free Money Market Fund 215 215
--------
Total Cash Equivalent
(Cost $215) 215
--------
Total Investments--99.0%
(Cost $40,634) 42,114
--------
OTHER ASSETS AND LIABILITIES, NET--1.0% 424
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 4,047,568 outstanding shares of
beneficial interest 40,600
================================================================================
39
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
PENNSYLVANIA MUNICIPAL SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------
FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 38,902 outstanding shares of
beneficial interest $ 397
Undistributed net investment income 1
Accumulated net realized gain on investments 60
Net unrealized appreciation on investments 1,480
--------
Total Net Assets--100.0% $42,538
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $10.41
========
Net Asset Value and Redemption Price
Per Share --Class A $10.38
========
Maximum Offering Price Per Share --
Class A ($10.38 / 97%) $10.70
========
(A) FLOATING RATE INSTRUMENT WITH DEMAND FEATURES. THE RATE REFLECTED ON THE
STATEMENT OF NET ASSETS IS THE RATE IN EFFECT ON DECEMBER 31, 1997. THE DATE
SHOWN IS THE LONGER OF THE RESET DATE OR THE DEMAND DATE.
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 CORPORATION
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FSA -- FINANCIAL SECURITY ASSURANCE
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
GNMA FUND
- --------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED BONDS--93.5%
Government National
Mortgage Association
8.000%, 05/15/23 $ 321 333
7.000%, 06/15/23 110 112
6.000%, 11/15/23 733 709
6.500%, 11/15/23 715 708
6.000%, 12/15/23 1,225 1,183
6.500%, 12/15/23 385 383
7.000%, 12/15/23 745 751
6.000%, 01/20/24 799 769
8.000%, 08/15/24 389 404
8.000%, 09/15/24 1,092 1,134
7.500%, 08/15/25 290 298
--------
Total U.S. Agency Mortgage-Backed Bonds
(Cost $6,691) 6,784
--------
- --------------------------------------------------------------
FACE AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
- --------------------------------------------------------------
CASH EQUIVALENTS--6.1%
SEI Liquid Asset Trust--
Government Portfolio $250 $ 250
SEI Liquid Asset Trust--
Treasury Portfolio 192 192
--------
Total Cash Equivalents
(Cost $442) 442
--------
Total Investments--99.6%
(Cost $7,132) 7,226
--------
OTHER ASSETS AND LIABILITIES, NET--0.4% 32
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 623,709 outstanding shares of
beneficial interest 6,756
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 107,723 outstanding shares of
beneficial interest 1,231
Accumulated net realized loss on investments (823)
Net unrealized appreciation on investments 94
--------
Total Net Assets--100.0% $7,258
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $9.93
========
Net Asset Value and Redemption Price
Per Share -- Class A $9.90
========
Maximum Offering Price Per Share --
Class A ($9.90 / 97%) $10.21
========
EQUITY GROWTH FUND
- --------------------------------------------------------------
COMMON STOCKS--92.9%
AIR TRANSPORTATION--0.0%
Federal Express* 954 58
--------
BANKS--2.6%
Northern Trust 66,600 4,645
--------
BEAUTY PRODUCTS--1.2%
Procter & Gamble 26,400 2,107
--------
COMMUNICATIONS EQUIPMENT--6.1%
Ciena* 57,900 3,539
Nokia Series A (ADR) 47,200 3,304
Qualcomm* 82,100 4,146
--------
10,989
--------
================================================================================
40
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
COMPUTERS & SERVICES--13.7%
America Online* 39,100 $ 3,487
Computer Associates International 73,350 3,878
Dell Computer* 30,600 2,570
Electronic Data Systems 109,987 4,833
EMC* 160,400 4,401
Hewlett Packard 24,900 1,556
Microsoft* 21,100 2,727
Sungard Data Systems* 31,800 986
--------
24,438
--------
DRUGS--7.7%
Bristol-Myers Squibb 30,100 2,848
Merck 20,100 2,136
Pfizer 67,000 4,996
Schering Plough 59,700 3,709
--------
13,689
--------
FINANCIAL SERVICES--8.0%
Freddie Mac 108,700 4,559
Franklin Resources 47,400 4,121
Green Tree Financial 89,300 2,339
MBNA 121,200 3,310
--------
14,329
--------
FOOD, BEVERAGE & TOBACCO--0.6%
Coca Cola 17,500 1,166
--------
HOUSEHOLD PRODUCTS--2.7%
Illinois Tool Works 80,000 4,810
--------
INSURANCE--6.7%
American International Group 28,000 3,045
Conseco 39,360 1,788
MGIC Investment 56,800 3,777
Travelers 63,999 3,448
--------
12,058
--------
LEISURE PRODUCTS--2.4%
Mattel 112,900 4,206
--------
MACHINERY--1.6%
General Electric 38,600 2,832
--------
MARINE TRANSPORTATION--2.3%
Carnival, Class A 74,200 4,109
--------
MEDICAL PRODUCTS & SERVICES--2.3%
Healthsouth Rehabilitation* 146,000 4,052
--------
MISCELLANEOUS BUSINESS SERVICES--8.0%
3Com* 30,000 1,048
Cambridge Technology Partners* 81,600 3,397
Cendant 114,300 3,929
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
Cisco Systems* 89,850 $ 5,009
Oracle Systems* 39,625 884
--------
14,267
--------
MISCELLANEOUS CONSUMER SERVICES--1.5%
Accustaff* 114,700 2,638
--------
PETROLEUM & FUEL PRODUCTS--1.7%
Baker Hughes 23,800 1,038
Diamond Offshore Drilling 21,750 1,047
Global Marine* 41,500 1,017
--------
3,102
--------
PROFESSIONAL SERVICES--4.7%
Apollo Group, Class A* 72,000 3,402
Halliburton 20,850 1,083
Paychex 78,800 3,989
--------
8,474
--------
RETAIL--9.4%
Corporate Express * 233,100 3,001
CompUSA* 113,300 3,512
CVS 51,200 3,280
Gap 55,650 1,972
Pier 1 Imports 77,000 1,742
Starbucks* 83,400 3,201
--------
16,708
--------
SEMI-CONDUCTORS/INSTRUMENTS--4.0%
American Power Conversion* 138,500 3,272
Intel 29,400 2,065
Lattice Semi-conductor 36,600 1,734
--------
7,071
--------
SPECIALTY CONSTRUCTION--1.7%
Ericsson LM (ADR) 82,750 3,088
--------
TELEPHONES & TELECOMMUNICATION--1.5%
Cincinnati Bell 30,300 939
Worldcom* 56,030 1,695
--------
2,634
--------
WHOLESALE--2.5%
Gillette 22,900 2,300
Johnson & Johnson 32,300 2,128
--------
4,428
--------
Total Common Stocks
(Cost $147,996) 165,898
--------
PREFERRED STOCK--0.9%
Conseco Financial Trust 33,000 1,691
--------
Total Preferred Stock
(Cost $1,650) 1,691
--------
================================================================================
41
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
EQUITY GROWTH FUND (CONTINUED)
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
OPTION--0.4%
MCI Call Option 285 $ 677
--------
Total Option
(Cost $488) 677
--------
REGULATED INVESTMENT COMPANY--5.4%
Vontobel Europacific Fund 530,461 9,644
--------
Total Regulated Investment Company
(Cost $8,558) 9,644
--------
CASH EQUIVALENTS--1.0%
Aim Short-Term Prime Obligation 1,741 1,741
--------
Total Cash Equivalents
(Cost $1,741) 1,741
--------
Total Investments--100.6%
(Cost $160,436) 179,651
--------
OTHER ASSETS AND LIABILITIES, NET--(0.6%) (1,061)
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 19,248,126 outstanding shares of
beneficial interest 153,316
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 46,733 outstanding shares of
beneficial interest 483
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 38,870 outstanding shares of
beneficial interest 401
Accumulated net realized gain on investments 5,175
Net unrealized appreciation on investments 19,215
--------
Total Net Assets--100.0% $178,590
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $9.24
========
Net Asset Value and Redemption Price
Per Share -- Class A $9.25
========
Maximum Offering Price Per Share --
Class A ($9.25 / 94.5%) $9.79
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class B (1) $9.18
========
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE.
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
EQUITY VALUE FUND
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
COMMON STOCKS--97.2%
AIRCRAFT--1.5%
United Technologies 55,000 $ 4,005
--------
BANKS--7.4%
Bank of New York 90,000 5,203
Citicorp 35,000 4,425
J.P. Morgan 35,000 3,951
Norwest 150,000 5,794
--------
19,373
--------
CHEMICALS--3.1%
E.I. DuPont de Nemours 76,000 4,565
Praxair 80,000 3,600
--------
8,165
--------
COMMUNICATIONS EQUIPMENT--1.1%
Nokia, Series A (ADR) 42,000 2,940
--------
COMPUTERS & SERVICES--5.6%
Compaq Computer* 80,000 4,515
Hewlett Packard 80,000 5,000
Microsoft* 40,000 5,170
--------
14,685
--------
DRUGS--10.9%
Bristol-Myers Squibb 60,000 5,677
Glaxo Wellcome PLC (ADR) 110,000 5,266
Merck 55,000 5,844
Pfizer 80,000 5,965
SmithKline Beecham 110,000 5,658
--------
28,410
--------
ELECTRICAL & ELECTRONIC PRODUCTS--4.0%
Emerson Electric 80,000 4,515
General Electric 80,000 5,870
--------
10,385
--------
ELECTRICAL UTILITIES--1.6%
FPL Group 70,000 4,143
--------
FINANCIAL SERVICES--5.8%
American Express 60,000 5,355
Federal National Mortgage
Association 100,000 5,706
Textron 64,000 4,000
--------
15,061
--------
FOOD, BEVERAGE & TOBACCO--7.4%
Anheuser Busch 100,000 4,400
CPC International 50,000 5,400
PepsiCo 110,000 4,008
Sara Lee 100,000 5,631
--------
19,439
--------
================================================================================
42
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
GAS/NATURAL GAS--2.9%
Consolidated Natural Gas 70,000 $ 4,235
Enron 80,000 3,325
--------
7,560
--------
GLASS PRODUCTS--1.4%
Corning 100,000 3,712
--------
HOUSEHOLD PRODUCTS--3.8%
Colgate-Palmolive 70,000 5,145
Procter & Gamble 60,000 4,789
--------
9,934
--------
INSURANCE--3.4%
American International Group 50,000 5,437
CIGNA 20,000 3,461
--------
8,898
--------
LEISURE PRODUCTS--2.1%
Mattel 150,000 5,587
--------
MACHINERY--3.4%
Deere 85,000 4,957
Tenneco 100,000 3,950
--------
8,907
--------
MANUFACTURING--1.3%
Minnesota Mining &
Manufacturing 40,000 3,283
--------
MISCELLANEOUS BUSINESS SERVICES--0.8%
Electronic Data Systems 50,000 2,197
--------
PAPER & PAPER PRODUCTS--1.4%
Kimberly Clark 75,000 3,698
--------
PETROLEUM & FUEL PRODUCTS--1.2%
Union Pacific Resources Group 130,000 3,153
--------
PETROLEUM REFINING--7.3%
Amoco 45,000 3,831
Exxon 80,000 4,895
Mobil 70,000 5,053
Royal Dutch Petroleum (ADR) 100,000 5,419
--------
19,198
--------
PRINTING & PUBLISHING--4.7%
Gannett 100,000 6,181
Time Warner 100,000 6,200
--------
12,381
--------
RAILROADS--3.2%
Burlington Northern Santa Fe 45,000 4,182
Union Pacific 65,000 4,058
--------
8,240
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
RETAIL--2.4%
Limited 100,000 $ 2,550
Sears Roebuck 80,000 3,620
--------
6,170
--------
SEMI-CONDUCTORS/INSTRUMENTS--1.3%
Intel 50,000 3,513
--------
TELEPHONES & TELECOMMUNICATION--8.2%
Ameritech 60,000 4,830
BellSouth 80,000 4,505
Lucent Technologies 65,000 5,192
SBC Communications 70,000 5,128
Worldcom* 60,000 1,815
--------
21,470
--------
Total Common Stocks
(Cost $217,594) 254,507
--------
CASH EQUIVALENTS--2.8%
SEI Liquid Asset Trust--
Government Portfolio 4,920 4,920
SEI Liquid Asset Trust--
Treasury Portfolio 2,500 2,500
--------
Total Cash Equivalents
(Cost $7,420) 7,420
--------
Total Investments--100.0%
(Cost $225,014) 261,927
--------
OTHER ASSETS AND LIABILITIES, NET--(0.0%) (51)
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 18,841,002 outstanding shares of
beneficial interest 205,301
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 1,079,472 outstanding shares of
beneficial interest 13,316
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 394,174 outstanding shares of
beneficial interest 5,911
Overdistributed net investment income (404)
Accumulated net realized gain on investments 839
Net unrealized appreciation on investments 36,913
--------
Total Net Assets--100.0% $261,876
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $12.89
========
================================================================================
43
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
EQUITY VALUE FUND (CONTINUED)
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
Net Asset Value and Redemption Price
Per Share -- Class A $12.90
========
Maximum Offering Price Per Share --
Class A ($12.90 / 94.5%) $13.65
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class B (1) $12.87
========
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE.
