PILLAR FUNDS, 485APOS, 1999-03-01

PILLAR FUNDS
485APOS, 1999-03-01

Previous: PILLAR FUNDS, NSAR-B, 1999-03-01

Next: BLACKROCK INSURED MUNICIPAL TERM TRUST INC, NSAR-B, 1999-03-01

<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 1999.

FILE NO. 33-44712

FILE NO. 811-6509
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20546

------------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 19 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 21 /X/

------------------------

THE PILLAR FUNDS

(Exact Name of Registrant as Specified in Charter)

2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (800) 932-7781

MARK E. NAGLE
c/o SEI Investments Company
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)

COPIES TO:

Richard W. Grant, Esquire
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103

------------------------

It is proposed that this filing will become effective (check appropriate box)

<TABLE>
<C> <S>
/ / immediately upon filing pursuant to Paragraph (b)
/ / on (date) pursuant to Paragraph (b)
/X/ 60 days after filing pursuant to Paragraph (a)
/ / 75 days after filing pursuant to Paragraph (a)
/ / on (date) pursuant to Paragraph (a) of Rule 485
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

THE PILLAR FUNDS

CLASS I SHARES

PROSPECTUS
APRIL 30, 1999

MONEY MARKET FUNDS
U.S. TREASURY SECURITIES MONEY MARKET FUND
PRIME OBLIGATION MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND

FIXED INCOME FUNDS
FIXED INCOME FUND
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND

EQUITY AND BALANCED FUNDS
EQUITY GROWTH FUND
EQUITY VALUE FUND
EQUITY INCOME FUND
EQUITY INDEX FUND
INTERNATIONAL EQUITY FUND
MID CAP FUND
BALANCED FUND

INVESTMENT ADVISOR
SUMMIT BANK

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.

Page 1 of 74
<PAGE>

IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 2 of 74
<PAGE>

HOW TO READ THIS PROSPECTUS

The Pillar Funds is a mutual fund family that offers different classes of shares
in separate investment portfolios (Funds). The Funds have individual investment
goals and strategies. This prospectus gives you important information about the
Class I Shares of the Funds that you should know before investing. Please read
this prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. IN THE INTRODUCTION SECTION, THERE IS SOME
GENERAL INFORMATION YOU SHOULD KNOW ABOUT THE FUNDS.
FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
U.S. TREASURY SECURITIES MONEY MARKET FUND XXX
PRIME OBLIGATION MONEY MARKET FUND XXX
TAX-EXEMPT MONEY MARKET FUND XXX
FIXED INCOME FUND XXX
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND XXX
NEW JERSEY MUNICIPAL SECURITIES FUND XXX
PENNSYLVANIA MUNICIPAL SECURITIES FUND XXX
HIGH YIELD BOND FUND XXX
EQUITY GROWTH FUND XXX
EQUITY VALUE FUND XXX
EQUITY INCOME FUND XXX
EQUITY INDEX FUND XXX
INTERNATIONAL EQUITY FUND XXX
MID CAP FUND XXX
BALANCED FUND XXX
MORE INFORMATION ABOUT RISK XXX
EACH FUND'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISOR, SUB-ADVISOR
AND PORTFOLIO MANAGERS XXX
PURCHASING, SELLING AND EXCHANGING FUND SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
THE PILLAR FUNDS Back Cover
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR [VAR:KEYTERMS.DESC].

Page 3 of 74
<PAGE>

INTRODUCTION

Each Fund is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal.
The investment managers invest Fund assets in a way that they believe will
help each Fund achieve its goal. Still, investing in each Fund involves risk
and there is no guarantee that a Fund will achieve its goal. The investment
managers' judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company
performance, and these judgments may affect the return on your investment. In
fact, no matter how good a job an investment manager does, you could lose
money on your investment in a Fund, just as you could with other investments.
A Fund share is not a bank deposit and it is not insured or guaranteed by the
FDIC or any government agency.

The value of your investment in a Fund (other than a Money Market Fund) is
based on the market value of the securities the Fund holds. These prices
change daily due to economic and other events that affect particular
companies and other issuers. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities a
Fund owns and the markets in which they trade. The effect on a Fund of a
change in the value of a single security will depend on how widely the Fund
diversifies its holdings.

THE U.S. TREASURY SECURITIES MONEY MARKET FUND, PRIME OBLIGATION MONEY MARKET
FUND, AND TAX-EXEMPT MONEY MARKET FUND TRY TO MAINTAIN A CONSTANT PRICE PER
SHARE OF $1.00, BUT THERE IS NO GUARANTEE THAT A MONEY MARKET FUND WILL
ACHIEVE THIS GOAL.

Page 4 of 74
<PAGE>

U.S. TREASURY SECURITIES MONEY MARKET FUND

<TABLE>
<CAPTION>
FUND SUMMARY
- ------------
<S> <C>
Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Money market instruments issued by the U.S.
Treasury

Share Price Volatility Very low

Principal Investment Strategy Investing in short-term U.S. dollar-denominated
obligations of the U.S. Treasury and repurchase
agreements

Investor Profile Conservative investors who want to receive
income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE U.S. TREASURY SECURITIES MONEY MARKET FUND

The Fund invests exclusively in short-term U.S. dollar-denominated money
market instruments issued by the U.S. Treasury and repurchase agreements that
are fully collateralized by U.S. Treasury securities. The Fund will maintain
an average dollar weighted maturity of 60 days or less, and will only acquire
securities that have a remaining maturity of 397 days or less. The Advisor's
investment selection process seeks to add value through yield analysis and
positioning on the yield curve. The Advisor actively manages the maturity of
the Fund based on current market interest rates and its outlook on the market
and future interest rate predictions.

PRINCIPAL RISKS OF INVESTING IN THE U.S. TREASURY SECURITIES MONEY MARKET FUND

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund
share is not a bank deposit and is not insured or guaranteed by the FDIC or
any government agency. In addition, although a money market fund seeks to
keep a constant price per share of $1.00, you may lose money by investing in
the Fund.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment

Page 5 of 74
<PAGE>

in the Fund. Of course, the Fund's past performance does not necessarily
indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio1: Import Performance bar chart
<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities Money X.XX% X.XX% X.XX% X.XX%*
Market Fund
</TABLE>

* Since 4/1/92

FUND FEES AND EXPENSES

EVERY MUTUAL FUND HAS OPERATING EXPENSES TO PAY FOR SERVICES SUCH AS
PROFESSIONAL ADVISORY, SHAREHOLDER, DISTRIBUTION, ADMINISTRATION AND CUSTODY
SERVICES AND OTHER COSTS OF DOING BUSINESS. THIS TABLE DESCRIBES THE HIGHEST
FEES AND EXPENSES THAT YOU MAY PAY INDIRECTLY IF YOU HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES*

Page 6 of 74
<PAGE>

<TABLE>
<CAPTION>
CLASS I
SHARES
- ---------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Other Expenses .XX%
- ---------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

U.S. TREASURY SECURITIES MONEY MARKET FUND - CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$_____ $_____ $_____ $_____
</TABLE>

Page 7 of 74
<PAGE>

PRIME OBLIGATION MONEY MARKET FUND

FUND SUMMARY
<TABLE>
<S> <C>
Investment Goal Preserve principal value and maintain a high degree
of liquidity while providing current income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term high
quality U.S. dollar-denominated debt securities

Investor Profile Conservative investors who want to receive current
income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE PRIME OBLIGATION MONEY MARKET FUND

The Fund invests in a broad range of high quality short-term U.S.
dollar-denominated money market instruments, such as obligations of the U.S.
Treasury; agencies and instrumentalities of the U.S. government; domestic and
foreign banks; domestic and foreign corporations; supranational entities; and
foreign governments. The Fund may also enter into fully collateralized
repurchase agreements. The Fund's portfolio is comprised only of short-term
debt securities that are rated in the two highest categories by nationally
recognized ratings organizations or securities that the Advisor determines
are of equal quality. The Fund will maintain an average dollar weighted
maturity of 90 days or less, and will only acquire securities that have a
remaining maturity of 397 days or less.

The Advisor's investment selection process seeks to add value through
security selection, sector rotation and positioning on the yield curve.
Securities are chosen based on the issuer's financial condition, the
financial condition of any person or company which guarantees the credit of
the issuer, liquidity and competitive yield. The Fund attempts to avoid
purchasing or holding securities that are subject to a decline in credit
quality of the issue through careful credit screening, as well as ongoing
monitoring of each issuer and any person or company providing credit support.

PRINCIPAL RISKS OF INVESTING IN THE PRIME OBLIGATION MONEY MARKET FUND

Page 8 of 74
<PAGE>

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio2: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

* Since 4/1/92

FUND FEES AND EXPENSES

Page 9 of 74
<PAGE>

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ---------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Other Expenses .XX%
- ---------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

PRIME OBLIGATION MONEY MARKET FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$_____ $_____ $_____ $_____
</TABLE>

Page 10 of 74

<PAGE>

TAX-EXEMPT MONEY MARKET FUND

SUMMARY

<TABLE>
<S> <C>
Investment Goal Preserve principal value and maintain a
high degree of liquidity while providing
current income that is exempt from Federal
income tax

Investment Focus Tax-free money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a well diversified portfolio of
short-term municipal securities which pay
interest that is exempt from Federal income taxes

Investor Profile Conservative taxable investors who want to
receive current income exempt from Federal
taxes through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE TAX-EXEMPT MONEY MARKET FUND

The Fund invests substantially all of its assets in a broad range of high
quality short-term municipal money market instruments that pay interest that
is exempt from Federal income taxes. The issuers of these securities may be
state and local governments and agencies located in any of the fifty states,
the District of Columbia, Puerto Rico and other U.S. territories and
possessions. The Fund's portfolio will be well diversified among these
issuers, and will be comprised only of short-term debt securities that are
rated in the two highest categories by nationally recognized ratings
organizations, or have been determined by the Advisor to be of equal quality.
The Fund will maintain an average dollar weighted maturity of 90 days or
less, and will only acquire securities that have a remaining maturity of 397
days or less.

The Advisor's investment selection process seeks to add value through a
strategy that takes advantage of the inefficient nature of the municipal
securities market. The Advisor actively manages the maturity of the Fund
based on current market interest rates and its outlook on the market and
future interest rate predictions. Securities are chosen based on the issuer's
financial condition, the financial condition of any person or company which
guarantees the credit of the issuer, liquidity and competitive yield. The
Fund attempts to avoid purchasing or holding securities that are subject to a
decline in credit quality of the issue through careful credit screening, as
well as ongoing monitoring of each issuer and any person or company providing
credit support.

PRINCIPAL RISKS OF INVESTING IN THE TAX-EXEMPT MONEY MARKET FUND

Page 11 of 74
<PAGE>

There may be economic or political changes that impact the ability of
municipal issuers to repay principal and to make interest payments on
municipal securities. Changes in the financial condition or credit rating of
municipal issuers also may adversely affect the value of the Fund's
securities.

Since the Fund may purchase securities supported by credit enhancements from
banks and other financial institutions, changes in the credit quality of
these institutions could cause losses to the Fund and affect its share price.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio3: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

Page 12 of 74
<PAGE>

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market Fund X.XX% X.XX% X.XX% X.XX%*

</TABLE>

* Since 4/6/92

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ----------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Other Expenses .XX%
- ----------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

TAX-EXEMPT MONEY MARKET FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

Page 13 of 74
<PAGE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$_____ $_____ $_____ $_____
</TABLE>

Page 14 of 74
<PAGE>

FIXED INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal High level of total return, through current
income and capital appreciation, consistent
with preservation of capital

Investment Focus Fixed income securities

Share Price Volatility Low

Principal Investment Strategy Investing in fixed income securities issued by
the U.S. government and U.S. corporate debt
obligations

Investor Profile Investors who seek a high level of total return
consistent with the preservation of capital
</TABLE>

INVESTMENT STRATEGY OF THE FIXED INCOME FUND

The Fund invests primarily in U.S. Treasury and U.S. government agency
obligations, including mortgage-backed securities, and U.S. corporate debt
securities that are rated in one of the three highest ratings categories. In
selecting investments for the Fund, the Advisor performs analysis and
research on individual securities available for purchase. The Advisor
determines how the Fund's investments will be weighted between the government
and corporate sectors. The Advisor may purchase securities with any stated
remaining maturity, but under normal circumstances, the Fund will maintain a
dollar-weighted average maturity of less than 15 years. The Advisor may vary
maturity if it believes interest rates will change in the future.

PRINCIPAL RISKS OF INVESTING IN THE FIXED INCOME FUND

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers. Generally, the Fund's fixed
income securities will decrease in value if interest rates rise and vice
versa, and the volatility of lower rated securities is even greater than that
of higher rated securities. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects
risk.

Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies
are backed by the U.S. Treasury, while others are backed solely by the
ability of the agency to borrow from the U.S. Treasury or by the agency's own
resources.

The mortgages underlying mortgage-backed securities may be paid off early,
which makes it

Page 15 of 74
<PAGE>

difficult to determine their actual maturity and therefore calculate how they
will respond to changes in interest rates. The Fund may have to reinvest
prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities.

The Fund is also subject to the risk that its investment approach, which
focuses on U.S. government and corporate fixed income securities, may perform
differently than other mutual funds which focus on different fixed income
market segments or other asset classes.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio4: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed Income Fund X.XX% X.XX% X.XX% X.XX% X.XX%*
The Lehman Brothers Intermediate X.XX% X.XX% X.XX% X.XX% X.XX%**
Government/Corporate Bond Index
</TABLE>
* Since 4/1/92
** Since [calc. date for index]

WHAT IS AN INDEX?

Page 16 of 74

<PAGE>

An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment advisor and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The Lehman Brothers
Intermediate Government/Corporate Bond Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower
market value stocks) index of U.S. Treasury securities, U.S. government
agency obligations, corporate debt backed by the U. S. government, fixed-rate
nonconvertible corporate debt securities, Yankee bonds and nonconvertible
debt securities issued by or guaranteed by foreign governments and agencies.
All securities in the index are rated investment grade (BBB) or higher, with
maturities of 1 to 10 years.

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
-------
- ---------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .60%
Other Expenses .XX%
- ---------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

FIXED INCOME FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

Page 17 of 74
<PAGE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$_______ $_______ $_______ $________
</TABLE>

Page 18 of 74
<PAGE>

INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Intermediate-term fixed income obligations
of the U.S. Treasury and U.S. government
agencies

Share Price Volatility Low

Principal Investment Strategy Investing in a portfolio of U.S. Treasury
obligations and U.S. government agency
obligations to attempt to maximize return
while limiting risk

Investor Profile Conservative investors who want to receive
income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND

The Fund attempts to invest fully in fixed income obligations issued by the
U.S. Treasury and U.S. government agencies. In selecting investments for the
Fund, the Advisor analyzes current market conditions and anticipated changes
in bond prices to attempt to obtain the highest possible yield with the least
amount of risk. The Advisor attempts to invest the Fund's assets
approximately 66% in U.S. Treasury obligations and 33% in U.S. government
agency obligations. The Advisor actively manages the maturity of the Fund's
portfolio and purchases securities which will mature in three to ten years.
Under normal circumstances, the Advisor anticipates that the Fund's
dollar-weighted average maturity will be approximately three years; however,
the Advisor may vary this average maturity substantially in anticipation of a
change in the interest rate environment.

PRINCIPAL RISKS OF INVESTING IN THE INTERMEDIATE-TERM GOVERNMENT SECURITIES
FUND

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes. Generally, the Fund's fixed
income securities will decrease in value if interest rates rise and vice
versa. Also, longer-term securities are generally more volatile, so the
average maturity or duration of these securities affects risk.

Page 19 of 74
<PAGE>

The Fund is also subject to the risk that its investment approach, which focuses
on U.S. government fixed income securities, may perform differently than mutual
funds which focus on different fixed income market segments or other asset
classes.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio5: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Intermediate-Term Government X.XX% X.XX% X.XX% X.XX% X.XX%*
Securities Fund
The Lehman Brothers Intermediate X.XX% X.XX% X.XX% X.XX% X.XX%**
Government Bond Index
</TABLE>
*Since 4/1/92
**Since [calc. date for index]

WHAT IS AN INDEX?

Page 20 of 74
<PAGE>

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ---------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .60%
Other Expenses .XX%
- ---------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$_______ $_______ $_______ $________
</TABLE>

Page 21 of 74
<PAGE>

NEW JERSEY MUNICIPAL SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Current income exempt from both Federal
and New Jersey state income tax, consistent
with preservation of capital

Investment Focus Tax-free New Jersey municipal securities

Share Price Volatility Medium

Principal Investment Strategy Invests in municipal obligations which pay
interest that is exempt from both Federal and
New Jersey state income tax

Investor Profile Conservative taxable investors who want to receive
current income exempt from Federal and New Jersey
state income tax and are willing to bear the risk
of investing in a portfolio of securities affected
by changes in economic conditions and governmental
policies within New Jersey
</TABLE>

INVESTMENT STRATEGY OF THE NEW JERSEY MUNICIPAL SECURITIES FUND

The Fund invests substantially all of its assets in municipal securities that
generate income exempt from Federal and New Jersey state income taxes. These
securities include securities of municipal issuers located in New Jersey, the
District of Columbia, Puerto Rico and other U.S. territories and possessions.
The Fund will invest most of its assets in securities that are not subject to
Federal taxes, including the alternative minimum tax, but it can purchase a
limited amount of taxable securities. The Fund's Advisor will purchase municipal
securities rated in one of the top three ratings categories and attempt to
maintain an average weighted portfolio maturity of less than 15 years. In
selecting securities for the Fund, the Advisor will consider each security's
yield and total return potential relative to other available municipal
securities.

PRINCIPAL RISKS OF INVESTING IN THE NEW JERSEY MUNICIPAL SECURITIES FUND

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if
interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also,
longer-term securities are generally more volatile, so the average maturity
or duration of these securities affects risk.

Page 22 of 74
<PAGE>

The Fund is non-diversified, which means that it may invest in the securities
of relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or political occurrence affecting one or more of
these issuers, and may experience increased volatility due to its investments
in those securities.

The Fund's concentration of investments in securities of issuers located in
New Jersey subjects the Fund to economic conditions and government policies
within that state. As a result, the Fund will be more susceptible to factors
which adversely affect issuers of New Jersey obligations than a mutual fund
which does not have as great a concentration in New Jersey municipal
obligations.

The Fund is also subject to the risk that its market segment, New Jersey
municipal debt securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio6: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL
BOND INDEX.

Page 23 of 74
<PAGE>

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey Municipal Securities Fund X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers 5-Year Municipal Bond X.XX% X.XX% X.XX% X.XX%**
Index
</TABLE>
*Since 5/4/92
**Since [calc. date for index]

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- --------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .60%
Other Expenses .XX%
- --------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

NEW JERSEY MUNICIPAL SECURITIES FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

Page 24 of 74
<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 25 of 74
<PAGE>

PENNSYLVANIA MUNICIPAL SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Current income exempt from both Federal
and Pennsylvania state income tax, consistent
with preservation of capital

Investment Focus Tax-free Pennsylvania municipal securities

Share Price Volatility Medium

Principal Investment Strategy Invests in municipal
obligations which pay interest that is exempt
from both Federal and Pennsylvania state
income tax

Investor Profile Conservative taxable investors who want to receive
current income exempt from Federal and Pennsylvania
state income tax and are willing to bear the risk
of investing in a portfolio of securities affected
by changes in economic conditions and governmental
policies within Pennsylvania
</TABLE>

INVESTMENT STRATEGY OF THE PENNSYLVANIA MUNICIPAL SECURITIES FUND

The Fund invests substantially all of its assets in municipal securities that
generate income exempt from Federal and Pennsylvania state income taxes.
These securities include securities of municipal issuers located in
Pennsylvania, the District of Columbia, Puerto Rico and other U.S.
territories and possessions. The Fund will invest most of its assets in
securities that are not subject to Federal taxes, including the alternative
minimum tax, but it can purchase a limited amount of taxable securities. The
Fund's Advisor will purchase municipal securities rated in one of the top
three ratings categories and attempt to maintain an average weighted
portfolio maturity of less than 15 years. In selecting securities for the
Fund, the Advisor will consider each security's yield and total return
potential relative to other available municipal securities.

PRINCIPAL RISKS OF INVESTING IN THE PENNSYLVANIA MUNICIPAL SECURITIES FUND

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if
interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also,
longer-term securities are generally more volatile, so the average maturity
or duration of these securities affects risk.

Page 26 of 74
<PAGE>

The Fund's concentration of investments in securities of issuers located in
Pennsylvania subjects the Fund to economic conditions and government policies
within that state. As a result, the Fund will be more susceptible to factors
which adversely affect issuers of Pennsylvania obligations than a mutual fund
which does not have as great a concentration in Pennsylvania municipal
obligations.

The Fund is also subject to the risk that its market segment, Pennsylvania
municipal debt securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio7: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Page 27 of 74
<PAGE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania Municipal Securities Fund X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers 5-Year Municipal Bond X.XX% X.XX% X.XX% X.XX%**
Index
</TABLE>
* Since 5/3/93
** Since [calc. date for index]

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .60%
Other Expenses .XX%
- ------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

Page 28 of 74
<PAGE>

ALL OR PART OF THIS WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S
ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

PENNSYLVANIA MUNICIPAL SECURITIES FUND - CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 29 of 74
<PAGE>

HIGH YIELD BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Maximize total return

Investment Focus High-yield fixed income securities

Share Price Volatility High

Principal Investment Strategy Investing the Fund's assets in another mutual
fund with an identical investment objective

Investor Profile Investors who want the potential for high total
return and who can tolerate the high risk of
share price volatility
</TABLE>

INVESTMENT STRATEGY OF THE HIGH YIELD BOND FUND

The Fund pursues its investment objective through what is sometimes called a
"master-feeder" arrangement. The Fund invests substantially all of its assets
in the SEI Institutional Managed Trust (SIMT) High Yield Bond Fund. As a
result, the Fund has an indirect interest in all the securities owned by the
SIMT Fund and the Fund's investment results will be the same as those of the
SIMT Fund, adjusted for the Fund's expenses.

The SIMT Fund invests directly in a portfolio of fixed income securities
rated below investment grade ("junk bonds"), including corporate bonds and
debentures, convertible and preferred securities, and zero coupon
obligations. The SIMT Fund's advisor chooses securities that offer a high
current yield as well as total return potential. The SIMT Fund's securities
are diversified as to issuers and industries. The SIMT Fund's average
weighted maturity may vary, and will generally not exceed ten years, and
there is no limit on the maturity or on the credit quality of any security.

PRINCIPAL RISKS OF INVESTING IN THE HIGH YIELD BOND FUND

The prices of the SIMT Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the SIMT Fund's fixed income securities will decrease in value if
interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also,
longer-term securities are generally more volatile, so the average maturity
or duration of these securities affects risk.

Junk bonds involve greater risks of default or downgrade and are more
volatile than investment grade securities. Junk bonds involve greater risk of
price declines than investment grade securities due to actual or perceived
changes in an issuer's creditworthiness. In addition, issuers of junk bonds
may be more susceptible than other issuers to economic downturns. Junk bonds
are subject to the risk that the issuer may not be able to pay interest or
dividends and ultimately to

Page 30 of 74

<PAGE>

repay principal upon maturity. Discontinuation of these payments could
substantially adversely affect the market value of the security.

The Fund is also subject to the risk that its market segment, junk bonds, may
underperform other fixed income market segments or the fixed income markets
as a whole. In addition, because the Fund invests indirectly in junk bonds
through another mutual fund, the Fund's investment returns depend on the
performance of the SIMT Fund.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio8: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

The performance for the periods prior to 9/1/98 represents the performance of
the SIMT Fund adjusted for the expenses of the Fund.

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE CS FIRST BOSTON HI YIELD INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS INCEPTION
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
High Yield Bond Fund X.XX% X.XX% X.XX%*
CS First Boston Hi Yield Index X.XX% X.XX% X.XX%**
</TABLE>
* Since 1/11/95
** Since [calc. date for index]

WHAT IS AN INDEX?

Page 31 of 74
<PAGE>

widely recognized index of bonds rated below investment grade.

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.09%
Other Expenses .XX%
- ------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

HIGH YIELD BOND FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 32 of 74
<PAGE>

EQUITY GROWTH FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Long-term growth of capital

Investment Focus Large capitalization U.S. common stocks

Share Price Volatility Medium

Principal Investment Strategy Investing in a diversified portfolio of common
stocks of established U.S. companies that
demonstrate long-term earnings growth

Investor Profile Investors who seek growth of capital and are
willing to bear the risk of investing in equity
securities
</TABLE>

INVESTMENT STRATEGY OF THE EQUITY GROWTH FUND

The Fund invests primarily in common stocks of established U.S. companies
with large market capitalizations (in excess of $5 billion). In selecting
investments for the Fund, the Advisor attempts to invest in a broad range of
companies that it expects will demonstrate greater long-term earnings growth
than the average company included in the Standard & Poor's 500 Composite
Index.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY GROWTH FUND

Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies
may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies
may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Fund.

The Fund is also subject to the risk that its market segment, large
capitalization growth equity securities, may underperform other equity market
segments or the equity markets as a whole.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

Page 33 of 74
<PAGE>

** Portfolio9: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------
<S> <C> <C>
Equity Growth Fund X.XX% X.XX%*
S&P 500 Index X.XX% X.XX%**
</TABLE>
* Since 2/3/97
** Since [calc. date for index]

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .75%
Other Expenses .XX%
- ------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

Page 34 of 74
<PAGE>

EQUITY GROWTH FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 35 of 74
<PAGE>

EQUITY VALUE FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Growth of capital and income

Investment Focus Large capitalization U.S. common stocks which pay
dividends

Share Price Volatility Medium

Principal Investment Investing in stocks which have an above-average
Strategy dividend yield relative to the Standard & Poor's
500 Composite Index (S&P 500) and are undervalued
by the market

Investor Profile Investors who want growth of capital and income who
can tolerate some share price volatility
</TABLE>

INVESTMENT STRATEGY OF THE EQUITY VALUE FUND

The Fund invests primarily in common stocks of established U.S. companies
with large market capitalizations (in excess of $5 billion). In selecting
investments for the Fund, the Advisor seeks to develop a broadly diversified
equity portfolio with projected total returns for the individual selections
that are superior to the S&P 500.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY VALUE FUND

The Fund is also subject to the risk that its market segment, large
capitalization value equity securities, may underperform other equity market
segments or the equity markets as a whole.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

Page 36 of 74
<PAGE>

** Portfolio10: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Value Fund X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>
* Since 4/1/92
** Since [calc. date for index]

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

Page 37 of 74
<PAGE>

EQUITY VALUE FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 38 of 74
<PAGE>

EQUITY INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Growth of capital consistent with an emphasis on
current income

Investment Focus Dividend-paying U.S. stocks

Share Price Volatility Medium

Principal Investment Strategy Investing in stocks
which have an above-average dividend
yield relative to the Standard & Poor's 500
Composite Index (S&P 500)

Investor Profile Investors who want growth of capital and income and
who can tolerate moderate share price volatility
</TABLE>

INVESTMENT STRATEGY OF THE EQUITY INCOME FUND

The Fund invests primarily in common stocks and other equity securities of
established U.S. companies with large market capitalizations (in excess of $5
billion). The Fund invests in companies operating in a broad range of
industries based on their prospects for both continued earnings and dividends
growth. In selecting investments for the Fund, the Advisor attempts to choose
stocks of companies with a dividend yield that is higher than the average
company in the S&P 500 in order to maintain an overall Fund yield that is
higher than the average yield of the stocks in the S&P 500.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY INCOME FUND

The Fund is also subject to the risk that its market segment, large
capitalization equity income securities, may underperform other equity market
segments or the equity markets as a whole.

PERFORMANCE INFORMATION

Page 39 of 74
<PAGE>

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio11: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE DOW JONES EQUITY MARKET INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Income Fund X.XX% X.XX% X.XX% X.XX%*
Dow Jones Equity Market Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>
* Since 4/1/92
** Since [calc. date for index]

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment advisor and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The Dow Jones Equity Market
Index is a widely-recognized, capitalization-weighted (companies with larger
market capitalizations have more influence than those with smaller market
capitalizations) index of about 700 stocks traded on the NYSE, AMEX and
Nasdaq.

FUND FEES AND EXPENSES

EVERY MUTUAL FUND HAS OPERATING EXPENSES TO PAY FOR SERVICES SUCH AS
PROFESSIONAL ADVISORY, SHAREHOLDER,

Page 40 of 74

<PAGE>

DISTRIBUTION, ADMINISTRATION AND CUSTODY SERVICES AND OTHER COSTS OF DOING
BUSINESS. THIS TABLE DESCRIBES THE HIGHEST FEES AND EXPENSES THAT YOU MAY PAY
INDIRECTLY IF YOU HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES*

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT
ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

EQUITY INCOME FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 41 of 74
<PAGE>

EQUITY INDEX FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Investment results that correspond to the
Standard & Poor's 500 Composite Index (S&P 500)

Investment Focus Large capitalization U.S. common stocks

Share Price Volatility Medium

Principal Investment Strategy Investing the Fund's assets in another mutual
fund with an identical investment objective

Investor Profile Investors who want growth of capital and who can
tolerate some share price volatility
</TABLE>

INVESTMENT STRATEGY OF THE EQUITY INDEX FUND

The Fund pursues its investment objective through what is sometimes called a
"master-feeder" arrangement. The Fund invests substantially all of its assets
in the SEI Index Funds (SIF) S&P 500 Index Fund, a separate mutual fund with
the same investment objective. As a result, the Fund has an indirect interest
in all of the securities owned by the SIF Fund and the Fund's investment
results will be the same as those of the SIF Fund, adjusted for the Fund's
expenses.

The SIF Fund invests exclusively in securities listed in the S&P 500, which
is comprised of 500 selected common stocks. The SIF Fund's ability to
duplicate the performance of the S&P 500 will depend to some extent on the
size and timing of cash flows in to and out of the Fund, as well as on the
level of the Fund's expenses. The SIF Fund's advisor makes no attempt to
"manage" the Fund in the traditional sense (i.e., by using economic,
financial or market analyses). However, the SIF Fund's advisor may sell an
investment if, in the judgment of the advisor, the merit of the investment
has been substantially impaired by extraordinary events or adverse financial
conditions.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY INDEX FUND

Since it purchases equity securities, the SIF Fund is subject to the risk
that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of the
SIF Fund's equity securities may fluctuate drastically from day-to-day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in
the SIF Fund.

Page 42 of 74
<PAGE>

The SIF Fund may not be able to match the performance of the S&P 500.

The Fund is also subject to the risk that its investment approach, which
attempts to duplicate the performance of the S&P 500, may perform differently
than other mutual funds which focus on particular equity market segments or
invest in other asset classes. In addition, because the Fund indirectly
attempts to match the performance of the S&P 500 through investing in another
mutual fund, the Fund's investment returns depend on the performance of the
SIF Fund.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio12: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

The performance for the periods prior to 9/1/98 represents the performance of
the SIF Fund adjusted for the expenses of the Fund.

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Index Fund X.XX% X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX% X.XX%**
</TABLE>
* Since 8/1/85
** Since [calc. date for index]

Page 43 of 74
<PAGE>

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment advisor and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The S&P 500 Index is a
widely-recognized, market value-weighted (higher market value stocks have
more influence than lower market value stocks) index of 500 stocks designed
to mimic the overall equity market's industry weightings.

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .78%
Other Expenses .XX%
- ------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

EQUITY INDEX FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

Page 44 of 74
<PAGE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 45 of 74

<PAGE>

INTERNATIONAL EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Long-term capital appreciation

Investment Focus Common stocks of medium to large sized companies in
Europe and the Pacific Basin

Share Price Volatility High

Principal Investment Strategy Investing in a diversified
portfolio of common stocks of companies that
have a history of consistent growth and little
or no debt

Investor Profile Investors who want capital appreciation,
who are willing to accept the risks of international
investing and who want to diversify their
investments by investing overseas
</TABLE>

INVESTMENT STRATEGY OF THE INTERNATIONAL EQUITY FUND

The Fund invests primarily in common stocks of medium to large capitalization
companies (in excess of $500 million) located in Europe and the Pacific
Basin. The Advisor has engaged Vontobel USA Inc. as sub-advisor (Sub-Advisor)
to manage the Fund on a day-to-day basis. The Fund focuses on companies that
have a history of consistent growth in cash flow, sales, operating profits,
returns on equity and returns on invested capital, and little or no debt. The
Fund is well diversified among industry sectors and has a low turnover ratio,
generally holding its core positions for at least two years.

PRINCIPAL RISKS OF INVESTING IN THE INTERNATIONAL EQUITY FUND

Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a
result, changes in the value of those currencies compared to the U.S. dollar
may affect (positively or negatively) the value of a Fund's investments.
These currency movements may happen separately from and in

Page 46 of 74
<PAGE>

response to events that do not otherwise affect the value of the security in
the issuer's home country. These various risks will be even greater for
investments in emerging market countries since political turmoil and rapid
changes in economic conditions are more likely to occur in these countries.

The Fund is also subject to the risk that its investment approach, which
focuses on international equity securities, may underperform other mutual
funds which invest in domestic equity market segments or the equity markets
as a whole.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio13: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

The performance for the periods prior to 9/1/98 represent the performance of
the Fund's previous Sub-Advisor.

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE MORGAN STANLEY EAFE INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS INCEPTION
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Fund X.XX% X.XX% X.XX%*
Morgan Stanley EAFE Index X.XX% X.XX% X.XX%**
</TABLE>
* Since 5/1/95
** Since [calc. date for index]

Page 47 of 74
<PAGE>

index had expenses, its performance would be lower. The Morgan Stanley EAFE
Index is a widely-recognized, capitalization-weighted (companies with larger
market capitalizations have more influence than those with smaller market
capitalizations) index of over 1,000 securities listed on the stock exchanges
in Europe, Australia and the Far East.

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- ------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 1.00%
Other Expenses .XX%
- ------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR AND
SUB-ADVISOR ARE WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL
OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISOR OR SUB-ADVISOR MAY
DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE
FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

INTERNATIONAL EQUITY FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

Page 48 of 74
<PAGE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 49 of 74
<PAGE>

MID CAP FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Growth of capital and income

Investment Focus Common stocks of medium and small sized U.S.
companies

Share Price Volatility High

Principal Investment Strategy Investing in companies that have a significant
growth potential

Investor Profile Investors who want growth of capital and income
and who can tolerate the share price volatility
that accompanies investing in smaller companies
</TABLE>

INVESTMENT STRATEGY OF THE MID CAP FUND

The Fund invests primarily in common stocks and other equity securities of
U.S. companies with medium and small market capitalizations (between $700
million and $7 billion). In selecting investments for the Fund, the Advisor
chooses stocks of companies that the Advisor believes have not yet reached
maturity and that have significant growth potential. The Fund invests in a
broad range of industries based primarily on their growth potential.

PRINCIPAL RISKS OF INVESTING IN THE MID CAP FUND

The smaller capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more
established companies. In particular, these small companies may have limited
product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.

The Fund is also subject to the risk that its market segment, medium and
small capitalization

Page 50 of 74

<PAGE>

equity growth securities, may underperform other equity market segments or
the equity markets as a whole.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio14: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P MIDCAP 400 INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid Cap Fund X.XX% X.XX% X.XX% X.XX%*
S&P MidCap 400 Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>
* Since 4/1/92
** Since [calc. date for index]

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment advisor and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The S&P MidCap 400 Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of 400 domestic mid-cap stocks chosen for market size,
liquidity, and industry group representation.

Page 51 of 74
<PAGE>

FUND FEES AND EXPENSES*

ANNUAL FUND OPERATING EXPENSES*

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

MID CAP FUND -CLASS I ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 52 of 74

<PAGE>

BALANCED FUND

FUND SUMMARY

<TABLE>
<S> <C>
Investment Goal Growth of capital consistent with current income

Investment Focus Common stocks and fixed income securities

Share Price Volatility Medium

Principal Investment Strategy Investing in a blended portfolio of equity and
fixed income securities designed to help maximize
the Fund's total return in both up and down markets

Investor Profile Investors who want total return, but who
are unwilling to tolerate the price volatility
of a fund that invests solely in equity securities
</TABLE>

INVESTMENT STRATEGY OF THE BALANCED FUND

The Fund invests primarily in a blended portfolio of U.S. common stocks and
fixed income securities rated in one of the top three ratings categories. In
selecting investments for the Fund, the Advisor purchases common stocks, as
well as fixed income securities issued by the U.S. government and its
agencies and instrumentalities and by U.S. corporations. The Advisor attempts
to maintain a portfolio which maximizes total return in all markets. The
Advisor will manage the Fund to attempt to minimize share price declines by
reallocating assets from equity investments to fixed income investments.

PRINCIPAL RISKS OF INVESTING IN THE BALANCED FUND

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if
interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also,
longer-term securities are generally more volatile, so the

Page 53 of 74
<PAGE>

average maturity or duration of these securities affects risk.

The Fund is also subject to the risk that the Advisor's asset allocation
decisions will not anticipate market trends successfully. For example,
weighting common stocks too heavily during a stock market decline may result
in a failure to preserve capital. Conversely, investing too heavily in fixed
income securities a during period of stock market appreciation may result in
lower total return. In fact, since the Fund will always have a portion of its
assets invested in fixed income securities, it may not perform as well during
periods of stock market appreciation as funds that invest only in stocks.

The Fund is also subject to the risk that its investment approach, which
blends equity and fixed income investments, may perform differently than
other mutual funds which focus on a particular market segment or other asset
classes.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

** Portfolio15: Import Performance bar chart

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX, THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CORPORATE INDEX, AND A 50/50 BLEND OF THOSE TWO
INDICES.
<TABLE>
<CAPTION>
SINCE
CLASS I SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX%**
Lehman Brothers Intermediate X.XX% X.XX% X.XX% X.XX%***
Government/Corporate Index
</TABLE>
* Since 4/1/92
** Since [calc. date for index]
*** Since [calc. date for index]

Page 54 of 74
<PAGE>

WHAT IS AN INDEX?

An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment advisor and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The S&P 500 Index is a
widely-recognized, market value-weighted (higher market value bonds have more
influence than lower market value bonds) index of 500 stocks designed to
mimic the overall equity market's industry weightings. The Lehman Brothers
Intermediate Government/Corporate Bond Index is a widely-recognized, market
value-weighted (higher market value bonds have more influence than lower
market value bonds) index of U.S. Treasury securities, U.S. government agency
obligations, corporate debt backed by the U. S. government, fixed-rate
nonconvertible corporate debt securities, Yankee bonds and nonconvertible
debt securities issued by or guaranteed by foreign governments and agencies.
All securities in the index are rated investment grade (BBB) or higher, with
maturities of 1 to 10 years.

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

BALANCED FUND -CLASS I SHARES ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

Page 55 of 74
<PAGE>

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- ---------
<S> <C> <C> <C>
$____ $_____ $_____ $______
</TABLE>

Page 56 of 74
<PAGE>

MORE INFORMATION ABOUT RISK

<TABLE>
<S> <C>
Equity and Balanced Funds
EQUITY RISK - Equity securities include
public and privately issued equity securities,
common and preferred stocks, warrants, rights to
subscribe to common stock and convertible
securities, as well as instruments that attempt to
track the price movement of equity indices.
Investments in equity securities and equity
derivatives in general are subject to market risks
that may cause their prices to fluctuate over time.
The value of securities convertible into equity
securities, such as warrants or convertible debt, is
also affected by prevailing interest rates, the
credit quality of the issuer and any call provision.
Fluctuations in the value of equity securities in
which a mutual fund invests will cause a fund's net
asset value to fluctuate. An investment in a
portfolio of equity securities may be more suitable
for long-term investors who can bear the risk of
these share price fluctuations.

Fixed Income Funds
FIXED INCOME RISK - The market value of fixed income
investments change in response to interest rate Balanced Fund
changes and other factors. During periods of falling
interest rates, the values of outstanding fixed
income securities generally rise. Moreover, while
securities with longer maturities tend to produce
higher yields, the prices of longer maturity
securities are also subject to greater market
fluctuations as a result of changes in interest
rates. In addition to these fundamental risks,
different types of fixed income securities may be
subject to the following additional risks:

Fixed Income Funds
CALL RISK - During periods of falling
interest rates, certain debt obligations Balanced Fund
with high interest rates may be prepaid
(or "called") by the issuer prior to
maturity. This may cause a Fund's average
weighted maturity to fluctuate, and may
require a Fund to invest the resulting
proceeds at lower interest rates.

Page 57 of 74
<PAGE>

Fixed Income Funds
CREDIT RISK - The possibility that an
issuer will be unable to make timely Balanced Fund
payments of either principal or interest.

Fixed Income Funds
EVENT RISK - Securities may suffer
declines in credit quality and market Balanced Fund
value due to issuer restructurings or
other factors. This risk should be reduced
because of the Fund's multiple holdings.

Page 58 of 74
<PAGE>
High Yield Bond Fund
HIGH-YIELD, LOWER RATED SECURITIES (or
"junk bonds") are High Yield Bond Fund
subject to additional risks associated
with investing in high-yield securities,
including:

- High-yield, lower rated securities
involve greater risk of default
or price declines than
investments in investment grade
securities (E.G., securities
rated BBB or higher by S&P or
Baa or higher by Moody's) due to
changes in the issuer's
creditworthiness.

- The market for high-yield, lower
rated securities may be thinner
and less active, causing market
price volatility and limited
liquidity in the secondary
market. This may limit the
ability of a Fund to sell these
securities at their fair market
values either to meet redemption
requests, or in response to
changes in the economy or the
financial markets.

- Market prices for high-yield, lower
rated securities may also be
affected by investors'
perception of the issuer's
credit quality and the outlook
for economic growth. Thus,
prices for high-yield, lower
rated securities may move
independently of interest rates
and the overall bond market.

- The market for high-yield, lower
rated securities may be
adversely affected by
legislative and regulatory
developments.

Page 59 of 74
<PAGE>

New Jersey Municipal Securities Fund
MUNICIPAL ISSUER RISK - There may be economic or Pennsylvania Municipal Securities Fund
political changes that impact the ability of
municipal issuers to repay principal and to make
interest payments on municipal securities.
Changes to the financial condition or credit
rating of municipal issuers may also adversely
affect the value of a Fund's municipal
securities. Constitutional or legislative limits
on borrowing by municipal issuers may result in
reduced supplies of municipal securities.
Moreover, certain municipal securities are backed
only by a municipal issuer's ability to levy and
collect taxes. In addition, each Fund's
concentration of investments in issuers located
in a single state makes each Fund more
susceptible to adverse political or economic
developments affecting that state. Each Fund
also may be riskier than mutual funds that buy
securities of issuers in numerous states.

Fixed Income Fund
MORTGAGE-BACKED SECURITIES -Mortgage-backed
securities are fixed income securities
representing an interest in a pool of underlying
mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes
differently from other fixed income securities
due to the possibility of prepayment of the
underlying mortgage loans. As a result, it may
not be possible to determine in advance the
actual maturity date or average life of a
mortgage-backed security. Rising interest rates
tend to discourage refinancings, with the result
that the average life and volatility of the
security will increase exacerbating its decrease
in market price. When interest rates fall,
however, mortgage-backed securities may not gain
as much in market value because of the
expectation of additional mortgage prepayments
that must be reinvested at lower interest rates.
Prepayment risk may make it difficult to
calculate the average maturity of a portfolio of
mortgage-backed securities and, therefore, to
assess the volatility risk of that portfolio.

Page 60 of 74

<PAGE>

International Equity Fund
FOREIGN SECURITY RISKS - Investments in securities
of foreign companies or governments can be more
volatile than investments in U.S. companies or
governments. Diplomatic, political, or economic
developments, including nationalization or
appropriation, could affect investments in foreign
countries. Foreign securities markets generally
have less trading volume and less liquidity than
U.S. markets. In addition, the value of securities
denominated in foreign currencies, and of dividends
from such securities, can change significantly when
foreign currencies strengthen or weaken relative to
the U.S. dollar. Foreign companies or governments
generally are not subject to uniform accounting,
auditing, and financial reporting standards
comparable to those applicable to domestic U.S.
companies or governments. Transaction costs are
generally higher than those in the U.S. and expenses
for custodial arrangements of foreign securities may
be somewhat greater than typical expenses for
custodial arrangements of similar U.S. securities.
Some foreign governments levy withholding taxes
against dividend and interest income. Although in
some countries a portion of these taxes are
recoverable, the non-recovered portion will reduce
the income received from the securities comprising
the portfolio.

In addition to these risks, certain foreign
securities may be subject to the following
additional risks factors:

Page 61 of 74
<PAGE>

International Equity Fund
CURRENCY RISK - Investments in foreign
securities International Equity Fund
denominated in foreign currencies involve
additional risks, including:

- The value of a Fund's assets measured
in U.S. dollars may be
affected by changes in
currency rates and in
exchange control regulations.

- A Fund may incur substantial costs in
connection with conversions
between various currencies.

- A Fund may be unable to hedge against
possible variations in
foreign exchange rates or to
hedge a specific security
transaction or portfolio
position.

- Only a limited market currently exists
for hedging transactions relating
to currencies in certain
emerging markets.

Equity Index Fund
TRACKING ERROR RISK - Factors such as Fund expenses,
imperfect correlation between the Fund's investments
and those of its benchmark, rounding of share
prices, changes to the benchmark, regulatory
policies, and leverage, may affect its ability to
achieve perfect correlation. The magnitude of any
tracking error may be affected by a higher portfolio
turnover rate.

Page 62 of 74
<PAGE>

All Funds
YEAR 2000 RISK - The Funds depend on the smooth
functioning of computer systems in almost every
aspect of their business. Like other mutual funds,
businesses and individuals around the world, the
Funds could be adversely affected if the computer
systems used by their service providers do not
properly process dates on and after January 1, 2000,
and distinguish between the year 2000 and the year
1900. The Funds have asked their service providers
whether they expect to have their computer systems
adjusted for the year 2000 transition, and is
seeking assurances from each service provider that
they are devoting significant resources to prevent
material adverse consequences to the Funds. While
it is likely that such assurances will be obtained,
the Funds and their shareholders may experience
losses if these assurances prove to be incorrect or
as a result of year 2000 computer difficulties
experienced by issuers of portfolio securities or
third parties, such as custodians, banks,
broker-dealers or others with which the Funds do
business. Furthermore, many foreign countries are
not as prepared as the U.S. for the year 2000
transition. As a result, computer difficulties in
foreign markets and with foreign institutions as a
result of the year 2000 may add to the possibility
of losses to the International Equity Fund and its
shareholders.
</TABLE>

EACH FUND'S OTHER INVESTMENTS

In addition to the investments and strategies described in this prospectus,
each Fund also may invest in other securities, use other strategies and
engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.

The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Fund may invest up to
100% of its assets in cash or money market instruments that would not
ordinarily be consistent with the Fund's objectives (other than the Money
Market Funds). A Fund will do so only if the Advisor or Sub-Advisor believes
that the risk of loss outweighs the opportunity for capital gains or higher
income.

Page 63 of 74

<PAGE>

INVESTMENT ADVISOR AND SUB-ADVISOR

The Investment Advisor makes investment decisions for each of the Funds,
other than the International Equity Fund, and continuously reviews,
supervises and administers the Funds' respective investment programs. The
Advisor oversees the Sub-Advisor for the International Equity Fund to ensure
compliance with that Fund's investment policies and guidelines, and monitors
the Sub-Advisor's adherence to its investment style. The Advisor pays the
Sub-Advisor out of the investment advisory fees it receives (described
below). The Advisor also monitors the performance of the SIMT Fund and the
SIF Fund. The Board of Trustees of The Pillar Funds supervises the Advisor
and Sub-Advisor and establishes policies that the Advisor and Sub-Advisor
must follow in their management activities.

Summit Bank serves as the Advisor to the Funds. As of December 31, 1998,
Summit Bank had approximately $9.5 billion in assets under management. For
the year ended December 31, 1998, Summit Bank received advisory fees of:

<TABLE>
<S> <C>
U.S. TREASURY SECURITIES MONEY MARKET FUND [VAR:Advisor1.Portfolio1.Fees]%
PRIME OBLIGATION MONEY MARKET FUND [VAR:Advisor1.Portfolio2.Fees]%
TAX-EXEMPT MONEY MARKET FUND [VAR:Advisor1.Portfolio3.Fees]%
FIXED INCOME FUND [VAR:Advisor1.Portfolio4.Fees]%
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND [VAR:Advisor1.Portfolio5.Fees]%
NEW JERSEY MUNICIPAL SECURITIES FUND [VAR:Advisor1.Portfolio6.Fees]%
PENNSYLVANIA MUNICIPAL SECURITIES FUND [VAR:Advisor1.Portfolio7.Fees]%
HIGH YIELD BOND FUND [VAR:Advisor1.Portfolio8.Fees]%
EQUITY GROWTH FUND [VAR:Advisor1.Portfolio9.Fees]%
EQUITY VALUE FUND [VAR:Advisor1.Portfolio10.Fees]%
EQUITY INCOME FUND [VAR: Advisor1.Portfolio11.Fees]%
EQUITY INDEX FUND [VAR: Advisor1.Portfolio12.Fees]%
INTERNATIONAL EQUITY FUND [VAR: Advisor1.Portfolio13.Fees]%
MID CAP FUND [VAR: Advisor1.Portfolio14.Fees]%
BALANCED FUND [VAR: Advisor1.Portfolio15.Fees]%
</TABLE>

Vontobel USA Inc. (Vontobel) manages the International Equity Fund on a
day-to-day basis. Vontobel selects, buys and sells securities for the Fund
under the supervision of the Advisor and the Board of Trustees of The Pillar
Funds.

Fabrizio Pierallini serves as a Senior Vice President of Vontobel. He has
managed the International Equity Fund since September, 1998. He has more than
10 years of investment experience. Prior to joining Vontobel in 1994, Mr.
Pierallini served as Associate-Director/Portfolio Manager with Swiss Bank
Corporation, New York.

Page 64 of 74
<PAGE>

Rajiv Jain serves as Vice President of Vontobel. He has served as associate
portfolio manager for the International Equity Fund since September, 1998. He
has more than 6 years of investment experience. Prior to joining Vontobel Mr.
Jain served as an analyst for Swiss Bank Corporation, New York.

SEI Investments Management Corporation (SEI) is the advisor of the SIMT Fund
and has engaged BEA Associates (BEA) as sub-advisor to manage the SIMT Fund
on a day-to-day basis. BEA selects, buys and sells securities for the SIMT
Fund under the supervision of SEI and the SIMT Board of Trustees.

World Asset Management (World) manages the SIF Fund on a day-to-day basis.
World selects, buys and sells securities for the SIF Fund under the
supervision of the SIF Board of Trustees.

PORTFOLIO MANAGERS

Judith Wolk serves as a Vice President of the Advisor. She has managed the
Prime Obligation Money Market Fund and the U.S. Treasury Securities Money
Market Fund since June, 1996. Prior to joining the Advisor in June, 1996, Ms.
Wolk had substantial experience in money market instruments with a large
regional bank.

Frances M. Tendall serves as a Senior Vice President of the Advisor. She has
managed the Intermediate-Term Government Securities Fund since April, 1992.
She joined the Advisor in 1982 and has more than 17 years of investment
experience.

Charlene P. Palmer serves as a Vice President of the Advisor. She has
managed the Tax-Exempt Money Market Fund since June, 1996 and the New Jersey
Municipal Securities Fund since May, 1992. She joined the Advisor in 1981 and
has more than 18 years of investment experience, with an emphasis on
tax-exempt bonds.

Joseph Markovich serves as a Vice President of the Advisor. He has managed the
Fixed Income Fund since January, 1997. He joined the Advisor in 1985 and has
more than 14 years of investment experience.

Randolph E. Lestyk serves as a Senior Vice President of the Advisor. He has
managed the Pennsylvania Municipal Securities Fund since 1994 and the Mid Cap
Fund since 1997. Prior to joining the Advisor, Mr. Lestyk was involved in
equity and fixed income investing at several financial institutions and
senior vice president and chief investment officer of a major Pennsylvania
insurance company. He has more than 27 years of investment experience.

Chris Clark serves as a Vice President of the Advisor. He has co-managed the
Equity Growth Fund since July, 1997 and managed the Fund since February,
1999. Prior to joining the Advisor in 1995, Mr. Clark served in equity
trading for Merrill Lynch.

Fernando Garip serves as a Senior Vice President of the Advisor. He has managed
the Equity

Page 65 of 74
<PAGE>

Value Fund since January, 1996. He joined the Advisor in 1982 and has more
than 17 years of investment experience.

Richard H. Caro serves as a Vice President of the Advisor. He has managed the
Equity Income Fund since January, 1996. He joined the Advisor in April, 1983
and has more than 28 years of investment experience.

Edward Kasperavich serves as a Vice President of the Advisor. He has managed
the Balanced Fund since January, 1997. He joined the Advisor in 1985 and has
more than 14 years of investment experience.

Page 66 of 74
<PAGE>

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or
exchange Class I shares of the Funds.

Class I Shares are for financial institutions investing for their own or
their customers' accounts. For information on how to open an account and set
up procedures for placing transactions call 1-800-932-7782.

HOW TO PURCHASE FUND SHARES

You may purchase shares directly by:
- - Mail
- - Telephone
- - Wire
- - Automated Clearing House (ACH).

To purchase shares directly, please call 1-800-932-7782, or complete and send
in the < ** attached/enclosed ** > application. Unless you arrange to pay by
wire or through ACH, write your check, payable in U.S. dollars, to "The
Pillar Funds" and include the name of the appropriate Fund(s) on the check. A
Fund cannot accept third-party checks, credit cards, credit card checks or
cash.

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If
you invest through an authorized institution, you will have to follow its
procedures which may be different from the procedures for investing directly.
Your institution may charge a fee for its services, in addition to the fees
charged by the Fund. You will also generally have to address your
correspondence or questions regarding a Fund to your institution.

GENERAL INFORMATION

You may purchase shares on any day that the New York Stock Exchange and, for
the Money Market Funds, the Federal Reserve are open for business (a Business
Day). Shares cannot be purchased by Federal Reserve Wire on days when either
the New York Stock Exchange or the Federal Reserve is closed.

A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.

Page 67 of 74
<PAGE>

The price per share (the offering price) will be the net asset value per
share (NAV) next determined after a Fund receives your purchase order.

Each Fund (except the Money Market Funds) calculates its NAV once each
Business Day at the regularly-scheduled close of normal trading on the New
York Stock Exchange (normally, 4:00 p.m. Eastern time). So, for you to
receive the current Business Day's NAV, a Fund generally must receive your
purchase order before 4:00 p.m. Eastern time.

Each Money Market Fund calculates its NAV once each Business Day at 3:00 p.m.
Eastern time. So, for you to be eligible to receive dividends declared on the
day you submit your purchase order, a Fund generally must receive your order
before 3:00 p.m. Eastern time and federal funds (readily available funds)
before 3:00 p.m. Eastern time.

HOW WE CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

In calculating NAV, a Fund generally values its investment portfolio at
market price (except the Money Market Funds). If market prices are
unavailable or a Fund thinks that they are unreliable, fair value prices may
be determined in good faith using methods approved by the Board of Trustees.

In calculating NAV for the Money Market Funds, we generally value a Fund's
investment portfolio using the amortized cost valuation method, which is
described in detail in our Statement of Additional Information. If this
method is determined to be unreliable during certain market conditions or for
other reasons, a Fund may value its portfolio at market price or fair value
prices may be determined in good faith using methods approved by the Board of
Trustees.

The International Equity Fund holds securities that are listed on foreign
exchanges. These securities may trade on weekends or other days when the Fund
does not calculate NAV. As a result, the NAV of the Fund's shares may change
on days when you cannot purchase or sell Fund shares.

HOW TO SELL YOUR FUND SHARES

Holders of Class I Shares may sell (sometimes called "redeem") shares by
following procedures established when they opened their account or accounts.
If you have questions, call 1-800-932-7782.

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

Page 68 of 74
<PAGE>

If you would like to sell $10,000 or more of your shares, or you would like
your proceeds sent to a third party or an address other than your own, please
notify the Fund in writing and include a signature guarantee by a bank or
other financial institution (a notarized signature is not sufficient).

The sale price of each share will be the next NAV determined after the Fund
receives your request.

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds within one Business Day after we
receive your request. Your proceeds can be wired to your bank account
(subject to a $10 fee) or sent to you by check. IF YOU RECENTLY PURCHASED
YOUR SHARES BY CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE
UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 BUSINESS DAYS).

HOW TO EXCHANGE YOUR SHARES

You may exchange your shares on any Business Day by contacting us directly by
mail or telephone.

You may also exchange shares through your financial institution or an
investment professional by mail or telephone.

IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE
TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15
BUSINESS DAYS).

When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.

TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is
extremely convenient, but not without risk. Although the Fund has certain
safeguards and procedures to confirm the identity of callers and the
authenticity of instructions, the Fund is not responsible for any losses or
costs incurred by following telephone instructions we reasonably believe to
be genuine. If you or your financial institution transact with the Fund over
the telephone, you will generally bear the risk of any loss.

Page 69 of 74
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund distributes its income as follows:

<TABLE>
<S> <C>
U.S. TREASURY SECURITIES MONEY MARKET FUND MONTHLY
PRIME OBLIGATION MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
FIXED INCOME FUND
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND

EQUITY GROWTH FUND QUARTERLY
EQUITY VALUE FUND
EQUITY INCOME FUND
EQUITY INDEX FUND
MID CAP FUND
BALANCED FUND

INTERNATIONAL EQUITY FUND ANNUALLY
</TABLE>

Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive
the distribution.

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment,
you must notify the Fund in writing at least 15 days prior to the date of the
distribution. Your election will be effective for dividends and distributions
paid after the Fund receives your written notice. To cancel your election,
simply send the Fund written notice.

Taxes

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT
FEDERAL, STATE AND LOCAL INCOME TAXES. Below we have summarized some
important tax issues that affect the Funds and their shareholders. This
summary is based on current tax laws, which may change.

The dividends and distributions you receive from a Fund may be subject to
federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you
reinvest them. Dividends are taxed as ordinary income, long-term capital
gains are taxed at a maximum rate of 20% and short-term capital gains are
currently taxed at ordinary income tax rates. Each Fund will tell you
annually how to treat dividends and distributions.

If you redeem a Fund's Shares, you will be subject to tax on any gain. The
character of such gain will generally be based on your holding period for the
shares. An exchange of one Fund's shares for shares of another Fund is a sale
for tax purposes.

More information about taxes is in the Statement of Additional Information.
In addition, because each investor's tax circumstances are unique and because
the tax laws are subject to change, you should consult your tax advisor about
your investment.

Page 70 of 74
<PAGE>

distribute income that is exempt from both federal taxes and Pennsylvania
state taxes. The Funds may invest a portion of their assets in securities
that generate taxable income for federal or state income taxes. Income exempt
from Federal tax may be subject to state and local taxes. Any capital gains
distributed by these Funds may be taxable.

The International Equity Fund may be able to pass along a tax credit for
foreign income taxes it pays. The Fund will notify you if it gives you the
credit.

The Funds use a tax management technique known as "highest in, first out."
Using this technique, the portfolio holdings that have experienced the
smallest gain or largest loss are sold first in an effort to minimize capital
gains and enhance after-tax returns.

Page 71 of 71
<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the Class I
Shares of each Fund. This information is intended to help you understand each
Fund's financial performance for the past five years, or, if shorter, the
period of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the tables
represent the rate that you would have earned (or lost) on an investment in a
Fund, assuming you reinvested all of your dividends and distributions. This
information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with each Fund's financial statements,
appears in the annual report that accompanies our Statement of Additional
Information. You can obtain the annual report, which contains more
performance information, at no charge by calling 1-800-932-7782.

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Class A
Shares of the SIMT High Yield Bond Fund. This information is intended to help
you understand the Fund's financial performance for the past five years, or,
if shorter, the period of the Fund's operations. Some of this information
reflects financial information for a single Fund share. The total returns in
the table represent the rate that you would have earned (or lost) on an
investment in the Fund, assuming you reinvested all of your dividends and
distributions. This information has been audited by PricewaterhouseCoopers
LLP, independent public accountants. Their report, along with each Fund's
financial statements, appears in the annual report that accompanies our
Statement of Additional Information. You can obtain the annual report, which
contains more performance information, at no charge by calling 1-800-342-5734.

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Class E
Shares of the SIF S&P 500 Index Fund. This information is intended to help
you understand the Fund's financial performance for the past five years, or,
if shorter, the period of the Fund's operations. Some of this information
reflects financial information for a single Fund share. The total returns in
the table represent the rate that you would have earned (or lost) on an
investment in the Fund, assuming you reinvested all of your dividends and
distributions. This information has been audited by Arthur Andersen LLP,
independent public accountants. Their report, along with the Fund's financial
statements, appears in the annual report that accompanies our Statement of
Additional Information. You can obtain the annual report, which contains more
performance information, at no charge by calling 1-800-342-5734.

Page 72 of 74
<PAGE>

THE PILLAR FUNDS

INVESTMENT ADVISOR

Summit Bank
210 Main Street
Hackensack, New Jersey 07601

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about The Pillar Funds is available without charge through
the following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 1999, includes detailed information about The Pillar
Funds. The SAI is on file with the SEC and is incorporated by reference into
this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the
Funds' managers about strategies, and recent market conditions and trends.
The reports also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-932-7782

BY MAIL: Write to us
The Pillar Funds
P.O. Box 8523
Boston, MA 02266-8523

BY INTERNET: www.pillarfunds.com

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as

Page 73 of 74
<PAGE>

other information about The Pillar Funds, from the SEC's website
("http://www.sec.gov"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for information call 1-800-SEC-0330). You
may request documents by mail from the SEC, upon payment of a duplicating
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-6009. The Pillar Funds' Investment Company Act
registration number is 811-6509.

The Pillar Funds, Pillar, the stylized "P" logo and Your Investment
Foundation are registered service marks of Summit Bank. Reach Higher, Summit,
Summit Financial Services Group and Summit Bancorp are registered service
marks of Summit Bancorp. Summit Bank is a service mark of Summit Bancorp.

Page 74 of 74
<PAGE>

THE PILLAR FUNDS

Class A and Class B Shares

PROSPECTUS
APRIL 30, 1999

MONEY MARKET FUNDS
U.S. TREASURY SECURITIES MONEY MARKET FUND
PRIME OBLIGATION MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND

FIXED INCOME FUNDS
FIXED INCOME FUND
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND

EQUITY AND BALANCED FUNDS
EQUITY GROWTH FUND
EQUITY VALUE FUND
EQUITY INCOME FUND
EQUITY INDEX FUND
INTERNATIONAL EQUITY FUND
BALANCED FUND

INVESTMENT ADVISOR
SUMMIT BANK

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES
OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 83

<PAGE>

HOW TO READ THIS PROSPECTUS

The Pillar Funds is a mutual fund family that offers different classes of shares
in separate investment portfolios (Funds). The Funds have individual investment
goals and strategies. This prospectus gives you important information about the
Class A and Class B Shares of the Funds that you should know before investing.
Please read this prospectus and keep it for future reference.

Class A and Class B Shares have different expenses and other characteristics,
allowing you to choose the class that best suits your needs. You should consider
the amount you want to invest, how long you plan to have it invested, and
whether you plan to make additional investments.

CLASS A SHARES
- Front-end sales charge (except for the Money Market Funds)
- 12b-1 fees
- $1,000 minimum initial investment

CLASS B SHARES
- Contingent deferred sales charge
- Higher 12b-1 fees and shareholder servicing fees
- $1,000 minimum initial investment
- Automatic conversion to Class A Shares after 8 years

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. IN THE INTRODUCTION SECTION, THERE IS SOME
GENERAL INFORMATION YOU SHOULD KNOW ABOUT THE FUNDS. FOR MORE DETAILED
INFORMATION ABOUT EACH FUND, PLEASE SEE:

<TABLE>
<CAPTION>
PAGE
<S> <C>
U.S. TREASURY SECURITIES MONEY MARKET FUND XXX
PRIME OBLIGATION MONEY MARKET FUND XXX
TAX-EXEMPT MONEY MARKET FUND XXX
FIXED INCOME FUND XXX
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND XXX
NEW JERSEY MUNICIPAL SECURITIES FUND XXX
PENNSYLVANIA MUNICIPAL SECURITIES FUND XXX
HIGH YIELD BOND FUND XXX
EQUITY GROWTH FUND XXX
EQUITY VALUE FUND XXX
EQUITY INCOME FUND XXX
EQUITY INDEX FUND XXX
INTERNATIONAL EQUITY FUND XXX
BALANCED FUND XXX
MORE INFORMATION ABOUT RISK XXX
EACH FUND'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISOR, SUB-ADVISOR

Page 2 of 83
<PAGE>

AND PORTFOLIO MANAGERS XXX
PURCHASING, SELLING AND EXCHANGING FUND SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
THE PILLAR FUNDS Back Cover

</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR [VAR:KEYTERMS.DESC].

Page 3 of 83

<PAGE>

INTRODUCTION

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help each
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. The investment managers'
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good
a job an investment manager does, you could lose money on your investment in a
Fund, just as you could with other investments. A Fund share is not a bank
deposit and it is not insured or guaranteed by the FDIC or any government
agency.

The value of your investment in a Fund (other than a Money Market Fund) is based
on the market value of the securities the Fund holds. These prices change daily
due to economic and other events that affect particular companies and other
issuers. These price movements, sometimes called volatility, may be greater or
lesser depending on the types of securities a Fund owns and the markets in which
they trade. The effect on a Fund of a change in the value of a single security
will depend on how widely the Fund diversifies its holdings.

Page 4 of 83

<PAGE>

U.S. TREASURY SECURITIES MONEY MARKET FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Preserve principal value and maintain a high degree
of liquidity while providing current income

Investment Focus Money market instruments issued by the U.S. Treasury

Share Price Volatility Very low

Principal Investment Strategy Investing in short-term U.S. dollar-denominated
obligations of the U.S. Treasury and repurchase
agreements

Investor Profile Conservative investors who want to receive income
through a liquid investment

</TABLE>

INVESTMENT STRATEGY OF THE U.S. TREASURY SECURITIES MONEY MARKET FUND

The Fund invests exclusively in short-term U.S. dollar-denominated money market
instruments issued by the U.S. Treasury and repurchase agreements that are fully
collateralized by U.S. Treasury securities. The Fund will maintain an average
dollar weighted maturity of 60 days or less, and will only acquire securities
that have a remaining maturity of 397 days or less. The Advisor's investment
selection process seeks to add value through yield analysis and positioning on
the yield curve. The Advisor actively manages the maturity of the Fund based on
current market interest rates and its outlook on the market and future interest
rate predictions.

PRINCIPAL RISKS OF INVESTING IN THE U.S. TREASURY SECURITIES MONEY MARKET FUND

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.

Page 5 of 83

<PAGE>

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
- ------------------------------------------------------------------------------
PORTFOLIO1: Import Performance bar chart
- ------------------------------------------------------------------------------

<TABLE>

<C> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX X.XX
X/X/XX X/X/XX

</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

</TABLE>

* Since 4/1/92

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

<TABLE>
<CAPTION>
CLASS A
SHARES
- ------------------------------------------------------------------------------------------------------ --------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None

Page 6 of 83

<PAGE>

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None

EXCHANGE FEE None

MAXIMUM ACCOUNT FEE None
- ----------------------------------------------------------------------------------------------------------------------

</TABLE>

ANNUAL FUND OPERATING EXPENSES*

CLASS A SHARES
- --------------------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .XX%
- --------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%

</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

U.S. TREASURY SECURITIES MONEY MARKET FUND - CLASS A ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$ $ $ $
----- ------ ------ -------

</TABLE>

Page 7 of 83

<PAGE>

PRIME OBLIGATION MONEY MARKET FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Preserve principal value and maintain a high degree
of liquidity while providing current income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term high
quality U.S. dollar-denominated debt securities

Investor Profile Conservative investors who want to receive current
income through a liquid investment

</TABLE>

INVESTMENT STRATEGY OF THE PRIME OBLIGATION MONEY MARKET FUND

The Fund invests in a broad range of high quality short-term U.S.
dollar-denominated money market instruments, such as obligations of the U.S.
Treasury; agencies and instrumentalities of the U.S. government; domestic and
foreign banks; domestic and foreign corporations; supranational entities; and
foreign governments. The Fund may also enter into fully collateralized
repurchase agreements. The Fund's portfolio is comprised only of short-term debt
securities that are rated in the two highest categories by nationally recognized
ratings organizations or securities that the Advisor determines are of equal
quality. The Fund will maintain an average dollar weighted maturity of 90 days
or less, and will only acquire securities that have a remaining maturity of 397
days or less.

The Advisor's investment selection process seeks to add value through security
selection, sector rotation and positioning on the yield curve. Securities are
chosen based on the issuer's financial condition, the financial condition of any
person or company which guarantees the credit of the issuer, liquidity and
competitive yield. The Fund attempts to avoid purchasing or holding securities
that are subject to a decline in credit quality of the issue through careful
credit screening, as well as ongoing monitoring of each issuer and any person or
company providing credit support.

Page 8 of 83

<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE PRIME OBLIGATION MONEY MARKET FUND

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

The performance of Class A and Class B Shares will differ due to differences in
expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

- -------------------------------------------------------------------------------
PORTFOLIO2: Import Performance bar chart
- -------------------------------------------------------------------------------

<TABLE>

<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX X.XX
X/X/XX X/X/XX

</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime Obligation Money Market Fund X.XX% X.XX% X.XX% X.XX%*

</TABLE>

* Since 4/1/92

Page 9 of 83

<PAGE>

SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ---------------------------------------------------------------------------------
<S> <C> <C>
Prime Obligation Money Market Fund X.XX% X.XX%*

</TABLE>

* Since 12/30/97

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)* None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None None
(AS A PERCENTAGE OF OFFERING PRICE)

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- ----------------------------------------------------------------------------------------------------------------------

</TABLE>

* Class B Shares of the Fund may be obtained only through exchanges.