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
EQUITY INCOME FUND
- --------------------------------------------------------------
COMMON STOCKS--85.4%
AIRCRAFT--0.9%
United Technologies 20,000 1,456
--------
AUTOMOTIVE--0.7%
Chrysler 30,000 1,056
--------
BANKS--9.5%
Bank of New York 70,000 4,047
Bankers Trust New York 20,000 2,249
Chase Manhattan Bank 21,000 2,299
First Union 25,000 1,281
J.P. Morgan 21,000 2,370
Norwest 66,000 2,549
--------
14,795
--------
BEAUTY PRODUCTS--1.0%
International Flavors & Fragrances 30,000 1,545
--------
CHEMICALS--3.0%
E.I. DuPont de Nemours 40,000 2,402
Imperial Chemical Industries PLC 35,000 2,273
--------
4,675
--------
DRUGS--10.7%
American Home Products 20,000 1,530
Bristol-Myers Squibb 36,000 3,406
Glaxo Wellcome PLC (ADR) 50,000 2,394
Merck 20,000 2,125
Pfizer 30,000 2,237
Pharmacia & Upjohn 55,000 2,014
SmithKline Beecham 60,000 3,086
--------
16,792
--------
ELECTRICAL & ELECTRONIC PRODUCTS--5.7%
Emerson Electric 44,000 2,483
General Electric 52,000 3,815
Thomas & Betts 57,000 2,693
--------
8,991
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
ELECTRICAL UTILITIES--0.7%
Southern 45,000 $ 1,164
--------
ENVIRONMENTAL SERVICES--1.0%
Browning-Ferris Industries 42,000 1,554
--------
FINANCIAL SERVICES--3.9%
Beneficial 30,000 2,494
Mid Ocean 25,000 1,356
Textron 35,000 2,187
--------
6,037
--------
FOOD, BEVERAGE & TOBACCO--2.6%
CPC International 20,000 2,160
Sara Lee 35,000 1,971
--------
4,131
--------
GAS/NATURAL GAS--6.4%
Consolidated Natural Gas 50,000 3,025
Enron 20,000 831
Sonat 50,000 2,288
Trans Canada Pipeline 75,000 1,678
Williams 80,000 2,270
--------
10,092
--------
GLASS PRODUCTS--2.3%
Corning 50,000 1,856
PPG Industries 30,000 1,714
--------
3,570
--------
HOUSEHOLD PRODUCTS--3.1%
Colgate-Palmolive 35,000 2,573
Hubbell Class B 47,000 2,318
--------
4,891
--------
INSURANCE--4.2%
Marsh & McLennan 30,000 2,237
St. Paul 30,000 2,462
TIG Holdings 55,000 1,825
--------
6,524
--------
MACHINERY--0.9%
Tenneco 35,000 1,383
--------
MARINE TRANSPORTATION--0.6%
Knightsbridge Tankers Limited 35,000 991
--------
MEDICAL PRODUCTS & SERVICES--1.3%
Baxter International 40,000 2,018
--------
PAPER & PAPER PRODUCTS--1.4%
Kimberly Clark 45,000 2,219
--------
================================================================================
44
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
PETROLEUM REFINING--8.8%
Atlantic Richfield 30,000 $ 2,404
British Petroleum (ADR) 33,000 2,630
Mobil 40,000 2,888
Royal Dutch Petroleum (ADR) 50,000 2,709
Texaco 40,000 2,175
Ultramar Diamond Shamrock 30,000 956
--------
13,762
--------
PRINTING & PUBLISHING--2.6%
Hollinger International 75,000 1,050
McGraw-Hill 40,000 2,960
--------
4,010
--------
RAILROADS--2.4%
Burlington Northern Santa Fe 15,000 1,394
Union Pacific 38,000 2,373
--------
3,767
--------
REAL ESTATE INVESTMENT TRUSTS--3.6%
Bedford Property Investors 50,000 1,094
First Real Estate Investment
Trust of New Jersey 5,000 128
Healthcare Realty Trust 30,000 868
Hospitality Properties Trust 30,000 986
Kilroy Realty 30,000 863
Liberty Property Trust 36,000 1,028
United Dominion Realty Trust 50,000 697
--------
5,664
--------
RETAIL--3.0%
J.C. Penney 35,000 2,111
Limited 100,000 2,550
--------
4,661
--------
TELEPHONES & TELECOMMUNICATION--5.1%
AT&T 25,000 1,531
Bell Atlantic 20,000 1,820
BellSouth 45,000 2,534
GTE 40,000 2,090
--------
7,975
--------
Total Common Stocks
(Cost $114,135) 133,723
--------
PREFERRED STOCKS--4.6%
Aetna 12,000 858
Airtouch Communications 24,000 1,496
Conseco Financial Trust 30,000 776
Mattel 50,000 800
MedPartners* 45,000 990
- --------------------------------------------------------------
SHARES/FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Sun 30,000 $ 1,076
SunAmerica 25,000 1,164
--------
Total Preferred Stocks
(Cost $6,045) 7,160
--------
CASH EQUIVALENTS--4.5%
SEI Liquid Asset Trust--
Treasury Portfolio $1,782 1,782
SEI Liquid Asset Trust--
Prime Obligation 5,297 5,297
--------
Total Cash Equivalents
(Cost $7,079) 7,079
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS--2.6%
Federal Home Loan Bank
6.750%, 06/30/03 1,000 1,002
Federal National Mortgage Association
3.266%, 01/05/98 1,000 1,000
5.740%, 06/09/98 2,000 2,000
--------
Total U.S. Government Agency Obligations
(Cost $3,999) 4,002
--------
CONVERTIBLE BONDS--2.4%
Hilton Hotels
5.000%, 05/15/06 200 220
Newell Financial
5.250%, 12/31/49 30 1,538
Parker Drilling Shares
5.500%, 08/01/04 400 431
PetSmart
6.750%, 11/01/04 500 518
U.S. Filter
4.500%, 12/15/01 600 616
USA Waste Services
4.000%, 02/01/02 400 445
--------
Total Convertible Bonds
(Cost $3,158) 3,768
--------
U.S. TREASURY OBLIGATION--0.3%
U.S. Treasury Note
5.625%, 10/31/99 500 499
--------
Total U.S. Treasury Obligation
(Cost $499) 499
--------
Total Investments--99.8%
(Cost $134,915) 156,231
--------
OTHER ASSETS AND LIABILITIES, NET--0.2% 285
--------
================================================================================
45
<PAGE>
Statement of Net Assets
EQUITY INCOME FUND (CONTINUED)
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 10,006,971 outstanding shares of
beneficial interest $110,203
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 1,261,765 outstanding shares of
beneficial interest 15,523
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 597,033 outstanding shares of
beneficial interest 8,862
Overdistribution of net investment income (368)
Accumulated net realized gain on investments 980
Net unrealized appreciation on investments 21,316
--------
Total Net Assets--100.0% $156,516
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $13.19
========
Net Asset Value and Redemption Price
Per Share -- Class A $13.22
========
Maximum Offering Price Per Share --
Class A ($13.22 / 94.5%) $13.99
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class B (1) $13.17
========
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE.
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
MID CAP FUND
- --------------------------------------------------------------
COMMON STOCKS--99.1%
APPAREL/TEXTILES--1.6%
Albany International 35,000 805
--------
AUTOMOTIVE--6.2%
Cooper* 37,500 1,533
Dial 27,500 572
Regal Beloit 35,500 1,049
--------
3,154
--------
BANKS--9.0%
First Bank of Puerto Rico 25,000 852
First Tennessee National 22,500 1,502
Sovereign Bancorp 10,000 207
Wilmington Trust 18,500 1,154
Zions Bancorp 20,000 907
--------
4,622
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
BUILDING & CONSTRUCTION--1.0%
Jacobs Engineering Group* 20,000 $ 507
--------
CHEMICALS--5.6%
Cytec Industries* 25,000 1,173
Olin 15,000 703
Praxair 22,500 1,012
--------
2,888
--------
COMMUNICATIONS EQUIPMENT--3.2%
ADC Telecommunications* 17,000 710
Ascend Communications * 15,000 367
Qualcomm* 11,500 581
--------
1,658
--------
COMPUTERS & SERVICES--4.5%
America Online* 10,000 892
Gateway 2000* 20,000 652
Sungard Data Systems* 25,000 775
--------
2,319
--------
DRUGS--5.8%
Biogen* 15,000 546
Centocor* 12,500 416
Medpartners* 25,000 559
Watson Pharmaceuticals* 45,000 1,460
--------
2,981
--------
ENERGY & POWER--1.1%
Calenergy* 20,000 575
--------
FINANCIAL SERVICES--3.7%
Capstead Mortgage 15,000 299
Firstplus Financial Group* 10,000 384
Franklin Resources 14,000 1,217
--------
1,900
--------
GAS/NATURAL GAS--0.9%
Sonat 10,000 457
--------
HOUSEHOLD PRODUCTS--1.5%
Danaher 12,000 757
--------
INSURANCE--3.7%
Amerin* 25,000 700
Delphi Financial Group* 18,360 826
Reliance Group Holdings 25,000 353
--------
1,879
--------
MACHINERY--2.4%
Lindsay Manufacturing 29,000 1,258
--------
MEDICAL PRODUCTS & SERVICES--3.7%
Biomet 22,500 577
Coherent* 8,500 299
================================================================================
46
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
Genesis Health Ventures* 22,000 $ 580
Vencor* 17,500 428
--------
1,884
--------
MISCELLANEOUS BUSINESS SERVICES--8.0%
Adaptec* 13,500 501
Cendant 20,000 687
Electronic Arts* 20,000 756
Networks Associates* 10,000 529
Parametric Technology* 11,000 521
U.S. Filter* 17,500 524
Whitman 22,500 586
--------
4,104
--------
MISCELLANEOUS CONSUMER SERVICES--2.7%
Accustaff* 30,000 690
Stewart Enterprises Class A 15,000 699
--------
1,389
--------
OFFICE FURNITURE & FIXTURES--1.1%
Lear* 12,000 570
--------
PAPER & PAPER PRODUCTS--2.4%
Bemis 27,500 1,212
--------
PETROLEUM & FUEL PRODUCTS--1.3%
Global Marine* 15,000 367
Parker Drilling* 25,000 305
--------
672
--------
PETROLEUM REFINING--2.0%
Saga Petroleum Class B 70,000 1,041
--------
PRINTING & PUBLISHING--0.5%
Hollinger International 20,000 280
--------
PROFESSIONAL SERVICES--2.7%
Devry* 15,000 478
Paychex 18,000 911
--------
1,389
--------
RETAIL--10.1%
Bed Bath and Beyond* 20,000 770
Circuit City Stores 10,000 356
Corporate Express * 35,000 451
Intimate Brands 20,000 481
Piercing Pagoda * 45,000 1,294
Rainforest Cafe* 20,000 660
Starbucks* 10,000 384
Tech Data* 20,000 778
--------
5,174
--------
RUBBER & PLASTIC--1.3%
Sonoco Products 20,000 694
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
SAVINGS AND LOANS--1.3%
Golden State Bancorp* 17,500 $ 654
--------
SEMI-CONDUCTORS/INSTRUMENTS--3.4%
American Power Conversion* 25,000 591
Analog Devices* 25,000 692
Xilinx* 13,000 456
--------
1,739
--------
SPECIALTY MACHINERY--0.9%
American Standard Companies* 11,500 441
--------
STEEL & STEEL WORKS--0.7%
Engelhard 20,000 348
--------
TELEPHONES & TELECOMMUNICATION--1.8%
Aliant Communications 30,000 941
--------
TESTING LABORATORIES--0.9%
Chiron* 27,500 468
--------
TRANSPORTATION SERVICES--1.4%
GATX 10,000 726
--------
TRUCKING--1.5%
Suiza Foods* 12,500 745
--------
WHOLESALE--1.2%
Cardinal Health 8,000 601
--------
Total Common Stocks
(Cost $36,736) 50,832
--------
CASH EQUIVALENTS--3.4%
SEI Liquid Asset Trust--
Government Portfolio 1,484 1,484
SEI Liquid Asset Trust--
Treasury Portfolio 251 251
--------
Total Cash Equivalents
(Cost $1,735) 1,735
--------
Total Investments-- 102.5%
(Cost $38,471) 52,567
--------
OTHER ASSETS AND LIABILITIES, NET--(2.5%) (1,295)
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 3,116,687 outstanding shares of
beneficial interest 31,343
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 348,829 outstanding shares of
beneficial interest 3,771
================================================================================
47
<PAGE>
================================================================================
Statement of Net Assets
MID CAP FUND (CONTINUED)
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
Accumulated net realized gain on investments $ 2,062
Net unrealized appreciation on investments 14,096
--------
Total Net Assets--100.0% $51,272
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $14.80
========
Net Asset Value and Redemption Price
Per Share -- Class A $14.76
========
Maximum Offering Price Per Share --
Class A ($14.76 / 96%) $15.38
========
* NON-INCOME PRODUCING SECURITY
BALANCED FUND
- --------------------------------------------------------------
COMMON STOCKS--69.3%
AIRCRAFT--2.8%
Allied Signal 17,000 662
United Technologies 6,000 437
--------
1,099
--------
BANKS--9.5%
Bank of New York 9,500 549
Chase Manhattan Bank 7,000 766
Citicorp 5,000 632
First Union 12,000 615
Nationsbank 8,000 486
Norwest 16,000 618
--------
3,666
--------
CHEMICALS--3.8%
E.I. DuPont de Nemours 13,000 781
Praxair 15,000 675
--------
1,456
--------
COMPUTERS & SERVICES--5.8%
Cisco Systems* 12,000 669
Compaq Computer* 10,000 564
Hewlett Packard 8,000 500
Microsoft* 4,000 517
--------
2,250
--------
DRUGS--7.5%
Bristol-Myers Squibb 6,000 568
Glaxo Wellcome PLC (ADR) 11,600 555
Merck 6,000 637
Pfizer 10,000 746
SmithKline Beecham 8,000 411
--------
2,917
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
ELECTRICAL & ELECTRONIC PRODUCTS--2.6%
Emerson Electric 6,000 $ 339
General Electric 9,000 660
--------
999
--------
FINANCIAL SERVICES--6.4%
American Express 6,000 535
Federal National Mortgage
Association 12,000 685
Morgan Stanley, Dean
Witter, Discover 12,000 710
Textron 8,800 550
--------
2,480
--------
FOOD, BEVERAGE & TOBACCO--3.9%
CPC International 5,000 540
PepsiCo 14,000 510
Sara Lee 8,000 451
--------
1,501
--------
GAS/NATURAL GAS--2.8%
Enron 11,000 457
Williams 22,000 624
--------
1,081
--------
GLASS PRODUCTS--1.6%
Corning 17,000 631
--------
INSURANCE--1.3%
American International Group 4,500 489
--------
LEISURE PRODUCTS--1.4%
Mattel 15,000 559
--------
MACHINERY--1.0%
Deere 6,500 379
--------
MISCELLANEOUS CONSUMER SERVICES--2.0%
Service International 21,000 776
--------
PAPER & PAPER PRODUCTS--1.3%
Kimberly Clark 10,000 493
--------
PETROLEUM REFINING--5.3%
Amoco 6,000 511
Exxon 8,000 490
Mobil 8,000 578
Royal Dutch Petroleum (ADR) 9,000 488
--------
2,067
--------
PRINTING & PUBLISHING--0.6%
Gannett 4,000 247
--------
================================================================================
48
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
SHARES/FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
RAILROADS--2.6%
Burlington Northern Santa Fe 5,500 $ 511
Union Pacific 8,000 500
--------
1,011
--------
RETAIL--1.3%
Limited 20,000 510
--------
SEMI-CONDUCTORS/INSTRUMENTS--1.5%
Intel 8,000 562
--------
TELEPHONES & TELECOMMUNICATION--3.1%
Lucent Technologies 8,000 639
Worldcom* 19,000 575
--------
1,214
--------
WHOLESALE--1.2%
Johnson & Johnson 7,000 461
--------
Total Common Stocks
(Cost $21,527) 26,848
--------
U.S. TREASURY OBLIGATIONS--14.8%
U.S. Treasury Bond
6.375%, 08/15/27 $2,000 2,110
U.S. Treasury Notes
5.875%, 02/15/04 1,000 1,009
6.625%, 05/15/07 1,000 1,058
6.125%, 08/15/07 1,500 1,541
--------
Total U.S. Treasury Obligations
(Cost $5,503) 5,718
--------
CORPORATE BONDS--10.7%
BANKS--1.4%
First Chicago NBD Bancorp
7.125%, 05/15/07 500 520
--------
INDUSTRIAL--9.3%
Abbott Laboratories
5.600%, 10/01/03 1,000 976
Amoco
6.250%, 10/15/04 1,000 1,005
Browning-Ferris
6.375%, 01/15/08 500 499
McDonald's
6.500%, 08/01/07 1,000 1,021
Philip Morris
9.250%, 02/15/00 100 106
--------
3,607
--------
Total Corporate Bonds
(Cost $4,050) 4,127
--------
- --------------------------------------------------------------
FACE AMOUNT MARKET
DESCRIPTION (000)/SHARES VALUE (000)
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--2.7%
Federal Home Loan
Mortgage Corporation
6.704%, 01/09/07 $500 $ 522
Federal National
Mortgage Association
7.760%, 08/02/06 500 513
--------
Total U.S. Government Agency Obligations
(Cost $1,002) 1,035
--------
CERTIFICATE OF DEPOSIT--1.0%
National City Bank Cleveland
7.100%, 09/25/12 400 411
--------
Total Certificate of Deposit
(Cost $400) 411
--------
CASH EQUIVALENTS--1.2%
SEI Liquid Asset Trust--
Government Portfolio 254 254
SEI Liquid Asset Trust--
Treasury Portfolio 215 215
--------
Total Cash Equivalents
(Cost $469) 469
--------
Total Investments--99.7%
(Cost $32,950) 38,608
--------
OTHER ASSETS AND LIABILITIES, NET--0.3% 102
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 2,029,771 outstanding shares of
beneficial interest 19,345
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 823,539 outstanding shares of
beneficial interest 8,850
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 371,541 outstanding shares of
beneficial interest 4,726
Undistributed net investment income 6
Accumulated net realized gain on investments 125
Net unrealized appreciation on investments 5,658
--------
Total Net Assets--100.0% 38,710
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $12.00
========
================================================================================
49
<PAGE>
================================================================================
Statement of Net Assets
BALANCED FUND (CONTINUED)
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
Net Asset Value and Redemption Price
Per Share -- Class A $12.02
========
Maximum Offering Price Per Share --
Class A ($12.02 / 94.5%) $12.72
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class B (1) $11.97
========
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE.