ANNUAL FUND OPERATING EXPENSES*

CLASS A CLASS B
SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .35% .35%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- ----------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%

</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

Page 10 of 83

<PAGE>

<TABLE>

<S> <C>
PRIME OBLIGATION MONEY MARKET FUND -CLASS A ____%
PRIME OBLIGATION MONEY MARKET FUND -CLASS B ____%

</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

Page 11 of 83

<PAGE>

TAX-EXEMPT MONEY MARKET FUND

<TABLE>
<CAPTION>
SUMMARY
<S> <C>
Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income that is exempt from Federal income tax

Investment Focus Tax-free money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a well diversified portfolio of
short-term municipal securities which pay
interest that is exempt from Federal income
taxes

Investor Profile Conservative taxable investors who want to
receive current income exempt from Federal
taxes through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE TAX-EXEMPT MONEY MARKET FUND

PRINCIPAL RISKS OF INVESTING IN THE TAX-EXEMPT MONEY MARKET FUND

Page 12 of 83
<PAGE>

guaranteed by the FDIC or any government agency. In addition, although a
money market fund seeks to keep a constant price per share of $1.00, you may
lose money by investing in the Fund.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

- --------------------------------------------------------------------------------
**Portfolio3. Import Performance bar chart
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX X.XX
X/X/XX X/X/XX
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

Page 13 of 83
<PAGE>
<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market Fund X.XX% X.XX% X.XX% X.XX%*
</TABLE>

* Since 4/6/92

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.
<TABLE>
<CAPTION>
CLASS A
SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None
(AS A PERCENTAGE OF OFFERING PRICE)

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None

EXCHANGE FEE None

MAXIMUM ACCOUNT FEE None
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

ANNUAL FUND OPERATING EXPENSES*
<TABLE>
<CAPTION>
CLASS A
SHARES
- --------------------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .XX%
- --------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

TAX-EXEMPT MONEY MARKET FUND -CLASS A ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF

Page 14 of 83
<PAGE>
FUND SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

The Example also assumes that each year your investment has a 5% return and
Fund expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$____ $____ $____ $____
</TABLE>

Page 15 of 83

<PAGE>

FIXED INCOME FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal High level of total return, through current
income and capital appreciation, consistent
with preservation of capital

Investment Focus Fixed income securities

Share Price Volatility Low

Principal Investment Strategy Investing in fixed income securities issued
by the U.S. government and U.S. corporate
debt obligations

Investor Profile Investors who seek a high level of total
return consistent with the preservation of capital
</TABLE>

INVESTMENT STRATEGY OF THE FIXED INCOME FUND

PRINCIPAL RISKS OF INVESTING IN THE FIXED INCOME FUND

The mortgages underlying mortgage-backed securities may be paid off early,
which makes it difficult to determine their actual maturity and therefore
calculate how they will respond to changes in interest rates. The Fund may
have to reinvest prepaid amounts at lower interest rates.

Page 16 of 83
<PAGE>

This risk of prepayment is an additional risk of mortgage-backed securities.

PERFORMANCE INFORMATION

The performance of Class A and Class B Shares will differ due to differences
in expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.

- -------------------------------------------------------------------------------
**Portfolio4. Import Performance bar chart
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed Income Fund X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers Intermediate
Government/Corporate Bond Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>
* Since 4/1/92
** Since [calc. date for index]

Page 17 of 83
<PAGE>
<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
Fixed Income Fund X.XX% X.XX%*
Lehman Brothers Intermediate X.XX% X.XX%**
Government/Corporate Bond Index
</TABLE>
* Since 5/16/97
** Since [calc. date for index]

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE)* 4.25% None

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None None
(AS A PERCENTAGE OF OFFERING PRICE)

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* This sales charge varies depending upon how much you invest. See
"Purchasing Fund Shares."
** This sales charge is imposed if you sell Class B Shares within 1 year of
your purchase. See "Selling Fund Shares."

Page 18 of 83
<PAGE>
ANNUAL FUND OPERATING EXPENSES*
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .60% .60%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- ------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%
</TABLE>

FIXED INCOME FUND-CLASS A ____%
FIXED INCOME FUND-CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated.

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

Page 19 of 83

<PAGE>

INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Preserve principal value and maintain a
high degree of liquidity while providing
current income

Investment Focus Intermediate-term fixed income obligations
of the U.S. Treasury and U.S. government
agencies

Share Price Volatility Low

Principal Investment Strategy Investing in a portfolio of U.S. Treasury
obligations and U.S. government agency
obligations to attempt to maximize return
while limiting risk

Investor Profile Conservative investors who want to receive
income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND

PRINCIPAL RISKS OF INVESTING IN THE INTERMEDIATE-TERM GOVERNMENT SECURITIES
FUND

Page 20 of 83
<PAGE>

agency's own resources.

The Fund is also subject to the risk that its investment approach, which
focuses on U.S. government fixed income securities, may perform differently
than mutual funds which focus on different fixed income market segments or
other asset classes.

Performance Information

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.

- -------------------------------------------------------------------------------
**Portfolio5: Import Perfermance bar chart
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT BOND INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Intermediate-Term Government X.XX% X.XX% X.XX% X.XX%*
Securities Fund
Lehman Brothers Intermediate X.XX% X.XX% X.XX% X.XX%**
Government Bond Index
</TABLE>
* Since 4/1/92
** Since [calc. date for index]

Page 21 of 83
<PAGE>

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.

<TABLE>
<CAPTION>
CLASS A
SHARES
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE)* 4.00%

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None
(AS A PERCENTAGE OF OFFERING PRICE)

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None

EXCHANGE FEE None

MAXIMUM ACCOUNT FEE None
- --------------------------------------------------------------------------------------- --------------- --------------
* This sales charge varies depending upon how much you invest. See "Purchasing Fund Shares."
</TABLE>

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A
SHARES
- -------------------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .60%
Distribution and Service (12b-1) Fees .25%
Other Expenses .XX%
- -------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL

Page 22 of 83
<PAGE>

OPERATING EXPENSES ARE AS FOLLOWS:

INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND -CLASS A ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR " AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$---- $---- $---- $----
</TABLE>

Page 23 of 83

<PAGE>

NEW JERSEY MUNICIPAL SECURITIES FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Current income exempt from both Federal
and New Jersey state income tax,
consistent with preservation of capital

Investment Focus Tax-free New Jersey municipal securities

Share Price Volatility Medium

Principal Investment Strategy Invests in municipal obligations which
pay interest that is exempt from both
Federal and New Jersey state income tax

Investor Profile Conservative taxable investors who want
to receive current income exempt from
federal and New Jersey state income tax
and are willing to bear the risk of
investing in a portfolio of securities
affected by changes in economic
conditions and governmental policies
within New Jersey
</TABLE>

INVESTMENT STRATEGY OF THE NEW JERSEY MUNICIPAL SECURITIES FUND

The Fund invests substantially all of its assets in municipal securities that
generate income exempt from Federal and New Jersey state income taxes. These
securities include securities of municipal issuers located in New Jersey, the
District of Columbia, Puerto Rico and other U.S. territories and possessions.
The Fund will invest most of its assets in securities that are not subject to
federal taxes, including the alternative minimum tax, but it can purchase a
limited amount of taxable securities. The Fund's Advisor will purchase
municipal securities rated in one of the top three ratings categories and
attempt to maintain an average weighted portfolio maturity of less than 15
years. In selecting securities for the Fund, the Advisor will consider each
security's yield and total return potential relative to other available
municipal securities.

PRINCIPAL RISKS OF INVESTING IN THE NEW JERSEY MUNICIPAL SECURITIES FUND

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if
interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also,
longer-term securities are generally more volatile, so the average maturity
or duration of these securities affects risk.

Page 24 of 83
<PAGE>

The Fund is also subject to the risk that its market segment, New Jersey
municipal debt securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

Performance Information

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.

- ------------------------------------------------------------------------------
**Portfolio6: Import Performance bar chart
- ------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Page 25 of 83
<PAGE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
---------------------------------------- -------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
New Jersey Municipal Securities Fund X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers 5-Year Municipal Bond
Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>

* Since 5/4/92
** Since [calc. date for index]

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment advisor and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The Lehman Brothers 5-Year
Municipal Bond Index is a widely-recognized index of intermediate investment
grade tax-exempt bonds. The index includes general obligation bonds, revenue
bonds, insured bonds and prefunded bonds with maturities between 4 and 6
years.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.

<TABLE>
<CAPTION>
CLASS A
SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE)* 3.00%

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None

EXCHANGE FEE None

MAXIMUM ACCOUNT FEE None
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

* This sales charge varies depending upon how much you invest. See
"Purchasing Fund Shares."

Page 26 of 83
<PAGE>

ANNUAL FUND OPERATING EXPENSES*

</TABLE>

NEW JERSEY MUNICIPAL SECURITIES FUND -CLASS A %
----

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$---- $---- $---- $----

</TABLE>

Page 27 of 83
<PAGE>

PENNSYLVANIA MUNICIPAL SECURITIES FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>

Investment Goal Current income exempt from both Federal
and Pennsylvania state income tax,
consistent with preservation of capital

Investment Focus Tax-free Pennsylvania municipal securities

Share Price Volatility Medium

Principal Investment Strategy Invests in municipal obligations which
pay interest that is exempt from both
Federal and Pennsylvania state income tax

Investor Profile Conservative taxable investors who want
to receive current income exempt from
Federal and Pennsylvania state income
tax and are willing to bear the risk of
investing in a portfolio of securities
affected by changes in economic
conditions and governmental
policies within Pennsylvania

</TABLE>

INVESTMENT STRATEGY OF THE PENNSYLVANIA MUNICIPAL SECURITIES FUND

The Fund invests substantially all of its assets in municipal securities that
generate income exempt from Federal and Pennsylvania state income taxes. These
securities include securities of municipal issuers located in Pennsylvania, the
District of Columbia, Puerto Rico and other U.S. territories and possessions.
The Fund will invest most of its assets in securities that are not subject to
federal taxes, including the alternative minimum tax, but it can purchase a
limited amount of taxable securities. The Fund's Advisor will purchase municipal
securities rated in one of the top three ratings categories and attempt to
maintain an average weighted portfolio maturity of less than 15 years. In
selecting securities for the Fund, the Advisor will consider each security's
yield and total return potential relative to other available municipal
securities.

PRINCIPAL RISKS OF INVESTING IN THE PENNSYLVANIA MUNICIPAL SECURITIES FUND

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.

Page 28 of 83
<PAGE>

There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.

The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or political occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities.

The Fund is also subject to the risk that its market segment, Pennsylvania
municipal debt securities, may underperform other fixed income market segments
or the fixed income markets as a whole.

Performance Information

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been reflected,
returns would be less than those shown below.

- -------------------------------------------------------------------------------
**Portfolio7: Import Performance bar chart
- -------------------------------------------------------------------------------

<TABLE>

<S> <C>
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

Page 29 of 83
<PAGE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
---------------------------------------- -------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Pennsylvania Municipal Securities Fund X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers 5-Year Municipal Bond
Index X.XX% X.XX% X.XX% X.XX%**

</TABLE>

* Since 5/13/93
** Since [calc. date for index]

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers 5-Year Municipal Bond Index is a
widely-recognized index of intermediate investment grade tax-exempt bonds. The
index includes general obligation bonds, revenue bonds, insured bonds and
prefunded bonds with maturities between 4 and 6 years.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

<TABLE>
<CAPTION>
CLASS A
SHARES
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE)* 3.00%

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None

EXCHANGE FEE None

Page 30 of 83
<PAGE>

ANNUAL FUND OPERATING EXPENSES*

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

PENNSYLVANIA MUNICIPAL SECURITIES FUND -CLASS A ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$---- $---- $---- $----
</TABLE>

Page 31 of 83

<PAGE>

HIGH YIELD BOND FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Maximize total return

Investment Focus High-yield fixed income securities

Share Price Volatility High

Principal Investment Strategy Investing the Fund's assets in another
mutual fund with an identical investment
objective

Investor Profile Investors who want the potential for
high total return and who can tolerate
the high risk of share
price volatility
</TABLE>

INVESTMENT STRATEGY OF THE HIGH YIELD BOND FUND

The Fund pursues its investment objective through what is sometimes called a
"master-feeder" arrangement. The Fund invests substantially all of its assets in
the SEI Institutional Managed Trust (SIMT) High Yield Bond Fund. As a result,
the Fund has an indirect interest in all the securities owned by the SIMT Fund
and the Fund's investment results will be the same as those of the SIMT Fund,
adjusted for the Fund's expenses.

The SIMT Fund invests directly in a portfolio of fixed income securities rated
below investment grade ("junk bonds"), including corporate bonds and debentures,
convertible and preferred securities, and zero coupon obligations. The SIMT
Fund's advisor chooses securities that offer a high current yield as well as
total return potential. The SIMT Fund's securities are diversified as to issuers
and industries. The SIMT Fund's average weighted maturity may vary, and will
generally not exceed ten years, and there is no limit on the maturity or on the
credit quality of any security.

PRINCIPAL RISKS OF INVESTING IN THE HIGH YIELD BOND FUND

The prices of the SIMT Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the SIMT Fund's fixed income securities will decrease in value if
interest rates rise and vice versa, and the volatility of lower rated securities
is even greater than that of higher rated securities. Also, longer-term
securities are generally more volatile, so the average maturity or duration of
these securities affects risk.

Junk bonds involve greater risks of default or downgrade and are more volatile
than investment grade securities. Junk bonds involve greater risk of price
declines than investment grade securities due to actual or perceived changes in
an issuer's creditworthiness. In addition, issuers of junk bonds may be more
susceptible than other issuers to economic downturns. Junk bonds are subject to
the risk that the issuer may not be able to pay interest or dividends and
ultimately to

Page 32 of 83

<PAGE>

repay principal upon maturity. Discontinuation of these payments could
substantially adversely affect the market value of the security.

The Fund is also subject to the risk that its market segment, junk bonds, may
underperform other fixed income market segments or the fixed income markets as a
whole. In addition, because the Fund invests indirectly in junk bonds through
another mutual fund, the Fund's investment returns depend on the performance of
the SIMT Fund.

Performance Information

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

The performance of Class A and Class B Shares will differ due to differences in
expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been reflected,
returns would be less than those shown below.

- -------------------------------------------------------------------------------
** PORTFOLIO8: Import Performance bar chart
- -------------------------------------------------------------------------------

<TABLE>

<S> <C>
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

The performance for the periods prior to 9/1/98 represents the performance of
the SIMT Fund adjusted for the expenses of the Fund.

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE CS FIRST BOSTON HI YIELD INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS INCEPTION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Yield Bond Fund X.XX% X.XX% X.XX%*
CS First Boston Hi Yield Index X.XX% X.XX% X.XX%**

</TABLE>

* Since 1/11/95
** Since [calc. date for index]

Page 33 of 83

<PAGE>

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR 3 YEARS INCEPTION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Yield Bond Fund X.XX% X.XX% X.XX%*
CS First Boston Hi Yield Index X.XX% X.XX% X.XX%**

</TABLE>

* Since 1/11/95
** Since [calc. date for index]

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The CS First Boston High Yield Index is a widely
recognized index of bonds rated below investment grade.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- --------------------------------------------------------------------------------------------------------------------

</TABLE>

* This sales charge varies depending upon how much you invest. See "Purchasing
Fund Shares."
** This sales charge is imposed if you sell Class B Shares within 1 year of
your purchase. See "Selling Fund Shares."

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>

Page 34 of 83

<PAGE>

Investment Advisory Fees 1.09% 1.09%
Distribution and Service (12b-1) Fees .50% 1.25%
Other Expenses .XX% .XX%
- --------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%

</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR AND
DISTRIBUTOR ARE WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THE ADVISOR OR DISTRIBUTOR MAY DISCONTINUE ALL OR
PART OF THIS WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL
OPERATING EXPENSES ARE AS FOLLOWS:

HIGH YIELD BOND FUND -CLASS A ____%
HIGH YIELD BOND FUND -CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

Page 35 of 83

<PAGE>

EQUITY GROWTH FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Long-term growth of capital

Investment Focus Large capitalization U.S. common stocks

Share Price Volatility Medium

Principal Investment Strategy Investing in a diversified portfolio of
common stocks of established U.S.
companies that
demonstrate long-term earnings growth

Investor Profile Investors who seek growth of capital and
are willing to bear the risk of
investing in equity
securities

</TABLE>

INVESTMENT STRATEGY OF THE EQUITY GROWTH FUND

The Fund invests primarily in common stocks of established U.S. companies with
large market capitalizations (in excess of $5 billion). In selecting investments
for the Fund, the Advisor attempts to invest in a broad range of companies that
it expects will demonstrate greater long-term earnings growth than the average
company included in the Standard & Poor's 500 Composite Index.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY GROWTH FUND

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.

The Fund is also subject to the risk that its market segment, large
capitalization growth equity securities, may underperform other equity market
segments or the equity markets as a whole.

Performance Information

Page 36 of 83

<PAGE>

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

The performance of Class A and Class B Shares will differ due to differences in
expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been reflected,
returns would be less than those shown below.

- ------------------------------------------------------------------------------
Portfolio 9: Import Performance bar chart
- ------------------------------------------------------------------------------

<TABLE>

<S> <C>
1998 X.XX
BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.

SINCE
CLASS A SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
Equity Growth Fund X.XX% X.XX%*
S&P 500 Index X.XX% X.XX%**
</TABLE>

* Since 2/3/97
** Since [calc. date for index]

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
Equity Growth Fund X.XX% X.XX%*
S&P 500 Index X.XX% X.XX%**
</TABLE>

* Since 5/21/97
** Since [calc. date for index]

Page 37 of 83

<PAGE>

recognized, market value-weighted (higher market value stocks have more
influence than lower market value stocks) index of 500 stocks designed to
mimic the overall equity market's industry weightings.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- ----------------------------------------------------------------------------------------------------------------------

</TABLE>

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .75% .75%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- ----------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%

</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

<TABLE>

<S> <C>
EQUITY GROWTH FUND -CLASS A ____%
EQUITY GROWTH FUND -CLASS B ____%

</TABLE>

Page 38 of 83
<PAGE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

Page 39 of 83

<PAGE>

EQUITY VALUE FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Growth of capital and income

Investment Focus Large capitalization U.S. common stocks
which pay dividends

Share Price Volatility Medium

Principal Investment Strategy Investing in stocks which have an
above-average dividend yield relative to
the Standard & Poor's 500 Composite
Index (S&P 500) and are undervalued
by the market

Investor Profile Investors who want growth of capital and
income who can tolerate some share price
volatility
</TABLE>

INVESTMENT STRATEGY OF THE EQUITY VALUE FUND

The Fund invests primarily in common stocks of established U.S. companies with
large market capitalizations (in excess of $5 billion). In selecting investments
for the Fund, the Advisor seeks to develop a broadly diversified equity
portfolio with projected total returns for the individual selections that are
superior to the S&P 500.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY VALUE FUND

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.

The Fund is also subject to the risk that its market segment, large
capitalization value equity securities, may underperform other equity market
segments or the equity markets as a whole.

Performance Information

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

Page 40 of 83
<PAGE>

The performance of Class A and Class B Shares will differ due to differences
in expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.

- -------------------------------------------------------------------------------
**Portfolio10: Import Performance bar chart
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Value Fund X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>
* Since 4/1/92
** Since [calc. date for index]

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
Equity Value Fund X.XX% X.XX%*
S&P 500 Index X.XX% X.XX%**
</TABLE>
* Since 5/12/97
** Since [calc. date for index]

WHAT IS AN INDEX?

Page 41 of 83
<PAGE>

index had expenses, its performance would be lower. The S&P 500 Index is a
widely-recognized, market value-weighted (higher market value stocks have
more influence than lower market value stocks) index of 500 stocks designed
to mimic the overall equity market's industry weightings.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

* This sales charge varies depending upon how much you invest. See "Purchasing
Fund Shares."

** This sales charge is imposed if you sell Class B Shares within 1 year of your
purchase. See "Selling Fund Shares."

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .75% .75%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- --------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%
</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

EQUITY VALUE FUND -CLASS A ____%

Page 42 of 83
<PAGE>

EQUITY VALUE FUND -CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

Page 43 of 83

<PAGE>

EQUITY INCOME FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Growth of capital consistent with an
emphasis on current income

Investment Focus Dividend-paying U.S. stocks

Share Price Volatility Medium

Principal Investment Strategy Investing in stocks which have an
above-average dividend yield relative to
the Standard & Poor's
500 Composite Index (S&P 500)

Investor Profile Investors who want growth of capital and
income and who can tolerate moderate
share price volatility

</TABLE>

INVESTMENT STRATEGY OF THE EQUITY INCOME FUND

The Fund invests primarily in common stocks and other equity securities of
established U.S. companies with large market capitalizations (in excess of $5
billion). The Fund invests in companies operating in a broad range of industries
based on their prospects for both continued earnings and dividends growth. In
selecting investments for the Fund, the Advisor attempts to choose stocks of
companies with a dividend yield that is higher than the average company in the
S&P 500 in order to maintain an overall Fund yield that is higher than the
average yield of the stocks in the S&P 500.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY INCOME FUND

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.

The Fund is also subject to the risk that its market segment, large
capitalization equity income securities, may underperform other equity market
segments or the equity markets as a whole.

Page 44 of 83

<PAGE>

Performance Information

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

The performance of Class A and Class B Shares will differ due to differences in
expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been reflected,
returns would be less than those shown below.

- ------------------------------------------------------------------------------
**Portfolio11: Import Performance bar chart
- ------------------------------------------------------------------------------

<TABLE>

<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE DOW JONES EQUITY MARKET INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Income Fund X.XX% X.XX% X.XX% X.XX%*
Dow Jones Equity Market Index X.XX% X.XX% X.XX% X.XX%**

</TABLE>

* Since 4/1/92
** Since [calc. date for index]

SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
Equity Income Fund X.XX% X.XX%*
Dow Jones Equity Market Index X.XX% X.XX%**

</TABLE>

* Since 5/8/97
** Since [calc. date for index]

Page 45 of 83

<PAGE>

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Dow Jones Equity Market Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of about 700 stocks traded on the NYSE, AMEX and Nasdaq.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- ----------------------------------------------------------------------------------------------------------------------

</TABLE>

ANNUAL FUND OPERATING EXPENSES*

CLASS A CLASS B
SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .75% .75%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- ----------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%

</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR

Page 46 of 83

<PAGE>

WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING A
PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY TIME.
WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS
FOLLOWS:

<TABLE>

<S> <C>
EQUITY INCOME FUND -CLASS A ____%
EQUITY INCOME FUND -CLASS B ____%

</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

Page 47 of 83

<PAGE>

EQUITY INDEX FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Investment results that correspond to
the Standard & Poor's 500 Composite
Index (S&P 500)

Investment Focus Large capitalization U.S. common stocks

Share Price Volatility Medium

Principal Investment Strategy Investing the Fund's assets in another
mutual fund with an identical investment
objective

Investor Profile Investors who want growth of capital
and who can tolerate some share price
volatility

</TABLE>

INVESTMENT STRATEGY OF THE EQUITY INDEX FUND

The Fund pursues its investment objective through what is sometimes called a
"master-feeder" arrangement. The Fund invests substantially all of its assets in
the SEI Index Funds (SIF) S&P 500 Index Fund, a separate mutual fund with the
same investment objective. As a result, the Fund has an indirect interest in all
of the securities owned by the SIF Fund and the Fund's investment results will
be the same as those of the SIF Fund, adjusted for the Fund's expenses.

The SIF Fund invests exclusively in securities listed in the S&P 500, which is
comprised of 500 selected common stocks. The SIF Fund's ability to duplicate the
performance of the S&P 500 will depend to some extent on the size and timing of
cash flows in to and out of the Fund, as well as on the level of the Fund's
expenses. The SIF Fund's advisor makes no attempt to "manage" the Fund in the
traditional sense (i.e., by using economic, financial or market analyses).
However, the SIF Fund's advisor may sell an investment if, in the judgment of
the advisor, the merit of the investment has been substantially impaired by
extraordinary events or adverse financial conditions.

PRINCIPAL RISKS OF INVESTING IN THE EQUITY INDEX FUND

Since it purchases equity securities, the SIF Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the SIF Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the SIF Fund.

Page 48 of 83
<PAGE>

The SIF Fund may not be able to match the performance of the S&P 500.

The Fund is also subject to the risk that its investment approach, which
attempts to duplicate the performance of the S&P 500, may perform differently
than other mutual funds which focus on particular equity market segments or
invest in other asset classes. In addition, because the Fund indirectly attempts
to match the performance of the S&P 500 through investing in another mutual
fund, the Fund's investment returns depend on the performance of the SIF Fund.

Performance Information

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

The performance of Class A and Class B Shares will differ due to differences in
expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been reflected,
returns would be less than those shown below.

- -----------------------------------------------------------------------------
**PORTFOLIO12: Import Performance bar chart
- -----------------------------------------------------------------------------

<TABLE>

<C> <C>
1989 X.XX
1990 X.XX
1991 X.XX
1992 X.XX
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

The performance for the periods prior to 9/1/98 represents the performance of
the SIF Fund adjusted for the expenses of the Fund.

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.

Page 49 of 83
<PAGE>

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Index Fund X.XX% X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX% X.XX%**

</TABLE>

* Since 8/1/85
** Since [calc. date for index]

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Index Fund X.XX% X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX% X.XX%**
* Since 8/1/85
** Since [calc. date for index]

</TABLE>

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- ----------------------------------------------------------------------------------------------------------------------

</TABLE>

Page 50 of 83
<PAGE>

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .78% .78%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- ----------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%

</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

<TABLE>

<S> <C>
EQUITY INDEX FUND -CLASS A ____%
EQUITY INDEX FUND -CLASS B ____%

</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

Page 51 of 83

<PAGE>

INTERNATIONAL EQUITY FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Long-term capital appreciation

Investment Focus Common stocks of medium to large sized
companies in Europe and the Pacific
Basin

Share Price Volatility High

Principal Investment Strategy Investing in a diversified portfolio of
common stocks of companies that have a
history of consistent growth and little
or no debt

Investor Profile Investors who want capital appreciation,
who are willing to accept the risks of
international investing and who want to
diversify their investments by investing
overseas

</TABLE>

INVESTMENT STRATEGY OF THE INTERNATIONAL EQUITY FUND

The Fund invests primarily in common stocks of medium to large capitalization
companies (in excess of $500 million) located in Europe and the Pacific Basin.
The Advisor has engaged Vontobel USA Inc. as sub-advisor (Sub-Advisor) to manage
the Fund on a day-to-day basis. The Fund focuses on companies that have a
history of consistent growth in cash flow, sales, operating profits, returns on
equity and returns on invested capital, and little or no debt. The Fund is well
diversified among industry sectors and has a low turnover ratio, generally
holding its core positions for at least two years.

PRINCIPAL RISKS OF INVESTING IN THE INTERNATIONAL EQUITY FUND

Page 52 of 83
<PAGE>

PERFORMANCE INFORMATION

The performance of Class A and Class B Shares will differ due to differences
in expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.

- ------------------------------------------------------------------------------
**Portfolio13: Import Performance bar chart
- ------------------------------------------------------------------------------

<TABLE>

<S> <C>
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

The performance for the periods prior to 9/1/98 represent the performance of
the Fund's previous Sub-Advisor.

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE MORGAN STANLEY EAFE INDEX.

SINCE
CLASS A SHARES 1 YEAR 3 YEARS INCEPTION
- ----------------------------------------- -------------- -------------- ---------------
<S> <C> <C> <C>
International Equity Fund X.XX% X.XX% X.XX%*
Morgan Stanley EAFE Index X.XX% X.XX% X.XX%**

</TABLE>

* Since 5/4/95
** Since [calc. date for index]

Page 53 of 83
<PAGE>

SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ----------------------------------------- -------------- ---------------
<S> <C> <C>
International Equity Fund X.XX% X.XX%*
Morgan Stanley EAFE Index X.XX% X.XX%**

</TABLE>

* Since 5/7/97
** Since [calc. date for index]

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. Unlike a mutual fund, an index does not have an
investment advisor and does not pay any commissions or expenses. If an index
had expenses, its performance would be lower. The Morgan Stanley EAFE Index
is a widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of over 1,000 securities listed on the stock exchanges
in Europe, Australia and the Far East.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- --------------------------------------------------------------------------------------- --------------- --------------

</TABLE>

* This sales charge varies depending upon how much you invest. See
"Purchasing Fund Shares."

** This sales charge is imposed if you sell Class B Shares within 1 year of
your purchase. See "Selling Fund Shares."

ANNUAL FUND OPERATING EXPENSES*

Page 54 of 83
<PAGE>

CLASS A CLASS B
SHARES SHARES
- --------------------------------------------------------------------- ---------------------- -------------------------
<S> <C> <C>
Investment Advisory Fees 1.00% 1.00%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- --------------------------------------------------------------------- ---------------------- -------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%

</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR AND
SUB-ADVISOR ARE WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THE ADVISOR OR SUB-ADVISOR MAY DISCONTINUE ALL OR
PART OF THIS WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL
OPERATING EXPENSES ARE AS FOLLOWS:

INTERNATIONAL EQUITY FUND -CLASS A ____%
INTERNATIONAL EQUITY FUND -CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____

</TABLE>

Page 55 of 83

<PAGE>

BALANCED FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Growth of capital consistent with
current income

Investment Focus Common stocks and fixed income
securities

Share Price Volatility Medium

Principal Investment Strategy Investing in a blended portfolio of
equity and fixed income securities
designed to help maximize the Fund's
total return in both up and down markets

Investor Profile Investors who want total return, but who
are unwilling to tolerate the price
volatility of a fund that invests solely
in equity securities
</TABLE>

INVESTMENT STRATEGY OF THE BALANCED FUND

The Fund invests primarily in a blended portfolio of U.S. common stocks and
fixed income securities rated in one of the top three ratings categories. In
selecting investments for the Fund, the Advisor purchases common stocks, as well
as fixed income securities issued by the U.S. government and its agencies and
instrumentalities and by U.S. corporations. The Advisor attempts to maintain a
portfolio which maximizes total return in all markets. The Advisor will manage
the Fund to attempt to minimize share price declines by reallocating assets from
equity investments to fixed income investments.

PRINCIPAL RISKS OF INVESTING IN THE BALANCED FUND

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the

Page 56 of 83

<PAGE>

average maturity or duration of these securities affects risk.

The Fund is also subject to the risk that the Advisor's asset allocation
decisions will not anticipate market trends successfully. For example, weighting
common stocks too heavily during a stock market decline may result in a failure
to preserve capital. Conversely, investing too heavily in fixed income
securities a during period of stock market appreciation may result in lower
total return. In fact, since the Fund will always have a portion of its assets
invested in fixed income securities, it may not perform as well during periods
of stock market appreciation as funds that invest only in stocks.

The Fund is also subject to the risk that its investment approach, which blends
equity and fixed income investments, may perform differently than other mutual
funds which focus on a particular market segment or other asset classes.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

The performance of Class A and Class B Shares will differ due to differences in
expenses.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

The chart does not reflect sales charges. If sales charges had been reflected,
returns would be less than those shown below.

- -------------------------------------------------------------------------------
**PORTFOLIO14: Import Performance bar chart
- -------------------------------------------------------------------------------
<TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO

Page 57 of 83

<PAGE>

THOSE OF THE S&P 500 INDEX, THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE INDEX AND A 50/50 BLEND OF THOSE TWO INDICES.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
---------------------------------------- -------------- -------------- ------------- -----------------------
<S> <C> <C> <C> <C>
Balanced Fund X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX%**
Lehman Brothers Intermediate
Government/Corporate Index X.XX% X.XX% X.XX% X.XX%***
</TABLE>

* Since 4/1/92
** Since [calc. date for index]
***Since [calc. date for index]

SINCE
CLASS B SHARES 1 YEAR INCEPTION
---------------------------------------- -------------- ----------------
<S> <C> <C>
Balanced Fund X.XX% X.XX%*
S&P 500 Index X.XX% X.XX%**
Lehman Brothers Intermediate X.XX% X.XX%***
Government/Corporate Index
</TABLE>

* Since 5/8/97
** Since [calc. date for index]
***Since [calc. date for index]

WHAT IS AN INDEX?

The Lehman Brothers Intermediate Government/Corporate Bond Index is a
widely-recognized, market value-weighted (higher market value bonds have more
influence than lower market value bonds) index of U.S. Treasury securities,
U.S. government agency obligations, corporate debt backed by the U. S.
government, fixed-rate nonconvertible corporate debt securities, Yankee bonds
and nonconvertible debt securities issued by or guaranteed by foreign
governments and agencies. All securities in the index are rated investment
grade (BBB) or higher, with maturities of 1 to 10 years.

FUND FEES AND EXPENSES

Page 58 of 83

<PAGE>

THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL FUND SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN THE
FUND.

MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE)** None 5.50%

MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS
(AS A PERCENTAGE OF OFFERING PRICE) None None

REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None

EXCHANGE FEE None None

MAXIMUM ACCOUNT FEE None None
- --------------------------------------------------------------------------------------- --------------- --------------
</TABLE>

* This sales charge varies depending upon how much you invest. See "Purchasing
Fund Shares."
** This sales charge is imposed if you sell Class B Shares within
1 year of your purchase. See "Selling Fund Shares."

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- --------------------------------------------------------------------- ---------------------- -------------------------
<S> <C> <C>
Investment Advisory Fees .75% .75%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .XX% .XX%
- --------------------------------------------------------------------- ---------------------- -------------------------
Total Annual Fund Operating Expenses X.XX% X.XX%
</TABLE>

*THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT ANY TIME. WITH
THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

<TABLE>

<S> <C>
BALANCED FUND -CLASS A ____%
BALANCED FUND -CLASS B ____%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

Page 59 of 83

<PAGE>

EXAMPLE

IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

Page 60 of 83

<PAGE>

MORE INFORMATION ABOUT RISK

<TABLE>

<S> <C>
Equity and Balanced Funds
EQUITY RISK - Equity securities include public and privately
issued equity securities, common and preferred stocks, warrants,
rights to subscribe to common stock and convertible securities, as
well as instruments that attempt to track the price movement of
equity indices. Investments in equity securities and equity
derivatives in general are subject to market risks that may cause
their prices to fluctuate over time. The value of securities
convertible into equity securities, such as warrants or
convertible debt, is also affected by prevailing interest rates,
the credit quality of the issuer and any call provision.
Fluctuations in the value of equity securities in which a mutual
fund invests will cause a fund's net asset value to fluctuate. An
investment in a portfolio of equity securities may be more
suitable for long-term investors who can bear the risk of these
share price fluctuations.

Fixed Income Funds
FIXED INCOME RISK - The market value of fixed income investments
change in response to interest rate changes and other factors. Balanced Fund
During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Moreover,
while securities with longer maturities tend to produce higher
yields, the prices of longer maturity securities are also subject
to greater market fluctuations as a result of changes in interest
rates. In addition to these fundamental risks, different types of
fixed income securities may be subject to the following additional
risks:

Fixed Income Funds
CALL RISK - During periods of falling interest rates,
certain debt obligations with high interest rates may be Balanced Fund
prepaid (or "called") by the issuer prior to maturity.
This may cause a Fund's average weighted maturity to
fluctuate, and may require a Fund to invest the resulting
proceeds at lower interest rates.

Page 61 of 83
<PAGE>

Fixed Income Funds
CREDIT RISK - The possibility that an issuer will be
unable to make timely payments of either principal or Balanced Fund
interest.

Fixed Income Funds
EVENT RISK - Securities may suffer declines in credit
quality and market value due to issuer restructurings or Balanced Fund
other factors. This risk should be reduced because of
the Fund's multiple holdings.