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------
FOREIGN COMMON STOCKS--91.3%
ARGENTINA--0.6%
Banco de Galacia 6,500 42
Telefonica de Argengentina (ADR) 1,400 52
--------
94
--------
AUSTRALIA--3.0%
Amcor 9,100 40
Australian & New Zealand Bank 11,000 73
Boral 23,380 59
Broken Hill Proprietary 8,404 78
Goodman Fielder 80,837 128
ICI Australia LTD 6,198 43
Newscorp Finance 6,000 33
--------
454
--------
AUSTRIA--0.8%
OMV 900 125
--------
BRAZIL--1.3%
Aracruz Cellulose (ADR) 1,700 24
Electrobras (ADR) 2,150 53
Telebras (ADR) 140 16
Telecomunicacoes Brasileiras 976,000 99
--------
192
--------
CANADA--3.1%
Alcan Aluminum Ltd. 2,400 66
Canada Pacific (ADR) 7,500 204
Canadian Imperial Bank 2,600 81
Canadian Imperial Bank (USD) 1,000 31
Canwest Global
Communication (ADR) 4,300 77
--------
459
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
CHILE--0.3%
Embotelladora Andina,
Series B (ADR) 2,400 $ 47
--------
CHINA--0.2%
China Southern Air (ADR)* 1,900 25
--------
DENMARK--1.8%
Unidanmark, Series A 3,750 275
--------
FINLAND--2.4%
Kesko Oy Akt 6,400 101
Metsa Serla, Series B 10,500 82
Nokia, Series A (ADR) 1,700 119
Rauma Oy 3,300 51
--------
353
--------
FRANCE--8.9%
Assurances Generales de France 2,930 155
Banque National Paris, Series A 2,345 125
Cie de Saint Gobain 600 85
Credit Commerce France 1,110 76
Havas 1,801 130
Peugeot 970 122
Rhone Poulenc 5,121 229
Societe Generale 910 124
Societe Nationale Elf Aquitaine 1,480 172
Total, Series B 1,029 112
--------
1,330
--------
GERMANY--6.5%
Bayer 6,900 256
Degussa 1,450 72
Karstadt 380 131
Lufthansa 2,640 50
Man AG 560 162
Mannesmann 310 156
Metallgesellschaft* 7,550 138
--------
965
--------
HONG KONG--1.6%
Hutchison Whampoa 17,000 107
Hysan Development 8,000 16
New World Development 12,000 41
Sung Hung Kai Properties 8,100 56
Tingyi (Cayman Island) 140,000 18
--------
238
--------
INDIA--0.3%
Ranbaxy Laboratories (GDR) 1,000 26
State Bank of India (GDR) 1,300 24
--------
50
--------
================================================================================
50
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
INDONESIA--0.1%
Kalbe Farma 62,000 $ 11
--------
IRELAND--0.2%
Allied Irish Bank 2,903 28
--------
ITALY--2.9%
Arnaldo Mondadori 6,175 49
Istituto Banc San Paolo Torino 8,700 83
Telecom Italia SPA 45,788 293
--------
425
--------
JAPAN--16.4%
Aisin Seiki 11,000 114
Bank of Tokyo-Mitsubishi 9,000 124
Daiwa Securities 8,000 28
Eisai 7,000 107
Exedy Corp 5,000 38
Fuji Machine Manufacturing 5,000 121
Fujisawa Pharmaceutical 4,000 35
Fukuda Denshi 2,000 20
Hitachi 8,000 57
JGC 19,000 40
Mabuchi Motor 3,000 152
Maruichi Steel Tube 6,000 73
Matsumotokiyoshi 2,400 92
Matsushita Electric 11,000 161
Mazda Motor* 47,000 112
Meiwa Estate 1,000 7
Murata Manufacturing 3,000 75
Namco 4,000 116
NGK Spark Plugs 9,500 54
Nomura Securities 2,000 27
Okumura 17,000 40
Otsuka Kagu LTD 500 18
Rohm Company 1,000 102
Sakura Bank 23,000 66
Sanwa Bank 5,000 51
Sawako 100 1
Shimachu 3,300 52
Sony 1,000 89
Sony Music Entertainment 5,200 191
Square Co Ltd 2,100 58
Sumitomo Rubber Industries 27,000 114
Toyo Ink 13,000 23
Yamato Kogyo 15,000 90
--------
2,448
--------
MALAYSIA--0.1%
Renong Berhad 19,000 9
Sime Darby 5,500 5
--------
14
--------
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
MEXICO--1.5%
Grupo Televisa* 3,800 $ 74
Kimberly Clark, Series A 26,000 127
Panamerican Beverage,
Series A (ADR) 900 29
--------
230
--------
NETHERLANDS--3.7%
Akzo Nobel 980 169
ING Groep NV 400 17
International Nederlanden 4,321 182
Polygram 2,800 134
Unilever NV 800 49
--------
551
--------
NEW ZEALAND--0.8%
Brierley Investment 27,683 20
Carter Holt Harvey 23,000 36
Telecom of New Zealand (ADR) 1,600 62
--------
118
--------
NORWAY--1.3%
Saga Petroleum AS, Series A 11,200 193
--------
PHILIPPINES--0.5%
Manila Electric, Series B 13,000 44
Metroropolitan Bank & Trust 3,600 25
--------
69
--------
SINGAPORE--1.3%
Far East Levingston Shipbuilding 20,000 56
Keppel 14,750 42
Overseas Union Bank 18,000 69
Straits Steamship Land 14,000 19
--------
186
--------
SOUTH AFRICA--0.5%
Billiton PLC* 27,600 71
--------
SPAIN--2.2%
Banco Popular Espana 2,160 151
Endesa - Empresa Nacional
de Electricidad 7,200 128
Telefonica de Espana (ADR) 600 55
--------
334
--------
SWEDEN--4.0%
Nordbanken Holding AB* 53,900 305
Pharmacia & Upjohn 6,400 235
Sparbanken Sverige AB, Series A 2,720 62
--------
602
--------
================================================================================
51
<PAGE>
================================================================================
Statement of Net Assets
INTERNATIONAL GROWTH FUND (CONTINUED)
- --------------------------------------------------------------
MARKET
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
SWITZERLAND--5.0%
Ciba Speciality Chemicals 560 $ 67
Holderbank Finan Glarus, Series B 250 204
Nestle 156 234
Roche Holdings AG 25 248
--------
753
--------
THAILAND--0.1%
Land & House 19,797 4
Siam City Cement "F" 563 1
Thai Farmers Bank "F" 7,000 13
--------
18
--------
UNITED KINGDOM--19.9%
Associated British Foods 19,813 172
Bank of Scotland 12,400 114
Bass 11,500 178
Billiton PLC* 7,400 19
BOC Group 7,913 130
British Petroleum 12,500 164
BTR 36,000 109
Burmah Castrol 11,100 193
Carlton Communications 17,000 131
Cookson Group 39,869 128
Guinness PLC 22,000 202
HSBC Holdings PLC 5,900 146
Jefferson Smurf GBP 65,170 181
Johnson Matthey PLC 14,000 125
Powergen 13,105 171
Rank Group 22,500 125
Reckitt & Coleman 10,573 166
Royal Bank of Scotland 11,000 140
Sun Alliance Group 11,919 120
Zeneca Group PLC 7,200 253
--------
2,967
--------
Total Foreign Common Stocks
(Cost $13,393) 13,625
--------
FOREIGN PREFERRED STOCKS--2.8%
BRAZIL--1.1%
Cemig 620,000 27
CIA Riograndense Telecom* 25,800 32
Petroleo Brasileiro 292,000 68
Telecomunicacoes de Sao Paulo 120,000 32
--------
159
--------
GERMANY--1.7%
Hornbach 1,400 97
Prosieben Media AG* 3,500 161
--------
258
--------
- --------------------------------------------------------------
SHARES/FACE MARKET
DESCRIPTION AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
Total Foreign Preferred Stocks
(Cost $420) $ 417
--------
REPURCHASE AGREEMENT--5.7%
Paine Webber
6.60%, dated 12/31/97, matures
01/02/98, repurchase price
$855,157 (collateralized by
U.S. Treasury Note,total
market value $876,888) $ 855 855
--------
Total Repurchase Agreement
(Cost $855) 855
--------
Total Investments--99.8%
(Cost $14,668) 14,897
--------
OTHER ASSETS AND LIABILITIES, NET--0.2% 29
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 1,367,608 outstanding shares of
beneficial interest 14,388
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 64,154 outstanding shares of
beneficial interest 649
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 11,308 outstanding shares of
beneficial interest 135
Undistributed net investment income 33
Accumulated net realized loss on investments (508)
Net unrealized appreciation on investments 229
--------
Total Net Assets-- 100.0% $14,926
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class I $10.34
========
Net Asset Value and Redemption Price
Per Share -- Class A $10.33
========
Maximum Public Offering Price
Per Share -- Class A ($10.33 / 94.5%) $10.93
========
Net Asset Value and Redemption Price
Per Share -- Class B (1) $10.30
========
(1) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE.
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPTS
F -- FOREIGN SHARES
GDR -- GLOBAL DEPOSITORY RECEIPTS
================================================================================
52
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Statement of Operations (000)
FOR THE YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------------------------------
U.S. TREASURY PRIME U.S. TREASURY INSTITUTIONAL
SECURITIES OBLIGATION TAX-EXEMPT SECURITIES SELECT
MONEY MONEY MONEY PLUS MONEY MONEY
MARKET MARKET MARKET MARKET MARKET
FUND FUND FUND FUND FUND (2)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME: $25,106 $24,650 $2,782 $4,061 $1,067
---------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 1,722 1,552 263 114 19
Less: Investment advisory fee waived (74) (58) (14) (78) (10)
Administration fee 984 887 150 267 19
Custody fee 123 111 19 19 5
Transfer agency fee 126 136 36 44 7
Professional fees 111 106 12 12 3
Registration fees 79 69 12 7 12
Distribution fees (1) 14 55 13 23 --
Printing expense 62 60 8 7 1
Amortization of deferred
organizational costs 1 1 1 2 1
Insurance and other expenses 65 20 2 2 --
---------------------------------------------------------------------------------------
Total expenses, net of waivers 3,213 2,939 502 419 57
---------------------------------------------------------------------------------------
NET INVESTMENT INCOME 21,893 21,711 2,280 3,642 1,010
Net realized gain(loss)
on investments 114 -- (1) 1 1
---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $22,007 $21,711 $2,279 $3,643 $1,011
=======================================================================================
<FN>
(1) DISTRIBUTION FEES ARE INCURRED AT THE CLASS A, CLASS B AND CLASS S LEVELS EXCEPT FOR THE U.S. TREASURY SECURITIES
PLUS MONEY MARKET FUND WHICH INCURS DISTRIBUTION FEES AT THE CLASS I LEVEL.
(2) THE INSTITUTIONAL SELECT MONEY MARKET FUND COMMENCED OPERATIONS ON JULY 1, 1997.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
53
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Statement of Operations (000)
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------------------------
INTERMEDIATE-
NEW JERSEY TERM PENNSYLVANIA
SHORT-TERM FIXED MUNICIPAL GOVERNMENT MUNICIPAL
INVESTMENT INCOME SECURITIES SECURITIES SECURITIES
FUND FUND FUND FUND FUND
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income -- -- -- -- --
Interest income $1,019 $15,956 $ 7,515 $2,264 $2,017
Less: Foreign taxes withheld -- -- -- -- --
------------------------------------------------------------------------------------
Total income 1,019 15,956 7,515 2,264 2,017
------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 111 1,428 823 209 229
Less: Investment advisory fee waived (40) (275) (194) (49) (56)
Administration fee 37 476 275 70 76
Less: Administration fee waived -- -- -- -- (6)
Custody fee 5 59 34 9 10
Transfer agency fee 25 76 52 23 23
Professional fees 2 43 26 6 7
Registration fees 4 50 41 5 12
Distribution fees (1) 2 12 45 5 1
Printing expense 2 27 15 4 4
Amortization of deferred
organizational costs 1 1 1 1 --
Insurance and other expenses 1 15 27 2 7
------------------------------------------------------------------------------------
Total expenses, net of waivers 150 1,912 1,145 285 307
------------------------------------------------------------------------------------
NET INVESTMENT INCOME 869 14,044 6,370 1,979 1,710
Net realized gain (loss)
on investments 19 (81) 147 (150) 150
Net realized loss on foreign currency
transactions and foreign
currency contracts -- -- -- -- --
Net change in unrealized depreciation
on foreign currency and translation
of other assets and liabilities
denominated in foreign currency -- -- -- -- --
Net unrealized appreciation
(deprecation) on investments (16) 3,905 2,621 485 929
------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 872 $17,868 $ 9,138 $2,314 $2,789
====================================================================================
<FN>
(1) ALL DISTRIBUTION FEES ARE INCURRED AT THE CLASS A AND CLASS B LEVELS.
(2) THE EQUITY GROWTH FUND COMMENCED OPERATIONS ON FEBRUARY 3, 1997.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
54
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
EQUITY EQUITY EQUITY INTERNATIONAL
GNMA GROWTH VALUE INCOME MID CAP BALANCED GROWTH
FUND FUND (2) FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-- $ 1,160 $ 4,175 3,360 $ 452 $ 347 $ 358
$522 325 658 619 126 812 35
-- -- -- -- -- -- (36)
- ----------------------------------------------------------------------------------------------------------------------------------
522 1,485 4,833 3,979 578 1,159 357
- ----------------------------------------------------------------------------------------------------------------------------------
44 1,270 1,761 953 392 251 160
(21) (461) (611) (365) (151) (117) (31)
14 339 469 254 105 67 32
-- -- -- -- -- -- --
2 42 59 32 13 8 27
19 51 80 63 34 38 24
1 25 46 24 7 5 6
(3) 59 39 37 10 8 4
3 1 47 60 13 35 2
1 17 27 14 6 4 2
-- 5 1 1 1 1 3
1 9 12 6 3 3 13
- ----------------------------------------------------------------------------------------------------------------------------------
61 1,357 1,930 1,079 433 303 242
- ----------------------------------------------------------------------------------------------------------------------------------
461 128 2,903 2,900 145 856 115
(30) 36,440 57,613 27,335 4,565 3,464 468
-- -- -- -- -- -- (18)
-- -- -- -- -- -- (1)
245 (14,365) (10,507) (3,525) 5,170 1,572 (551)
- ----------------------------------------------------------------------------------------------------------------------------------
$676 $22,203 $50,009 $26,710 $9,880 $5,892 $ 13
==================================================================================================================================
</TABLE>
================================================================================
55
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (000)
FOR THE YEARS ENDED DECEMBER 31
MONEY MARKET FUNDS
---------------------------------------------------------------------
U.S. TREASURY PRIME OBLIGATION
SECURITIES MONEY MARKET
MONEY MARKET FUND FUND
---------------------------------------------------------------------
1997 1996 1997 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income $ 21,893 $ 18,990 $ 21,711 $ 17,654
Net realized gain (loss) on investments 114 40 -- (32)
---------------------------------------------------------------------
Net increase in net assets resulting
from operations 22,007 19,030 21,711 17,622
---------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I (21,651) (18,841) (20,773) (17,270)
Class A (242) (149) (693) (384)
Class B -- -- -- --
Class S -- -- (245) --
Realized capital gains:
Class I -- -- -- --
Class A -- -- -- --
Class B -- -- -- --
Class S -- -- -- --
---------------------------------------------------------------------
Total distributions (21,893) (18,990) (21,711) (17,654)
---------------------------------------------------------------------
SHARE TRANSACTIONS (ALL AT $1.00 PER SHARE):
Class I: (2)
Shares issued 1,263,191 1,120,245 796,652 802,073
Shares issued in lieu of cash distributions 271 90 3,999 973
Shares redeemed (1,281,107) (1,079,179) (801,385) (661,258)
---------------------------------------------------------------------
Net Class I share transactions (17,645) 41,156 (734) 141,788
---------------------------------------------------------------------
Class A: (2)
Shares issued 24,231 4,115 44,915 20,093
Shares issued in lieu of cash distributions 129 137 682 363
Shares redeemed (15,373) (4,279) (39,430) (16,034)
---------------------------------------------------------------------
Net Class A share transactions 8,987 (27) 6,167 4,422
---------------------------------------------------------------------
Class B:
Shares issued -- -- 10 --
Shares issued in lieu of cash distributions -- -- -- --
Shares redeemed -- -- -- --
---------------------------------------------------------------------
Net Class B share transactions -- -- 10 --
---------------------------------------------------------------------
Class S:
Shares issued -- -- 39,261 --
Shares issued in lieu of cash distributions -- -- -- --
Shares redeemed -- -- (8,741) --
---------------------------------------------------------------------
Net Class S share transactions -- -- 30,520 --
---------------------------------------------------------------------
Increase/(decrease) in net assets from
share transactions (8,658) 41,129 35,963 146,210
---------------------------------------------------------------------
Total increase/(decrease) in net assets (8,544) 41,169 35,963 146,178
---------------------------------------------------------------------
NET ASSETS:
Beginning of period 508,232 467,063 412,770 266,592
---------------------------------------------------------------------
NET ASSETS:
End of period $ 499,688 $ 508,232 $ 448,733 $ 412,770
=====================================================================
<FN>
(1) THE INSTITUTIONAL SELECT MONEY MARKET FUND COMMENCED OPERATIONS ON JULY 1, 1997.
(2) ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
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.
================================================================================
56
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT U.S. TREASURY INSTITUTIONAL
MONEY MARKET SECURITIES PLUS SELECT MONEY
FUND MONEY MARKET FUND MARKET FUND (1)
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,280 $ 2,108 $ 3,642 $ 3,188 $ 1,010
(1) (1) 1 -- 1
- ---------------------------------------------------------------------------------------------------------------------------
2,279 2,107 3,643 3,188 1,011
- ---------------------------------------------------------------------------------------------------------------------------
(2,132) (2,003) (3,642) (3,188) (1,010)
(148) (105) -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
(2,280) (2,108) (3,642) (3,188) (1,010)
- ---------------------------------------------------------------------------------------------------------------------------
126,993 136,217 502,154 527,102 78,541
508 101 3,189 3,035 74
(119,483) (132,864) (501,859) (529,661) (17,094)
- ---------------------------------------------------------------------------------------------------------------------------
8,018 3,454 3,484 476 61,521
- ---------------------------------------------------------------------------------------------------------------------------
12,367 6,240 -- -- --
110 114 -- -- --
(7,822) (7,739) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
4,655 (1,385) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
-- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
12,673 2,069 3,484 476 61,521
- ---------------------------------------------------------------------------------------------------------------------------
12,672 2,068 3,485 476 61,522
- ---------------------------------------------------------------------------------------------------------------------------
70,934 68,866 65,173 64,697 --
- ---------------------------------------------------------------------------------------------------------------------------
$ 83,606 $ 70,934 $ 68,658 $ 65,173 $ 61,522
===========================================================================================================================
</TABLE>
================================================================================
57
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (000)
FOR THE YEARS ENDED DECEMBER 31
FIXED INCOME FUNDS
-------------------------------------------------------------
SHORT-TERM FIXED
INVESTMENT INCOME
FUND FUND
-------------------------------------------------------------
1997 1996 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income $ 869 $ 1,639 $ 14,044 $ 6,339
Net realized gain (loss) on investments 19 (29) (81) (8)
Net unrealized appreciation (depreciation) on investments (16) (36) 3,905 (3,461)
-------------------------------------------------------------
Net increase in net assets resulting from operations 872 1,574 17,868 2,870
-------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I (829) (1,571) (13,798) (6,017)
Class A (40) (69) (241) (322)
Class B -- -- (6) --
Realized capital gains:
Class I -- -- -- (11)
Class A -- -- -- --
Class B -- -- -- --
-------------------------------------------------------------
Total distributions (869) (1,640) (14,045) (6,350)
-------------------------------------------------------------
SHARE TRANSACTIONS:
Class I: (1)
Proceeds from shares issued 4,226 16,470 34,904 12,563
Shares issued in connection with acquisition
of common trust fund assets -- -- 173,842 --
Reinvestment of cash distributions 795 1,504 6,576 6,010
Cost of shares redeemed (33,181) (16,926) (112,404) (28,653)
-------------------------------------------------------------
Net Class I share transactions (28,160) 1,048 102,918 (10,080)
-------------------------------------------------------------
Class A: (1)
Proceeds from shares issued 35 492 1,038 2,412
Reinvestment of cash distributions 38 62 197 274
Cost of shares redeemed (671) (1,515) (1,594) (3,520)
-------------------------------------------------------------
Net Class A share transactions (598) (961) (359) (834)
-------------------------------------------------------------
Class B:
Proceeds from shares issued -- -- 1,581 --
Reinvestment of cash distributions -- -- 4 --
Cost of shares redeemed -- -- (322) --
-------------------------------------------------------------
Net Class B share transactions -- -- 1,263 --
-------------------------------------------------------------
Increase (decrease) in net assets from share transactions (28,758) 87 103,822 (10,914)
-------------------------------------------------------------
Total increase (decrease) in net assets (28,755) 21 107,645 (14,394)
-------------------------------------------------------------
NET ASSETS:
Beginning of period 32,706 32,685 104,959 119,353
-------------------------------------------------------------
NET ASSETS:
End of period $ 3,951 $32,706 $212,604 $104,959
=============================================================
SHARES ISSUED AND REDEEMED:
Class I shares:
Issued 422 1,647 3,278 1,208
Shares issued in connection with acquisition of
common trust fund assets -- -- 17,057 --
Issued in lieu of cash distributions 80 150 644 609
Redeemed (3,317) (1,693) (10,860) (2,829)
-------------------------------------------------------------
Net Class I share transactions (2,815) 104 10,119 (1,012)
-------------------------------------------------------------
Class A shares:
Issued 4 49 101 236
Issued in lieu of cash distributions 4 6 20 27
Redeemed (67) (151) (157) (347)
-------------------------------------------------------------
Net Class A share transactions (59) (96) (36) (84)
-------------------------------------------------------------
Class B shares:
Issued -- -- 153 --
Issued in lieu of cash distributions -- -- -- --
Redeemed -- -- (31) --
-------------------------------------------------------------
Net Class B share transactions -- -- 122 --
-------------------------------------------------------------
Net increase (decrease) in shares (2,874) 8 10,205 (1,096)
=============================================================
<FN>
(1)ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
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.