Page 62 of 83
<PAGE>

High Yield Bond Fund
HIGH-YIELD, LOWER RATED SECURITIES (or "junk bonds") are subject to
additional risks associated with investing in high-yield securities,
including:

- High-yield, lower rated securities involve greater risk of
default or price declines than investments in investment
grade securities (E.G., securities rated BBB or higher by
S&P or Baa or higher by Moody's) due to changes in the
issuer's creditworthiness.

- The market for high-yield, lower rated securities may be
thinner and less active, causing market price volatility and
limited liquidity in the secondary market. This may limit
the ability of a Fund to sell these securities at their fair
market values either to meet redemption requests, or in
response to changes in the economy or the financial markets.

- Market prices for high-yield, lower rated securities may
also be affected by investors' perception of the issuer's
credit quality and the outlook for economic growth. Thus,
prices for high-yield, lower rated securities may move
independently of interest rates and the overall bond market.

- The market for high-yield, lower rated securities may be
adversely affected by legislative and regulatory
developments.

Page 63 of 83
<PAGE>

New Jersey Municipal Securities
MUNICIPAL ISSUER RISK - There may be economic or Fund
political changes that impact the ability of municipal Pennsylvania Municipal Securities
issuers to repay principal and to make interest payments Fund
on municipal securities. Changes to the financial
condition or credit rating of municipal issuers may also
adversely affect the value of a Fund's municipal
securities. Constitutional or legislative limits on
borrowing by municipal issuers may result in reduced
supplies of municipal securities. Moreover, certain
municipal securities are backed only by a municipal
issuer's ability to levy and collect taxes. In addition,
each Fund's concentration of investments in issuers
located in a single state makes each Fund more
susceptible to adverse political or economic developments
affecting that state. Each Fund also may be riskier than
mutual funds that buy securities of issuers in numerous
states.

Fixed Income Fund
MORTGAGE-BACKED SECURITIES -Mortgage-backed securities
are fixed income securities representing an interest in a
pool of underlying mortgage loans. They are sensitive to
changes in interest rates, but may respond to these
changes differently from other fixed income securities
due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to
determine in advance the actual maturity date or average
life of a mortgage-backed security. Rising interest
rates tend to discourage refinancings, with the result
that the average life and volatility of the security will
increase exacerbating its decrease in market price. When
interest rates fall, however, mortgage-backed securities
may not gain as much in market value because of the
expectation of additional mortgage prepayments that must
be reinvested at lower interest rates. Prepayment risk
may make it difficult to calculate the average maturity
of a portfolio of mortgage-backed securities and,
therefore, to assess the volatility risk of that
portfolio.

Page 64 of 83
<PAGE>

International Equity Fund

FOREIGN SECURITY RISKS - Investments in securities of
foreign companies or governments can be more volatile than
investments in U.S. companies or governments. Diplomatic,
political, or economic developments, including
nationalization or appropriation, could affect investments
in foreign countries. Foreign securities markets generally
have less trading volume and less liquidity than U.S.
markets. In addition, the value of securities denominated in
foreign currencies, and of dividends from such securities,
can change significantly when foreign currencies strengthen
or weaken relative to the U.S. dollar. Foreign companies or
governments generally are not subject to uniform accounting,
auditing, and financial reporting standards comparable to
those applicable to domestic U.S. companies or governments.
Transaction costs are generally higher than those in the
U.S. and expenses for custodial arrangements of foreign
securities may be somewhat greater than typical expenses for
custodial arrangements of similar U.S. securities. Some
foreign governments levy withholding taxes against dividend
and interest income. Although in some countries a portion of
these taxes are recoverable, the non-recovered portion will
reduce the income received from the securities comprising
the portfolio.

In addition to these risks, certain foreign securities may be
subject to the following additional risks factors:

</TABLE>

Page 65 of 83

<PAGE>

International Equity Fund

CURRENCY RISK - Investments in foreign securities
denominated in foreign currencies involve additional
risks, including:

- The value of a Fund's assets measured in
U.S. dollars may be affected by changes
in currency rates and in exchange control
regulations.

- A Fund may incur substantial costs in
connection with conversions between
various currencies.

- A Fund may be unable to hedge against
possible variations in foreign exchange
rates or to hedge a specific security
transaction or portfolio position.

- Only a limited market currently exists
for hedging transactions relating to
currencies in certain emerging markets.

Equity Index Fund

TRACKING ERROR RISK - Factors such as Fund expenses, imperfect
correlation between the Fund's investments and those of its
benchmark, rounding of share prices, changes to the benchmark,
regulatory policies, and leverage, may affect its ability to
achieve perfect correlation. The magnitude of any tracking error
may be affected by a higher portfolio turnover rate.

Page 66 of 83

<PAGE>

All Funds

YEAR 2000 RISK - The Funds depend on the smooth functioning of
computer systems in almost every aspect of their business. Like
other mutual funds, businesses and individuals around the world,
the Funds could be adversely affected if the computer systems used
by their service providers do not properly process dates on and
after January 1, 2000, and distinguish between the year 2000 and
the year 1900. The Funds have asked their service providers
whether they expect to have their computer systems adjusted for
the year 2000 transition, and is seeking assurances from each
service provider that they are devoting significant resources to
prevent material adverse consequences to the Funds. While it is
likely that such assurances will be obtained, the Funds and their
shareholders may experience losses if these assurances prove to be
incorrect or as a result of year 2000 computer difficulties
experienced by issuers of portfolio securities or third parties,
such as custodians, banks, broker-dealers or others with which the
Funds do business. Furthermore, many foreign countries are not as
prepared as the U.S. for the year 2000 transition. As a result,
computer difficulties in foreign markets and with foreign
institutions as a result of the year 2000 may add to the
possibility of losses to the International Equity Fund and its
shareholders.

EACH FUND'S OTHER INVESTMENTS

The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Fund may invest up to 100%
of its assets in cash or money market instruments that would not ordinarily be
consistent with the Fund's objectives (other than the Money Market Funds). A
Fund will do so only if the Advisor or Sub-Advisor believes that the risk of
loss outweighs the opportunity for capital gains or higher income.

Page 67 or 83

<PAGE>

INVESTMENT ADVISOR AND SUB-ADVISOR

The Investment Advisor makes investment decisions for each of the Funds, other
than the International Equity Fund, and continuously reviews, supervises and
administers the Funds' respective investment programs. The Advisor oversees the
Sub-Advisor for the International Equity Fund to ensure compliance with that
Fund's investment policies and guidelines, and monitors the Sub-Advisor's
adherence to its investment style. The Advisor pays the Sub-Advisor out of the
investment advisory fees it receives (described below). The Advisor also
monitors the performance of the SIMT Fund and the SIF Fund. The Board of
Trustees of The Pillar Funds supervises the Advisor and Sub-Advisor and
establishes policies that the Advisor and Sub-Advisor must follow in their
management activities.

Summit Bank serves as the Advisor to the Funds. As of December 31, 1998, Summit
Bank had approximately $9.5 billion in assets under management. For the year
ended December 31, 1998, Summit Bank received advisory fees of:

<TABLE>

<S> <C>
U.S. TREASURY SECURITIES MONEY MARKET FUND [VAR:Advisor1.Portfolio1.Fees] %
PRIME OBLIGATION MONEY MARKET FUND [VAR:Advisor1.Portfolio2.Fees] %
TAX-EXEMPT MONEY MARKET FUND [VAR:Advisor1.Portfolio3.Fees] %
FIXED INCOME FUND [VAR:Advisor1.Portfolio4.Fees] %
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND [VAR:Advisor1.Portfolio5.Fees] %
NEW JERSEY MUNICIPAL SECURITIES FUND [VAR:Advisor1.Portfolio6.Fees] %
PENNSYLVANIA MUNICIPAL SECURITIES FUND [VAR:Advisor1.Portfolio7.Fees] %
HIGH YIELD BOND FUND [VAR:Advisor1.Portfolio8.Fees] %
EQUITY GROWTH FUND [VAR:Advisor1.Portfolio9.Fees] %
EQUITY VALUE FUND [VAR:Advisor1.Portfolio10.Fees] %
EQUITY INCOME FUND [VAR: Advisor1.Portfolio11.Fees]%
EQUITY INDEX FUND [VAR: Advisor1.Portfolio12.Fees]%
INTERNATIONAL EQUITY FUND [VAR: Advisor1.Portfolio13.Fees]%
BALANCED FUND [VAR: Advisor1.Portfolio14.Fees]%

</TABLE>

Vontobel USA Inc. (Vontobel) manages the International Equity Fund on a
day-to-day basis. Vontobel selects, buys and sells securities for the Fund under
the supervision of the Advisor and the Board of Trustees of The Pillar Funds.

Fabrizio Pierallini serves as a Senior Vice President of Vontobel. He has
managed the International Equity Fund since September, 1998. He has more than 10
years of investment experience. Prior to joining Vontobel in 1994, Mr.
Pierallini served as Associate-

Page 68 of 83

<PAGE>

Director/Portfolio Manager with Swiss Bank Corporation, New York.

SEI Investments Management Corporation (SEI) is the advisor of the SIMT Fund and
has engaged BEA Associates (BEA) as sub-advisor to manage the SIMT Fund on a
day-to-day basis. BEA selects, buys and sells securities for the SIMT Fund under
the supervision of SEI and the SIMT Board of Trustees.

World Asset Management (World) manages the SIF Fund on a day-to-day basis. World
selects, buys and sells securities for the SIF Fund under the supervision of the
SIF Board of Trustees.

PORTFOLIO MANAGERS

Judith Wolk serves as a Vice President of the Advisor. She has managed the Prime
Obligation Money Market Fund and the U.S. Treasury Securities Money Market Fund
since June, 1996. Prior to joining the Advisor in June, 1996, Ms. Wolk had
substantial experience in money market instruments with a large regional bank.

Frances M. Tendall serves as a Senior Vice President of the Advisor. She has
managed the Intermediate-Term Government Securities Fund since April, 1992. She
joined the Advisor in 1982 and has more than 17 years of investment experience.

Charlene P. Palmer serves as a Vice President of the Advisor . She has managed
the Tax-Exempt Money Market Fund since June, 1996 and the New Jersey Municipal
Securities Fund since May, 1992. She joined the Advisor in 1981 and has more
than 18 years of investment experience, with an emphasis on tax-exempt bonds.

Randolph E. Lestyk serves as a Senior Vice President of the Advisor. He has
managed the Pennsylvania Municipal Securities Fund since 1994 and the Mid Cap
Fund since 1997. Prior to joining the Advisor, Mr. Lestyk was involved in equity
and fixed income investing at several financial institutions and senior vice
president and chief investment officer of a major Pennsylvania insurance
company. He has more than 27 years of investment experience.

Chris Clark serves as a Vice President of the Advisor. He has co-managed the
Equity Growth Fundsince July, 1997 and managed the Fund since February, 1999.
Prior to joining the Advisor in 1995, Mr. Clark served in equity trading for
Merrill Lynch.

Page 69 of 83

<PAGE>

Fernando Garip serves as a Senior Vice President of the Advisor. He has managed
the Equity Value Fund since January, 1996. He joined the Advisor in 1982 and has
more than 17 years of investment experience.

Richard H. Caro serves as a Vice President of the Advisor. He has managed the
Equity Income Fund since January, 1996. He joined the Advisor in April, 1983 and
has more than 28 years of investment experience.

Edward Kasperavich serves as a Vice President of the Advisor. He has managed the
Balanced Fund since January, 1997. He joined the Advisor in 1985 and has more
than 14 years of investment experience.

Page 70 of 83

<PAGE>

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or
exchange Class A and Class B Shares of the Funds.

The classes have different expenses and other characteristics.

CLASS A SHARES
- Front-end sales charge (except for the Money Market Funds)
- 12b-1 fees
- $1,000 minimum initial investment

CLASS B SHARES
- Contingent deferred sales charge
- Higher 12b-1 fees and shareholder servicing fees
- $1,000 minimum initial investment
- Automatic conversion to Class A Shares after 8 years

For some investors the minimum initial investment for Class A and Class B
Shares may be lower.

HOW TO PURCHASE FUND SHARES

You may purchase shares directly by:
- - Mail
- - Telephone
- - Wire
- - Automated Clearing House (ACH).

To purchase shares directly, please call 1-800-932-7782, or complete and send
in the (** attached/enclosed **) application. Unless you arrange to pay by
wire or through ACH, write your check, payable in U.S. dollars, to "The
Pillar Funds" and include the name of the appropriate Fund(s) on the check. A
Fund cannot accept third-party checks, credit cards, credit card checks or
cash.

GENERAL INFORMATION

Page 71 of 83
<PAGE>

A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.

The price per share (the offering price) will be the net asset value per
share (NAV) next determined after a Fund receives your purchase order plus,
in the case of Class A Shares, the applicable front-end sales charge.

Each Fund (except the Money Market Funds) calculates its NAV once each
Business Day at the regularly-scheduled close of normal trading on the New
York Stock Exchange (normally, 4:00 p.m. Eastern time). So, for you to
receive the current Business Day's NAV, a Fund must generally receive your
purchase order before 4:00 p.m. Eastern time.

Each Money Market Fund calculates its NAV once each Business Day at 3:00 p.m.
Eastern time. So, for you to be eligible to receive dividends declared on the
day you submit your purchase order, a Fund must generally receive your order
before 3:00 p.m. Eastern time and federal funds (readily available funds)
before 3:00 p.m. Eastern time.

HOW WE CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

Page 72 of 83
<PAGE>

MINIMUM PURCHASES

To purchase Class A or Class B Shares for the first time, you must invest at
least $1,000 in any Fund. Your subsequent investments in any Fund must be
made in amounts of at least $100. A Fund may accept investments of smaller
amounts for either class of shares at our discretion.

SYSTEMATIC INVESTMENT PLAN

If you have a checking or savings account with a bank, you may purchase Class
A or Class B Shares automatically through regular deductions from your
account in amounts of at least $50 per month.

FRONT-END SALES CHARGES - CLASS A SHARES

The offering price of Class A Shares is the NAV next calculated after a Fund
receives your request, plus the front-end sales load (except the Money Market
Funds).

The amount of any front-end sales charge included in your offering price
varies, depending on the amount of your investment:

YOUR SALES CHARGE AS A
IF YOUR INVESTMENT YOUR SALES CHARGE AS A PERCENTAGE OF YOUR NET
IS: PERCENTAGE OF OFFERING PRICE INVESTMENT
- --------------------------- -------------------------- ---------------------------------- ---------------------------------
<S> <C> <C> <C>
Fixed Income Fund $0-99,999 4.25% 4.44%
High Yield Bond Fund $100,000-249,000 3.75% 3.90%
$250,000-499,999 2.75% 2.83%
$500,000-999,999 2.00% 2.04%
$1,000,000 and above* 0.00% 0.00%

YOUR SALES CHARGE AS A
IF YOUR INVESTMENT YOUR SALES CHARGE AS A PERCENTAGE OF YOUR NET
IS: PERCENTAGE OF OFFERING PRICE INVESTMENT
-------------------------- ---------------------------------- ---------------------------------
<S> <C> <C> <C>
Intermediate-Term $0-99,999 4.00% 4.17%
Government Securities Fund $100,000-249,000 3.00% 3.09%
$250,000-499,999 2.00% 2.04%
$500,000-999,999 1.00% 1.01%
$1,000,000 and above* 0.00% 0.00%

YOUR SALES CHARGE AS A
IF YOUR INVESTMENT YOUR SALES CHARGE AS A PERCENTAGE OF YOUR NET
IS: PERCENTAGE OF OFFERING PRICE INVESTMENT
-------------------------- ---------------------------------- ---------------------------------
<S> <C> <C> <C>
New Jersey Municipal $0-249,999 3.00% 3.10%
Securities Fund $250,000-499,999 2.00% 2.05%
Pennsylvania Municipal $500,000-999,999 1.00% 1.01%
Securities Fund $1,000,000 and above* 0.00% 0.00%

<S> <C> <C> <C>
Equity and Balanced Funds $0-49,999 5.50% 5.82%
$50,000-99,999 4.75% 4.99%
$100,000-249,000 3.75% 3.90%
$250,000-499,999 2.75% 2.83%
$500,000-999,999 2.00% 2.04%
$1,000,000 and above* 0.00% 0.00%

</TABLE>

*Purchases of $1,000,000 or more do not have a sales charge. However, the
Distributor will charge you a 1.00% contingent deferred sales charge if you
redeem your shares within 12 months from the date you bought them.

WAIVER OF FRONT-END SALES CHARGE --CLASS A SHARES

The front-end sales charge will be waived on Class A Shares:

- - issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which The Pillar Funds is a party;

- - sold to dealers or brokers that have a sales arrangement with the
Distributor, for their own account or for retirement plans for their
employees;

- - sold to present employees of dealers or brokers that certify to the
Distributor at the time of purchase that such purchase is for their own
account;

- - sold to present or retired employees of Summit Bancorp, or one of its
affiliates and/or the spouses of such employees;

- - sold to present employees of service providers to The Pillar Funds;

- - sold to any qualified customer who has entered into an agreement with
Summit Bank, its affiliates or correspondent banks;

- - sold to present or retired Trustees of The Pillar Funds and their immediate
families;

- - sold to present or retired Directors of Summit Bancorp or its affiliates,
and their immediate families;

- - sold to beneficial owners of Class I Shares whose interests are converted
into Class A Shares;

- - purchased within 90 days of a redemption of Class A Shares of a non-money
market fund (only to the amount of the redemption); or

- - sold to 401(k) plans that have entered into service arrangements with
Summit Bank, its affiliates or correspondent banks.

REPURCHASE OF CLASS A SHARES

You may repurchase any amount of Class A Shares of any Fund at NAV (without
the normal front-end sales charge), up to the limit of the value of any
amount of Class A Shares (other than those which were purchased with
reinvested dividends and distributions) that you redeemed within the past 90
days. In effect, this allows you to reacquire shares that you may have had to
redeem, without re-paying the front-end sales charge. You may only exercise
this privilege once. To exercise this privilege, the Fund must receive your
purchase order within 90 days of your redemption. IN ADDITION, YOU MUST
NOTIFY THE FUND WHEN YOU SEND IN YOUR PURCHASE ORDER THAT YOU ARE
REPURCHASING SHARES.

Page 74 of 83
<PAGE>

REDUCED SALES CHARGES --CLASS A SHARES

RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate,
this right allows you to add the value of the Class A Shares you already own
to the amount that you are currently purchasing. The Fund will combine the
value of your current purchases with the current value of any Class A Shares
you purchased previously for (i) your account, (ii) your spouse's account,
(iii) a joint account with your spouse, or (iv) your minor children's trust
or custodial accounts. A fiduciary purchasing shares for the same fiduciary
account, trust or estate may also use this right of accumulation. The Fund
will only consider the value of Class A Shares purchased previously that were
sold subject to a sales charge. TO BE ENTITLED TO A REDUCED SALES CHARGE
BASED ON SHARES ALREADY OWNED, YOU MUST ASK US FOR THE REDUCTION AT THE TIME
OF PURCHASE. You must provide the Fund with your account number(s) and, if
applicable, the account numbers for your spouse and/or children (and provide
the children's ages). The Fund may amend or terminate this right of
accumulation at any time.

LETTER OF INTENT. You may purchase Class A Shares at the sales charge rate
applicable to the total amount of the purchases you intend to make over a
13-month period. In other words, a Letter of Intent allows you to purchase
Class A Shares of a Fund over a 13-month period and receive the same sales
charge as if you had purchased all the shares at the same time. The Fund will
only consider the value of Class A Shares sold subject to a sales charge. As
a result, shares of the Class A Shares purchased with dividends or
distributions will not be included in the calculation. To be entitled to a
reduced sales charge based on shares you intend to purchase over the 13-month
period, you must send the Fund a Letter of Intent. In calculating the total
amount of purchases you may include in your letter purchases made up to 90
days before the date of the Letter. The 13-month period begins on the date of
the first purchase, including those purchases made in the 90-day period
before the date of the Letter. Please note that the purchase price of these
prior purchases will not be adjusted.

You are not legally bound by the terms of your Letter of Intent to purchase
the amount of your shares stated in the Letter. The Letter does, however,
authorize the Fund to hold in escrow 5% of the total amount you intend to
purchase. If you do not complete the total intended purchase at the end of
the 13-month period, the Fund's transfer agent will redeem the necessary
portion of the escrowed shares to make up the difference between the reduced
rate sales charge (based on the amount you intended to purchase) and the
sales charge that would normally apply (based on the actual amount you
purchased).

COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the
appropriate sales charge rate, the Fund will combine same day purchases of
Class A Shares (that are subject to a sales charge) made by you, your spouse
and your minor children (under age 21). This combination also applies to
Class A Shares you purchase with a Letter of Intent.

Page 75 of 83
<PAGE>

CONTINGENT DEFERRED SALES CHARGES - CLASS B SHARES

You do not pay a sales charge when you purchase Class B Shares. The offering
price of Class B Shares is simply the next calculated NAV. But if you sell
your shares within 7 years after your purchase, you will pay a contingent
deferred sales charge as described in the table below for either (1) the NAV
of the shares at the time of purchase, or (2) NAV of the shares next
calculated after the Fund receives your sale request, whichever is less. The
sales charge does not apply to shares you purchase through reinvestment of
dividends or distributions. So, you never pay a deferred sales charge on any
increase in your investment above the initial offering price. This sales
charge does not apply to exchanges of Class B Shares of one Fund for Class B
Shares of another Fund.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE AS
YEAR SINCE A PERCENTAGE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
------------------ -------------------------------------
<S> <C>
First 5.50%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
</TABLE>

The contingent deferred sales charge will be waived if you sell your Class B
Shares for the following reasons:

- - to make certain required withdrawals from a retirement plan (including
IRAs);

- - because of death or disability;

- - by investors who purchase shares with redemption proceeds (but only to the
extent of such redemption proceeds) from another investment company within
30 days of such redemption, provided that, the investors paid either a
front-end or contingent deferred sales charge on the original shares
redeemed (certain documentation may be required);

- - on the redemption of shares originally purchased through a bank trust
department, a registered investment advisor, or retirement plans who have
made certain arrangements with the Distributor or any other financial
institution, to the extent that no payments were advanced for purchases
made through those institutions; or

- - shareholders who automatically reinvest their dividends and distributions
may redeem up to 10% of the value of their shares each year.

GENERAL INFORMATION ABOUT SALES CHARGES

Your securities dealer is paid a commission when you buy your shares and is
paid a servicing fee as long as you hold your shares. Your securities dealer
or servicing agent may receive different levels of compensation depending on
which Class of shares you buy.

Page 76 of 83

<PAGE>

From time to time, some financial institutions, including brokerage firms
affiliated with the Advisor, may be reallowed up to the entire sales charge.
Firms that receive a reallowance of the entire sales charge may be considered
underwriters for the purpose of federal securities law.

The Distributor may, from time to time in its sole discretion, institute one
or more promotional incentive programs for dealers, which will be paid for by
the Distributor from any sales charge it receives or from any other source
available to it. Under any such program, the Distributor may provide
incentives, in the form of cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, to dealers selling shares of
the Funds.

HOW TO SELL YOUR FUND SHARES

If you own your shares directly, you may sell (sometimes called "redeem")
your shares on any Business Day by contacting a Fund directly by mail or
telephone at 1-800-932-7782.

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

The sale price of each share will be the next NAV determined after the Fund
receives your request, less any applicable deferred sales charge.

SYSTEMATIC WITHDRAWAL PLAN

If you have at least $2,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly,
semi-annual or annual automatic withdrawals of at least $50 from any Fund.
The proceeds of each withdrawal will be mailed to you by check or, if you
have a checking or savings account with a bank, electronically transferred to
your account.

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds within one Business Day after we
receive your request. Your proceeds can be wired to your bank account (subject
to a $10 fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY
CHECK OR THROUGH ACH, REDEMPTION

Page 77 of 83

<PAGE>

PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP
TO 15 BUSINESS DAYS).

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below $1,000 because of redemptions, you may be
required to sell your shares. But, we will always give you at least 60 days'
written notice to give you time to add to your account and avoid the sale of
your shares.

HOW TO EXCHANGE YOUR SHARES

You may exchange your shares on any Business Day by contacting us directly by
mail or telephone.

You may also exchange shares through your financial institution or an
investment professional by mail or telephone.

IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE
TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15
BUSINESS DAYS).

CLASS A SHARES

You may exchange Class A Shares of any Fund for Class A Shares of any other
Fund. If you exchange shares that you purchased without a sales charge or
with a lower sales charge into a Fund with a sales charge or with a higher
sales charge, the exchange is subject to an incremental sales charge (e.g.,
the difference between the lower and higher applicable sales charges). If you
exchange shares into a Fund with the same, lower or no sales charge there is
no incremental sales charge for the exchange.

CLASS B SHARES

You may exchange Class B Shares of any Fund for Class B Shares of any other
Fund. No

Page 78 of 83

<PAGE>

contingent deferred sales charge is imposed on redemptions on Class B Shares
of the Prime Obligation Money Market Fund shares you acquire in an exchange,
provided you hold your shares for at least 7 years from the date of your
initial purchase.

TELEPHONE TRANSACTIONS

Purchasing, selling and exchanging Fund shares over the telephone is
extremely convenient, but not without risk. Although the Fund has certain
safeguards and procedures to confirm the identity of callers and the
authenticity of instructions, the Fund is not responsible for any losses or
costs incurred by following telephone instructions we reasonably believe to
be genuine. If you or your financial institution transact with the Fund over
the telephone, you will generally bear the risk of any loss.

DISTRIBUTION OF FUND SHARES

Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares,
and for services provided to shareholders. Because these fees are paid out of
a Fund's assets continuously, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales
charges.

Distribution fees, as a percentage of average daily net assets are as follows:

<TABLE>
<S> <C>
CLASS A SHARES 0.25%
CLASS B SHARES 1.00%
</TABLE>

Dividends, Distributions and Taxes

Each Fund distributes its income as follows:

EQUITY GROWTH FUND QUARTERLY
EQUITY VALUE FUND
EQUITY INCOME FUND
EQUITY INDEX FUND
BALANCED FUND
</TABLE>

Page 79 of 83

<PAGE>
<TABLE>
<S> <C>
INTERNATIONAL EQUITY FUND ANNUALLY
</TABLE>

Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive
the distribution.

Taxes

The dividends and distributions you receive from a Fund may be subject to
federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are taxed as ordinary income, long-term capital gains are taxed
at a maximum rate of 20% and short-term capital gains are currently taxed at
ordinary income tax rates. Each Fund will tell you annually how to treat
dividends and distributions.

More information about taxes is in the Statement of Additional Information. In
addition, because each investor's tax circumstances are unique and because the
tax laws are subject to change, you should consult your tax advisor about your
investment.

The Tax-Exempt Money Market Fund intends to distribute federally tax-exempt
income. The New Jersey Municipal Securities Fund intends to distribute income
that is exempt from both federal taxes and New Jersey state taxes. The
Pennsylvania Municipal Securities Fund intends to distribute income that is
exempt from both federal taxes and Pennsylvania state taxes. The Funds may
invest a portion of their assets in securities that generate taxable income
for federal or state income taxes. Income exempt from federal tax may be
subject to state and local taxes. Any capital gains distributed by these
Funds may be taxable.

The International Equity Fund may be able to pass along a tax credit for
foreign income taxes it pays. The Fund will notify you if it gives you the
credit.

Page 80 of 83

<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the Class A and
Class B Shares of each Fund. This information is intended to help you understand
each Fund's financial performance for the past five years, or, if shorter, the
period of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the tables represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions. This
information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with each Fund's financial statements, appears
in the annual report that accompanies our Statement of Additional Information.
You can obtain the annual report, which contains more performance information,
at no charge by calling 1-800-932-7782.

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Class A Shares
of the SIMT High Yield Bond Fund. This information is intended to help you
understand the Fund's financial performance for the past five years, or, if
shorter, the period of the Fund's operations. Some of this information reflects
financial information for a single Fund share. The total returns in the table
represent the rate that you would have earned (or lost) on an investment in the
Fund, assuming you reinvested all of your dividends and distributions. This
information has been audited by PricewaterhouseCoopers LLP, independent public
accountants. Their report, along with each Fund's financial statements, appears
in the annual report that accompanies our Statement of Additional Information.
You can obtain the annual report, which contains more performance information,
at no charge by calling 1-800-342-5734.

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Class E Shares
of the SIF S&P 500 Index Fund. This information is intended to help you
understand the Fund's financial performance for the past five years, or, if
shorter, the period of the Fund's operations. Some of this information reflects
financial information for a single Fund share. The total returns in the table
represent the rate that you would have earned (or lost) on an investment in the
Fund, assuming you reinvested all of your dividends and distributions. This
information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with the Fund's financial statements, appears
in the annual report that accompanies our Statement of Additional Information.
You can obtain the annual report, which contains more performance information,
at no charge by calling 1-800-342-5734.

Page 81 of 83
<PAGE>

THE PILLAR FUNDS

INVESTMENT ADVISOR
Summit Bank
210 Main Street
Hackensack, New Jersey 07601

DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about The Pillar Funds is available without charge through the
following:

ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Funds'
managers about strategies, and recent market conditions and trends. The reports
also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-932-7782

BY MAIL: Write to us
The Pillar Funds
P.O. Box 8523
Boston, MA 02266-8523

BY INTERNET: www.pillarfunds.com

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as

Page 82 of 83
<PAGE>

other information about The Pillar Funds, from the SEC's website
("HTTP://WWW.SEC.GOV"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for information call 1-800-SEC-0330). You
may request documents by mail from the SEC, upon payment of a duplicating
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-6009. The Pillar Funds' Investment Company Act
registration number is 811-6509.

The Pillar Funds, Pillar, the stylized "P" logo and Your Investment Foundation
are registered service marks of Summit Bank. Reach Higher, Summit, Summit
Financial Services Group and Summit Bancorp are registered service marks of
Summit Bancorp. Summit Bank is a service mark of Summit Bancorp.

Page 83 of 83

<PAGE>

THE PILLAR FUNDS

COMMERCIAL CASH MANAGEMENT ACCOUNT
PROSPECTUS

APRIL 30, 1999

INSTITUTIONAL SELECT MONEY MARKET FUND
U.S. TREASURY SECURITIES MONEY MARKET FUND (CLASS I SHARES)
PRIME OBLIGATION MONEY MARKET FUND (CLASS I SHARES)

INVESTMENT ADVISOR
SUMMIT BANK

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 21

<PAGE>

HOW TO READ THIS PROSPECTUS

The Pillar Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the Funds that are available through Summit Bank's
Commercial Cash management account that you should know before investing.
Please read this prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN
EASILY REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME
GENERAL INFORMATION YOU SHOULD KNOW ABOUT THE FUNDS. FOR MORE DETAILED
INFORMATION ABOUT EACH FUND, PLEASE SEE:

<TABLE>
<CAPTION>
PAGE
<S> <C>
INSTITUTIONAL SELECT MONEY MARKET FUND XXX
U.S. TREASURY SECURITIES MONEY MARKET FUND XXX
PRIME OBLIGATION MONEY MARKET FUND XXX
MORE INFORMATION ABOUT RISK XXX
EACH FUND'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISOR AND PORTFOLIO MANAGERS XXX
PURCHASING, SELLING AND EXCHANGING FUND SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
THE PILLAR FUNDS Back Cover
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR [VAR:KEYTERMS.DESC].

Page 2 of 21

<PAGE>

INTRODUCTION

Each Fund is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.

THE FUNDS TRY TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, BUT THERE IS NO
GUARANTEE THAT A FUND WILL ACHIEVE THIS GOAL.

Page 3 of 21

<PAGE>

INSTITUTIONAL SELECT MONEY MARKET FUND

FUND SUMMARY
<S> <C>
Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term high
quality U.S. dollar-denominated debt
securities

Investor Profile Conservative investors who want to receive
current income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE INSTITUTIONAL SELECT MONEY MARKET FUND

PRINCIPAL RISKS OF INVESTING IN THE INSTITUTIONAL SELECT MONEY MARKET FUND

Page 4 of 21

<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund from year to year.

- ------------------------------------------------------------------------------
** Portfolio1: Import Performance bar chart
- ------------------------------------------------------------------------------

<S> <C>
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

<TABLE>
<CAPTION>
SINCE
SHARES 1 YEAR INCEPTION
<S> <C> <C>
----------------------------------------------------------------------------
Institutional Select Money Market Fund X.XX% X.XX%*
</TABLE>

* Since 7/1/97

FUND FEES AND EXPENSES

Page 5 of 21

<PAGE>

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
SHARES
<S> <C>
- ------------------------------------------------------------------------
Investment Advisory Fees .10%
Other Expenses .XX%

- ------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

INSTITUTIONAL SELECT MONEY MARKET FUND %
-----
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$---- $---- $---- $----

</TABLE>

Page 6 of 21

<PAGE>

U.S. TREASURY SECURITIES MONEY MARKET FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Money market instruments issued by the
U.S. Treasury

Share Price Volatility Very low

Principal Investment Strategy Investing in short-term U.S. dollar-denominated
obligations of the U.S. Treasury and repurchase
agreements

Investor Profile Conservative investors who want to receive
income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE U.S. TREASURY SECURITIES MONEY MARKET FUND

PRINCIPAL RISKS OF INVESTING IN THE U.S. TREASURY SECURITIES MONEY MARKET FUND

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.

Page 7 of 21

<PAGE>

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

- -------------------------------------------------------------------------------
** Portfolio2: Import Performance bar chart
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

</TABLE>

* Since 4/1/92

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- -------------------------------------------------------------------------------------------

Page 8 of 21

<PAGE>

<S> <C>
Investment Advisory Fees .35%
Other Expenses .XX%

- -------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%

</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

U.S. TREASURY SECURITIES MONEY MARKET FUND -CLASS I %
----

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$---- $---- $---- $----
</TABLE>

Page 9 of 21

<PAGE>

PRIME OBLIGATION MONEY MARKET FUND

<TABLE>
<CAPTION>
FUND SUMMARY
<S> <C>
Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term
high quality U.S. dollar-denominated debt
securities

Investor Profile Conservative investors who want to receive
current income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE PRIME OBLIGATION MONEY MARKET FUND

PRINCIPAL RISKS OF INVESTING IN THE PRIME OBLIGATION MONEY MARKET FUND

Page 10 of 21

<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
** Portfolio3: Import Performance bar chart
- --------------------------------------------------------------------------------
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

</TABLE>

*Since 4/1/92

FUND FEES AND EXPENSES

Page 11 of 21

<PAGE>

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS I
SHARES
- -------------------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Other Expenses .XX%

- -------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%

</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

PRIME OBLIGATION MONEY MARKET FUND - CLASS I %
-----

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
$---- $---- $---- $----

</TABLE>

Page 12 of 21

<PAGE>

MORE INFORMATION ABOUT RISK

YEAR 2000 RISK - The Funds depend on the smooth All Funds
functioning of computer systems in almost every
aspect of their business. Like other mutual
funds, businesses and individuals around the
world, the Funds could be adversely affected if
the computer systems used by their service
providers do not properly process dates on and
after January 1, 2000, and distinguish between
the year 2000 and the year 1900. The Funds have
asked their service providers whether they
expect to have their computer systems adjusted
for the year 2000 transition, and is seeking
assurances from each service provider that they
are devoting significant resources to prevent
material adverse consequences to the Funds.
While it is likely that such assurances will be
obtained, the Funds and their shareholders may
experience losses if these assurances prove to
be incorrect or as a result of year 2000
computer difficulties experienced by issuers of
portfolio securities or third parties, such as
custodians, banks, broker-dealers or others
with which the Funds do business.

EACH FUND'S OTHER INVESTMENTS

Page 13 of 21

<PAGE>

INVESTMENT ADVISOR

The Investment Advisor makes investment decisions for each of the Funds, and
continuously reviews, supervises and administers the Funds' respective
investment programs. The Board of Trustees of The Pillar Funds supervises the
Advisor and establishes policies that the Advisor must follow in its
management activities.

<TABLE>
<S> <C>
INSTITUTIONAL SELECT MONEY MARKET FUND [VAR:Advisor1.Portfolio1.Fees] %
U.S. TREASURY SECURITIES MONEY MARKET FUND [VAR:Advisor1.Portfolio2.Fees] %
PRIME OBLIGATION MONEY MARKET FUND [VAR:Advisor1.Portfolio3.Fees] %
</TABLE>

PORTFOLIO MANAGER

Judith Wolk serves as a Vice President of the Advisor. She has managed the
Prime Obligation Money Market Fund, the U.S. Treasury Securities Money Market
Fund and the Institutional Select Money Market Fund since June, 1996. Prior
to joining the Advisor in 1995, Ms. Wolk had substantial experience in money
market instruments with a large regional bank.

Page 14 of 21

<PAGE>

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or
exchange shares of the Funds.

HOW TO PURCHASE FUND SHARES

Shares of the Funds are for financial institutions investing for their own or
their customers' accounts and cash management account customers of Summit
Bank. For information on how to open an account and set up procedures for
placing transactions, call 1-800-932-7782. Cash management account
shareholders should consult their cash management account agreement or call
1-888-8SUMMIT for more information on purchasing shares.

To purchase shares directly from us, please call 1-800-932-7782, or complete
and send in the enclosed application. Unless you arrange to pay by wire or
through direct deposit or ACH, write your check, payable in U.S. dollars, to
"The Pillar Funds" and include the name of the appropriate Fund(s) on the
check. A Fund generally will not accept checks, third-party checks, credit
cards, credit card checks or cash.

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If
you invest through an authorized institution, you will have to follow its
procedures, which may be different from the procedures for investing
directly. Your institution may charge a fee for its services, in addition to
the fees charged by the Fund. You will also generally have to address your
correspondence or questions regarding the Fund to your institution.

GENERAL INFORMATION

You may purchase shares on any day that the New York Stock Exchange and the
Federal Reserve are open for business (a Business Day). Shares cannot be
purchased by Federal Reserve Wire on days when either the New York Stock
Exchange or the Federal Reserve is closed.

A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.

The price per share (the offering price) will be the net asset value per
share (NAV) next determined after a Fund receives your purchase order.

Each Fund calculates its NAV once each Business Day at 3:00 p.m. Eastern
time. So, for you to be eligible to receive dividends declared on the day you
submit your purchase order, a Fund must

Page 15 of 21

<PAGE>

generally receive your order before 3:00 p.m. Eastern time and federal funds
(readily available funds) before 3:00 p.m. Eastern time.

HOW WE CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

In calculating NAV, we generally value a Fund's investment portfolio using
the amortized cost valuation method, which is described in detail in our
Statement of Additional Information. If this method is determined to be
unreliable during certain market conditions or for other reasons, a Fund may
value its portfolio at market price or fair value prices may be determined in
good faith using methods approved by the Board of Trustees.

MINIMUM PURCHASES

Summit Bank may require cash management account customers to maintain minimum
banking account levels in order to participate in the cash management account
program. The minimum levels are subject to the terms of your cash management
account agreement with Summit Bank. In general, however, if your banking
account falls below the minimum amount, your shares in a Fund may be redeemed
or you may be charged additional fees.

For the Institutional Select Money Market Fund, the minimum initial
investment and minimum account sizes are $5,000,000.

HOW TO SELL YOUR FUND SHARES

Cash management account shareholders may sell shares by following procedures
established when they opened their account or accounts. If you have
questions, call 1-888-8SUMMIT.

If you own your shares directly, you may sell (sometimes called "redeem")
your shares on any Business Day by contacting a Fund directly by mail or
telephone at 1-800-932-7782.

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

The sale price of each share will be the NAV next determined after the Fund
receives your request.

RECEIVING YOUR MONEY

Page 16 of 21

<PAGE>

AUTOMATIC EXCHANGE OF YOUR SHARES

TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards
and procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you
or your financial institution transact with the Fund over the telephone, you
will generally bear the risk of any loss.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund declares dividends daily and distributes its income monthly and
makes distributions of capital gains, if any, at least annually. If you own
Fund shares on a Fund's record date, you will be entitled to receive the
distribution.

Cash management account shareholders automatically receive dividends and
distributions in cash. Other shareholders will receive dividends and
distributions in the form of additional Fund shares unless you elect to
receive payment in cash. To elect cash payment, you must notify the Fund in
writing at least 15 days prior to the date of the distribution. Your election
will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.

TAXES

The dividends and distributions you receive from a Fund may be subject to
federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are taxed as ordinary income, long-term capital gains are taxed
at a maximum rate of 20% and short-term capital gains are currently taxed at
ordinary income tax rates. Each Fund will tell you annually how to treat
dividends and distributions.

More information about taxes is in the Statement of Additional Information. In
addition, because each investor's tax circumstances are unique and because the
tax laws are subject to change, you should consult your tax advisor about your
investment.

Page 17 of 21

<PAGE>

Page 18 of 21

<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about each Fund. This
information is intended to help you understand each Fund's financial
performance for the past five years, or, if shorter, the period of the Fund's
operations. Some of this information reflects financial information for a
single Fund share. The total returns in the tables represent the rate that
you would have earned (or lost) on an investment in a Fund, assuming you
reinvested all of your dividends and distributions. This information has been
audited by Arthur Andersen LLP, independent public accountants. Their report,
along with each Fund's financial statements, appears in the annual report
that accompanies our Statement of Additional Information. You can obtain the
annual report, which contains more performance information, at no charge by
calling 1-800-932-7782.

Page 19 of 21

<PAGE>

THE PILLAR FUNDS

INVESTMENT ADVISOR

Summit Bank
210 Main Street
Hackensack, New Jersey 07601

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about The Pillar Funds is available without charge through the
following:

ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends.
The reports also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-932-7782

BY MAIL: Write to us
The Pillar Funds
P.O. Box 8523
Boston, MA 02266-8523

BY INTERNET: www.pillarfunds.com
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as

Page 20 of 21
<PAGE>

Page 21 of 21
<PAGE>

THE PILLAR FUNDS

RETAIL CASH MANAGEMENT ACCOUNT

PROSPECTUS
APRIL 30, 1999

U.S. TREASURY SECURITIES MONEY MARKET FUND (CLASS A SHARES)
PRIME OBLIGATION MONEY MARKET FUND (CLASS S SHARES)
TAX-EXEMPT MONEY MARKET FUND (CLASS A SHARES)

INVESTMENT ADVISOR
SUMMIT BANK

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 22
<PAGE>

HOW TO READ THIS PROSPECTUS

The Pillar Funds is a mutual fund family that offers different classes of shares
in separate investment portfolios (Funds). The Funds have individual investment
goals and strategies. This prospectus gives you important information about the
Funds that are available through Summit Bank's Retail Cash management account
that you should know before investing. Please read this prospectus and keep it
for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT THE FUNDS. FOR MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:

<TABLE>
<CAPTION>
PAGE
<S> <C>
U.S. TREASURY SECURITIES MONEY MARKET FUND XXX
PRIME OBLIGATION MONEY MARKET FUND XXX
TAX-EXEMPT MONEY MARKET FUND XXX
MORE INFORMATION ABOUT RISK XXX
EACH FUND'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISOR AND PORTFOLIO MANAGERS XXX
PURCHASING AND SELLING FUND SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
PILLAR FUNDS Back Cover
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR [VAR:KEYTERMS.DESC].

Page 2 of 22
<PAGE>

INTRODUCTION

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal.
The investment managers invest Fund assets in a way that they believe will help
each Fund achieve its goal. Still, investing in each Fund involves risk and
there is no guarantee that a Fund will achieve its goal. The investment
managers' judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company performance,
and these judgments may affect the return on your investment. In fact, no
matter how good a job an investment manager does, you could lose money on your
investment in a Fund, just as you could with other investments. A Fund share is
not a bank deposit and it is not insured or guaranteed by the FDIC or any
government agency.

THE FUNDS TRY TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, BUT THERE IS NO
GUARANTEE THAT A FUND WILL ACHIEVE THIS GOAL.

Page 3 of 22
<PAGE>

U.S. TREASURY SECURITIES MONEY MARKET FUND

<TABLE>
<CAPTION>
FUND SUMMARY
- ------------
<S> <C>
Investment Goal Preserve principal value and maintain a
high degree of liquidity while providing
current income

Investment Focus Money market instruments issued by the
U.S. Treasury

Share Price Volatility Very low

Principal Investment Strategy Investing in short-term U.S. dollar-
denominated obligations of the U.S.
Treasury and repurchase agreements

Investor Profile Conservative investors who want to receive
income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE U.S. TREASURY SECURITIES MONEY MARKET FUND

The Fund invests exclusively in short-term U.S. dollar-denominated money market
instruments issued by the U.S. Treasury and repurchase agreements that are fully
collateralized by U.S. Treasury securities. The Fund will maintain an average
dollar weighted maturity of 60 days or less, and will only acquire securities
that have a remaining maturity of 397 days or less. The Advisor's investment
selection process seeks to add value through yield analysis and positioning on
the yield curve. The Advisor actively manages the maturity of the Fund based on
current market interest rates and its outlook on the market and future interest
rate predictions.

PRINCIPAL RISKS OF INVESTING IN THE U.S. TREASURY SECURITIES MONEY MARKET FUND

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund

Page 4 of 22
<PAGE>

will perform in the future.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

[ PORTFOLIO 1 CHART]
** Portfolio1: Import Performance bar chart

<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities Money X.XX% X.XX% X.XX% X.XX%*
Market Fund
</TABLE>

* Since 4/1/92

FUND FEES AND EXPENSES

Page 5 of 22
<PAGE>

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A
SHARES
- ------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .XX%
- ------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR AND THE
DISTRIBUTOR ARE WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THE ADVISOR OR DISTRIBUTOR MAY DISCONTINUE ALL
OR PART OF THIS WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL
TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

U.S. TREASURY SECURITIES MONEY MARKET FUND - CLASS A ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$____ $____ $____ $____
</TABLE>

Page 6 of 22
<PAGE>

PRIME OBLIGATION MONEY MARKET FUND

FUND SUMMARY

Investment Goal Preserve principal value and maintain a
high degree of liquidity while providing
current income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term
high quality U.S. dollar-denominated debt
securities

Investor Profile Conservative investors who want to
receive current income through a liquid
investment

INVESTMENT STRATEGY OF THE PRIME OBLIGATION MONEY MARKET FUND

The Fund invests in a broad range of high quality short-term U.S.
dollar-denominated money market instruments, such as obligations of the U.S.
Treasury; agencies and instrumentalities of the U.S. government; domestic and
foreign banks; domestic and foreign corporations; supranational entities; and
foreign governments. The Fund may also enter into fully collateralized
repurchase agreements. The Fund's portfolio is comprised only of short-term
debt securities that are rated in the two highest categories by nationally
recognized ratings organizations or securities that the Advisor determines are
of equal quality. The Fund will maintain an average dollar weighted maturity of
90 days or less, and will only acquire securities that have a remaining maturity
of 397 days or less.

The Advisor's investment selection process seeks to add value through security
selection, sector rotation and positioning on the yield curve. Securities are
chosen based on the issuer's financial condition, the financial condition of any
person or company which guarantees the credit of the issuer, liquidity and
competitive yield. The Fund attempts to avoid purchasing or holding securities
that are subject to a decline in credit quality of the issue through careful
credit screening, as well as ongoing monitoring of each issuer and any person or
company providing credit support.

PRINCIPAL RISKS OF INVESTING IN THE PRIME OBLIGATION MONEY MARKET FUND

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.

Page 7 of 22
<PAGE>

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class S Shares
from year to year.

[PORTFOLIO 2 CHART]

** Portfolio2: Import Performance bar chart

<TABLE>
<S> <C>
1998 X.XX
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

<TABLE>
<CAPTION>
SINCE
CLASS S SHARES 1 YEAR INCEPTION
- ----------------------------------------------------------------------------
<S> <C> <C>
Prime Obligation Money Market Fund X.XX% X.XX%*
</TABLE>

*Since 8/18/97

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

Page 8 of 22
<PAGE>

<TABLE>
<CAPTION>
CLASS S
SHARES
- -----------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Distribution and Service (12b-1) Fees .60%
Other Expenses .XX%
- -----------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

PRIME OBLIGATION MONEY MARKET FUND --CLASS S ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$____ $____ $____ $____
</TABLE>

Page 9 of 22
<PAGE>

TAX-EXEMPT MONEY MARKET FUND

SUMMARY

Investment Goal Preserve principal value and
maintain a high degree of liquidity
while providing current income that
is exempt from Federal income tax

Investment Focus Tax-free money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a well diversified
portfolio of short-term municipal
securities which pay interest that
is exempt from Federal income taxes

Investor Profile Conservative taxable investors who
want to receive current income
exempt from Federal taxes through a
liquid investment

INVESTMENT STRATEGY OF THE TAX-EXEMPT MONEY MARKET FUND

The Fund invests substantially all of its assets in a broad range of high
quality short-term municipal money market instruments that pay interest that is
exempt from Federal income taxes. The issuers of these securities may be state
and local governments and agencies located in any of the fifty states, the
District of Columbia, Puerto Rico and other U.S. territories and possessions.
The Fund's portfolio will be well diversified among these issuers, and will be
comprised only of short-term debt securities that are rated in the two highest
categories by nationally recognized ratings organizations, or have been
determined by the Advisor to be of equal quality. The Fund will maintain an
average dollar weighted maturity of 90 days or less, and will only acquire
securities that have a remaining maturity of 397 days or less.

The Advisor's investment selection process seeks to add value through a strategy
that takes advantage of the inefficient nature of the municipal securities
market. The Advisor actively manages the maturity of the Fund based on current
market interest rates and its outlook on the market and future interest rate
predictions. Securities are chosen based on the issuer's financial condition,
the financial condition of any person or company which guarantees the credit of
the issuer, liquidity and competitive yield. The Fund attempts to avoid
purchasing or holding securities that are subject to a decline in credit quality
of the issue through careful credit screening, as well as ongoing monitoring of
each issuer and any person or company providing credit support.

PRINCIPAL RISKS OF INVESTING IN THE TAX-EXEMPT MONEY MARKET FUND

Page 10 of 22
<PAGE>

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in the Fund.

There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.

Since the Fund may purchase securities supported by credit enhancements from
banks and other financial institutions, changes in the credit quality of these
institutions could cause losses to the Fund and affect its share price.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.

[PORTFOLIO 3 BAR CHART]

** Portfolio3: Import Performance bar chart

<TABLE>
<S> <C>
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

Page 11 of 22
<PAGE>

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Money Market Fund X.XX% X.XX% X.XX% X.XX%*
* Since 4/6/92
</TABLE>

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>
<CAPTION>
CLASS A
SHARES
- ----------------------------------------------------------
<S> <C>
Investment Advisory Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .XX%
- ----------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

TAX-EXEMPT MONEY MARKET FUND -Class A ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

The Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate

Page 12 of 22
<PAGE>

costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$____ $____ $____ $____
</TABLE>

Page 13 of 22
<PAGE>

MORE INFORMATION ABOUT RISK

All Funds
YEAR 2000 RISK - The Funds depend on the smooth
functioning of computer systems in almost every aspect
of their business. Like other mutual funds, businesses
and individuals around the world, the Funds could be
adversely affected if the computer systems used by
their service providers do not properly process dates
on and after January 1, 2000, and distinguish between
the year 2000 and the year 1900. The Funds have asked
their service providers whether they expect to have
their computer systems adjusted for the year 2000
transition, and is seeking assurances from each
service provider that they are devoting significant
resources to prevent material adverse consequences to
the Funds. While it is likely that such assurances
will be obtained, the Funds and their shareholders may
experience losses if these assurances prove to be
incorrect or as a result of year 2000 computer
difficulties experienced by issuers of portfolio
securities or third parties, such as custodians,
banks, broker-dealers or others with which the Funds
do business.

EACH FUND'S OTHER INVESTMENTS

In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information. Of course, we cannot guarantee that any Fund will
achieve its investment goal.

Page 14 of 22
<PAGE>

INVESTMENT ADVISOR

Summit Bank serves as the Advisor to the Funds. As of December 31, 1998, Summit
Bank had approximately $9.5 billion in assets under management. For the year
ended December 31, 1998, Summit Bank received advisory fees of:

PORTFOLIO MANAGERS

Judith Wolk serves as a Vice President of the Advisor. She has managed the
Prime Obligation Money Market Fund and the U.S. Treasury Securities Money Market
Fund since June, 1996. Prior to joining the Advisor in 1995, Ms. Wolk had
substantial experience in money market instruments with a large regional bank.

Charlene P. Palmer serves as a Vice President of the Advisor. She has managed
the Tax-Exempt Money Market Fund since June, 1996. She joined the Advisor in
1981 and has more than 18 years of investment experience, with an emphasis on
tax-exempt bonds.

Page 15 of 22
<PAGE>

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy and sell (sometimes called "redeem") shares of
the Funds.

HOW TO PURCHASE FUND SHARES

Cash management account shareholders should consult their cash management
account agreement or call 1-888-8SUMMIT for more information on purchasing
shares. A Fund generally will not accept checks, third-party checks, credit
cards, credit card checks or cash.

GENERAL INFORMATION

A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order.

Each Fund calculates its NAV once each Business Day at 3:00 p.m. Eastern time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, a Fund must receive your order before 3:00 p.m. Eastern
time and federal funds (readily available funds) before 3:00 p.m. Eastern time.

HOW WE CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.

In calculating NAV, we generally value a Fund's investment portfolio using the
amortized cost valuation method, which is described in detail in our Statement
of Additional Information. If this method is determined to be unreliable during
certain market conditions or for other reasons, a Fund may value its portfolio
at market price or fair value prices may be determined in good faith using
methods approved by the Board of Trustees.

Page 16 of 22
<PAGE>

MINIMUM PURCHASES

Summit Bank may require cash management account customers to maintain minimum
banking account levels in order to participate in the cash management account
program. The minimum levels are subject to the terms of your cash management
agreement with Summit Bank. In general, however, if your banking account falls
below the minimum amount, your shares in a Fund may be redeemed or you may be
charged additional fees.

HOW TO SELL YOUR FUND SHARES

Cash management account shareholders may sell shares by following procedures
established when they opened their account or accounts. If you have questions,
call 1-888-8SUMMIT.

If you own your shares directly, you may sell (sometimes called "redeem") your
shares on any Business Day by contacting a Fund directly by mail or telephone at
1-800-932-7782.

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

The sale price of each share will be the NAV next determined after the Funds
receives your request.

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds within one Business Day after we
receive your request. Your proceeds can be wired to your bank account (subject
to a $10 fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY
CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK
HAS CLEARED (WHICH MAY TAKE UP TO 15 BUSINESS DAYS).

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below the minimum level required in your cash
sweep agreement with Summit Bank because of redemptions, you may be required to
sell your shares. But, we will always give you at least 60 days' written notice
to give you time to add to your account and avoid the sale of your shares.

TELEPHONE TRANSACTIONS

Page 17 of 22
<PAGE>

following telephone instructions we reasonably believe to be genuine. If you
or your financial institution transact with the Fund over the telephone, you
will generally bear the risk of any loss.

DISTRIBUTION OF FUND SHARES

Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

Distribution fees, as a percentage of average daily net assets are as follows:

<TABLE>
<S> <C>
CLASS A SHARES
U.S. Treasury Securities Money Market Fund 0.25%
Tax-Exempt Money Market Fund 0.25%

CLASS S SHARES

Prime Obligation Money Market Fund 0.60%
</TABLE>

The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor. Under any such program, the Distributor may provide incentives, in
the form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling shares of the Funds.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund declares dividends daily and distributes its income monthly and makes
distributions of capital gains, if any, at least annually. If you own Fund
shares on a Fund's record date, you will be entitled to receive the
distribution.

Cash management account shareholders automatically receive dividends and
distributions in cash. Other shareholders will receive dividends and
distributions in the form of additional Fund shares unless you elect to receive
payment in cash. To elect cash payment, you must notify the Fund in writing at
least 15 days prior to the date of the distribution. Your election will be
effective for dividends and distributions paid after the Fund receives your
written notice. To cancel your election, simply send the Fund written notice.

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND

Page 18 of 22
<PAGE>

LOCAL INCOME TAXES. Below we have summarized some important tax
issues that affect the Funds and their shareholders. This summary is based on
current tax laws, which may change.

The dividends and distributions you receive from a Fund may be subject to
federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are taxed as ordinary income, long-term capital gains are taxed
at a maximum rate of 20% and short-term capital gains are currently taxed at
ordinary income tax rates. Each Fund will tell you annually how to treat
dividends and distributions.

More information about taxes is in the Statement of Additional Information. In
addition, because each investor's tax circumstances are unique and because the
tax laws are subject to change, you should consult your tax advisor about your
investment.

The Tax Exempt Money Market Fund intends to distribute federally tax-exempt
income. The Fund may invest a portion of its assets in securities that generate
taxable income for federal or state income taxes. Income exempt from federal
tax may be subject to state and local taxes. Any capital gains distributed by
the Fund may be taxable.

The Funds use a tax management technique known as "highest in, first out."
Using this technique, the portfolio holdings that have experienced the smallest
gain or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.

Page 19 of 22
<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about each Fund. This
information is intended to help you understand each Fund's financial
performance for the past five years, or, if shorter, the period of the Fund's
operations. Some of this information reflects financial information for a
single Fund share. The total returns in the tables represent the rate that
you would have earned (or lost) on an investment in a Fund, assuming you
reinvested all of your dividends and distributions. This information has
been audited by Arthur Andersen LLP, independent public accountants. Their
report, along with each Fund's financial statements, appears in the annual
report that accompanies our Statement of Additional Information. You can
obtain the annual report, which contains more performance information, at no
charge by calling 1-800-932-7782.

Page 20 of 22
<PAGE>

THE PILLAR FUNDS

INVESTMENT ADVISOR
Summit Bank
210 Main Street
Hackensack, New Jersey 07601

DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about The Pillar Funds is available without charge through the
following:

ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Funds'
managers about strategies, and recent market conditions and trends. The reports
also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-932-7782

BY MAIL: Write to us
The Pillar Funds
P.O. Box 8523
Boston, MA 02266-8523

BY INTERNET: www.pillarfunds.com

Page 21 of 22
<PAGE>

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as other information about The Pillar Funds, from the SEC's
website ("http://www.sec.gov"). You may review and copy documents at the SEC
Public Reference Room in Washington, DC (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplicating
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-6009. The Pillar Funds' Investment Company Act
registration number is 811-6509.

The Pillar Funds, Pillar, the stylized "P" logo and Your Investment Foundation
are registered service marks of Summit Bank. Reach Higher, Summit, Summit
Financial Services Group and Summit Bancorp are registered service marks of
Summit Bancorp. Summit Bank is a service mark of Summit Bancorp.

Page 22 of 22
<PAGE>

THE PILLAR FUNDS

PROSPECTUS
APRIL 30, 1999

INSTITUTIONAL SELECT MONEY MARKET FUND

INVESTMENT ADVISOR
SUMMIT BANK

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 15

<PAGE>

HOW TO READ THIS PROSPECTUS

The Pillar Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the shares of the Institutional Select Money Market Fund
that you should know before investing. Please read this prospectus and keep
it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN
EASILY REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME
GENERAL INFORMATION YOU SHOULD KNOW ABOUT THE FUND. FOR MORE DETAILED
INFORMATION ABOUT THE FUND, PLEASE SEE:

<TABLE>

PAGE
<S> <C>
PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES XXX
MORE INFORMATION ABOUT RISK XXX
THE FUND'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISOR AND PORTFOLIO MANAGER XXX
PURCHASING, SELLING AND EXCHANGING FUND SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
THE PILLAR FUNDS Back Cover

</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR [VAR:KEYTERMS.DESC].

Page 2 of 15

<PAGE>

INTRODUCTION

The Fund is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.

The Fund has an investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help
the Fund achieve its goal. Still, investing in the Fund involves risk and
there is no guarantee that the Fund will achieve its goal. The investment
managers' judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company
performance, and these judgments may affect the return on your investment.
In fact, no matter how good a job an investment manager does, you could lose
money on your investment in the Fund, just as you could with other
investments. A Fund share is not a bank deposit and it is not insured or
guaranteed by the FDIC or any government agency.

THE INSTITUTIONAL SELECT MONEY MARKET FUND TRIES TO
MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, BUT
THERE IS NO GUARANTEE THAT THE FUND WILL ACHIEVE THIS GOAL.

Page 3 of 15

<PAGE>

INSTITUTIONAL SELECT MONEY MARKET FUND

FUND SUMMARY

Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term high
quality U.S. dollar-denominated debt securities

Investor Profile Conservative investors who want to receive
current income through a liquid investment

INVESTMENT STRATEGY OF THE INSTITUTIONAL SELECT MONEY MARKET FUND

The Fund invests in a broad range of high quality short-term
U.S. dollar-denominated money market instruments, such as obligations of the
U.S. Treasury; agencies and instrumentalities of the U.S. government;
domestic and foreign banks; domestic and foreign corporations; supranational
entities; and foreign governments. The Fund may also enter into fully
collateralized repurchase agreements. The Fund's portfolio is comprised only
of short-term debt securities that are rated in the two highest categories by
nationally recognized ratings organizations or securities that the Advisor
determines are of equal quality. The Fund will maintain an average dollar
weighted maturity of 90 days or less, and will only acquire securities that
have a remaining maturity of 397 days or less.

PRINCIPAL RISKS OF INVESTING IN THE INSTITUTIONAL SELECT MONEY MARKET FUND

PERFORMANCE INFORMATION

Page 4 of 15

<PAGE>

This bar chart shows changes in the performance of the Fund from year to year.

** PORTFOLIO1: IMPORT PERFORMANCE BAR CHART

1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

Call 1-800-932-7782 or visit the Fund's website (www.pillarfunds.com) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

SINCE
1 YEAR INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
Institutional Select Money Market Fund X.XX% X.XX%*

*Since 7/1/97

</TABLE>

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

<TABLE>

- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .10%
Other Expenses .XX%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%

</TABLE>

Page 5 of 15

<PAGE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

INSTITUTIONAL SELECT MONEY MARKET FUND ______%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$_____ $______ $______ $_______

</TABLE>

Page 6 of 15

<PAGE>

MORE INFORMATION ABOUT RISK

YEAR 2000 RISK - The Fund depends on the smooth
functioning of computer systems in almost every aspect of
its business. Like other mutual funds, businesses and
individuals around the world, the Fund could be adversely
affected if the computer systems used by its service
providers do not properly process dates on and after
January 1, 2000, and distinguish between the year 2000 and
the year 1900. The Fund has asked its service providers
whether they expect to have its computer systems
adjusted for the year 2000 transition, and is seeking
assurances from each service provider that they are
devoting significant resources to prevent material adverse
consequences to the Fund. While it is likely that such
assurances will be obtained, the Fund and its shareholders
may experience losses if these assurances prove to be
incorrect or as a result of year 2000 computer
difficulties experienced by issuers of portfolio
securities or third parties, such as custodians, banks,
broker-dealers or others with which the Fund does
business.

THE FUND'S OTHER INVESTMENTS

In addition to the investments and strategies described in this prospectus,
the Fund also may invest in other securities, use other strategies and engage
in other investment practices. These investments and strategies, as well as
those described in this prospectus, are described in detail in our Statement
of Additional Information. Of course, we cannot guarantee that the Fund will
achieve its investment goal.

Page 7 of 15

<PAGE>

INVESTMENT ADVISOR

The Investment Advisor makes investment decisions for the Fund and
continuously reviews, supervises and administers the Fund's investment
program. The Board of Trustees of The Pillar Funds supervises the Advisor
and establishes policies that the Advisor must follow in its management
activities.

Summit Bank serves as the Advisor to the Fund. As of December 31, 1998,
Summit Bank had approximately $9.5 billion in assets under management. For
the year ended December 31, 1998, Summit Bank received advisory fees of:

INSTITUTIONAL SELECT MONEY MARKET FUND [VAR:Advisor1.Portfolio1.Fees] %

PORTFOLIO MANAGER

Judith Wolk serves as a Vice President of the Advisor. She has managed the
Institutional Select Money Market Fund since its inception. Prior to joining
the Advisor in June, 1996, Ms. Wolk had substantial experience in money
market instruments with a large regional bank.

Page 8 of 15

<PAGE>

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or
exchange shares of the Fund.

HOW TO PURCHASE FUND SHARES

Shares of the Fund are for financial institutions investing for their own or
their customers' accounts or cash sweep customers of Summit Bank. For
information on how to open an account and set up procedures for placing
transactions call 1-800-932-7782. Cash Sweep shareholders should consult
their Cash Sweep agreement or call 1-888-8SUMMIT for more information on
purchasing shares.

You may purchase shares directly by:
- - Mail
- - Telephone
- - Wire
- - Automated Clearing House (ACH).

To purchase shares directly, please call 1-800-932-7782, or complete and send
in the [** attached/enclosed **] application. Unless you arrange to pay by
wire or through ACH, write your check, payable in U.S. dollars, to "The
Pillar Funds" and include the name of the Institutional Select Money Market
Fund on the check. The Fund cannot accept checks, third-party checks, credit
cards, credit card checks or cash.

GENERAL INFORMATION

The Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.

Page 9 of 15

<PAGE>

The price per share (the offering price) will be the net asset value per
share (NAV) next determined after the Fund receives your purchase order.

The Fund calculates its NAV once each Business Day at 3:00 p.m. Eastern time.
So, for you to be eligible to receive dividends declared on the day you
submit your purchase order, the Fund generally must receive your order before
3:00 p.m. Eastern time and federal funds (readily available funds) before
3:00 p.m. Eastern time.

HOW WE CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

In calculating NAV for the Fund, we generally value the Fund's investment
portfolio using the amortized cost valuation method, which is described in
detail in our Statement of Additional Information. If this method is
determined to be unreliable during certain market conditions or for other
reasons, the Fund may value its portfolio at market price or fair value
prices may be determined in good faith using methods approved by the Board of
Trustees.

MINIMUM PURCHASES

To purchase shares for the first time, you must invest at least $5,000,000 in
the Fund. The Fund may accept investments of smaller amounts at its
discretion.

HOW TO SELL YOUR FUND SHARES

Cash sweep shareholders may sell shares by following procedures established
when they opened their account or accounts. If you have questions, call
1-888-8SUMMIT.

If you own your shares directly, you may sell (sometimes called "redeem")
your shares on any Business Day by contacting the Fund directly by mail or
telephone at 1-800-932-7782.

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

The sale price of each share will be the NAV next determined after the Fund
receives your request.

RECEIVING YOUR MONEY

Page 10 of 15

<PAGE>

AUTOMATIC EXCHANGES OF YOUR SHARES

If your account balance for the Institutional Select Money Market Fund drops
below $5,000,000 because of redemptions, your shares will be automatically
exchanged for Class I shares of the Prime Obligation Money Market Fund. But,
we will always give you at least 30 days' written notice to give you time to
add to your account and avoid the automatic exchange of your shares. You
will receive a current prospectus of the Class I Shares of the Prime
Obligation Money Market Fund in connection with such an exchange. The Fund
may modify or terminate the automatic exchange feature of the Fund at any
time upon 60 days' notice to shareholders.

TELEPHONE TRANSACTIONS

Purchasing and selling Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards
and procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you
or your financial institution transact with the Fund over the telephone, you
will generally bear the risk of any loss.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund distributes its income monthly and makes distributions of capital
gains, if any, at least annually. If you own Fund shares on a Fund's record
date, you will be entitled to receive the distribution.

Cash Sweep shareholders automatically receive dividends and distributions in
cash. Other shareholders will receive dividends and distributions in the
form of additional Fund shares unless you elect to receive payment in cash.
To elect cash payment, you must notify the Fund in writing at least 15 days
prior to the date of the distribution. Your election will be effective for
dividends and distributions paid after the Fund receives your written notice.
To cancel your election, simply send the Fund written notice.

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT
FEDERAL, STATE AND LOCAL INCOME TAXES. Below we have summarized some
important tax issues that affect the Fund and its shareholders. This summary
is based on current tax laws, which may change.

The dividends and distributions you receive from a Fund may be subject to
federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are taxed as ordinary income, long-term capital gains are taxed
at a maximum rate of 20% and short-term capital gains are currently taxed at
ordinary income tax rates. Each Fund will tell you annually how to treat
dividends and distributions.

More information about taxes is in the Statement of Additional Information. In
addition, because each investor's tax circumstances are unique and because the
tax laws are subject to change, you should consult your tax advisor about your
investment.

Page 11 of 15

<PAGE>

The Fund uses a tax management technique known as "highest in, first out."
Using this technique, the portfolio holdings that have experienced the
smallest gain or largest loss are sold first in an effort to minimize capital
gains and enhance after-tax returns.

Page 12 of 15

<PAGE>

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Fund. This
information is intended to help you understand the Fund's financial
performance for the past five years, or, if shorter, the period of the Fund's
operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in the Fund, assuming you
reinvested all of your dividends and distributions. This information has
been audited by Arthur Andersen LLP, independent public accountants. Their
report, along with the Fund's financial statements, appears in the annual
report that accompanies our Statement of Additional Information. You can
obtain the annual report, which contains more performance information, at no
charge by calling 1-800-932-7782.

Page 13 of 15

<PAGE>

THE PILLAR FUNDS

INVESTMENT ADVISOR
Summit Bank
210 Main Street
Hackensack, New Jersey 07601

DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about The Pillar Funds is available without charge through the
following:

ANNUAL AND SEMI-ANNUAL REPORTS
These reports list the Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends.
The reports also contain detailed financial information about the Fund.

TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-932-7782

BY MAIL: Write to us
The Pillar Funds
P.O. Box 8523
Boston, MA 02266-8523

BY INTERNET: WWW.PILLARFUNDS.COM

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as

Page 14 of 15

<PAGE>

The Pillar Funds, Pillar, the stylized "P" logo and Your Investment
Foundation are registered service marks of Summit Bank. Reach Higher,
Summit, Summit Financial Services Group and Summit Bancorp are registered
service marks of Summit Bancorp. Summit Bank is a service mark of Summit
Bancorp.

Page 15 of 15

<PAGE>

THE PILLAR FUNDS

PROSPECTUS
APRIL 30, 1999

U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND

INVESTMENT ADVISOR
SUMMIT BANK

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 14

<PAGE>

HOW TO READ THIS PROSPECTUS

The Pillar Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the shares of the U.S. Treasury Securities Plus Money
Market Fund that you should know before investing. Please read this
prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN
EASILY REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME
GENERAL INFORMATION YOU SHOULD KNOW ABOUT THE FUND. FOR MORE DETAILED
INFORMATION ABOUT THE FUND, PLEASE SEE:

PAGE
<S> <C>
PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES XXX
MORE INFORMATION ABOUT RISK XXX
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS XXX
THE INVESTMENT ADVISOR AND PORTFOLIO MANAGER XXX
PURCHASING AND SELLING FUND SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
THE PILLAR FUNDS Back Cover

</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR [VAR:KEYTERMS.DESC].