================================================================================
58
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY INTERMEDIATE- PENNSYLVANIA
MUNICIPAL TERM GOVERNMENT MUNICIPAL GNMA
SECURITIES FUND SECURITIES FUND SECURITIES FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 6,370 $ 1,915 $ 1,979 $ 1,614 $ 1,710 $ 174 $ 461 $ 548
147 (71) (150) (172) 150 (3) (30) 13
2,621 (483) 485 (533) 929 (17) 245 (317)
- ----------------------------------------------------------------------------------------------------------------------------------
9,138 1,361 2,314 909 2,789 154 676 244
- ----------------------------------------------------------------------------------------------------------------------------------
(5,607) (1,007) (1,876) (1,453) (1,695) (161) (388) (453)
(762) (907) (104) (161) (15) (13) (73) (95)
-- -- -- -- -- -- -- --
-- -- -- -- (77) -- -- --
-- -- -- -- (1) -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
(6,369) (1,914) (1,980) (1,614) (1,788) (174) (461) (548)
- ----------------------------------------------------------------------------------------------------------------------------------
25,303 4,639 4,041 7,641 8,097 789 1,865 2,410
108,448 -- 13,328 -- 37,351 -- -- --
757 879 845 1,116 57 9 281 337
(26,652) (12,628) (11,473) (12,330) (8,028) (458) (2,708) (4,683)
- ----------------------------------------------------------------------------------------------------------------------------------
107,856 (7,110) 6,741 (3,573) 37,477 340 (562) (1,936)
- ----------------------------------------------------------------------------------------------------------------------------------
2,828 3,066 1 726 123 76 11 187
666 741 88 135 13 10 48 64
(5,402) (9,242) (1,285) (1,868) (85) (11) (450) (526)
- ----------------------------------------------------------------------------------------------------------------------------------
(1,908) (5,435) (1,196) (1,007) 51 75 (391) (275)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
105,948 (12,545) 5,545 (4,580) 37,528 415 (953) (2,211)
- ----------------------------------------------------------------------------------------------------------------------------------
108,717 (13,098) 5,879 (5,285) 38,529 395 (738) (2,515)
- ----------------------------------------------------------------------------------------------------------------------------------
40,936 54,034 27,257 32,542 4,009 3,614 7,996 10,511
- ----------------------------------------------------------------------------------------------------------------------------------
$149,653 $40,936 $33,136 $27,257 $42,538 $4,009 $7,258 $7,996
==================================================================================================================================
2,148 434 397 750 787 78 192 252
10,125 -- 1,311 -- 3,676 -- -- --
70 83 83 110 5 1 29 35
(2,273) (1,187) (1,129) (1,215) (781) (46) (279) (485)
- ----------------------------------------------------------------------------------------------------------------------------------
10,070 (670) 662 (355) 3,687 33 (58) (198)
- ----------------------------------------------------------------------------------------------------------------------------------
262 287 -- 71 12 8 1 19
62 70 9 14 1 1 5 7
(503) (871) (127) (184) (8) (1) (47) (55)
- ----------------------------------------------------------------------------------------------------------------------------------
(179) (514) (118) (99) 5 8 (41) (29)
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
9,891 (1,184) 544 (454) 3,692 41 (99) (227)
==================================================================================================================================
</TABLE>
================================================================================
59
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (000)
FOR THE YEARS ENDED DECEMBER 31
EQUITY FUNDS
--------------------------------------------------------------
EQUITY GROWTH EQUITY VALUE
FUND (1) FUND
--------------------------------------------------------------
1997 1997 1996
--------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income $ 128 $ 2,903 $ 1,763
Net realized gain on investments 36,440 57,613 17,503
Net realized loss on foreign currency transactions -- -- --
Net unrealized appreciation (depreciation) on foreign
currency and translation of other assets and
liabilities in foreign currency -- -- --
Net unrealized appreciation (depreciation)
on investments (14,365) (10,507) 2,402
--------------------------------------------------------------
Net increase in net assets resulting
from operations 22,203 50,009 21,668
--------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I (234) (2,778) (1,641)
Class A -- (119) (122)
Class B -- (8) --
Realized capital gains:
Class I (31,061) (53,922) (15,212)
Class A (51) (3,066) (1,302)
Class B (47) (1,012) --
--------------------------------------------------------------
Total distributions (31,393) (60,905) (18,277)
--------------------------------------------------------------
SHARE TRANSACTIONS:
Class I: (2)
Proceeds from shares issued 12,703 30,001 33,908
Shares issued in connection with
acquisition of common trust fund assets 221,033 84,527 --
Reinvestment of cash distributions 31,109 55,164 16,529
Cost of shares redeemed (77,949) (33,977) (19,461)
--------------------------------------------------------------
Net Class I share transactions 186,896 135,715 30,976
--------------------------------------------------------------
Class A: (2)
Proceeds from shares issued 882 3,622 2,210
Reinvestment of cash distributions 52 3,156 1,421
Cost of shares redeemed (451) (2,347) (1,604)
--------------------------------------------------------------
Net Class A share transactions 483 4,431 2,027
--------------------------------------------------------------
Class B:
Proceeds from shares issued 356 5,303 --
Reinvestment of cash distributions 46 1,019 --
Cost of shares redeemed (1) (411) --
--------------------------------------------------------------
Net Class B share transactions 401 5,911 --
--------------------------------------------------------------
Increase (decrease) in net assets from
share transactions 187,780 146,057 33,003
--------------------------------------------------------------
Total increase (decrease) in net assets 178,590 135,161 36,394
--------------------------------------------------------------
NET ASSETS:
Beginning of period -- 126,715 90,321
--------------------------------------------------------------
NET ASSETS:
End of period $178,590 $261,876 $126,715
==============================================================
SHARES ISSUED AND REDEEMED:
Class I shares:
Issued 1,139 2,011 2,485
Shares issued in connection with
acquisition of common trust fund assets 22,103 6,015 --
Issued in lieu of cash distributions 3,464 4,300 1,226
Redeemed (7,458) (2,230) (1,418)
--------------------------------------------------------------
Net Class I share transactions 19,248 10,096 2,293
--------------------------------------------------------------
Class A shares:
Issued 80 241 160
Issued in lieu of cash distributions 6 246 109
Redeemed (39) (156) (116)
--------------------------------------------------------------
Net Class A share transactions 47 331 153
--------------------------------------------------------------
Class B shares:
Issued 34 340 --
Issued in lieu of cash distributions 5 80 --
Redeemed -- (26) --
--------------------------------------------------------------
Net Class B share transactions 39 394 --
--------------------------------------------------------------
Net increase (decrease) in shares 19,334 10,821 2,446
--------------------------------------------------------------
<FN>
(1) THE EQUITY GROWTH FUND COMMENCED OPERATIONS ON FEBRUARY 3, 1997.
(2) ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
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.
================================================================================
60
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME MID CAP BALANCED INTERNATIONAL GROWTH
FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,900 $ 1,553 $ 145 $ 320 $ 856 $ 1,311 $ 115 $ 113
27,335 10,647 4,565 4,218 3,464 4,293 468 1,013
-- -- -- -- -- -- (18) (9)
-- -- -- -- -- -- (1) 1
(3,525) 32 5,170 1,825 1,572 (1,625) (551) 307
- ---------------------------------------------------------------------------------------------------------------------------------
26,710 12,232 9,880 6,363 5,892 3,979 13 1,425
- ---------------------------------------------------------------------------------------------------------------------------------
(2,560) (1,301) (145) (295) (600) (995) (109) (100)
(294) (252) (7) (25) (227) (316) (3) (3)
(47) -- -- -- (27) -- -- --
(24,107) (7,946) (3,654) (2,642) (2,362) (2,650) (1,120) (779)
(3,179) (1,706) (392) (341) (954) (1,256) (51) (42)
(1,264) -- -- -- (364) -- (7) --
- ---------------------------------------------------------------------------------------------------------------------------------
(31,451) (11,205) (4,198) (3,303) (4,534) (5,217) (1,290) (924)
34,867 16,356 2,701 4,772 5,476 5,420 2,630 5,647
34,921 -- -- -- -- -- -- --
24,716 8,601 3,686 2,816 2,647 3,290 813 521
(17,108) (11,867) (10,946) (7,122) (4,106) (20,821) (2,910) (1,804)
- ---------------------------------------------------------------------------------------------------------------------------------
77,396 13,090 (4,559) 466 4,017 (12,111) 533 4,364
- ---------------------------------------------------------------------------------------------------------------------------------
3,142 5,660 245 665 1,031 1,186 102 1,040
3,438 1,928 397 363 1,155 1,535 54 45
(2,060) (5,040) (1,895) (1,180) (1,915) (1,631) (231) (951)
- ---------------------------------------------------------------------------------------------------------------------------------
4,520 2,548 (1,253) (152) 271 1,090 (75) 134
- ---------------------------------------------------------------------------------------------------------------------------------
7,936 -- -- -- 4,572 -- 167 --
1,301 -- -- -- 390 -- 7 --
(375) -- -- -- (236) -- (39) --
- ---------------------------------------------------------------------------------------------------------------------------------
8,862 -- -- -- 4,726 -- 135 --
- ---------------------------------------------------------------------------------------------------------------------------------
90,778 15,638 (5,812) 314 9,014 (11,021) 593 4,498
- ---------------------------------------------------------------------------------------------------------------------------------
86,037 16,665 (130) 3,374 10,372 (12,259) (684) 4,999
- ---------------------------------------------------------------------------------------------------------------------------------
70,479 53,814 51,402 48,028 28,338 40,597 15,610 10,611
- ---------------------------------------------------------------------------------------------------------------------------------
$156,516 $70,479 $51,272 $51,402 $38,710 $28,338 $14,926 $15,610
=================================================================================================================================
2,405 1,181 185 365 447 439 224 503
2,525 -- -- -- -- -- -- --
1,867 640 252 214 220 281 77 47
(1,147) (847) (738) (539) (327) (1,697) (253) (161)
- ---------------------------------------------------------------------------------------------------------------------------------
5,650 974 (301) 40 340 (977) 48 389
- ---------------------------------------------------------------------------------------------------------------------------------
211 414 18 50 84 95 9 93
258 143 27 28 95 132 5 4
(139) (360) (135) (90) (153) (130) (20) (84)
- ---------------------------------------------------------------------------------------------------------------------------------
330 197 (90) (12) 26 97 (6) 13
- ---------------------------------------------------------------------------------------------------------------------------------
522 -- -- -- 357 -- 14 --
99 -- -- -- 33 -- 1 --
(24) -- -- -- (19) -- (4) --
- ---------------------------------------------------------------------------------------------------------------------------------
597 -- -- -- 371 -- 11 --