Page 2 of 14

<PAGE>

INTRODUCTION

The Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

The Fund has an investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help
the Fund achieve its goal. Still, investing in the Fund involves risk and
there is no guarantee that the Fund will achieve its goal. The investment
managers' judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company
performance, and these judgments may affect the return on your investment. In
fact, no matter how good a job an investment manager does, you could lose
money on your investment in the Fund, just as you could with other
investments. A Fund share is not a bank deposit and it is not insured or
guaranteed by the FDIC or any government agency.

THE U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND TRIES TO MAINTAIN A CONSTANT
PRICE PER SHARE OF $1.00, BUT THERE IS NO GUARANTEE THAT THE FUND
WILL ACHIEVE THIS GOAL.

Page 3 of 14

<PAGE>

U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND

FUND SUMMARY

<S> <C>

Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Money market instruments issued by the U.S.
Treasury

Share Price Volatility Very low

Principal Investment Strategy Investing in short-term U.S. dollar-denominated
obligations of the U.S. Treasury and repurchase
agreements

Investor Profile Conservative investors who want to receive
income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND

The Fund invests exclusively in a short-term U.S. dollar-denominated money
market instruments issued by the U.S. Treasury and repurchase agreements that
are fully collateralized by U.S. Treasury securities. The Fund will maintain
an average dollar weighted maturity of 60 days or less, and will only acquire
securities that have a remaining maturity of 397 days or less. The Advisor's
investment selection process seeks to add value through yield analysis and
positioning on the yield curve. The Advisor actively manages the maturity of
the Fund based on current market interest rates and its outlook on the market
and future interest rate predictions.

PRINCIPAL RISKS OF INVESTING IN THE U.S. TREASURY SECURITIES PLUS MONEY
MARKET FUND

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

Page 4 of 14

<PAGE>

This bar chart shows changes in the performance of the Fund from year to year.

- --------------------------------------------------------------------------------
** Portfolio1: Import Performance bar chart
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Call 1-800-932-7782 or visit the Fund's website (WWW.PILLARFUNDS.COM) for the
Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities Plus Money X.XX% X.XX% X.XX% X.XX%*
Market Fund
</TABLE>

* Since 5/3/93

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES*

Page 5 of 14

<PAGE>

<TABLE>
<S> <C>
Investment Advisory Fees .15%
Distribution and Service (12b-1) Fees .03%
Other Expenses .XX%
- --------------------------------------------------------------------- --------------
Total Annual Fund Operating Expenses X.XX%

</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISOR IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISOR MAY DISCONTINUE ALL OR PART OF THIS WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE AS FOLLOWS:

U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you sell your shares at the end of the period.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$____ $____ $____ $____

Page 6 of 14

<PAGE>

MORE INFORMATION ABOUT RISK

YEAR 2000 RISK - The Fund depends on the smooth functioning of computer
systems in almost every aspect of its business. Like other mutual funds,
businesses and individuals around the world, the Fund could be adversely
affected if the computer systems used by its service providers do not
properly process dates on and after January 1, 2000, and distinguish between
the year 2000 and the year 1900. The Fund has asked its service providers
whether they expect to have their computer systems adjusted for the year 2000
transition, and is seeking assurances from each service provider that they
are devoting significant resources to prevent material adverse consequences
to the Fund. While it is likely that such assurances will be obtained, the
Fund and its shareholders may experience losses if these assurances prove to
be incorrect or as a result of year 2000 computer difficulties experienced by
issuers of portfolio securities or third parties, such as custodians, banks,
broker-dealers or others with which the Fund does business.

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS

The Fund's investments and strategies are described in more detail in our
Statement of Additional Information. Of course, we cannot guarantee that the
Fund will achieve its investment goal.

Page 7 of 14

<PAGE>

INVESTMENT ADVISOR

The Investment Advisor makes investment decisions for the Fund and
continuously reviews, supervises and administers the Fund's investment
program. The Board of Trustees of The Pillar Funds supervises the Advisor and
establishes policies that the Advisor must follow in its management
activities.

U.S. TREASURY SECURITIES PLUS MONEY [VAR:Advisor1.Portfolio1.Fees] %
MARKET FUND

PORTFOLIO MANAGER

Judith Wolk serves as a Vice President of the Advisor. She has managed the
U.S. Treasury Securities Plus Money Market Fund since June, 1996. Prior to
joining the Advisor in 1995, Ms. Wolk had substantial experience in money
market instruments with a large regional bank.

Page 8 of 14

<PAGE>

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy and sell (sometimes called "redeem") shares
of the Fund. Shares of the Fund are available only to customers of Summit
Bank's Money Desk.

HOW TO PURCHASE FUND SHARES

To purchase shares directly, please call 1-800-243-8550, or complete and send
in the []** attached/enclosed **] application. Unless you arrange to pay by
wire or through ACH, write your check, payable in U.S. dollars, to "The
Pillar Funds" and include the name of the U.S. Treasury Securities Plus Money
Market Fund on the check. The Fund cannot accept third-party checks, credit
cards, credit card checks or cash.

GENERAL INFORMATION

The Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.

The price per share (the offering price) will be the net asset value per
share (NAV) next determined after the Fund receives your purchase order.

HOW WE CALCULATE NAV
Page 9 of 14

<PAGE>

NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.

MINIMUM PURCHASES

To purchase shares for the first time, you must invest at least $100,000 in
the Fund. The Fund may accept investments of smaller amounts at its
discretion.

HOW TO SELL YOUR FUND SHARES

If you own your shares directly, you may sell (sometimes called "redeem")
your shares on any Business Day by contacting the Money Desk directly by mail
or telephone at 1-800-243-8550.

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds within one Business Day after we
receive your request. Your proceeds will be credited to your account (subject
to a $10 fee) or sent to you by check.

DISTRIBUTION OF FUND SHARES

The Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of the
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

Page 10 of 14

<PAGE>

Distribution fees, as a percentage of average daily net assets are 0.03% for
the Fund.

The Distributor may, from time to time in its sole discretion, institute one
or more promotional incentive programs for dealers, which will be paid for by
the Distributor. Under any such program, the Distributor may provide
incentives, in the form of cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, to dealers selling shares of
the Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund declares dividends daily and distributes its income monthly and
makes distributions of capital gains, if any, at least annually. If you own
Fund shares on a Fund's record date, you will be entitled to receive the
distribution.

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment,
you must notify the Money Desk by telephone or in writing at least 15 days
prior to the date of the distribution. Your election will be effective for
dividends and distributions paid after the Fund receives your written notice.
To cancel your election, simply send the Fund written notice.

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT
FEDERAL, STATE AND LOCAL INCOME TAXES. Below we have summarized some
important tax issues that affect the Fund and its shareholders. This summary
is based on current tax laws, which may change.

The dividends and distributions you receive from a Fund may be subject to
federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are taxed as ordinary income, long-term capital gains are taxed
at a maximum rate of 20% and short-term capital gains are currently taxed at
ordinary income tax rates. Each Fund will tell you annually how to treat
dividends and distributions.

More information about taxes is in the Statement of Additional Information. In
addition, because each investor's tax circumstances are unique and because the
tax laws are subject to change, you should consult your tax advisor about your
investment.

Page 11 of 14

<PAGE>

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Fund. This
information is intended to help you understand the Fund's financial
performance for the past five years, or, if shorter, the period of the Fund's
operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in the Fund, assuming you
reinvested all of your dividends and distributions. This information has been
audited by Arthur Andersen LLP, independent public accountants. Their report,
along with the Fund's financial statements, appears in the annual report that
accompanies our Statement of Additional Information. You can obtain the
annual report, which contains more performance information, at no charge by
calling 1-800-932-7782.

Page 12 of 14

<PAGE>

THE PILLAR FUNDS

INVESTMENT ADVISOR

Summit Bank
210 Main Street
Hackensack, New Jersey 07601

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about The Pillar Funds is available without charge through
the following:

TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-243-8550

BY MAIL: Write to us
Summit Bank
214 Main Street, Third Floor
Hackensack, New Jersey 07601
Attention: Bank Investments

BY INTERNET: WWW.PILLARFUNDS.COM

Page 13 of 14

<PAGE>

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as other information about The Pillar Funds, from the SEC's
website ("HTTP://WWW.SEC.GOV"). You may review and copy documents at the SEC
Public Reference Room in Washington, DC (for information call
1-800-SEC-0330). You may request documents by mail from the SEC, upon payment
of a duplicating fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, DC 20549-6009. The Pillar Funds'
Investment Company Act registration number is 811-6509.

Page 14 of 14

<PAGE>
THE PILLAR FUNDS
INVESTMENT ADVISOR:
SUMMIT BANK INVESTMENT MANAGEMENT DIVISION,
A DIVISION OF SUMMIT BANK

This Statement of Additional Information is not a prospectus. It is intended
to provide additional information regarding the activities and operations of The
Pillar Funds (the "Trust") and should be read in conjunction with the Trust's
Prospectuses for the following: U.S. Treasury Securities Plus Money Market, U.S.
Treasury Securities Money Market, Prime Obligation Money Market, Institutional
Select Money Market, Tax-Exempt Money Market, Fixed Income, Intermediate-Term
Government Securities, New Jersey Municipal Securities, Pennsylvania Municipal
Securities, High Yield Bond, Balanced, Equity Growth, Equity Value, Equity
Income, Equity Index, Mid Cap, and International Equity Funds dated April 30,
1999, as may be amended or supplemented from time to time. Capitalized terms
used in this Statement of Additional Information have the same meaning as
defined in the prospectus. Prospectuses may be obtained through the Distributor,
SEI Investments Distribution Co., Oaks, PA 19456, or by calling 1-800-932-7782.

TABLE OF CONTENTS

<TABLE>
<S> <C>
The Trust................................................................. S-4
Investment Objectives and Policies........................................ S-
Additional Information About the Funds' Investment Objectives and
Policies................................................................ S-5
The Euro.................................................................. S-16
Description of Permitted Investments.................................... S-16
Investment Limitations.................................................. S-35
The Trust............................................................. S-35
SIMT Fund............................................................. S-38
SIF Fund.............................................................. S-39
Management of the Trust................................................... S-41
Trustees and Officers of the Trust...................................... S-41
Trustees and Officers of SIMT and SIF................................... S-43
The Advisor............................................................. S-45
The Sub-Advisor......................................................... S-47
SIMT Fund............................................................... S-48
SIF Fund................................................................ S-49
The Administrator....................................................... S-50
The Transfer Agent and Shareholder Servicing Agent...................... S-51
The SIMT Fund and SIF Fund's Administrator and Transfer Agent........... S-51
Custodians.............................................................. S-52
Fund Transactions......................................................... S-52
Trading Practices and Brokerage......................................... S-52
The Trust............................................................. S-52
SEI Institutional Managed Trust....................................... S-56
SEI Index Funds....................................................... S-57
The Distributor and the Distribution Plans of the Trust................... S-59
Distribution of the SIMT Fund and SIF Fund................................ S-63
SIMT Fund............................................................. S-63
SIF Fund.............................................................. S-64
Performance............................................................... S-64
Computation of Yield.................................................... S-64
Calculation of Total Return............................................. S-66
Purchase and Redemption of Shares....................................... S-68
Shareholder Services...................................................... S-69
Determination of Net Asset Value.......................................... S-69
</TABLE>
<PAGE>
<TABLE>
<S> <C>
The Trust............................................................... S-69
SIMT and SIF............................................................ S-71
General Information and History........................................... S-71
General Information..................................................... S-71
Description of Shares................................................... S-72
Shareholder Liability................................................... S-78
Limitation of Trustees' Liability....................................... S-78
Taxes..................................................................... S-78
Federal Income Tax...................................................... S-78
State Taxes............................................................. S-81
Legal Matters............................................................. S-81
Experts................................................................... S-81
Financial Statements...................................................... S-82
Appendix.................................................................. A-1
Description of Ratings.................................................. A-1
</TABLE>

April 30, 1999
[PIL-F-027-04]

S-2
<PAGE>
The Pillar Funds, Pillar, the stylized "P" logo and Your Investment
Foundation are registered service marks of Summit Bank. Reach Higher, Summit,
Summit Financial Services Group and Summit Bancorp are registered service marks
of Summit Bancorp. Summit Bank is a service mark of Summit Bancorp.

Neither the Equity Index Fund nor the SEI Index Funds ("SIF") S&P 500 Index
Portfolio is sponsored, endorsed, sold or promoted by Standard & Poor's Ratings
Group ("S&P"). S&P makes no representation or warranty, implied or expressed, to
the purchasers of the Fund, Portfolio or any member of the public regarding the
advisability of investing in index funds or the Fund or Portfolio or the ability
of the S&P 500 Index to track general stock market performance. S&P has no
obligation to take the needs of the owners of the Fund or Portfolio into
consideration in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination of, the timing
of, pricing at, or quantities of the Fund or Portfolio to be issued or in the
determination or calculation of the equation by which the Fund or Portfolio is
to be converted into cash. S&P has no obligation or liability in connection with
the administration, marketing or trading of the Fund or Portfolio.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR
ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE FUND, PORTFOLIO, OWNERS OF THE FUND, OWNERS OF THE
PORTFOLIO, OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESSED OR IMPLIED
WARRANTIES, AND HEREBY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED
THEREIN.

S-3
<PAGE>
THE TRUST

The Trust is an open-end management investment company established under
Massachusetts law as a Massachusetts business trust under a Declaration of Trust
dated September 9, 1991. The Declaration of Trust permits the Trust to offer
separate series of units of beneficial interest ("shares") and different classes
of shares of each series. This Statement of Additional Information relates to
the shares of the Trust's:

<TABLE>
<CAPTION>
FUND CLASS(ES)
- --------------------------------------------------------------------------- -----------------
<S> <C>
U.S. Treasury Securities Plus Money Market Fund............................ Not Applicable
Institutional Select Money Market Fund..................................... Not Applicable
U.S. Treasury Securities Money Market Fund................................. I/A
Tax-Exempt Money Market Fund............................................... I/A
New Jersey Municipal Securities Fund....................................... I/A
Pennsylvania Municipal Securities Fund..................................... I/A
Intermediate-Term Government Securities Fund............................... I/A
Equity Index Fund.......................................................... I/A/B
Fixed Income Fund.......................................................... I/A/B
Equity Growth Fund......................................................... I/A/B
Equity Value Fund.......................................................... I/A/B
Equity Income Fund......................................................... I/A/B
High Yield Bond Fund....................................................... I/A/B
International Equity Fund.................................................. I/A/B
Balanced Fund.............................................................. I/A/B
Prime Obligation Money Market Fund......................................... I/A/B/S
Mid Cap Fund............................................................... I
</TABLE>

Shareholders may purchase shares of the Funds through the different classes
as indicated above. The different classes provide for variations in distribution
and transfer agent costs, voting rights and dividends. In addition, a sales load
is imposed on the sale and/or redemption of Class A and Class B Shares of
certain Funds. See "Description of Shares."

Under the "master-feeder"structure, the High Yield Bond Fund will invest up
to 100% of its assets in the SEI Institutional Managed Trust High Yield Bond
Fund (the "SIMT Fund"). The Equity Index Fund will invest up to 100% of its
assets in the SEI Index Funds S&P 500 Index Portfolio (the "SIF Fund").

The investment policies of the High Yield Bond Fund and the Equity Index
Fund will be substantially similar to those of the SIMT Fund and the SIF Fund,
respectively, should the Funds withdraw from the master-feeder structure and the
Advisor manage their assets directly.

Unless otherwise indicated, policies with respect to "a Fund," "all Funds"
or "Fixed Income Funds" includes the SIMT Fund, and policies with respect to "a
Fund," "all Funds" or "Equity Funds" includes the SIF Fund. Unless otherwise
indicated, the term "Advisor", as used in this Statement of Additional
Information, includes the Advisor, the Sub-Advisor and any Advisor, Sub-Advisor
or Money Manager of either the SIMT Fund or the SIF Fund.

S-4
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES

THE MONEY MARKET FUNDS

U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND
U.S. TREASURY SECURITIES MONEY MARKET FUND
PRIME OBLIGATION MONEY MARKET FUND
INSTITUTIONAL SELECT MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND

The investment objective of each Money Market Fund is to preserve principal
value and maintain a high degree of liquidity while providing current income. In
addition, the Tax-Exempt Money Market Fund seeks to provide current income that
is exempt from Federal income tax.

Each money market fund intends to comply with regulations of the Securities
and Exchange Commission ("SEC") applicable to money market funds using the
amortized cost method for calculating net asset value. These regulations impose
certain quality, maturity and diversification restraints on investments by a
Money Market Fund. Under these regulations, each Money Market Fund will invest
only in U.S. dollar-denominated securities, will maintain an average portfolio
maturity on a dollar-weighted basis of 90 days or less, and will acquire only
"eligible securities" that present minimal credit risks and have a maturity of
397 days or less.

U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND
U.S. TREASURY SECURITIES MONEY MARKET FUND

Each Fund invests in (i) bills, notes and bonds issued by the U.S. Treasury;
(ii) separately traded interest and principal component parts of such
obligations that are transferable through the federal book entry system
(together, "U.S. Treasury Obligations"); and (iii) repurchase agreements
involving U.S. Treasury Obligations. Each Fund may also engage in securities
lending.

PRIME OBLIGATION MONEY MARKET FUND
INSTITUTIONAL SELECT MONEY MARKET FUND

Each Fund will invest in "eligible securities" consisting of (i) commercial
paper and short-term corporate obligations of U.S. issuers that satisfy the
Fund's quality criteria; (ii) obligations (certificates of deposit, time
deposits and bankers' acceptances) of U.S. commercial banks, U.S. savings and
loan institutions and U.S. and London branches of foreign banks, provided such
institutions have total assets of $500 million or more shown on their last
published financial statements at the time of investment and are insured by the
FDIC (each Fund may not invest more than 25% of its total assets in obligations
issued by foreign branches of U.S. banks and London branches of foreign banks);
(iii) U.S. Treasury Obligations; (iv) obligations issued or guaranteed as to
principal and interest by the agencies or instrumentalities of the U.S.
Government ("U.S. Government Agencies"); and (v) repurchase agreements involving
any such obligations. In addition, each Fund may also engage in securities
lending.

TAX-EXEMPT MONEY MARKET FUND

The Fund will invest at least 80% of its total assets in obligations issued
by or on behalf of the states, territories and possessions of the United States
and the District of Columbia and their political subdivisions, agencies and
instrumentalities, the interest of which, in the opinion of bond counsel for the
issuer, is exempt from Federal income tax (collectively, "Municipal
Securities"). The Fund will primarily purchase municipal bonds, notes and
tax-exempt commercial paper rated in one of the two highest short-term rating
categories by a nationally recognized statistical rating organization (an
"NRSRO") in accordance with SEC regulations at the time of investment or, if not
rated, as determined by the Advisor to be of comparable quality. Because the
Fund often purchases securities supported by credit enhancements from

S-5
<PAGE>
banks and other financial institutions, changes in credit quality of these
institutions could cause losses to the Fund and affect its share price.

The Fund may purchase municipal obligations with demand features including
floating or variable rate obligations. In addition, the Fund may invest in
commitments to purchase securities on a "when-issued" basis, and reserves the
right to purchase securities subject to a standby commitment. The Advisor has
discretion to invest up to a total of 20% of the Fund's assets in taxable money
market instruments (including repurchase agreements) and securities subject to
the Federal alternative minimum tax. However, the Fund generally intends to be
fully invested in securities exempt from Federal income tax. The Fund may also
engage in securities lending.

THE FIXED INCOME FUNDS

FIXED INCOME FUND

The Fund seeks to provide a high level of total return, primarily through
current income and capital appreciation, consistent with preservation of
capital. The Fund may not invest in certain securities that may earn a higher
return but which are more volatile and riskier than the Fund's permitted
investments.

At least 65% of the Fund's assets will be invested in (i) U.S. Treasury
Obligations; (ii) U.S. Government Agencies; (iii) corporate debt obligations
rated in one of the three highest rating categories by an NRSRO or determined by
the Advisor to be of comparable quality at the time of investment; (iv)
commercial paper rated in the highest short-term rating category by an NRSRO or
determined by the Advisor to by of comparable quality at the time of investment;
(v) short-term bank obligations (certificates of deposit, time deposits and
bankers' acceptances) of U.S. commercial banks with assets of at least $1
billion as of the end of their most recent fiscal year; (vi) securities of the
government of Canada and its provincial and local governments; (vii) custodial
receipts evidencing separately traded interest and principal component parts of
U.S. Treasury Obligations; (viii) obligations subject to Federal income tax
issued by or on behalf of states, territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities ("Taxable Municipal Securities"), which are rated A or
higher by an NRSRO or determined by the Advisor to be of comparable quality; and
(ix) repurchase agreements involving such securities. Of this amount, the Fund
may, for temporary defensive purposes, invest up to 35% of its assets in
commercial paper rated in one of the two highest short-term rating categories by
an NRSRO or determined by the Advisor to be of comparable quality at the time of
investment. Securities rated A are considered to be investment grade, but could
be more vulnerable to adverse developments than obligations with higher ratings.
In addition, the Fund may invest in corporate bonds and debentures and
commercial paper issued by foreign issuers.

The remaining 35% of the Fund's assets may be invested in (i)
mortgage-backed securities consisting of collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs") that are rated
in one of the top two rating categories by an NRSRO and which are backed solely
by Government National Mortgage Association ("GNMA") certificates or other
mortgage pass-throughs issued or guaranteed by the U.S. Government, its agencies
or instrumentalities; and (ii) asset-backed securities secured by company
receivables, truck and auto loans, leases and credit card receivables rated in
one of the top two rating categories by an NRSRO.

The principal governmental issuers or guarantors of mortgage-backed
securities are GNMA, Fannie Mae and the Federal Home Loan Mortgage Corporation
("FHLMC"). Obligations of GNMA are backed by the full faith and credit of the
U.S. Government while obligations of FNMA and FHLMC are supported by the
respective agency only. The Fund may purchase mortgage-backed securities that
are backed or collateralized by fixed, adjustable or floating rate mortgages.

S-6
<PAGE>
The Fund expects to maintain a dollar-weighted average portfolio maturity
that will not exceed fifteen years. The Advisor may vary this maturity
substantially in anticipation of a change in the interest rate environment.

INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND

The Fund seeks to preserve principal value and maintain a high degree of
liquidity while providing current income.

The Fund will be fully invested in U.S. Treasury Obligations and U.S.
Government Agencies.

The Fund will maintain a dollar-weighted average maturity of three to ten
years. Under normal circumstances, the Advisor anticipates that the Fund's
dollar-weighted average maturity will be approximately five years; however, the
Advisor may vary this average maturity substantially in anticipation of a change
in the interest rate environment.

NEW JERSEY MUNICIPAL SECURITIES FUND

The Fund seeks to provide current income exempt from both Federal and New
Jersey income taxes, consistent with preservation of capital.

The Fund will invest at least 80% of its net assets in Municipal Securities.
Under normal circumstances, except when acceptable securities are unavailable as
determined by the Advisor, at least 65% of the Fund's assets will be invested in
Municipal Securities, the interest of which, in the opinion of bond counsel for
the issuer, is exempt from the New Jersey gross income tax ("New Jersey
Municipal Securities"). The Fund will primarily purchase (i) municipal bonds
rated in one of the three highest rating categories by an NRSRO; (ii) municipal
notes rated in one of the two highest rating categories by an NRSRO; (iii)
commercial paper rated in one of the two highest short-term rating categories by
an NRSRO; (iv) any of the foregoing determined by the Advisor to be of
comparable quality at the time of investment; or (v) securities of closed-end
investment companies traded on a national securities exchange. Securities rated
A are considered to be investment grade but could be more vulnerable to adverse
developments than obligations with higher ratings.

The Fund expects to maintain a dollar-weighted average portfolio maturity of
less than fifteen years. The Advisor may vary this maturity substantially in
anticipation of a change in the interest rate environment.

The Fund reserves the right to engage in "put" transactions, although it has
no present intention to do so. In addition, the Advisor has discretion to invest
up to a total of 20% of the Fund's assets in taxable money market instruments
(including repurchase agreements) and securities subject to the Federal
alternative minimum tax. However, the Fund generally intends to be as fully
invested as possible in securities exempt from Federal income tax and not
subject to the Federal alternative minimum tax.

The Fund is a non-diversified investment company.

PENNSYLVANIA MUNICIPAL SECURITIES FUND

The Fund seeks to provide current income exempt from both Federal and
Pennsylvania income taxes, consistent with preservation of capital.

At least 80% of the Fund's assets will be invested in Municipal Securities.
Under normal circumstances, except when acceptable securities are unavailable as
determined by the Advisor, at least 65% of the Fund's assets will be invested in
Municipal Securities, the interest of which, in the opinion of bond counsel for
the issuer, is exempt from Pennsylvania income tax ("Pennsylvania Municipal
Securities"). The Fund may invest up to 10% of its assets in securities the
income tax from which is subject to the Federal

S-7
<PAGE>
alternative minimum tax. Although permitted to do so, the Fund has no present
intention to invest in repurchase agreements or purchase securities subject to
the Federal alternative minimum tax.

Municipal Securities that the Fund may purchase include (i) municipal bonds
which are rated BBB or better by S&P or Baa or better by Moody's Investor
Service, Inc. ("Moody's") at the time of investment or, if not rated, determined
by the Advisor to be of comparable quality; (ii) municipal notes which are rated
at least SP-1 by S&P or MIG-1 or V-MIG-1 by Moody's at the time of investment
or, if not rated, determined by the Advisor to be of comparable quality; and
(iii) tax-exempt commercial paper rated at least A-1 by S&P or Prime-1 by
Moody's at the time of investment or, if not rated, determined by the Advisor to
be of comparable quality. Bonds rated BBB by S&P or Baa by Moody's have
speculative characteristics.

The Fund may invest in commitments to purchase such securities on a
"when-issued" basis, and reserves the right to engage in "put" transactions. The
Fund may also purchase other types of tax-exempt instruments as long as they are
of a quality equivalent to the long-term bond or commercial paper ratings stated
above.

The Fund is a non-diversified investment company.

HIGH YIELD BOND FUND

The Fund seeks to maximize total return. It currently pursues this objective
by investing up to 100% of its assets in the SIMT Fund, which as an identical
investment objective.

Under normal market conditions, the SIMT Fund will invest at least 65% of
its total assets in fixed income securities that are rated below investment
grade, I.E., rated below the top four rating categories by an NRSRO at the time
of purchase or, if not rated, determined to be of comparable quality by the
money manager or managers chosen by SIMC (the "Money Managers"). Securities
rated in the lowest rating categories may have predominantly speculative
characteristics or may be in default. The achievement of the SIMT Fund's
investment objective may be more dependent on a Money Manager's own credit
analysis than would be the case if the SIMT Fund invested in higher rated
securities. There is no bottom limit on the ratings of high yield securities
that may be purchased or held by the SIMT Fund.

The SIMT Fund may invest in all types of fixed income securities issued by
domestic or foreign issuers, including (i) mortgage-backed securities, (ii)
asset-backed securities, (iii) zero coupon, pay-in-kind or deferred payment
securities, and (iv) variable and floating rate instruments.

Any assets of the SIMT Fund not invested in the fixed income securities
described above may be invested in: (i) convertible securities; (ii) preferred
stocks; (iii) equity securities; (iv) investment grade fixed income securities;
(v) money market securities; (vi) securities issued on a when-issued or
delayed-delivery basis, including TBA mortgage-backed securities; (vii) forward
foreign currency contracts; and (vii) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures and options on futures.

The Money Managers may vary the average maturity of the securities in the
SIMT Fund without limit, and there is no restriction on the maturity of any
individual security.

GENERAL INVESTMENT POLICIES--FIXED INCOME FUNDS

Both the Fixed Income and Intermediate-Term Government Securities Funds may
purchase mortgage-backed securities issued or guaranteed as to payment of
principal and interest by the U.S. Government, its agencies or
instrumentalities. These Funds may also invest in mortgage-backed securities
issued by private issuers rated in one of the two highest rating categories by
an NRSRO and backed by mortgage pass-throughs issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

S-8
<PAGE>
Each of the Fixed Income Funds may invest in floating or variable rate
obligations and may purchase securities on a when-issued basis. In addition,
each Fund reserves the right to engage in securities lending but has no present
intention to do so.

If, after purchase, the rating of a security held by a Fixed Income Fund
drops below the prescribed investment quality, such security shall be sold at a
time when, in the judgment of the Advisor, it is not in the Fund's interest to
continue to hold such security.

RISK FACTORS--FIXED INCOME FUNDS

The market value of each Fixed Income Fund's fixed income investments will
fluctuate in response to interest rate changes and other factors. During periods
of falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal will also affect the value of these investments. Changes
in the value of portfolio securities will not affect cash income derived from
these securities but will affect a Fund's net asset value.

Mortgage-backed securities are subject to prepayment of the underlying
mortgages. During periods of declining interest rates, prepayment of mortgages
underlying these securities can be expected to accelerate. When the
mortgage-backed securities held by a Fixed Income Fund are prepaid, the Fund
must reinvest the proceeds in securities, the yield on which reflects prevailing
interest rates. Thus, mortgage-backed securities may not be an effective means
of locking in long-term interest rates for a Fund. Because of prepayments, it is
difficult to predict the actual maturity of mortgage-backed securities, which
may increase the difficulty of managing the average weighted maturity of the
Funds.

Investments in securities of foreign issuers may subject the Fixed Income
Fund to different risks than those attendant to investments in securities of
U.S. issuers, such as differences in accounting, auditing and financial
reporting standards, the possibility of expropriation or confiscatory taxation,
and political instability. There may also be less publicly available information
with regard to foreign issuers than domestic issuers. In addition, foreign
markets may be characterized by less liquidity, greater price volatility, less
regulation and higher transaction costs than U.S. markets.

ADDITIONAL RISK FACTORS FOR NEW JERSEY MUNICIPAL SECURITIES

New Jersey Municipal Securities are primarily issued by or on behalf of the
State of New Jersey, its political subdivisions, agencies and instrumentalities.
The concentration in obligations of New Jersey issuers by the New Jersey
Municipal Securities Fund subjects the Fund to special investment risks. In
particular, changes in economic conditions and governmental policies of the
State of New Jersey and its municipalities could adversely affect the value of
the Fund and the securities held by it. For a further description of these
risks, see "New Jersey Municipal Securities and Special Considerations Relating
Thereto" in this Statement of Additional Information.

ADDITIONAL RISK FACTORS FOR PENNSYLVANIA MUNICIPAL SECURITIES

Under normal conditions the Pennsylvania Municipal Securities Fund will be
fully invested in obligations that produce interest income exempt from Federal
income tax and Pennsylvania state income tax. Accordingly, the Fund will have
considerable investments in Pennsylvania Municipal Securities. As a result, the
Fund will be more susceptible to factors that adversely affect issuers of
Pennsylvania obligations
than a mutual fund which does not have as great a concentration in Pennsylvania
Municipal Securities.

S-9
<PAGE>
An investment in the Fund will be affected by the many factors that affect
the financial condition of the Commonwealth of Pennsylvania. For example,
financial difficulties of the Commonwealth, its counties, municipalities and
school districts that hinder efforts to borrow and lower credit ratings are
factors which may affect the Fund. See "Pennsylvania Municipal Securities and
Special Considerations Relating Thereto" in this Statement of Additional
Information.

THE EQUITY AND BALANCED FUNDS

EQUITY GROWTH FUND

The Fund seeks long-term growth of capital.

The Fund will normally be as fully invested as practicable in equity
securities consisting of common stocks, warrants to purchase common stocks, debt
securities and preferred stocks that are convertible into common stocks and
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"),
Continental Depositary Receipts ("CDRs") and Global Depositary Receipts
("GDRs"). The Advisor will invest in companies that it expects will demonstrate
greater long-term earnings growth than the average company included in the S&P
500 Composite Index (the "S&P 500 Index"). This method of investing is based
upon the premise that growth in a company's earnings will eventually translate
into growth in the price of its stock.

To the extent that the Fund is not invested in equity securities, the Fund
may invest in the following fixed income securities for cash management
purposes: U.S. Government Securities; corporate bonds and debentures rated in
one of the three highest rating categories by an NRSRO or determined by the
Advisor to be of comparable quality at the time of purchase, except that as part
of its investment strategy, the Fund may invest up to 5% of its total assets in
lower rated bonds, commonly referred to as "junk bonds," rated B or higher by an
NRSRO or determined to be of comparable quality by the Advisor; mortgage-backed
securities consisting of CMOs and REMICs that are rated in one of the top two
rating categories by an NRSRO and which are backed solely by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; and asset-backed securities secured by company
receivables, truck and auto loans, leases and credit card receivables that are
rated in one of the top two rating categories by an NRSRO. The Fund may also
employ certain hedging and risk management techniques, including the purchase
and sale of exchange-listed and over-the-counter ("OTC") options, futures and
options on futures involving equity and debt securities, aggregates of equity
and debt securities and other financial indices. The Fund may write options and
invest in futures only on a covered basis.

EQUITY VALUE FUND

The Fund seeks growth of both capital and income.

EQUITY INCOME FUND

The Fund seeks growth of capital consistent with an emphasis on current
income.

S-10
<PAGE>
MID CAP FUND

The Fund seeks growth of both capital and income.

The Fund will normally be as fully invested as practicable in equity
securities consisting of common stocks, warrants to purchase common stocks, debt
securities and preferred stocks convertible into common stocks and ADRs. The
Advisor will purchase equity securities which, in the Advisor's opinion, are
undervalued in the marketplace at the time of purchase. Under normal market
conditions, the Fund will invest at least 65% of its total assets in equity
securities of mid cap issuers (I.E., companies with market capitalizations
ranging between $700 million and $7 billion at the time of purchase). The Fund
may also invest in equity securities of small cap issuers (I.E, companies with
market capitalizations between $100 million and $700 million at the time of
purchase).

The Advisor will attempt to maintain a highly diversified portfolio in order
to reduce risks associated with investments in smaller capitalization companies
which may be subject to greater volatility than investments in companies with
larger capitalizations.

EQUITY INDEX FUND

The Fund seeks investment results that correspond to the S&P 500. It
currently pursues this objective by investing up to 100% of its assets in the
SIF Fund, which has an identical investment objective.

The SIF Fund's ability to duplicate the performance of the S&P 500 will
depend to some extent on the size and timing of cash flows into and out of the
SIF Fund, as well as on the level of the SIF Fund's expenses.

Adjustments made to accommodate cash flows will track the S&P 500 to the
maximum extent practicable, and may result in brokerage expenses for the SIF
Fund. Over time, the correlation between the performance of the SIF Fund and the
S&P 500 is expected to be over 0.95. A correlation of 1.00 would indicate
perfect correlation, which would be achieved when the net asset value of the SIF
Fund, including the value of its dividends and capital gains distributions,
increased or decreased in exact proportion to changes in the S&P 500.

The SIF Fund will normally invest in all of the stocks which comprise the
S&P 500, except when changes are made to the S&P 500 itself. The SIF Fund's
policy is to fully invest in common stocks, and it is expected that cash
reserves or other non-Index securities would normally be less than 10% of net
assets. Accordingly, an investment in shares of the SIF Fund involves risks
similar to those of investing in a fund consisting of the common stocks of some
or all of the companies included in the S&P 500.

The weightings of stocks in the S&P 500 are based on each stock's relative
total market value, I.E., market price per share times the number of shares
outstanding. Because of this weighting, approximately 50% of the S&P 500 is
currently composed of stocks of the 50 largest companies in the S&P 500, and the
S&P 500 currently represents over 65% of the market value of all U.S. common
stocks listed on the New York Stock Exchange.

The Advisor makes no attempt to "manage" the SIF Fund in the traditional
sense (I.E., by using economic, financial or market analyses). The adverse
financial situation of a company usually will not result in the elimination of a
stock from the SIF Fund. However, an investment may be removed from the SIF Fund
if, in the judgement of the Advisor, the merit of the investment has been
substantially impaired by extraordinary events or adverse financial conditions.
Furthermore, administrative adjustments may be made in the SIF Fund from time to
time because of mergers, changes in the composition of the S&P 500 and similar
reasons. In certain circumstances, the Advisor may exercise discretion in
determining whether to exercise warrants and rights issued in respect to
portfolio securities or whether to tender portfolio securities pursuant to a
tender or exchange offer.

S-11
<PAGE>
The SIF Fund may enter into stock index futures contracts to maintain
adequate liquidity to meet its redemption demands while maximizing the level of
the SIF Fund's assets which are tracking the performance of the S&P 500,
provided that the value of these contracts does not exceed 20% of the SIF Fund's
total assets. The SIF Fund may only purchase those stock index futures
contracts--such as futures contracts on the S&P 500--that are likely to closely
duplicate the performance of the S&P 500. The SIF Fund also can sell such
futures contracts in order to close out a previously established position. The
SIF Fund will not enter into any stock index futures contract for the purpose of
speculation, and will only enter into contracts traded on national securities
exchange with standardized maturity dates.

The SIF Fund may invest cash reserves in securities issued by the U.S.
Government, its agencies or instrumentalities, bankers' acceptances, commercial
paper rated at least A-1 by S&P and/or Prime-1 by Moody's, certificates of
deposit or repurchase agreements involving such obligations. Such investments
will not be used for defensive purposes.

The equity securities in which the SIF Fund invests are common stocks,
preferred stocks, securities convertible into common stock and ADRs.

The SIF Fund may lend up to 20% of its assets to qualified institutions for
the purpose of realizing additional income, however the SIF Fund has no present
intention to lend its securities. The SIF Fund may invest in illiquid
securities. The SIF Fund may enter into forward commitments, or purchase
securities on a when-issued or delayed delivery basis.

In order to maintain liquidity during times of unusual market conditions,
the Fund may also invest temporarily in cash and cash items.

INTERNATIONAL EQUITY FUND

The investment objective of the Fund is to seek capital appreciation. The
Fund will attempt to achieve its objective by investing a carefully selected and
continuously managed diversified portfolio consisting primarily of equity
securities (including such equity-related securities as warrants, convertible
bonds, debentures or convertible preferred stock) of companies located in
European and Pacific Basin countries.

Using a bottom-up investment approach, the Sub-Advisor invests in large- and
medium-capitalization companies that have a long record of successful operations
in their core business. Typically, such companies occupy a leading position in
their industry, have consistently generated free cash flow, and achieved
earnings growth through increasing market share and unit sales volumes. The
Sub-Advisor's goal is to construct a portfolio of the best companies in the
developed markets of Europe and the Pacific Basin without making any country
bets. With approximately 80-100 names, the Fund also seeks to be well
diversified in terms of industry exposure.

From a country allocation standpoint, the Sub-Advisor's main objective is to
control portfolio risk by normalizing the distribution of country/regional
weights relative to those of the Fund's benchmark. The Sub-Advisor analyzes
approximately 35 international equity markets, including those comprised in
Morgan Stanley Capital International's EAFE (Europe, Australia and Far East) and
Emerging Markets Free Indexes. The Sub-Advisor establishes a risk-variance
matrix by fixing minimum/maximum ranges for each market based on its historical
volatility over the last 10 years. Generally, investments in emerging markets
will constitute less than 5% of the Fund's assets. The Sub-Advisor also gives
consideration to such factors as market liquidity, accessibility to foreign
investors, regulatory protection of shareholders, accounting and disclosure
standards, transferability of funds and foreign exchange controls, if any.

The Sub-Advisor's stock selection process begins with rigorous research into
historical fundamentals, with a focus on companies that have a proven record of
at least 7 to 10 years of predictable earnings. The Sub-Advisor screens a
universe of approximately 3000 stocks in a market capitalization range from
approximately $500 million to approximately $100 billion. The Sub-Advisor's
screens are designed to be representative of each market/industry and generally
cover a broad cross-section of companies which

S-12
<PAGE>
together account for about 90% of total market capitalization. The Sub-Advisor's
data series focus on companies that have achieved consistent growth in cash
flow, sales, operating profits, returns on equity and returns on invested
capital, and that have little or no debt. The Sub-Advisor defines cash flow as
recurrent net profit plus depreciation. Furthermore, the Sub-Advisor analyzes
the share price in relation to earnings before interest, taxes, depreciation and
amortization, and looks at the underlying trend of cash and retained earnings.

The Sub-Advisor supplements the quantitative screening process by an
analysis of qualitative criteria, one of the most important of which is to
identify strong, stable and reliable management that maintains a company's
market position through consistent unit volume growth and gains in market share.

The screening process eliminates highly leveraged companies, cyclical
companies and companies with erratic sales growth, negative cash flow, weak
operating profits, volatile retained earnings, and low returns on equity and
returns on invested capital. As a result of the screening process, the original
universe of 3000 companies is distilled to an "investable universe" of
approximately 250-300 stocks of analyzable companies with a proven historical
record that the Sub-Advisor deems to be within its circle of competence. For
each company in its investable universe, the Sub-Advisor estimates cash flow
available to the company's shareholders over the next 10 years, discounting that
10-year cash flow growth by the 10-year bond of the respective country/region to
calculate an intrinsic value to its market price. If the company's stock is
trading lower than or close to the Sub-Advisor's determination of the company's
intrinsic value, the Sub-Advisor considers it a candidate for purchase.

Position size at purchase ranges from 1% to 3% of total portfolio assets.
Within this range position size varies in proportion to the market
capitalization of the company within a given country's stock market. The
Sub-Advisor normally allows positions to reach a maximum of approximately 5% of
total assets.

Normally, the Fund will tend to be fully invested. Stock are sold if a
country's maximum weight based on the risk-variance matrix has been exceeded.
The Sub-Advisor may trim or sell positions if a company's fundamentals have
deteriorated, or if it is selling significantly above the Sub-Advisor's
estimation of its intrinsic value. Within each country, no conscious sector
allocation decision is made. Sector allocation is the result of the stock
selection within each country. The holding periods of the Fund's core positions
generally exceed two years.

For active currency risk management, the Sub-Advisor employs a systematic
currency hedging approach based on a technical-trend-following model.

Portfolio turnover is expected not to exceed an annual rate of 100% under
normal circumstances. Such a turnover rate may reflect substantial short-term
trading and corresponding brokerage costs which the Fund must pay.

Under normal circumstances the Fund will have at least 65% of its assets
invested in European and Pacific Basin equity securities. The Fund intends to
diversify investments broadly among countries and normally to have represented
in the portfolio business activities of not fewer than three different
countries. The securities the Fund purchases may not always be purchased on the
principal market. For example, ADRs may be purchased if trading conditions make
them more attractive than the underlying security.

The Fund may (i) enter into forward contracts to purchase or sell foreign
currencies ("forward currency contracts"); (ii) purchase and write covered call
options on foreign currencies ("currency options"); (iii) enter into contracts
for the purchase or sale for future delivery of foreign currencies ("currency
futures"); or (iv) purchase and write covered call options on currency futures.

THE BALANCED FUND

The Fund seeks growth of capital consistent with current income.

S-13
<PAGE>
The Fund seeks to achieve growth of capital and current income by investing
in a balanced portfolio of equity securities, fixed income securities and money
market securities. The actual blend will vary according to market and economic
conditions. However, under normal market conditions, at least 25% of the Fund's
total assets will be invested in fixed income securities. This investment policy
may be changed by the Trust's Board of Trustees (the "Trustees") at any time;
however, shareholders will be notified of such change in advance.

The Fund may invest in the following equity securities: common stocks,
warrants to purchase common stocks, debt securities and preferred stocks
convertible into common stocks and ADRs.

The Fund may invest in the following fixed income securities: (i) U.S.
Government Securities; (ii) corporate bonds and debentures rated in one of the
three highest rating categories by an NRSRO or determined by the Advisor to be
of comparable quality at the time of purchase; (iii) mortgage-backed securities
consisting of CMOs and REMICs that are rated in one of the top two rating
categories by an NRSRO and which are backed solely by GNMA certificates or other
mortgage pass-throughs issued or guaranteed by the U.S. Government, its agencies
or instrumentalities; and (iv) asset-backed securities secured by company
receivables, truck and auto loans, leases and credit card receivables which are
rated in one of the top two rating categories by an NRSRO. Securities rated A
are considered to be investment grade but could be more vulnerable to adverse
developments than obligations with higher ratings. The Fund may invest in money
market securities.

GENERAL INVESTMENT POLICIES--BALANCED AND EQUITY FUNDS

For temporary defensive purposes during periods when the Advisor determines
that market conditions warrant, each Balanced and Equity Fund may invest up to
100% of its assets in the money market securities and may hold cash for
liquidity purposes. To the extent a Balanced or Equity Fund is engage in
temporary defensive investing, the Fund will not be pursuing its investment
objective.

Each of the Equity Value, Equity Income, Mid Cap and Balanced Funds seeks to
invest in equity securities that the Advisor believe are of high quality. In
evaluating the quality of such securities, the Advisor places particular
emphasis on the management history of the issuer and on ratio analyses which
focus on prospective earnings, book value and anticipated growth rates.

Securities purchased by the Balanced and Equity Funds may involve floating
or variable interest rates and may be acquired through a forward commitment or
on a when-issued basis.

In addition, each Balanced and Equity Fund reserves the right to engage in
securities lending. The Balanced and Equity Funds will purchase equity
securities, including ADRs, that are traded in the United States on registered
exchanges or the over-the-counter market. However, each of these five Funds
reserves the right to invest up to 25% of its assets in foreign equity
securities denominated in foreign currency and traded on foreign markets, but
has no present intention to do so.

RISK FACTORS--BALANCED AND EQUITY FUNDS

The value of the shares of the Balanced and Equity Funds will fluctuate due
to the underlying securities in which these Funds invest. The market value of
the convertible securities purchased by each Balanced and Equity Fund may also
be affected by changes in interest rates, the credit quality of the issuer and
any call provisions.

The market value of the Balanced and Equity Growth Funds' fixed income
securities will fluctuate in response to interest rate changes and other
factors. See "Risk Factors--Fixed Income Funds" for a discussion of the risks
associated with fixed income investments.

Each Balanced and Equity Fund's investments in securities of foreign issuers
may subject that Fund to risks different than those attendant to investments in
securities of U.S. issuers, such as differences in

S-14
<PAGE>
accounting, auditing and financial reporting standards applicable in foreign
countries, the possibility of expropriation or confiscatory taxation, political
instability and greater fluctuations in value due to changes in currency
exchange rates. There may also be less publicly available information with
regard to foreign issuers than domestic issuers. In addition, foreign markets
may be characterized by less liquidity, greater price volatility, less
regulation and higher transaction costs than U.S. markets. Moreover, the
dividends payable on an Balanced or Equity Fund's foreign securities may be
subject to foreign witholding taxes, thus reducing the net amount of income
available for distribution to the Fund's shareholders. Also, it may be more
difficult to obtain a judgment in a court outside the United States. These risks
could be greater in emerging markets than in more developed foreign markets
because emerging markets may have less stable political environments than more
developed countries.

The Equity Growth Fund may invest in junk bonds. The Fund may also invest in
options and futures. There are various risks associated with options and
futures, including (i) the success of a hedging strategy may depend on an
ability to accurately predict movements in security prices, interest rates or
currency exchange rates; (ii) there may be little correlation between the
changes in a security's value and the price of futures or options; (iii) a
related future or option may not be liquid; (iv) an exchange may impose trading
restrictions or limitations; (v) government regulations may restrict trading in
futures and options; and (vi) the possible lack of full participation in a rise
in the market value of the underlying security.

RISK FACTORS--NON-DIVERSIFICATION

The New Jersey Municipal Securities and Pennsylvania Municipal Securities
Funds are non-diversified funds under the Investment Company Act of 1940, as
amended, (the "1940 Act"), and each therefore may invest a greater portion of
its assets in the securities of a smaller number of issuers and may, as a
result, be subject to greater risk with respect to its portfolio securities.
Each of the Funds intends to satisfy the diversification requirements necessary
to qualify as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), by limiting its investments so that, at the close
of each quarter of the taxable year: (a) not more than 25% of the market value
of the Fund's total assets is invested in the securities (other than U.S.
Government securities) of a single issuer; and (b) at least 50% of the market
value of the Fund's total assets is represented by (i) cash and cash items, (ii)
U.S. Government securities and (iii) other securities limited in respect to any
one issuer to an amount not greater in value than 5% of the market value of the
Fund's total assets and to not more than 10% of the outstanding voting
securities of such issuer.

PORTFOLIO TURNOVER RATE

It is anticipated that the long-term average annual portfolio turnover rate
for each Fixed Income, Equity and Balanced Fund will not exceed 100%; however,
there may be times that the Advisor will sell securities depending on market
conditions and opportunities, and the portfolio turnover rate for each Fund may
reach higher levels. Higher portfolio turnover may increase the distribution
which a Fund is required to make to shareholders and, therefore, lead to higher
tax liability for shareholders with taxable accounts. Higher levels of portfolio
turnover will also lead to higher trading costs, which are reflected in each
Funds' operating expenses. With respect to the Balanced Fund, portfolio turnover
applies only to its investments in equity securities and non-money market, fixed
income securities, which are calculated separately.

THE FEEDER FUNDS AND THE PORTFOLIOS

Unlike other mutual funds which directly acquire and manage their own
portfolio securities, each Feeder Fund seeks to achieve its investment objective
by investing up to 100% of its assets in the corresponding Portfolio, which is a
separate registered investment company with identical investment objectives. The
investment objective of a Feeder Fund or a Portfolio may not be changed without
shareholder approval. In addition to selling beneficial interests to the Feeder
Funds, each Portfolio may

S-15
<PAGE>
sell beneficial interests to other mutual funds or institutional investors. Such
investors will invest in a Portfolio on the same terms and conditions and will
pay a proportionate share of that Portfolio's expenses. However, other investors
investing in a Portfolio are not required to buy their shares at the same public
offering prices as the corresponding Feeder Fund. Investors in a Feeder Fund
should be aware that because of these differences, other investors in the other
funds that invest in the corresponding Portfolio may obtain different returns.
Such differences in returns are also present in other mutual fund structures.

Certain changes in a Portfolio's investment objective, policies or
restrictions may require the corresponding Feeder Fund to redeem its investment.
Any such withdrawal could result in a distribution-in-kind of portfolio
securities (as opposed to a cash distribution from the Portfolio). The Feeder
Fund could incur brokerage fees or other transaction costs in converting such
securities into cash. The distribution-in-kind may also result in a less
diversified portfolio of investments or adversely affect the liquidity of the
Feeder Fund. In addition, the investment of a Feeder Fund may be withdrawn from
the corresponding Portfolio at any time if the Trustees of the Trust determine
that it is in the best interest of the Feeder Fund to do so.

Upon any such withdrawal, the Trustees of the Trust would consider what
action might be taken, including the investment of all of the assets of such
Feeder Fund in another pooled investment entity having the same investment
objective as the Feeder Fund or retaining an investment advisor to manage the
Feeder Fund's assets in accordance with its investment objective and policies.
The performance of a Feeder Fund might be adversely affected under such
circumstances and such Feeder Fund may not be able to achieve its investment
objective.

THE EURO

On January 1, 1999, the European Monetary Union (EMU) implemented a new
currency unit, the Euro, to help reshape financial markets, banking systems and
monetary policies in Europe and other parts of the world. The countries
converting or tying their currencies to the Euro include Austria, Belgium,
France, Germany, Luxembourg, the Netherlands, Ireland, Finland, Italy, Portugal
and Spain. Financial transactions and market information, including share
quotations and company accounts, in participating countries are denominated in
Euros. Approximately 46% of the stock exchange capitalization of the total
European market may now be reflected in Euros, and participating governments
will now issue their bonds in Euros. Monetary policy for participating countries
will now be uniformly managed by a new central bank, the European Central Bank
(ECB).

Although it is not possible to predict the impact of the Euro implementation
plan on the Funds, particularly the International Equity Fund, the transition to
the Euro may change the economic environment and behavior of investors,
particularly in European markets. For example, investors may begin to view those
countries participating in the EMU as a single entity, and the Advisor may need
to adapt its investment strategy accordingly. The process of implementing the
Euro also may adversely affect financial markets world-wide and may result in
changes in the relative strength and value of the U.S. dollar or other major
currencies, as well as possible adverse tax consequences. The transition from
current currencies to the Euro may be considered a taxable event. The transition
to the Euro is likely to have a significant impact on fiscal and monetary policy
in the participating countries and may produce unpredictable effects on trade
and commerce generally. These resulting uncertainties could create increased
volatility in financial markets world-wide.

DESCRIPTION OF PERMITTED INVESTMENTS

AMERICAN DEPOSITARY RECEIPTS ("ADRs"), EUROPEAN DEPOSITARY RECEIPTS
("EDRs"), CONTINENTAL DEPOSITARY RECEIPTS ("CDRs") AND GLOBAL DEPOSITARY
RECEIPTS ("GDRs"). ADRs are securities, typically issued by a U.S. financial
institution (a "depositary"), that evidence ownership interests in a security or
a pool of securities issued by a foreign issuer and deposited with the
depositary. ADRs include American Depositary Shares and New York Shares. EDRs,
which are sometimes referred to as Continental Depositary Receipts, are
securities, typically issued by a non-U.S. financial institution, that evidence
ownership interests in a security

S-16
<PAGE>
or a pool of securities issued by either a U.S. or foreign issuer. GDRs are
issued globally and evidence a similar ownership arrangement. Generally, ADRs
are designed for trading in the U.S. securities markets, EDRs are designed for
trading in European securities markets and GDRs are designed for trading in
non-U.S. securities markets. ADRs, EDRs, CDRs and GDRs may be available for
investment through "sponsored" or "unsponsored" facilities. A sponsored facility
is established jointly by the issuer of the security underlying the receipt and
a depositary, whereas an unsponsored facility may be established by a depositary
without participation by the issuer of the receipt's underlying security.
Holders of an unsponsored depositary receipt generally bear all the costs of the
unsponsored facility. The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through to the holders of the
receipts voting rights with respect to the deposited securities.

ASSET BACKED SECURITIES. The Funds may invest in asset-backed securities
including company receivables, truck and auto loans, leases, and credit card
receivables. These securities, like mortgage-backed securities, represent
ownership of a pool of obligations. The payment of principal and interest on
non-mortgage asset-backed securities may be guaranteed up to certain amounts and
for a certain time period by a letter of credit issued by a financial
institution (such as a bank or insurance company) unaffiliated with the issuers
of such securities. In addition, these issues typically have a short to
intermediate maturity structure depending on the paydown characteristics of the
underlying financial assets that are passed through to the security holder. The
purchase of non-mortgage asset-backed securities raises risk considerations
peculiar to the financing of the instruments underlying such securities. For
example, due to the manner in which the issuing organizations may perfect their
interests in their respective obligations, there is a risk that another party
could acquire an interest in the obligations superior to that of the holders of
the asset-backed securities. Also, in most states the security interest in a
motor vehicle must be noted on the certificate of title to perfect a security
interest against competing claims of other parties. Due to the large number of
vehicles involved, however, the certificate of title to each vehicle financed,
pursuant to the obligations underlying the asset-backed securities, usually is
not amended to reflect the assignment of the seller's security interest for the
benefit of the holders of the asset-backed securities. Therefore, the
possibility exists that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. In addition,
various state and Federal laws give the motor vehicle owner the right to assert
against the holder of the owner's obligation certain defenses such owner would
have against the seller of the motor vehicle. The assertion of such defenses
could reduce payments on the related asset-backed securities. Insofar as credit
card receivables are concerned, credit card holders are entitled to the
protection of a number of state and Federal consumer credit laws, many of which
give such holders the right to set off certain amounts against balances owned on
the credit card, thereby reducing the amounts paid on such receivables. In
addition, unlike most other asset-backed securities, credit card receivables are
unsecured obligations of the card holder. Asset-backed securities entail
prepayment risk, which may vary depending on the type of asset but is generally
less than the prepayment risk associated with mortgage-backed securities.

The development of non-mortgage asset-backed securities is at an earlier
stage than that of mortgage-backed securities. While the market for asset-backed
securities is becoming increasingly liquid, the market for non-mortgage
asset-backed securities is not as well developed as that for mortgage-backed
securities guaranteed by government agencies or instrumentalities. The Advisor
intends to limit purchases of non-mortgage asset-backed securities to securities
that are readily marketable at the time of purchase.

BANKERS' ACCEPTANCES. Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. They are used by corporations
to finance the shipment and storage of goods and to furnish dollar exchange.
Maturities are generally six months or less.

CERTIFICATES OF DEPOSIT. Certificates of deposit are interest-bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and

S-17
<PAGE>
normally can be traded in the secondary market prior to maturity. Certificates
of deposit with penalties for early withdrawal will be considered illiquid.

COMMERCIAL PAPER. Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a few to 270 days.

CONVERTIBLE SECURITIES. Convertible securities are corporate securities
that are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both fixed
income and equity securities. Because of the conversion feature, the market
value of convertible securities tends to move with the market value of the
underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer and any call
provisions.

CURRENCY TRANSACTIONS. The International Equity Fund and High Yield Bond
Fund may engage in currency transactions with counterparties in order to hedge
the value of portfolio holdings denominated in particular currencies against
fluctuations in relative value. Currency transactions include forward currency
contracts, exchange listed currency futures and options thereon, exchange listed
and OTC options on currencies, and currency swaps. A forward currency contract
involves a privately negotiated obligation to purchase or sell (with delivery
generally required) a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded in the
interbank market conducted directly between currency traders (usually large,
commercial banks) and their customers. A forward foreign currency contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A currency swap is an agreement to exchange cash flows based
on the notional difference among two or more currencies and operates similarly
to an interest rate swap, which is described below. A Fund may enter into
currency transactions with counterparties which have received (or the guarantors
of the obligations of which have received) a credit rating of A-1 or P-1 by S&P
or Moody's, respectively, or that have an equivalent rating from an NRSRO or
(except for OTC currency options) are determined to be of equivalent credit
quality by the Advisor.

A Fund's dealings in forward currency contracts and other currency
transactions such as futures, options on futures, options on currencies and
swaps will be limited to hedging involving either specific transactions
("Transaction Hedging") or portfolio positions ("Position Hedging"). Transaction
Hedging is entering into a currency transaction with respect to specific assets
or liabilities of a Fund, which will generally arise in connection with the
purchase or sale of its portfolio securities or the receipt of income therefrom.
A Fund may enter into Transaction Hedging out of a desire to preserve the U.S.
dollar price of a security when it enters into a contract for the purchase or
sale of a security denominated in a foreign currency. A Fund will be able to
protect itself against possible losses resulting from changes in the
relationship between the U.S. dollar and foreign currencies during the period
between the date the security is purchased or sold and the date on which payment
is made or received by entering into a forward contract for the purchase or
sale, for a fixed amount of dollars, of the amount of the foreign currency
involved in the underlying security transactions.

Position Hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency. A
Fund may use Position Hedging when the Advisor, believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar. A Fund may enter into a forward foreign currency contract to sell, for a
fixed amount of dollars, the amount of foreign currency approximating the value
of some or all of its portfolio securities denominated in such foreign currency.
The precise matching of the forward foreign currency contract amount and the
value of the portfolio securities involved may not have a perfect correlation
since the future value of the securities hedged will change as a consequence of
market between the date the forward contract is entered into and the date its
matures. The projection of short-term currency market movement is difficult, and
the successful execution of this short-term hedging strategy is uncertain.

S-18
<PAGE>
A Fund will not enter into a transaction to hedge currency exposure to an
extent greater, after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.

A Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which that Fund has or in which that Fund
expects to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, a Fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which a Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and to buy U.S. dollars. The amount of the contract
would not exceed the value of the Fund's securities denominated in linked
currencies. For example, if the Advisor considers that the Swedish krone is
linked to the Euro, the Fund holds securities dominated in krone and the Advisor
believes that the value of the krone will decline against the U.S. dollar, the
Advisor may enter into a contract to sell Euros and buy dollars. Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to a Fund
if the currency being hedged fluctuates in value to a degree in a direction that
is not anticipated. Furthermore, there is risk that the perceived linkage
between various currencies may not by present or may not be present during the
particular time that a Fund is engaging in proxy hedging. If a Fund enters into
a currency hedging transaction, the Fund will comply with the asset segregation
requirements described below.

RISK OF CURRENCY TRANSACTIONS. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchase and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy. Although forward foreign currency contracts and currency
futures tend to minimize the risk of loss due to a decline in the value of the
hedged currency, at the same time they tend to limit any potential gain which
might result should the value of such currency increase.

DERIVATIVES. Derivatives are securities that derive their value from other
securities, financial instruments or indices. The following are considered
derivative securities: options on futures, futures, options (E.G.,puts and
calls), swap agreements, mortgage-backed securities (E.G.,CMOs, REMICs,
interest-only class ("IOs") and principal-only class ("POs")), when-issued
securities and forward commitments, floating and variable rate securities,
convertible securities, "stripped" U.S. Treasury securities (E.G., Receipts and
STRIPs), and privately issued stripped securities (E.G., TGRs, TRs and CATs).
See elsewhere in this "Description of Permitted Investments" for discussions of
these various instruments, and see "Investment Limitations" for more information
about any investment policies and limitations applicable to their use.

S-19
<PAGE>
EQUITY SECURITIES. Equity securities represent ownership interests in a
company and consist of common stocks, preferred stocks, warrants to acquire
common stock and securities convertible into common stock. Investments in equity
securities in general are subject to market risks that may cause their prices to
fluctuate over time. The value of convertible equity securities is also affected
by prevailing interest rates, the credit quality of the issuer and any call
provision. Fluctuations in the value of equity securities in which a Fund
invests will cause the net asset value of a Fund to fluctuate.

FIXED INCOME SECURITIES. Fixed income securities consist of bonds, notes,
debentures and other interest-bearing securities that represent indebtedness.
The market value of the fixed income investments in which a Fund invests will
change in response to interest rate changes and other factors. During periods of
falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of these securities will not necessarily affect cash income derived
from these securities but will affect a Fund's net asset value.

FOREIGN SECURITIES. The Funds may invest in the securities of foreign
issuers, and each reserves the right to invest up to 25% of its assets in
foreign equity securities denominated in foreign currencies, except for the
International Equity Fund which will invest at least 65% of its assets in
foreign equity securities. The Funds may also invest in EDRs, CDRs and GDRs.
These instruments may subject the Funds to investment risks that differ in some
respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in currency exchange rates, or the adoption
of other foreign governmental restrictions which might adversely affect the
payment of principal and interest on such obligations. Such investments may also
entail higher custodial fees and sales commission than domestic investments.
Foreign issuers of securities or obligations are often subject to accounting
treatment and engage in business practices different from those respecting
domestic issuers of similar securities or obligations. Foreign branches of U.S.
banks and foreign banks may be subject to less stringent reserve requirements
than those applicable to domestic branches of U.S. banks. In addition, foreign
markets may be characterized by lower liquidity, greater price volatility, less
regulation and higher transaction costs than U.S. markets.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Fund may enter into
contracts for the purchase or sale of securities, including index contracts. A
purchase of a futures contract means the acquisition of a contractual right to
obtain delivery to the Fund of the securities called for the by the contract at
a specified price during a specified future month. When a futures contract on
securities is sold, a Fund incurs a contractual obligation to deliver the
securities underlying the contract at a specified price on a specified date
during a specified future month. A Fund may sell stock index futures contracts
in anticipation of, or during, a market decline to attempt to offset the
decrease in market value of its common stocks that might otherwise result; and
it may purchase such contracts in order to offset increases in the cost of
common stocks that it intends to purchase. A Fund may enter into futures
contracts and options thereon to the extent that not more than 5% of the Fund's
assets are required as futures contract margin deposits and premiums on options
and may engage in futures contracts to the extent that obligations relating to
such futures contracts represent not more than 20% of the Fund's total assets.

A Fund may also purchase and write options to buy or sell futures contracts.
A Fund may write options on futures only on a covered basis. Options on futures
are similar to options on securities except that options on futures give the
purchaser the right, in return for the premium paid, to assume a position in

S-20
<PAGE>
a futures contract, rather than actually to purchase or sell the futures
contract, at a specified exercise price at any time during the period of the
option.

A Fund's ability to effectively utilize futures contracts depends on several
factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying securities,
financial instruments or indices. In addition, the purchase of a futures
contract involves the risk that a Fund could lose more than the original margin
deposit required to initiate a futures transaction.

In considering the proposed use of futures contracts, particular note should
be taken that futures contracts relate to the anticipated levels at some point
in the future, not to the current level of the underlying instruments; thus, for
example, trading of stock index futures may not reflect the trading of the
securities which are used to formulate an index or even actual fluctuations in
the relevant index itself. There is, in addition, a risk that movements in the
price of futures contracts will not correlate with the movement in prices of the
stock index being tracked. There may be several reasons unrelated to the value
of the underlying securities which causes this situation to occur. First, all
participants in the futures market are subject to initial and variation margin
requirements. This amount is maintained in a segregated account at the custodian
bank. If, to avoid meeting additional margin deposit requirements or for other
reasons, investors choose to close a significant number of futures contracts
through offsetting transactions, distortions in the normal price relationship
between the securities markets and futures markets may occur. Second, because
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market, there may be increased participation by
speculators in the futures market which may also cause temporary price
distortions.

A Fund will enter into such futures and options on futures transactions on
domestic exchanges and, to the extent such transactions have been approved by
the Commodity Futures Trading Commission for sale to customers in the United
States, on foreign exchanges. Options and futures can be volatile investments
and involve certain risks. If the Advisor applies a hedge at an inappropriate
time or judges interest rates incorrectly options and futures strategies may
lower a Fund's return. A Fund could also experience losses if the prices of its
options and futures positions were poorly correlated with its other instruments,
or if it could not close out its positions because of an illiquid secondary
market.

No price is paid upon entering into futures contracts. Instead, a Fund is
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a futures contract.

The SIMT Fund has undertaken to restrict its futures contract trading as
follows: First, the SIMT Fund will not engage in transactions in futures
contracts for speculative purposes. Second, the SIMT Fund will not market itself
to the public as a commodity pool or otherwise as a vehicle for trading in the
commodities futures or commodity options markets. Third, the SIMT Fund will
disclose to all prospective shareholders the purpose and limitations on its
commodity futures trading. Fourth, the SIMT Fund will submit to the Commodity
Futures Trading Commission ("CFTC") special calls for information. Accordingly,
registration as a commodities pool operator with the CFTC is not expected to be
required.

ILLIQUID SECURITIES. All Funds may invest in illiquid securities up to the
limits described in the Investment Limitations section of this Statement of
Additional Information. An illiquid security is a security which cannot be
disposed of within seven days in the usual course of business at approximately
the price at which it is being carried on a Fund's books, and includes
repurchase agreements maturing in more than seven days, time deposits with a
withdrawal penalty, non-negotiable instruments and instruments for which no
market exists.

S-21
<PAGE>
INVESTMENT COMPANIES. A Fund may invest up to 10% of its total assets in
shares of other investment companies. Because of restrictions on direct
investment by U.S. entities in certain countries, investment in other investment
companies may be the most practical or only manner in which an international and
global fund can invest in the securities markets of those countries. Such
investments may involve the payment of substantial premiums above the net asset
value of such issuers' fund securities, and are subject to limitations under the
1940 Act.

A Fund does not intend to invest in other investment companies unless, in
the judgment of the Advisor, the potential benefits of such investment exceed
the associated costs relative to the benefits and costs associated with direct
investments in the underlying securities. As a shareholder in an investment
company, a Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. The High Yield Bond
Fund and Equity Index Fund invest 100% of their assets in other investment
companies under master-feeder arrangements, as discussed in the appropriate
prospectus.

JUNK BONDS. Bonds rated below investment grade are often referred to as
"junk bonds." Such securities involve greater risk of default or price declines
than investment grade securities due to changes in the issuer's creditworthiness
and the outlook for economic growth. The market for these securities may be less
active, causing market price volatility and limited liquidity in the secondary
market. This may limit a Fund's ability to sell such securities at their market
value. In addition, the market for these securities may also be adversely
affected by legislative and regulatory developments. Credit quality in the junk
bond market can change suddenly and unexpectedly, and even recently issued
credit ratings may not fully reflect the actual risks imposed by a particular
security.

The SIMT Fund will primarily invest in lower-rated bonds commonly referred
to as "junk bonds" or high-yield/high-risk securities. These securities are
rated "Ba" or lower by Moody's or "BB" or lower by S&P, Fitch Investors
Services, Inc. ("Fitch"), Duff & Phelps, Inc. ("Duff"), IBCA Limited ("IBCA")
and Thomson BankWatch ("Thomson"). These ratings indicate that the obligations
are speculative and may be in default. See the Appendix for a description of the
foregoing agencies' ratings.

CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES. The
descriptions below are intended to supplement the discussion of risks contained
in the appropriate Prospectus.

GROWTH OF HIGH-YIELD BOND, HIGH-RISK BOND MARKET. The widespread expansion
of government, consumer and corporate debt within the U.S. economy has made the
corporate sector more vulnerable to economic downturns or increased interest
rates. Further, an economic downturn could severely disrupt the market for lower
rated bonds and adversely affect the value of outstanding bonds and the ability
of the issuers to repay principal and interest.

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES. Lower rated bonds are
very sensitive to adverse economic changes and corporate developments. During an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals, and to obtain additional financing. If the issuer
of a bond defaulted on its obligations to pay interest or principal or entered
into bankruptcy proceedings, a Fund may incur losses or expenses in seeking
recovery of amounts owed to it. In addition, periods of economic uncertainty and
change can be expected to result in increased volatility of market prices of
high-yield, high-risk bonds and a Fund's net asset value.

PAYMENT EXPECTATIONS. High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these provisions in a declining interest
rate market, a Fund would likely have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely, a
high-yield, high-risk bond's value will decrease in a rising interest rate
market, as will the value of the Fund's assets. If a Fund experiences
significant unexpected net redemptions, this may force it to sell

S-22
<PAGE>
high-yield, high-risk bonds without regard to their investment merits, thereby
decreasing the asset base upon which expenses can be spread and possibly
reducing the Fund's rate of return.

LIQUIDITY AND VALUATION. There may be little trading in the secondary
market for particular bonds, which may adversely affect a Fund's ability to
value accurately or dispose of such bonds. Adverse publicity and investor
perception, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.

LEGISLATION. Federal laws require the divestiture by federally insured
savings and loan associations of their investments in lower rated bonds and
limit the deductibility of interest by certain corporate issuers of high yield
bonds. These laws could adversely affect a Fund's net asset value and investment
practices, the secondary market for high-yield securities, the financial
condition of issuers of these securities and the value of outstanding high-yield
securities.