- ---------------------------------------------------------------------------------------------------------------------------------
6,577 1,171 (391) 28 737 (880) 53 402
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
61
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
NET ASSET DISTRIBUTIONS RATIO OF RATIO OF
VALUE NET FROM NET NET ASSET NET ASSETS EXPENSES NET INCOME
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL END OF TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN PERIOD (000) NET ASSETS NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 $1.00 $0.04 $(0.04) $1.00 4.55% $487,196 0.65% 4.45%
1996 1.00 0.04 (0.04) 1.00 4.53 504,729 0.65 4.44
1995 1.00 0.05 (0.05) 1.00 5.05 463,531 0.65 4.92
1994 1.00 0.03 (0.03) 1.00 3.44 465,125 0.62 3.39
1993 1.00 0.02 (0.02) 1.00 2.46 420,947 0.64 2.42
1992(1) 1.00 0.02 (0.02) 1.00 2.81* 387,960 0.65 2.67
CLASS A**
1997 $1.00 $0.04 $(0.04) $1.00 4.28% $ 12,492 0.90% 4.22%
1996 1.00 0.04 (0.04) 1.00 4.27 3,503 0.90 4.19
1995 1.00 0.05 (0.05) 1.00 4.80 3,532 0.90 4.66
1994 1.00 0.03 (0.03) 1.00 3.17 633 0.87 3.07
1993 1.00 0.02 (0.02) 1.00 2.21 834 0.89 2.17
1992(1) 1.00 0.02 (0.02) 1.00 2.56* 436 0.90 2.27
- ---------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATION MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $1.00 $0.05 $(0.05) $1.00 5.02% $400,689 0.65% 4.90%
1996 1.00 0.05 (0.05) 1.00 4.83 401,423 0.65 4.73
1995 1.00 0.05 (0.05) 1.00 5.40 259,667 0.65 5.26
1994 1.00 0.04 (0.04) 1.00 3.67 157,378 0.62 3.68
1993 1.00 0.03 (0.03) 1.00 2.65 129,780 0.64 2.63
1992(1) 1.00 0.02 (0.02) 1.00 2.85* 124,811 0.65 2.63
CLASS A**
1997 $1.00 $0.05 $(0.05) $1.00 4.75% $ 17,514 0.90% 4.67%
1996 1.00 0.04 (0.04) 1.00 4.58 11,347 0.90 4.48
1995 1.00 0.05 (0.05) 1.00 5.14 6,925 0.90 5.01
1994 1.00 0.03 (0.03) 1.00 3.40 3,281 0.87 3.89
1993 1.00 0.02 (0.02) 1.00 2.40 377 0.89 2.38
1992(1) 1.00 0.02 (0.02) 1.00 2.60* 243 0.89 2.43
CLASS B
1997(2) $1.00 -- -- $1.00 5.48%* $ 10 1.65% 8.53%
CLASS S
1997(3) $1.00 $0.02 $(0.02) $1.00 4.69%* $ 30,520 1.00% 4.67%
- ---------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $1.00 $0.03 $(0.03) $1.00 3.10% $ 75,097 0.65% 3.05%
1996 1.00 0.03 (0.03) 1.00 2.94 67,082 0.65 2.90
1995 1.00 0.03 (0.03) 1.00 3.42 63,628 0.65 3.37
1994 1.00 0.02 (0.02) 1.00 2.27 37,745 0.65 2.27
1993 1.00 0.02 (0.02) 1.00 1.99 32,994 0.65 1.97
1992(4) 1.00 0.02 (0.02) 1.00 2.42* 22,963 0.65 2.39
CLASS A**
1997 $1.00 $0.03 $(0.03) $1.00 2.84% $ 8,509 0.90% 2.82%
1996 1.00 0.03 (0.03) 1.00 2.70 3,852 0.90 2.65
1995 1.00 0.03 (0.03) 1.00 3.17 5,238 0.90 3.14
1994 1.00 0.02 (0.02) 1.00 2.02 2,790 0.90 1.97
1993 1.00 0.02 (0.02) 1.00 1.74 3,866 0.90 1.72
1992(4) 1.00 0.02 (0.02) 1.00 2.17* 2,273 0.90 2.07
- ---------------------------------------------------------------------------------------------------------------------
RATIO OF
RATIO OF EXPENSES NET INCOME
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS
(EXCLUDING (EXCLUDING
WAIVERS) WAIVERS)
- ----------------------------------------------------
U.S. TREASURY SECURITIES MONEY MARKET FUND
- ----------------------------------------------------
<S> <C> <C>
CLASS I**
1997 0.66% 4.44%
1996 0.65 4.44
1995 0.65 4.92
1994 0.62 3.39
1993 0.64 2.42
1992(1) 0.70 2.62
CLASS A**
1997 0.90% 4.22%
1996 0.90 4.19
1995 0.90 4.66
1994 0.87 3.07
1993 0.89 2.17
1992(1) 0.95 2.22
- ----------------------------------------------------
PRIME OBLIGATION MONEY MARKET FUND
- ----------------------------------------------------
CLASS I**
1997 0.66% 4.89%
1996 0.67 4.71
1995 0.66 5.25
1994 0.62 3.68
1993 0.64 2.63
1992(1) 0.77 2.51
CLASS A**
1997 0.91% 4.66%
1996 0.92 4.46
1995 0.91 5.00
1994 0.87 3.89
1993 0.89 2.38
1992(1) 1.01 2.31
CLASS B
1997(2) 3.01% 7.17%
CLASS S
1997(3) 1.02% 4.65%
- ----------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
- ----------------------------------------------------
CLASS I**
1997 0.67% 3.03%
1996 0.68 2.87
1995 0.72 3.30
1994 0.68 2.24
1993 0.69 1.93
1992(4) 0.79 2.25
CLASS A**
1997 0.92% 2.80%
1996 0.93 2.62
1995 0.96 3.08
1994 0.92 1.95
1993 0.94 1.68
1992(4) 1.04 1.93
- ----------------------------------------------------
<FN>
*ANNUALIZED
**ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
(1) COMMENCED OPERATIONS ON APRIL 1, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON DECEMBER 30, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(3) COMMENCED OPERATIONS ON AUGUST 18, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(4) COMMENCED OPERATIONS ON APRIL 6, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
62
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000)
- ---------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 $ 1.00 $0.05 -- $(0.05) -- $1.00 4.89% $ 68,658
1996 1.00 0.05 -- (0.05) -- 1.00 4.82 65,173
1995 1.00 0.05 -- (0.05) -- 1.00 5.40 64,697
1994 1.00 0.04 -- (0.04) -- 1.00 3.60 46,301
1993(1) 1.00 0.02 -- (0.02) -- 1.00 2.66* 89,278
- ---------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I
1997(2) $1.00 $0.03 -- $(0.03) -- $1.00 5.38% $ 61,522
- ---------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $10.01 $0.47 $ 0.03 $(0.47) -- $10.04 5.13% $ 3,472
1996 10.02 0.48 (0.01) (0.48) -- 10.01 4.86 31,630
1995 9.97 0.55 0.05 (0.55) -- 10.02 6.19 30,642
1994 10.01 0.35 (0.04) (0.35) -- 9.97 3.21 29,187
1993 10.01 0.29 -- (0.29) -- 10.01 2.96 31,337
1992(3) 10.00 0.27 0.03 (0.27) $(0.02) 10.01 3.47* 30,998
CLASS A**
1997 $10.02 $0.44 $ 0.02 $(0.45) -- $10.03 4.66% $ 479
1996 10.05 0.45 (0.02) (0.46) -- 10.02 4.39 1,076
1995 9.98 0.53 0.07 (0.53) -- 10.05 6.13 2,043
1994 10.03 0.33 (0.05) (0.33) -- 9.98 2.85 769
1993 10.01 0.28 0.01 (0.27) -- 10.03 2.90 205
1992(3) 10.00 0.25 0.03 (0.25) $(0.02) 10.01 3.23* 193
- ---------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $10.21 $0.60 $ 0.17 $(0.60) -- $10.38 7.78% $206,810
1996 10.49 0.57 (0.28) (0.57) -- 10.21 2.94 100,129
1995 9.44 0.59 1.05 (0.59) -- 10.49 17.76 113,509
1994 10.68 0.59 (1.18) (0.59) $(0.06) 9.44 (5.66) 96,558
1993 10.38 0.61 0.52 (0.61) (0.22) 10.68 11.05 113,892
1992(3) 10.00 0.49 0.44 (0.49) (0.06) 10.38 11.60* 89,701
CLASS A**
1997 $10.20 $0.57 $ 0.16 $(0.57) -- $10.36 7.41% $ 4,526
1996 10.48 0.55 (0.28) (0.55) -- 10.20 2.68 4,830
1995 9.44 0.56 1.04 (0.56) -- 10.48 17.36 5,844
1994 10.68 0.56 (1.18) (0.56) $(0.06) 9.44 (5.90) 5,525
1993 10.38 0.58 0.52 (0.58) (0.22) 10.68 10.76 6,519
1992(3) 10.00 0.47 0.44 (0.47) (0.06) 10.38 11.39* 1,214
CLASS B
1997(4) $10.11 $0.31 $ 0.28 $(0.31) -- $10.39 9.41% $ 1,268
- ---------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
RATIO OF RATIO OF TO AVERAGE TO AVERAGE
EXPENSES NET INCOME NET ASSETS NET ASSETS PORTFOLIO
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- -------------------------------------------------------------------------
U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I**
1997 0.55% 4.78% 0.65% 4.68% n/a
1996 0.55 4.72 0.65 4.62 n/a
1995 0.55 5.26 0.62 5.19 n/a
1994 0.55 3.42 0.63 3.34 n/a
1993(1) 0.55 2.62 0.68 2.49 n/a
- -------------------------------------------------------------------------
INSTITUTIONAL SELECT MONEY MARKET FUND
- -------------------------------------------------------------------------
CLASS I
1997(2) 0.30% 5.32% 0.35% 5.27% n/a
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
- -------------------------------------------------------------------------
CLASS I**
1997 0.80% 4.71% 1.02% 4.49% 0.00%
1996 0.80 4.85 0.96 4.69 33.83
1995 0.80 5.52 0.97 5.35 64.85
1994 0.80 3.51 0.94 3.37 68.39
1993 0.80 2.94 0.95 2.79 81.92
1992(3) 0.80 3.50 1.01 3.29 68.15
CLASS A**
1997 1.05% 4.50% 1.27% 4.38% 0.00%
1996 1.05 4.60 1.21 4.44 33.83
1995 1.05 5.27 1.22 5.10 64.85
1994 1.05 3.50 1.20 3.35 68.39
1993 1.05 2.09 1.13 2.01 81.92
1992(3) 1.05 3.14 1.26 2.93 68.15
- -------------------------------------------------------------------------
FIXED INCOME FUND
- -------------------------------------------------------------------------
CLASS I**
1997 0.80% 5.90% 0.91% 5.79% 80.34%
1996 0.80 5.60 0.92 5.48 40.56
1995 0.80 5.83 0.91 5.72 35.49
1994 0.80 5.91 0.90 5.81 15.24
1993 0.80 5.59 0.91 5.48 49.49
1992(3) 0.80 6.24 0.94 6.10 23.86
CLASS A**
1997 1.05% 5.60% 1.16% 5.49% 80.34%
1996 1.05 5.35 1.17 5.23 40.56
1995 1.05 5.58 1.16 5.47 35.49
1994 1.05 5.65 1.15 5.55 15.24
1993 1.05 5.24 1.13 5.16 49.49
1992(3) 1.05 5.93 1.20 5.78 23.86
CLASS B
1997(4) 1.80% 5.02% 1.86% 4.96% 80.34%
- -------------------------------------------------------------------------
<FN>
*ANNUALIZED
**ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
(1) COMMENCED OPERATIONS ON MAY 3, 1993. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON JULY 1, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(3) COMMENCED OPERATIONS ON APRIL 1, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(4) COMMENCED OPERATIONS ON MAY 16, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
63
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000)
- ---------------------------------------------------------------------------------------------------------------------
NEW JERSEY MUNICIPAL SECURITIES FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 $10.71 $0.49 $ 0.21 $(0.49) -- $10.92 6.76% $131,002
1996 10.79 0.44 (0.08) (0.44) -- 10.71 3.42 20,689
1995 9.93 0.47 0.86 (0.47) -- 10.79 13.57 28,080
1994 10.85 0.48 (0.92) (0.48) -- 9.93 (4.12) 19,977
1993 10.29 0.50 0.56 (0.50) -- 10.85 10.48 27,064
1992(1) 10.00 0.30 0.29 (0.30) -- 10.29 9.01* 9,395
CLASS A**
1997 $10.70 $0.49 $ 0.17 $(0.47) -- $10.89 6.31% $ 18,651
1996 10.79 0.41 (0.09) (0.41) -- 10.70 3.08 20,247
1995 9.93 0.44 0.86 (0.44) -- 10.79 13.30 25,954
1994 10.85 0.45 (0.92) (0.45) -- 9.93 (4.35) 21,195
1993 10.29 0.46 0.56 (0.46) -- 10.85 10.09 22,061
1992(1) 10.00 0.29 0.29 (0.29) -- 10.29 8.29* 5,424
- ---------------------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $10.16 $0.58 $ 0.11 $(0.58) -- $10.27 6.96% $ 31,739
1996 10.37 0.53 (0.21) (0.53) -- 10.16 3.26 24,679
1995 9.51 0.54 0.86 (0.54) -- 10.37 15.00 28,877
1994 10.53 0.51 (1.01) (0.51) $(0.01) 9.51 (4.85) 26,277
1993 10.23 0.52 0.32 (0.52) (0.02) 10.53 8.32 34,075
1992(2) 10.00 0.41 0.24 (0.41) (0.01) 10.23 7.95* 16,327
CLASS A**
1997 $10.16 $0.55 $ 0.10 $(0.55) -- $10.26 6.60% $ 1,397
1996 10.37 0.52 (0.22) (0.51) -- 10.16 3.01 2,578
1995 9.51 0.51 0.86 (0.51) -- 10.37 14.71 3,665
1994 10.53 0.49 (1.01) (0.49) $(0.01) 9.51 (5.09) 2,372
1993 10.24 0.49 0.31 (0.49) (0.02) 10.53 7.94 4,903
1992(2) 10.00 0.39 0.25 (0.39) (0.01) 10.24 7.86* 2,190
- ---------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $10.17 $0.45 $ 0.26 $(0.45) $(0.02) $10.41 7.18% $ 42,134
1996 10.23 0.44 (0.06) (0.44) -- 10.17 3.89 3,665
1995 9.55 0.40 0.68 (0.40) -- 10.23 11.53 3,345
1994 10.17 0.36 (0.62) (0.36) -- 9.55 (2.58) 2,734
1993(3) 10.00 0.23 0.17 (0.23) -- 10.17 6.01 2,922
CLASS A**
1997 $10.17 $0.43 $ 0.23 $(0.43) $(0.02) $10.38 6.63% $ 404
1996 10.22 0.42 (0.05) (0.42) -- 10.17 3.74 344
1995 9.55 0.38 0.67 (0.38) -- 10.22 11.15 269
1994 10.17 0.33 (0.62) (0.33) -- 9.55 (2.83) 336
1993(4) 9.98 0.20 0.19 (0.20) -- 10.17 6.28* 289
- ---------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
RATIO OF RATIO OF TO AVERAGE TO AVERAGE
EXPENSES NET INCOME NET ASSETS NET ASSETS PORTFOLIO
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- -------------------------------------------------------------------------
NEW JERSEY MUNICIPAL SECURITIES FUND
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS I**
1997 0.80% 4.68% 0.94% 4.54% 22.85%
1996 0.67 4.13 0.93 3.87 13.93
1995 0.41 4.43 0.93 3.91 2.83
1994 0.27 4.65 0.93 3.99 16.81
1993 0.20 4.57 1.00 3.77 23.83
1992(1) 0.46 4.56 1.22 3.80 2.23
CLASS A**
1997 1.05% 4.35% 1.19% 4.21% 22.85%
1996 0.92 3.88 1.18 3.62 13.93
1995 0.66 4.18 1.18 3.66 2.83
1994 0.52 4.40 1.18 3.74 16.81
1993 0.45 4.34 1.23 3.54 23.83
1992(1) 0.62 4.44 1.39 3.67 2.23
- -------------------------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------
CLASS I**
1997 0.80% 5.69% 0.94% 5.55% 57.82%
1996 0.80 5.26 0.87 5.19 40.60
1995 0.80 5.33 1.05 5.08 68.29
1994 0.80 5.13 0.95 4.98 40.27
1993 0.80 4.87 1.00 4.67 31.69
1992(2) 0.80 5.30 1.11 4.99 12.38
CLASS A**
1997 1.05% 5.40% 1.19% 5.26% 57.82%
1996 1.05 5.01 1.12 4.94 40.60
1995 1.05 5.08 1.30 4.83 68.29
1994 1.05 4.83 1.20 4.68 40.27
1993 1.05 4.59 1.23 4.41 31.69
1992(2) 1.05 5.00 1.36 4.69 12.38
- -------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- -------------------------------------------------------------------------
CLASS I**
1997 0.80% 4.47% 0.96% 4.31% 71.89%
1996 0.69 4.42 1.49 3.62 25.88
1995 0.80 4.05 1.27 3.58 36.92
1994 0.80 3.67 1.61 2.86 38.20
1993(3) 0.80 3.35 1.48 2.67 16.51
CLASS A**
1997 1.05% 4.18% 1.21% 4.02% 71.89%
1996 0.94 4.19 1.74 3.39 25.88
1995 1.05 3.80 1.55 3.30 36.92
1994 1.05 3.42 1.92 2.55 38.20
1993(4) 1.05 3.24 1.48 2.81 16.51
- -------------------------------------------------------------------------
<FN>
*ANNUALIZED
**ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
(1) COMMENCED OPERATIONS ON MAY 4, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON APRIL 1, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(3) COMMENCED OPERATIONS ON MAY 3, 1993. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(4) COMMENCED OPERATIONS ON MAY 13, 1993. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
64
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000)
- ---------------------------------------------------------------------------------------------------------------------
GNMA FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 $ 9.63 $0.62 $ 0.30 $(0.62) -- $9.93 9.88% $ 6,191
1996 9.94 0.60 (0.31) (0.60) -- 9.63 3.09 6,570
1995 8.85 0.60 1.09 (0.60) -- 9.94 19.52 8,750
1994 9.85 0.54 (1.00) (0.53) $(0.01) 8.85 (4.71) 6,983
1993(1) 10.00 0.34 (0.15) (0.34) -- 9.85 2.80* 10,900
CLASS A**
1997 $ 9.61 $0.61 $ 0.27 $(0.59) -- $9.90 9.50% $ 1,067
1996 9.93 0.57 (0.32) (0.57) -- 9.61 2.73 1,426
1995 8.84 0.58 1.08 (0.57) -- 9.93 19.24 1,761
1994 9.85 0.50 (1.00) (0.50) $(0.01) 8.84 (5.05) 1,853
1993(2) 10.01 0.31 (0.16) (0.31) -- 9.85 2.31* 2,633
- ---------------------------------------------------------------------------------------------------------------------
EQUITY GROWTH FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997(3) $10.00 $0.01 $1.22 $(0.01) $(1.98) $9.24 14.17%* $177,801
CLASS A**
1997(3) $10.00 $(0.01) $1.24 -- $(1.98) $9.25 14.13%* $ 432
CLASS B
1997(4) $10.41 $(0.02) $0.77 -- $(1.98) $9.18 13.01%* $ 357
- ---------------------------------------------------------------------------------------------------------------------
EQUITY VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $13.35 $0.18 $3.20 $(0.18) $(3.66) $12.89 25.71% $242,881
1996 12.81 0.22 2.54 (0.22) (2.00) 13.35 21.69 116,715
1995 10.19 0.25 3.46 (0.25) (0.84) 12.81 36.71 82,677
1994 11.10 0.21 (0.83) (0.21) (0.08) 10.19 (5.61) 61,407
1993 10.64 0.18 0.46 (0.18) -- 11.10 6.12 67,383
1992(5) 10.00 0.14 0.64 (0.14) -- 10.64 10.51* 62,116
CLASS A**
1997 $13.35 $0.15 $3.20 $(0.14) $(3.66) $12.90 25.51% $ 13,923
1996 12.83 0.19 2.51 (0.18) (2.00) 13.35 21.15 10,000
1995 10.21 0.21 3.47 (0.22) (0.84) 12.83 36.35 7,644
1994 11.12 0.18 (0.83) (0.18) (0.08) 10.21 (5.83) 3,031
1993 10.66 0.16 0.46 (0.16) -- 11.12 5.85 2,741
1992(5) 10.00 0.09 0.67 (0.10) -- 10.66 10.35* 1,562
CLASS B
1997(6) $14.81 $0.04 $1.73 $(0.05) $(3.66) $12.87 19.17%* $ 5,072
- ---------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
RATIO OF RATIO OF TO AVERAGE TO AVERAGE
EXPENSES NET INCOME NET ASSETS NET ASSETS PORTFOLIO AVERAGE
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE++
- ----------------------------------------------------------------------------------------
GNMA FUND
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS I**
1997 0.80% 6.37% 1.08% 6.09% 0.00% n/a
1996 0.80 6.23 1.16 5.87 5.77 n/a
1995 0.80 6.29 1.13 5.96 9.69 n/a
1994 0.80 5.72 0.97 5.55 102.77 n/a
1993(1) 0.80 4.48 1.08 4.20 252.73 n/a
CLASS A**
1997 1.05% 6.13% 1.33% 5.85% 0.00% n/a
1996 1.05 5.98 1.41 5.62 5.77 n/a
1995 1.05 6.05 1.37 5.73 9.69 n/a
1994 1.05 5.47 1.22 5.30 102.77 n/a
1993(2) 1.05 4.70 1.29 4.46 252.73 n/a
- ----------------------------------------------------------------------------------------
EQUITY GROWTH FUND
- ----------------------------------------------------------------------------------------
CLASS I**
1997(3) 0.80% 0.07% 1.07% (0.20)% 114.51% .0591
CLASS A**
1997(3) 1.05% (0.28)% 1.32% (0.55)% 114.51% .0591
CLASS B
1997(4) 1.80% (1.08)% 2.09% (1.37)% 114.51% .0591
- ----------------------------------------------------------------------------------------
EQUITY VALUE FUND
- ----------------------------------------------------------------------------------------
CLASS I**
1997 0.80% 1.26% 1.06% 1.00% 80.24% .0609
1996 0.80 1.67 1.08 1.39 85.30 .0950
1995 0.80 2.08 1.07 1.81 61.88 n/a
1994 0.80 1.92 1.06 1.66 44.98 n/a
1993 0.80 1.74 1.07 1.47 89.91 n/a
1992(5) 0.80 1.82 1.10 1.52 45.68 n/a
CLASS A**
1997 1.05% 0.98% 1.31% 0.72% 80.24% .0609
1996 1.05 1.42 1.33 1.14 85.30 .0950
1995 1.05 1.83 1.32 1.56 61.88 n/a
1994 1.05 1.67 1.31 1.41 44.98 n/a
1993 1.05 1.51 1.30 1.26 89.91 n/a
1992(5) 1.05 1.64 1.36 1.33 45.68 n/a
CLASS B
1997(6) 1.80% 0.09% 2.07% (0.18)% 80.24% .0609
- ----------------------------------------------------------------------------------------
<FN>
*ANNUALIZED
**ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND 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) COMMENCED OPERATIONS ON MAY 3, 1993. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON MAY 5, 1993. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(3) COMMENCED OPERATIONS ON FEBRUARY 3, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(4) COMMENCED OPERATIONS ON MAY 21, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(5) COMMENCED OPERATIONS ON APRIL 1, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(6) COMMENCED OPERATIONS MAY 12, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
65
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000)
- --------------------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 $13.32 $0.32 $2.95 $(0.32) $(3.08) $13.19 25.04% $131,968
1996 13.07 0.33 2.35 (0.34) (2.09) 13.32 21.01 58,035
1995 10.26 0.31 3.29 (0.31) (0.48) 13.07 35.55 44,202
1994 11.17 0.32 (0.81) (0.32) (0.10) 10.26 (4.42) 34,514
1993 10.72 0.29 0.80 (0.29) (0.35) 11.17 10.27 38,237
1992(1) 10.00 0.22 0.72 (0.22) -- 10.72 12.72* 32,538
CLASS A**
1997 $13.35 $0.29 $2.94 $(0.28) $(3.08) $13.22 24.68% $ 16,686
1996 13.08 0.31 2.34 (0.29) (2.09) 13.35 20.70 12,444
1995 10.27 0.28 3.29 (0.28) (0.48) 13.08 35.21 9,612
1994 11.17 0.29 (0.80) (0.29) (0.10) 10.27 (4.56) 5,657
1993 10.73 0.28 0.78 (0.27) (0.35) 11.17 9.94 4,421
1992(1) 10.00 0.15 0.77 (0.19) -- 10.73 12.43* 585
CLASS B
1997(2) $14.34 $0.15 $1.94 $(0.18) $(3.08) $13.17 22.87%* $ 7,862
- --------------------------------------------------------------------------------------------------------------------
MID CAP FUND
- --------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $13.33 $0.04 $2.65 $(0.04) $(1.18) $14.80 20.49% $ 46,125
1996 12.55 0.09 1.59 (0.09) (0.81) 13.33 13.56 45,556
1995 10.83 0.15 1.95 (0.15) (0.23) 12.55 19.49 42,375
1994 12.32 0.12 (1.27) (0.12) (0.22) 10.83 (9.34) 33,448
1993 10.99 0.11 1.33 (0.11) -- 12.32 13.22 35,648
1992(1) 10.00 0.07 0.99 (0.07) -- 10.99 14.30* 29,507
CLASS A**
1997 $13.31 $0.01 $2.64 $(0.02) $(1.18) $14.76 20.16% $ 5,147
1996 12.53 0.05 1.59 (0.05) (0.81) 13.31 13.32 5,846
1995 10.82 0.12 1.94 (0.12) (0.23) 12.53 19.13 5,653
1994 12.31 0.10 (1.27) (0.10) (0.22) 10.82 (9.54) 4,567
1993 10.99 0.09 1.32 (0.09) -- 12.31 12.88 2,720
1992(1) 10.00 0.05 1.00 (0.06) -- 10.99 14.08* 637
- --------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------------------------------------------
CLASS I**
1997 $11.39 $0.32 $1.88 $(0.32) $(1.27) $12.00 19.68% $ 24,362
1996 12.05 0.48 1.16 (0.47) (1.83) 11.39 13.77 19,243
1995 9.91 0.44 2.27 (0.44) (0.13) 12.05 27.76 32,145
1994 10.78 0.37 (0.86) (0.38) -- 9.91 (4.61) 26,921
1993 10.35 0.38 0.43 (0.38) -- 10.78 7.89 25,712
1992(1) 10.00 0.29 0.34 (0.28) -- 10.35 8.53* 16,899
CLASS A**
1997 $11.40 $0.26 $1.92 $(0.29) $(1.27) $12.02 19.46% $ 9,901
1996 12.07 0.43 1.17 (0.44) (1.83) 11.40 13.39 9,095
1995 9.92 0.42 2.28 (0.42) (0.13) 12.07 27.53 8,452
1994 10.79 0.35 (0.87) (0.35) -- 9.92 (4.87) 6,737
1993 10.36 0.37 0.42 (0.36) -- 10.79 7.62 8,122
1992(1) 10.00 0.20 0.40 (0.24) -- 10.36 8.15* 2,990
CLASS B
1997(2) $11.93 $0.15 $1.34 $(0.18) $(1.27) $11.97 19.45%* $ 4,447
- --------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
RATIO OF RATIO OF TO AVERAGE TO AVERAGE
EXPENSES NET INCOME NET ASSETS NET ASSETS PORTFOLIO AVERAGE
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE++
- ---------------------------------------------------------------------------------------
EQUITY INCOME FUND
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 0.80% 2.34% 1.09% 2.05% 76.67% .0694
1996 0.80 2.55 1.09 2.26 85.47 .1095
1995 0.80 2.61 1.10 2.31 42.97 n/a
1994 0.80 2.96 1.08 2.68 37.76 n/a
1993 0.80 2.65 1.10 2.35 89.89 n/a
1992(1) 0.80 2.88 1.14 2.54 58.41 n/a
CLASS A**
1997 1.05% 2.05% 1.34% 1.76% 76.67% .0694
1996 1.05 2.30 1.34 2.01 85.47 .1095
1995 1.05 2.36 1.35 2.06 42.97 n/a
1994 1.05 2.71 1.33 2.43 37.76 n/a
1993 1.05 2.42 1.35 2.12 89.89 n/a
1992(1) 1.05 2.54 1.40 2.19 58.41 n/a
CLASS B
1997(2) 1.80% 1.27% 2.13% 0.94% 76.67% .0694
- ---------------------------------------------------------------------------------------
MID CAP FUND
- ---------------------------------------------------------------------------------------
CLASS I**
1997 0.80% 0.30% 1.09% 0.01% 59.80% .0847
1996 0.80 0.66 1.10 0.36 41.41 .1010
1995 0.80 1.28 1.10 0.98 32.96 n/a
1994 0.80 1.06 1.08 0.78 13.82 n/a
1993 0.80 1.03 1.10 0.73 24.49 n/a
1992(1) 0.80 0.98 1.15 0.63 9.29 n/a
CLASS A**
1997 1.05% 0.06% 1.34% (0.23% 59.80% .0847
1996 1.05 0.41 1.35 0.11 41.41 .1010
1995 1.05 1.03 1.35 0.73 32.96 n/a
1994 1.05 0.85 1.33 0.57 13.82 n/a
1993 1.05 0.83 1.35 0.53 24.49 n/a
1992(1) 1.05 0.88 1.40 0.53 9.29 n/a
- ---------------------------------------------------------------------------------------
BALANCED FUND
- ---------------------------------------------------------------------------------------
CLASS I**
1997 0.80% 2.67% 1.14% 2.33% 93.85% .0959
1996 0.80 3.68 1.11 3.37 43.80 .1165
1995 0.80 3.89 1.11 3.58 41.63 n/a
1994 0.80 3.64 1.09 3.35 27.15 n/a
1993 0.80 3.75 1.14 3.41 63.03 n/a
1992(1) 0.80 3.88 1.20 3.48 82.76 n/a
CLASS A**
1997 1.05% 2.44% 1.39% 2.10% 93.85% .0959
1996 1.05 3.43 1.36 3.12 43.80 .1165
1995 1.05 3.64 1.36 3.33 41.63 n/a
1994 1.05 3.39 1.34 3.10 27.15 n/a
1993 1.05 3.47 1.38 3.14 63.03 n/a
1992(1) 1.05 3.59 1.45 3.19 82.76 n/a
CLASS B
1997(2) 1.80% 1.23% 2.28% 0.75% 93.85% .0959
- ---------------------------------------------------------------------------------------
<FN>
*ANNUALIZED
**ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND 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) COMMENCED OPERATIONS ON APRIL 1, 1992. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON MAY 8, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
66
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR LOSSES INVESTMENT CAPITAL VALUE END TOTAL END OF
OF PERIOD INCOME ON SECURITIES INCOME GAINS OF PERIOD RETURN(+) PERIOD (000)
- --------------------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 $11.23 $ 0.08 $(0.04) $(0.08) $(0.85) $10.34 0.25% $14,143
1996 10.74 0.08 1.11 (0.08) (0.62) 11.23 11.17 14,822
1995(1) 10.00 0.03 0.75 (0.02) (0.02) 10.74 7.81 9,990
CLASS A**
1997 $11.22 $ 0.05 $(0.04) $(0.05) $(0.85) $10.33 0.00% $ 665
1996 10.73 0.09 1.06 (0.04) (0.62) 11.22 10.88 788
1995(2) 10.00 0.01 0.75 (0.01) (0.02) 10.73 7.64 621
CLASS B
1997(3) $11.45 $(0.03) $(0.23) $(0.04) $(0.85) $10.30 (3.39%)* $ 118
- --------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET INCOME
RATIO OF RATIO OF TO AVERAGE TO AVERAGE
EXPENSES NET INCOME NET ASSETS NET ASSETS PORTFOLIO AVERAGE
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE++
- -----------------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS I**
1997 1.50% 0.95% 1.69% 0.76% 71.22% .0052
1996 1.50 0.85 1.73 0.62 67.03 .0051
1995(1) 1.50 0.79 2.11 0.18 14.32 n/a
CLASS A**
1997 1.75% 0.70% 1.95% 0.50% 71.22% .0052
1996 1.75 0.70 1.98 0.47 67.03 .0051
1995(2) 1.75 0.45 2.38 (0.18) 14.32 n/a
CLASS B
1997(3) 2.50% (0.60%) 2.70% (0.80%) 71.22% .0052
- -----------------------------------------------------------------------------------------
<FN>
*ANNUALIZED
**ON APRIL 30, 1997, CLASS A SHARES WERE REDESIGNATED CLASS I SHARES AND CLASS B SHARES WERE REDESIGNATED CLASS A SHARES.
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND 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) COMMENCED OPERATIONS ON MAY 1, 1995. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON MAY 4, 1995. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
(3) COMMENCED OPERATIONS ON MAY 7, 1997. RATIOS FOR THIS PERIOD HAVE BEEN ANNUALIZED.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
67
<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
seventeen 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, Institutional Select 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 Growth Fund, the Equity Value Fund, the Equity
Income Fund, the Mid Cap Fund, the International Growth Fund (the "Equity
Funds") and the Balanced 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 Funds' 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:
[BULLET] market value of investment securities, other assets and
liabilities at the current rate of exchange; and
[BULLET] 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 equity investment securities that is due to changes in foreign
exchange rates from that which is due to changes in market prices of such
securities.
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.
================================================================================
68
<PAGE>
========================================================== [PILLAR LOGO OMITTED]
DECEMBER 31, 1997
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 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 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", $68,437, $106,226, $401,052, $147,169, $7,145, and
$5,097 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, Equity Growth, Equity Value,
Equity Income, Mid Cap and Balanced Funds, respectively, as of December 31, 1997
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.
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES
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 Funds are amortizing their organizational costs, the redemption proceeds
payable to the holder thereof will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption. 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"). Such officers are paid no
fees by the Trust for serving as officers of the Trust. The Trust pays each
unaffiliated Trustee an annual fee for attendance at quarterly, interim and
committee meetings.
================================================================================
69
<PAGE>
================================================================================
Notes to Financial Statements (CONTINUED)
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 and
the Institutional Select Money Market Fund with annual fees that are calculated
daily and paid monthly at an annual rate of 0.35% and 0.10% of average daily net
assets, respectively. 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 Investments Distribution Co. (the "Distributor") acts as the
distributor of the Trust's shares. The Trust has adopted a distribution plan for
Class A shares (the "Class A Plan") pursuant to Rule 12b-1 under the 1940 Act.
Under the Class A Plan, the Distributor is entitled to receive from the Trust an
annual distribution fee of 0.25% of the Fund's Class A average daily net assets.
The Trust has also adopted a distribution plan for Class B shares (the
"Class B Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Class B
Plan, the Distributor is entitled to receive from the Trust an annual
distribution fee of 0.75% of the Fund's Class B average daily net assets.
Additionally, the Class B Plan provides that Class B shares are subject to a
service fee at an annual rate of 0.25% of the Fund's Class B average daily net
assets.
The Trust has also adopted a distribution plan for Class S shares (the
"Class S Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Class S
Plan, the Distributor is entitled to receive from the Trust an annual
distribution fee of 0.60% of the Fund's Class S average daily net assets. The
Distributor has agreed to voluntarily waive a portion of its distribution fees
from Class S shares in order to limit the operating expenses of the Funds.
The Distributor receives no fees for its distribution services for Class I
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 Money Market and Tax-Exempt
Money Market Funds, 0.15% of the average daily net assets of the U.S. Treasury
Securities Plus Money Market Fund, 0.10% of the average daily net assets of the
Institutional Select MoneyMarket 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 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 receives 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. The sub-advisory fees are paid by the Adviser.
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.
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, 1997
were as follows:
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70
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DECEMBER 31, 1997
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 -- 225,087 104,835 24,297 -- --
Other -- 56,932 27,152 -- 61,849 --
Sales
U.S. Gov't -- 115,239 -- 19,188 -- 1,354
Other 300 60,579 28,771 -- 25,291 --
EQUITY EQUITY EQUITY MID INTERNATIONAL
GROWTH VALUE INCOME CAP BALANCED GROWTH
------ ------ ------ ----- -------- -------------
(000) (000) (000) (000) (000) (000)
Purchases
U.S. Gov't -- -- 1,493 -- 10,976 --
Other 195,272 186,022 111,372 29,455 24,933 10,784
Sales
U.S. Gov't -- -- 996 -- 15,069 --
Other 252,700 173,011 86,544 37,099 15,142 11,464
At December 31, 1997, 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, 1997, 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 2 3,928 5,795 476 1,493 118
Aggregate gross
unrealized loss -- (55) (116) (3) (13) (24)
---- ----- ----- ----- ----- ----
Net unrealized
gain 2 3,873 5,679 473 1,480 94
==== ===== ===== ===== ===== ====
EQUITY EQUITY EQUITY MID INTERNATIONAL
GROWTH VALUE INCOME CAP BALANCED GROWTH
------ ------ ------ ----- -------- -------------
(000) (000) (000) (000) (000) (000)
Aggregate gross
unrealized gain 27,464 45,956 23,636 15,616 6,294 1,897
Aggregate gross
unrealized loss (8,249) (9,043) (2,320) (1,520) (636) (1,668)
------ ------ ------ ------ ----- ------
Net unrealized
gain 19,215 36,913 21,316 14,096 5,658 229
====== ====== ====== ====== ===== ======
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
organization ("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 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 concentrate its investments 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 Securities 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 economic developments in a specific
state or region. The following tables present a summary of holdings in each of
these portfolios:
<TABLE>
<CAPTION>
TAX- INSTITUTIONAL
U.S. EXEMPT U.S. SELECT
TREASURY PRIME MONEY TREASURY MONEY
SECURITIES OBLIGATION MARKET SECURITIES PLUS MARKET
---------- ---------- -------- --------------- -------------
<S> <C> <C> <C> <C>
U.S. Gov't. Securities 76.3% 15.9% -- 66.3% 13.9%
Repurchase Agreements 23.7 12.3 -- 33.7 27.8
Municipal Securities -- -- 96.3% -- --
Commercial Paper -- 71.8 -- -- 58.3
Other Short Term
Securities -- -- 3.7 -- --
</TABLE>
SHORT-TERM FIXED NEW JERSEY INT.-TERM
INV. INCOME MUNI. GOVT.
---------- ------ ---------- ---------
U.S. Gov't. Securities 96.2% 55.7% -- 96.5%
AAA -- 21.3 55.8% --
AA -- 12.0 21.5 --
A -- 7.0 7.3 --
BBB -- 0.5 -- --
NR 3.8 -- 13.0 --
All Other -- 3.5 2.4 3.5
PA
BALANCED MUNI. GNMA
-------- ---- ----
U.S. Gov't. Securities 17.5% -- 93.9%
AAA 5.0 63.0% --
AA 2.6 22.6 --
A 3.9 5.5 --
BBB -- 0.2 --
NR -- 7.2 6.1
Common Stock 69.5 -- --
All Other 1.5 1.5 --
================================================================================
71
<PAGE>
================================================================================
Notes to Financial Statements (CONTINUED)
8. CAPITAL LOSS CARRYFORWARDS
The capital loss carryforwards at December 31, 1997, for Federal income tax
purposes are as follows:
EXPIRATION
AMOUNT DATE
------ ----------
Prime Obligation
Money Market Fund $31,590 2004
Tax-Exempt Money
Market Fund 7,727 2000-2005
U.S. Treasury
Securities Plus 18,949 2001-2002
Short-Term
Investment 42,712 2003-2004
Fixed Income 235,953 2003
New Jersey Municipal
Securities 232,038 2003-2004
Intermediate-Term
Government Securities 1,517,919 2002-2005
GNMA 822,392 2002-2005
The Equity Growth Fund had wash sales during the fiscal year ended
December 31, 1997 amounting to $1,005,565. These wash sale losses cannot be
used for Federal income tax purposes and are deferred.
9. OPTIONS TRANSACTIONS
The Equity Growth Fund purchased call options during the period. These
transactions, which were undertaken principally to hedge against market risk,
entail certain risks. These risks include: (1) the success of a hedging strategy
may depend on an ability to predict movements in the prices of individual
securities, fluctuations in markets and movements in interest rates; (2) there
may be an imperfect correlation between the movement in prices of options and
the securities underlying them; and (3) there may not be a liquid secondary
market for options. Option activity for the Equity Growth Fund for the period
ended December 31, 1997 is as follows:
CALL OPTIONS (000)
-----------------------
NUMBER MARKET
OF OPTIONS VALUE
------------ ----------
December 31, 1997 285 $677
The Fund realized losses of approximately $182,298 on call options in 1997.
10. COMMON TRUST FUND CONVERSIONS
On February 1, 1997, certain Common Trust Funds of Summit Bank and its
affiliates were converted into the Pillar Funds. The Funds that were involved in
the conversion were as follows:
Common Trust Fund Pillar Fund
- ------------------ -----------
Pyramid Equity Income Fund Equity Income Fund
First Valley Bank Pennsylvania Pennsylvania Municipal
Tax-Exempt Fund Securities Fund
Pyramid Government Intermediate-Term
Fund Government Securities Fund
Pyramid Municipal Fund
Summit Bank CTF New Jersey Municipal
Tax-Exempt Fund Securities Fund
First Valley Bank Corporate/
Government Income Fund
Summit Bank CTF
Taxable Bond Fund
Pyramid Income Fund
Summit Bank Employee Benefit
Bond Fund Fixed Income Fund
First Valley Bank Equity Fund
Pyramid Growth Fund Equity Value Fund
Summit Bank Employee Benefit
Common Stock Fund
Self Employed Retirement Fund
Summit Bank CTF Capital
Growth Fund Equity Growth Fund
The number of shares issued for each fund and the net assets (including net
unrealized gain/loss) of each fund immediately before the conversion were as
follows:
Unrealized
Common Trust Fund Net Assets Gain/(Loss)
- ------------------ ---------- -----------
Pyramid Equity Income Fund $34,921,068 $15,070,845
First Valley Bank Pennsylvania
Tax-Exempt Fund 37,351,305 479,926
Pyramid Government Fund 13,328,272 82,578
Pyramid Municipal Fund 27,106,556 1,470,536
Summit Bank CTF
Tax-Exempt Fund 81,341,717 994,062
First Valley Bank Corporate/
Government Income Fund 25,359,209 (39,338)
Summit Bank CTF
Taxable Bond Fund 68,089,184 96,610
Pyramid Income Fund 33,854,976 168,397
Summit Bank Employee
Benefit Bond Fund 46,538,572 (18,801)
First Valley Bank Equity Fund 29,213,010 6,986,551
Pyramid Growth Fund 55,314,477 20,924,589
Summit Bank Employee
Benefit Common Stock Fund 65,394,986 1,223,470
Self Employed Retirement Fund 3,352,225 39,136
Summit Bank CTF
Capital Growth Fund 152,286,126 32,316,660
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72
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DECEMBER 31, 1997
Net Assets
Pillar Funds Prior to Conversion Shares Issued
- ------------------ ------------------ -------------
Equity Income Fund $72,031,803 2,525,125
Pennsylvania Municipal
Securities Fund 4,058,459 3,676,310
Intermediate-Term Government
Securities Fund 27,272,305 1,311,380
New Jersey Municipal
Securities Fund 40,228,805 10,125,023
Fixed Income Fund 103,362,682 17,056,956
Equity Value Fund 132,299,525 6,015,148
Equity Growth Fund -- 22,103,334
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73
<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, Institutional Select Money Market,
Short-Term Investment, Fixed Income, New Jersey Municipal Securities,
Intermediate-Term Government Securities, Pennsylvania Municipal Securities,
GNMA, Equity Growth, Equity Value, Equity Income, Mid Cap, Balanced, and
International Growth Funds of The Pillar Funds (the "Trust") as of December 31,
1997, 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, 1997, by correspondence with the custodian and application of
alternative procedures with respect to unsettled transactions. 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, Institutional Select
Money Market, Short-Term Investment, Fixed Income, New Jersey Municipal
Securities, Intermediate-Term Government Securities, Pennsylvania Municipal
Securities, GNMA, Equity Growth, Equity Value, Equity Income, Mid Cap, Balanced,
and International Growth Funds of The Pillar Funds as of December 31, 1997, 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 16, 1998
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74
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DECEMBER 31, 1997
Notice to Shareholders of the
Pillar Funds (UNAUDITED)
Dear Pillar Shareholders:
For the fiscal year ended December 31, 1997, 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)
NET (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 94
U.S. Treasury Securities
Plus MM Fund 0 100 100 0 0
Institutional Select Money Market 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 0 100
Intermediate-Term Government
Securities Fund 0 100 100 0 0
Pennsylvania Municipal
Securities Fund 5 95 100 0 100
GNMA Fund 0 100 100 0 0
Equity Growth Fund 67 33 100 8 0
Equity Value Fund 74 26 100 23 0
Equity Income Fund 86 14 100 57 0
Mid Cap Fund 86 14 100 79 0
Balanced Fund 80 20 100 35 0
International Growth Fund 39 61 100 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.
Please consult your tax adviser for proper treatment of this information.
[BULLET] The U.S. Treasury Securities Money Market Fund and Short-Term
Investment Fund satisfy 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
is 99.09% and 73.76% of the total "Ordinary Income Distribution" of the
U.S. Treasury Securities Money Market Fund and the Short-Term
Investment Fund, respectively in column B above. No other funds within
this complex qualify in CA, CT, or NY to pass through exempt interest
dividends from U.S. obligations.
</FN>
</TABLE>
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75
<PAGE>
================================================================================
Notes
================================================================================
76
<PAGE>
<PAGE>
The Pillar Funds
Annual Report
----------------
December 31, 1997
INVESTMENT ADVISER
Summit Bank Investment Management Division
a division of Summit Bank
ADMINISTRATOR
SEI Fund Resources
Oaks, PA 19456
DISTRIBUTOR
SEI Investments Distribution Co.
Oaks, PA 19456
-------------------------------------------
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
INVESTMENTS DISTRIBUTION CO.
SEI INVESTMENTS DISTRIBUTION CO. 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-015-08