TAXES. The Funds may purchase debt securities (such as zero-coupon or
pay-in-kind securities) that contain original issue discount. Original issue
discount that accrues in a taxable year is treated as earned by a Fund and
therefore is subject to the distribution requirements of the Internal Revenue
Code of 1986, as amended (the "Code"). Because the original issue discount
earned by a Fund in a taxable year may not be represented by cash income, the
Funds may have to dispose of other securities and use the proceeds to make
distributions to shareholders.

MONEY MARKET SECURITIES. Money market securities include short-term U.S.
Government Securities; custodial receipts evidencing separately traded interest
and principal components of securities issued by the U.S. Treasury; commercial
paper rated in the highest short-term rating category by an NRSRO or determined
by the Advisor to be of comparable quality at the time of purchase; short-term
bank obligations (certificates of deposit, time deposits and bankers'
acceptances) of U.S. commercial banks with assets of at least $1 billion as of
the end of their most recent fiscal year; and repurchase agreements involving
such securities.

MORTGAGE-BACKED SECURITIES. The Funds may invest in mortgage-backed
securities issued or guaranteed by U.S. Government agencies or instrumentalities
such as the Government National Mortgage Association ("GNMA"), Fannie Mae and
the Federal Home Loan Mortgage Corporation ("FHLMC") and privately issued
mortgage-backed securities. Obligations of GNMA are backed by the full faith and
credit of the U.S. Government. Obligations of Fannie Mae, FHLMC and Federal Home
Loan Banks are not backed by the full faith and credit of the U.S. Government
but are considered to be of high quality since they are considered to be
instrumentalities of the United States. The market value and interest yield of
these mortgage-backed securities can vary due to market interest rate
fluctuations and early prepayments of underlying mortgages. These securities
represent ownership in a pool of federally insured mortgage loans with a maximum
maturity of 30 years. However, due to scheduled and unscheduled principal
payments on the underlying loans, these securities have a shorter average
maturity and, therefore, less principal volatility than a comparable 30-year
bond. The scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. Government
mortgage-backed securities differ from conventional bonds in that principal is
paid back to the certificate holders over the life of the loan rather than at
maturity. As a result, there will be monthly scheduled payments of principal and
interest. In addition, there may be unscheduled principal payments representing
prepayments on the underlying mortgages.

Although these securities may offer yields higher than those available from
other types of U.S. Government securities, mortgage-backed securities may be
less effective than other types of securities as a means of "locking in"
attractive long-term rates because of the prepayment feature. For instance, when
interest rates decline, the value of these securities likely will not rise as
much as comparable debt securities due to the prepayment feature. In addition,
these prepayments can cause the price of a mortgage-backed security originally
purchased at a premium to decline in price to its par value, which may result in
a loss.

S-23
<PAGE>
Since prepayment rates vary widely, it is not possible to predict accurately
the average maturity of a particular mortgage-backed security. In the absence of
a known maturity, market participants generally refer to an estimated average
life. An average life estimate is a function of an assumption regarding
anticipated prepayment patterns, based upon current interest rates, current
conditions in the relevant housing markets and other factors. The assumption is
necessarily subjective, and thus different market participants can produce
different average life estimates with regard to the same security. There can be
no assurance that estimated average life will be a security's actual average
life.

GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are GNMA, Fannie Mae and FHLMC. Fannie Mae and FHLMC obligations are
not backed by the full faith and credit of the U.S. Government as GNMA
certificates are, but Fannie Mae and FHLMC securities are supported by the
instrumentalities right to borrow from the U.S. Treasury. GNMA, Fannie Mae and
FHLMC each guarantees timely distributions of interest to certificate holders.
GNMA and Fannie Mae also each guarantees timely distributions of scheduled
principal. FHLMC has in the past guaranteed only the ultimate collection of
principal of the underlying mortgage loan; however, FHLMC now issues
mortgage-backed securities (FHLMC Gold PCS) which also guarantee timely payment
of monthly principal reductions. Government and private guarantees do not extend
to the securities value, which is likely to vary inversely with fluctuations in
interest rates.

PRIVATE PASS-THROUGH SECURITIES These are mortgage-backed securities issued
by a non-governmental entity, such as a trust. These securities include CMOs and
REMICs that are rated in one of the top two rating categories by an NRSRO. While
they are generally structured with one or more types of credit enhancement,
private pass-through securities typically lack a guarantee by an entity having
the credit status of a governmental agency or instrumentality.

CMOs. The Funds may also invest in mortgage-backed securities issued by
non-governmental entities. The mortgage-backed securities the Funds may purchase
are CMOs and REMICs that are rated in one of the two top categories by S&P or
Moody's and which are backed solely by GNMA certificates or other mortgage
pass-throughs issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. CMOs are securities collateralized by mortgages, mortgage
pass-throughs, mortgage "pay-through" bonds (bonds representing an interest in a
pool of mortgages where the cash flow generated from the mortgage collateral
pool is dedicated to bond repayment), and "mortgage-backed" bonds (general
obligations of the issuers payable out of the issuers' general funds and
additionally secured by a first lien on a pool of single family detached
properties). Many CMOs are issued with a number of classes or series which have
different maturities and are retired in sequence.

Investors purchasing such CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligation is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-throughs to be prepaid prior to their
stated maturity. Although some of the mortgages underlying CMOs may be supported
by various types of insurance, and some CMOs may be backed by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by U.S. Government agencies
or instrumentalities, the CMOs themselves are not generally guaranteed by U.S.
Government agencies or instrumentalities.

REMICs. REMICs are private entities formed for the purpose of holding a
fixed pool of mortgages secured by an interest in real property. REMICs are
similar to CMOs in that they issue multiple classes of securities.

PARALLEL PAY SECURITIES; PAC BONDS: Parallel pay CMOs and REMICs are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are

S-24
<PAGE>
taken into account in calculating the stated maturity date or final distribution
date of each class, which must be retired by its stated maturity date or final
distribution date, but may be retired earlier. Planned Amortization Class CMOs
("PAC Bonds") generally require payments of a specified amount of principal on
each payment date. PAC Bonds are always parallel pay CMOs with the required
principal payment on such securities having the highest priority after interest
has been paid to all classes.

REITs: REITs are trusts that invest primarily in commercial real estate or
real estate-related loans. The value of interests in REITs may be affected by
the value of the property owned or the quality of the mortgages held by the
trust.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured
with two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments and is thus termed an IO while the other class may
receive all of the principal payments and is thus termed the PO. The value of
IOs tends to increase as rates rise and decrease as rates fall; the opposite is
true of POs. SMBs are extremely sensitive to changes in interest rates because
of the impact thereon of prepayment of principal on the underlying mortgage
securities and can experience wide swings in value in response to changes in
interest rates and associated mortgage prepayment rates. During times when
interest rates are experiencing fluctuations, such securities can be difficult
to price on a consistent basis. The market for SMBs is not as fully developed as
other markets; SMBs therefore may be illiquid.

MUNICIPAL SECURITIES. Municipal securities include:

MUNICIPAL NOTES consist of general obligation notes, tax anticipation notes
(notes sold to finance working capital needs of the issuer in anticipation of
receiving taxes on a future date), revenue anticipation notes (notes sold to
provide needed cash prior to receipt of expected non-tax revenues from a
specific source), bond anticipation notes, certificates of indebtedness, demand
notes and construction loan notes.

MUNICIPAL BONDS consist of general obligation bonds, revenue or special
obligation bonds and private activity bonds, the interest paid on which is
excludable from Federal income tax. Private activity bonds are issued by or on
behalf of states or political subdivisions thereof to finance privately-owned or
operated facilities for business and manufacturing, housing, sports, and
pollution control and to finance activities of and facilities for charitable
institutions. Private activity bonds are also used to finance public facilities
such as airports, mass transit systems, ports, parking and low-income housing.
The payment of the principal and interest on private activity bonds is not
backed by a pledge of tax revenues and is dependent solely on the ability of the
facility's operator to meet its financial obligations and may be secured by a
pledge of real and personal property so financed.

The Funds may also purchase variable and floating rate demand notes and
synthetic variable rate demand notes. Investments in such floating rate
instruments will normally involve industrial development or revenue bonds which
provide that the rate of interest is set as a specific percentage of a
designated base rate (such as the prime rate) at a major commercial bank, and
that the Fund involved can demand payment of the obligation at all times or at
stipulated dates on short notice (not to exceed 30 days) at par plus accrued
interest. Such obligations are frequently secured by letters of credit or other
credit support arrangements provided by banks. The Advisor will monitor the
earning power, cash flow and liquidity ratios of the issuers of such instruments
and the ability of an issuer of a demand instrument to pay principal and
interest on demand. The Funds may also purchase participation interests in
municipal securities (such as industrial development bonds and municipal
lease/purchase agreements). A participation interest gives the Fund an undivided
interest in the underlying municipal security. If it is unrated, the
participation interest will be backed by an irrevocable letter of credit or
guarantee of a creditworthy financial institution or the payment obligation
otherwise will be collateralized by U.S. Government securities. Participation
interests may have fixed, variable or floating rates of interest and may include
a demand feature. A participation interest without a demand feature or a
participation interest or demand

S-25
<PAGE>
note with a demand feature exceeding seven days may be deemed to be an illiquid
security subject to each Fund's investment limitations restricting its purchases
of illiquid securities. The Advisor may purchase other types of tax-exempt
instruments as long as they are of a quality equivalent to the bond or
commercial paper ratings applicable to each Fund and satisfy other applicable
requirements.

NEW JERSEY MUNICIPAL SECURITIES AND SPECIAL CONSIDERATIONS RELATING
THERETO. The New Jersey Municipal Securities Fund invests primarily in the
obligations of New Jersey State government and various local governments,
including counties, cities, special districts, agencies and authorities. In
general, the credit quality and credit risk of any issuer's debt depend on the
state and local economy, the health of the issuer's finances, the amount of the
issuer's debt, the quality of management, and the strength of legal provisions
in debt documents that protect debt holders. Credit risk is usually lower
wherever the economy is strong, growing and diversified; financial operations
are sound; and the debt burden is reasonable.

New Jersey is the ninth largest state in population and the fifth smallest
in land area. With an average of 1,077 persons per square mile, it is the most
densely populated of all the states. New Jersey is located at the center of the
megalopolis which extends from Boston to Washington, and which includes over
one-fifth of the country's population. This central location in the northeastern
corridor, the transportation and port facilities and proximity to New York City
make the State an attractive location for corporate headquarters and
international business offices. A number of Fortune Magazine's top 500 companies
maintain headquarters or major facilities in New Jersey.

The State's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural areas
with selective commercial agriculture. New Jersey has the Atlantic seashore on
the east and lakes and mountains in the north and northwest, which provide
recreation for residents as well as for out-of-state visitors. Since 1976,
casino gambling in Atlantic city has been an important State tourist attraction.

Between 1980 and 1990, New Jersey's annual population growth was 0.51
percent and between 1990 and 1997, it accelerated slightly to .53 percent. While
this rate of growth is less than that for the United States, it compares
favorably with other Middle Atlantic States. New York has shown a 0.11 percent
annual rate of increase since 1990 and Pennsylvania's population has increased
0.16 percent per year. Historically, New Jersey's average per capita income has
been well above the national average. In 1997 the State ranked second among all
the states in per capita personal income at $32,654, compared to a national
average of $25,598.

The onset of the national recession (which officially began in July 1990
according to the National Bureau of Economic Research) caused an acceleration of
New Jersey's job losses in construction and manufacturing. In addition, the
national recession caused an employment downturn in such previously growing
sectors as wholesale trade, retail trade, finance, utilities, trucking and
warehousing. Reflecting the downturn, the rate of unemployment in the State rose
from a low of 4.1% for 1989 to 8.5% in 1992, which was greater than the national
average of 7.5% for that year. Improvement has been slow but steady. New
Jersey's unemployment rate dropped to 5.0% in June 1998 versus the national
average of 4.5% at that time.

In its seventh year of expansion, the State has benefited and will continue
to benefit from national growth. While the latest national indicators show that
economic growth strongly accelerated during the first quarter of 1998, the
inflation rate remained low. After a robust economic growth of 5.5% in the first
quarter of 1998, inflation-adjusted gross domestic product slowed to 1.4% in the
second quarter. This second quarter pace is slower, but is positive and more
sustainable.

Business investment expenditures and consumer spending have increased
substantially in the nation as well as in the State. Capital and consumer
spending may continue to rise due to the sustained character of economic growth
and the interest-sensitive homebuilding industry may continue to provide
stimulus both

S-26
<PAGE>
nationally and in New Jersey. It is expected that the employment and income
growth that has and is taking place will lead to further growth in State
consumer outlays.

Looking further ahead, prospects for New Jersey are favorable. While growth
is likely to be slower than in the nation, the locational advantages that have
served New Jersey well for many years will still be there. Structural changes
that have been going on for years can be expected to continue, with job creation
concentrated most heavily in the service industries.

The primary method for State financing of capital projects is through the
sale of the general obligation bonds of the State. These bonds are backed by the
full faith and credit of the State tax revenues and certain other fees are
pledged to meet the principal and interest payments and if provided, redemption
premium payments, if any, required to repay the bonds. General obligation debt
must be approved by voter referendum and is used primarily to finance various
environmental, transportation, correctional and institutional projects. As of
June 30, 1998, the state's outstanding general obligation debt totaled $3.6
billion. The debt service obligation for such outstanding indebtedness was $484
million for fiscal year 1998.

The State operates on a fiscal year beginning July 1 and ending June 30. On
June 30, 1998, Governor Whitman signed the New Jersey Legislature's $18.1
billion budget for fiscal year 1999. As part of the fiscal year 1999 budget, the
State enacted additional tax cuts. The State closed recent fiscal years with
surpluses in the general fund (the fund into which all State revenues not
otherwise restricted by statute are deposited and from which appropriations are
made) of $569.2 million in 1995, $442 million in 1996, $280.5 million in 1997,
and $143.9 million in 1998. It is estimated that fiscal year 1999 will end with
a surplus of $199 million.

All outstanding general obligation bonds of New Jersey are rated "AA+" by
S&P, "Aa1" by Moody's and "AA+" by Fitch. The ratings reflect only the views of
the rating agencies.

PENNSYLVANIA MUNICIPAL SECURITIES AND SPECIAL CONSIDERATIONS RELATING
THERETO. The Pennsylvania Municipal Securities Fund invests primarily in the
obligations of Pennsylvania state government, state agencies and various local
governments, including counties, cities, townships, special districts, and
authorities. In general, the credit quality and credit risk of any issuer's debt
depend on the state and local economy, the health of the issuer's finances, the
amount of the issuer's debt, the quality of management, and the strength of
legal provisions in debt documents that protect debt holders. Credit risk is
usually lower wherever the economy is strong, growing and diversified; financial
operations are sound; and the debt burden is reasonable.

The Commonwealth of Pennsylvania is one of the most populous states, ranking
fifth behind California, New York, Texas and Florida. Pennsylvania is an
established yet growing state with a diversified economy, and is the
headquarters for many major corporations. Pennsylvania had been historically
identified as a heavy industry state. That reputation has changed over the last
thirty years as the coal, steel and railroad industries declined and the
Commonwealth's business environment readjusted to reflect a more diversified
industrial base. This economic readjustment was a direct result of a long-term
shift in jobs, investment and workers away from the northeast part of the
nation. Currently, the major sources of growth in Pennsylvania are in the
service sector, including trade, medical and health services, education, and
financial institutions. Pennsylvania's workforce is estimated at 5.9 million
people, ranking as the sixth largest labor pool in the nation. The high level of
education embodied in the Commonwealth's work force fosters a wide variety of
employment capabilities with the State's basic and higher education statistics
comparing favorably with other states in the nation.

The Commonwealth is highly urbanized. Of the Commonwealth's 1990 census
population, 79 percent resided in the 15 Metropolitan Statistical Areas ("MSAs")
of the Commonwealth. The largest MSAs in the Commonwealth are those which
include the cities of Philadelphia and Pittsburgh, which together contain almost
44 percent of the State's total population. The population of Pennsylvania,
12.02 million people in 1997, according to the U.S. Bureau of the Census,
represents a slight increase from the 1988 population of 11.85 million. A high
proportion of Pennsylvania's population is comprised of persons 65 and over.

S-27
<PAGE>
Non-agricultural employment in Pennsylvania over the ten years ending in
1997 increased at an annual rate of 0.76 percent, compared to a 0.17 percent
rate for the Middle Atlantic region and 1.69 percent for the U.S. during the
period 1988 through 1997. For the five years ending with 1997, employment in the
Commonwealth has increased 5.4 percent, which is higher than the 4.8 percent
growth in the Middle Atlantic region during this period. Non-manufacturing
employment in Pennsylvania has increased in recent years to 82.7 percent of
total employment in 1997. Consequently, manufacturing employment constitutes a
diminished share of total employment within the Commonwealth.

In 1994 and 1995, Pennsylvania's annual average unemployment rate was below
the Middle Atlantic Region's average, but slightly higher than that of the
United States. As of October 1998, the most recent month for which data is
available, the seasonally adjusted unemployment rate for the Commonwealth was
4.7 percent, compared to 4.6 percent for the United States.

Personal income in the Commonwealth for 1997 is $308.6 billion, an increase
of 4.5 percent over the previous year. During the same period, national personal
income increased at a rate of 5.7 percent. Based on the 1997 personal income
estimates, per capita income for 1997 is at $25,678 in the Commonwealth compared
to per capita income in the United States of $25,298.

Commonwealth revenues (prior to tax refunds) during the 1998 fiscal year
totaled $18,123.2 million, $676.1 million (3.9 percent) above the estimate made
at the time the budget was enacted. Tax revenue received in fiscal 1998 grew 4.8
percent over tax revenues received during fiscal 1997. This rate of increase
includes the effect of legislated tax reductions that affected receipts during
both fiscal years and therefore understates the actual underlying rate of growth
of tax revenue during fiscal 1998. Expenditures from all fiscal 1998
appropriations of Commonwealth revenues totaled $17,229.8 million (excluding
pooled financing expenditures and net of current year lapses). This amount
represents an increase of 4.5 percent over fiscal 1997 appropriation
expenditures.

The unappropriated balance of Commonwealth revenues increased during the
1998 fiscal year by $86.4 million to $488.7 million at June 30, 1998 (prior to
reserves for transfer to the Tax Stabilization Reserve Fund). Higher than
estimated revenues, offset in part by increased reserves for tax refunds, and
slightly lower expenditures than budgeted were responsible for the increase.
Transfers to the Tax Stabilization Reserve Fund for fiscal 1998 operations will
total $223.3 million, consisting of $73.3 million representing the required
transfer of fifteen percent of the ending unappropriated surplus balance, plus
an additional $150 million authorized by the General Assembly when it enacted
the fiscal 1999 budget. With these transfers, the balance in the Tax
Stabilization Reserve Fund will exceed $664 million and represent 3.7 percent of
fiscal 1998 revenues.

By law, the Governor must submit a balanced operating budget and while the
General Assembly may change items, the Governor retains a line-item veto power.
Total appropriations cannot exceed estimated revenues, also taking into account
any deficit or surplus remaining from the previous year. When adjusted to
include the estimated effect of enacted tax changes, fiscal 1999 Commonwealth
revenues are projected to increase by 1.66 percent over actual Commonwealth
revenues for fiscal 1998. Tax reductions included in the enacted 1999 fiscal
year budget totaled an estimated $241.0 million for fiscal 1999 and reserves for
tax refunds for fiscal 1999 total $603.9 million. Appropriations enacted for
fiscal 1999 are 4.1 percent ($705.1 million) above the appropriations enacted
for fiscal 1998 (including supplemental appropriations). The enacted fiscal 1999
budget assumes the draw down of the $265.4 million beginning budgetary balance
by $143.9 million to an estimated closing balance, prior to transfer of the
required portion to the Tax Stabilization Reserve Fund, of $124.3 million. For
the fiscal year through October 1998, Commonwealth revenues are $69.2 million,
or 1.3 percent above estimate for the period.

All outstanding general obligation bonds of the Commonwealth are rated AA by
S&P, Aa3 by Moody's and AA by Fitch. The ratings reflect only the views of the
rating agencies.

S-28
<PAGE>
OPTIONS. A put option gives the purchaser of the option the right to sell,
and the writer of the option the obligation to buy, the underlying security at
any time during the option period. A call option gives the purchase of the
option the right to buy, and the writer of the option the obligation to sell,
the underlying security at any time during the option period. The premium paid
to the writer is the consideration for undertaking the obligations under the
option contract. The initial purchase (sale) of an option contract is an
"opening transaction." In order to close out an option position, a Fund may
enter into a "closing transaction," which is simply the sale (purchase) of an
option contract on the same security with the same exercise price and expiration
date as the option contract originally opened.

A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to protect against an
increase in the cost of securities that the Fund may seek to purchase in the
future. A Fund pays a premium for purchasing put and call options. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for a Fund, loss of the premium paid may be offset by an
increase in the value of the Fund's securities or by a decrease in the cost of
acquisition of securities by the Fund.

A Fund may write covered put and call options as a means of increasing the
yield on its portfolio and as a means of providing limited protection against
decrease in its market value. When a Fund sells an option, if the underlying
securities do not increase or decrease to a price level that would make the
exercise of the option profitable to the holder thereof, the option generally
will expire without being exercised and the Fund will realize as profit the
premium received for such option. When a call option of which a Fund is the
writer is exercised, the Fund will be required to sell the underlying securities
to the option holder at the strike price, and will not participate in any
increase in the price of such securities above the strike price. When a put
option of which a Fund is the writer is exercised, the Fund will be required to
purchase the underlying securities at the strike price, which may be in excess
of the market value of such securities.

A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation and therefore entail the risk of nonperformance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are illiquid.

A Fund may purchase and write put and call options on foreign currencies
(traded on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on securities or foreign currency
written by a Fund will be covered with an equal amount of the underlying
security or foreign currency or other liquid assets and/or cash. With respect to
put options on securities or foreign currency written by a Fund, the Fund will
establish a segregated account with its custodian bank consisting of liquid
assets and/or cash in an amount equal to the amount the Fund would be required
to pay upon exercise of the put.

A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of a Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.

S-29
<PAGE>
All options written on indices must be covered. When a Fund writes an option
on an index, it will establish a segregated account containing liquid assets
and/or cash with its custodian in an amount at least equal to the market value
of the option and will maintain the account while the option is open or will
otherwise cover the transaction.

RISK FACTORS. Risks associated with options transactions 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; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.

RECEIPTS. The Funds may invest in receipts. Interests in separately traded
interest and principal component parts of U.S. Government obligations that are
issued by banks or brokerage firms and are created by depositing U.S. Government
obligations into a special account at a custodian bank. The custodian holds the
interest and principal payments for the benefit of the registered owners of the
certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Receipts include "Treasury Receipts" ("TRs"), "Treasury Investment Growth
Receipts" ("TIGRs"), and "Certificates of Accrual on Treasury Securities"
("CATS"). TIGRs and CATS are interests in private proprietary accounts while TRs
and STRIPS are interests in accounts sponsored by the U.S. Treasury. Receipts
are sold as zero coupon securities; for more information, see "Zero Coupon
Securities."

REPURCHASE AGREEMENTS. The Funds may invest in repurchase agreements.
Repurchase agreements are agreements by which a person (E.G., a portfolio)
obtains a security and simultaneously commits to return the security to the
seller (a financial institution deemed to present minimal risk of bankruptcy
during the term of the agreement based on guidelines established by the Trustees
of the Trust) at an agreed upon price (including principal and interest) on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an agreed
upon market rate of interest which is unrelated to the coupon rate or maturity
of the underlying security. A repurchase agreement involves the obligation of
the seller to pay the agreed upon price, which obligation is in effect secured
by the value of the underlying security.

Repurchase agreements are considered to be loans by a Fund for purposes of
its investment limitations. The repurchase agreements entered into by the Funds
will provide that the underlying security at all times shall have a value at
least equal to 102% of the resale price stated in the agreement (the Advisor
monitors compliance with this requirement). Under all repurchase agreements
entered into by the Funds, a Fund takes actual or constructive possession of the
underlying collateral. However, if the seller defaults, a Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale including accrued interest are less than the resale price provided in the
agreement including interest. In addition, even though the United States
Bankruptcy Code provides protection for most repurchase agreements, if the
seller should be involved in bankruptcy or insolvency proceedings, a Fund may
incur delay and costs in selling the underlying security or may suffer a loss of
principal and interest if a Fund is treated as an unsecured creditor and
required to return the underlying security to the seller's estate.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS. Investments by a money
market fund are subject to limitations imposed under regulations adopted by the
SEC. Under these regulations, money market funds may only acquire obligations
that present minimal credit risks and that are "eligible securities," which
means they are (i) rated, at the time of investment, by at least two NRSROs (one
if it is the only organization rating such obligation) in the highest short-term
rating category or, if unrated, determined to be of comparable quality (a "first
tier security"), or (ii) rated according to the foregoing criteria in the second
highest short-term rating category or, if unrated, determined to be of
comparable quality ("second tier security"). Investments in second tier
securities (second tier conduit securities for the Tax-Exempt

S-30
<PAGE>
Money Market Fund) are subject to the further constraint that (i) no more than
5% of a Fund's assets may be invested in such securities in the aggregate, and
(ii) any investments in such securities of one issuer is limited to the greater
of 1% of a Fund's total assets or $1 million. A taxable money market fund may
hold more than 5% of its assets in the first tier securities of a single issuer
for three business days. A security is not considered to be unrated if its
issuer has outstanding obligations of comparable priority and security that have
a short-term rating. The Advisor will determine that an obligation presents
minimal credit risks or that unrated instruments are of comparable quality in
accordance with guidelines established by the Trustees. The securities that
money market funds may acquire may be supported by credit enhancements, such as
demand features or guarantees. SEC regulations limit the percentage of
securities that a money market fund may hold for which a single issuer provides
credit enhancements.

RESTRICTED SECURITIES. Each of the Funds may invest in restricted
securities. Restricted securities are securities that may not be sold freely to
the public absent registration under the Securities Act of 1933, as amended (the
"1933 Act"), or an exemption from registration. Section 4(2) commercial paper is
issued in reliance on an exemption from registration under Section 4(2) of the
1933 Act, and is generally sold to institutional investors who purchase for
investment. Any resale of such commercial paper must be an exempt transaction,
usually to an institutional investor through the issuer or investment dealers
who make a market on such commercial paper. Rule 144A securities are securities
re-sold in reliance on an exemption from registration provided by Rule 144A
under the 1933 Act.

SECURITIES OF FOREIGN ISSUERS. There are certain risks connected with
investing in foreign securities. These include risks of adverse political and
economic developments, the possible imposition of exchange controls or other
governmental restrictions, less uniformity in accounting and reporting
requirements, the possibility that there will be less information on such
securities and their issuers available to the public, the difficulty of
obtaining or enforcing court judgments abroad, restrictions on foreign
investments in other jurisdictions, difficulties in effecting repatriation of
capital invested abroad and difficulties in transaction settlements and the
effect of delay on shareholder equity. Foreign securities may be subject to
foreign taxes, and may be less marketable than comparable U.S. securities. Also
it may be more difficult to obtain a judgment in a court outside the United
States.

SECURITIES LENDING. Each Fund may lend securities pursuant to agreements
requiring that the loans be continuously secured by cash, U.S. Government
securities, or any combination of cash and such securities, as collateral equal
at all times to at least 100% of the market value of the securities lent. Such
loans will not be made if, as a result, the aggregate amount of all outstanding
securities loans for the Fund exceed one-third of the value of a Fund's total
assets taken at fair market value. A Fund will continue to receive interest or
dividends on the securities lent while simultaneously earning interest on the
investment of the cash collateral in U.S. Government securities. However, a Fund
will normally pay lending fees to such broker-dealers and related expenses from
the interest earned on invested collateral. There may be risks of delay in
receiving additional collateral or risks of delay in recovery of the securities
if the borrowers fail financially. However, loans are made only to borrowers
deemed by the Advisor to be of good standing and when, in the judgment of the
Advisor, the consideration which can be earned currently from such securities
loans justifies the attendant risk. Any loan may be terminated by either party
upon reasonable notice to the other party. The Funds may use SEI Investments
Distribution Co. ("SEI Investments" or the "Distributor") or a broker/dealer
affiliate of the Advisor as a broker in these transactions.

STANDBY COMMITMENTS AND PUTS. The Funds may purchase securities at a price
which would result in a yield to maturity lower than that generally offered by
the seller at the time of purchase when they can simultaneously acquire the
right to sell the securities back to the seller, the issuer, or a third party
(the "writer") at an agreed-upon price at any time during a stated period or on
a certain date. Such a right is generally denoted as a "standby commitment" or a
"put." The purpose of engaging in transactions involving standby commitments or
puts is to maintain flexibility and liquidity to permit the Funds to meet
redemptions and remain as fully invested as possible in municipal securities.
The right to put the securities

S-31
<PAGE>
depends on the writer's ability to pay for the securities at the time the put is
exercised. The Funds will limit their put transactions to institutions which the
Advisor believes present minimum credit risks, and the Advisor will use its best
efforts to initially determine and continue to monitor the financial strength of
the sellers of the options by evaluating their financial statements and such
other information as is available in the marketplace. It may, however, be
difficult to monitor the financial strength of the writers because adequate
current financial information may not be available. In the event that any writer
is unable to honor a put for financial reasons, the Fund would be a general
creditor (i.e., on a parity with all other unsecured creditors) of the writer.
Furthermore, particular provisions of the contract between the Fund and the
writer may excuse the writer from repurchasing the securities; for example, a
change in the published rating of the underlying municipal securities or any
similar event that has an adverse effect on the issuer's credit or a provision
in the contract that the put will not be exercised except in certain special
cases, for example, to maintain portfolio liquidity. A Fund could, however, at
any time sell the underlying portfolio security in the open market or wait until
the portfolio security matures, at which time it should realize the full par
value of the security.

Municipal Securities purchased subject to a put may be sold to third persons
at any time, even though the put is outstanding, but the put itself, unless it
is an integral part of the security as originally issued, may not be marketable
or otherwise assignable. Therefore, the put would have value only to the Fund.
The sale of the securities to a third party or the lapse of a certain period of
time with the put unexercised may terminate the right to put the securities.
Prior to the expiration of any put option, the Fund could seek to negotiate
terms for the extension of such an option. If such a renewal cannot be
negotiated on terms satisfactory to the Fund, the Fund could, of course, sell
the portfolio security. The maturity of the underlying security will generally
be different from that of the put. There will be no limit to the percentage of
portfolio securities that a Fund may purchase subject to a standby commitment or
put, but the amount paid directly or indirectly for all standby commitments and
puts, which are not integral parts of the security as originally issued, held in
the Fund will not exceed 1/2 of 1% of the value of the total assets of such Fund
calculated immediately after any such put is acquired.

STOCK INDEX FUTURES. The Funds may invest in stock index futures as
permitted in the Investment Limitations section of this Statement of Additional
Information. The nature of initial and variation margin in futures transactions
is different from that of margin in security transactions in that futures
contract margin does not involve the borrowing of funds to finance the
transactions. Rather, the margin is in the nature of a performance bond or
good-faith deposit on the contract that is returned to the Fund upon termination
of the contract, assuming all contractual obligations have been satisfied.
Positions in futures contracts may be closed only on an exchange or board of
trade providing a secondary market for such futures contracts. The value of the
contract usually will vary in direct proportion to the total face value. Market
value of a stock index futures position is defined as the closing value of the
index multiplied by 500 times the number of contracts held.

A Fund's ability to effectively utilize futures contracts depends on several
factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index. In
addition, the purchase of a futures contract involves the risk that the Fund
could lose more than the original margin deposit required to initiate a futures
transaction.

S-32
<PAGE>
through offsetting transactions, distortions in the normal price relationship
between the securities markets and futures markets may occur. Second, because
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market, there may be increased participation by
speculators in the futures market which may also cause temporary price
distortions.

The SIF Fund has undertaken to restrict its futures contract trading as
follows: First, the SIF Fund will not engage in transactions in futures
contracts for speculative purposes. Second, the SIF Fund will not market itself
to the public as a commodity pool or otherwise as a vehicle for trading in the
commodities futures or commodity options markets. Third, the SIF Fund will
disclose to all prospective shareholders the purpose and limitations on its
commodity futures trading. Fourth, the SIF Fund will submit to the Commodity
Futures Trading Commission ("CFTC") special calls for information. Accordingly,
registration as a commodities pool operator with the CFTC is not expected to be
required.

TAXABLE MUNICIPAL SECURITIES. Taxable Municipal Securities are municipal
securities the interest on which is not exempt from Federal income tax. Taxable
Municipal Securities include "private activity bonds" that are issued by or on
behalf of states or their political subdivisions to finance privately-owned or
operated facilities for business and manufacturing, housing, sports, and
pollution control and to finance activities of, and facilities for, charitable
institutions. Private activity bonds are also used to finance public facilities
such as airports, mass transit systems, ports, parking lots and low income
housing. The payment of principal and interest on private activity bonds is not
backed by a pledge of tax revenues, and is dependent solely on the ability of
the facility's operator to meet its financial obligations, and may be secured by
a pledge of the financial real and/or personal property.

TIME DEPOSITS. Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or that
mature in more than seven days are considered to be illiquid securities.

U.S. GOVERNMENT AGENCIES. Obligations issued or guaranteed by agencies of
the U.S. Government, including, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage Corporation, the Federal
Land Banks and the U.S. Postal Service. Some of these securities are supported
by the full faith and credit of the U.S. Treasury, others are supported by the
right of the issuer to borrow from the Treasury, while still others are
supported only by the credit of the instrumentality. Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be a guarantee of
payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing on
the obligation prior to maturity. Guarantees as to the timely payment of
principal and interest do not extend to the value or yield of these securities
nor to the value of a Fund's shares.

U.S. TREASURY OBLIGATIONS. U.S. Treasury obligations consist of bills,
notes and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS").

VARIABLE AND FLOATING RATE INSTRUMENTS. Certain obligations may carry
variable or floating rates of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. The
interest

S-33
<PAGE>
rates on these securities may be reset daily, weekly, quarterly or some other
reset period, and may have a floor or ceiling on interest rate changes. There is
a risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such security.

VARIABLE AMOUNT MASTER DEMAND NOTES. The Funds may invest in variable
amount master demand notes which may or may not be backed by bank letters of
credit. These notes permit the investment of fluctuating amounts at varying
market rates of interest pursuant to direct arrangements between the Trust, as
lender, and the borrower. Such notes provide that the interest rate on the
amount outstanding varies on a daily, weekly or monthly basis depending upon a
stated short-term interest rate index. Both the lender and the borrower have the
right to reduce the amount of outstanding indebtedness at any time. There is no
secondary market for the notes. It is not generally contemplated that such
instruments will be traded.

WARRANTS. Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.

WHEN-ISSUED SECURITIES. The Funds may acquire fixed income and equity
securities on a when-issued basis, in which case delivery and payment normally
take place within 45 days after the date of commitment to purchase. The Funds
will only make commitments to purchase obligations on a when-issued basis with
the intention of actually acquiring the securities, but may sell them before the
settlement date. The when-issued securities may be subject to market
fluctuation, and no interest accrues to the purchaser on a fixed income security
to the purchaser during this period. The payment obligation and the interest
rate that will be received on the fixed income securities are each fixed at the
time the purchaser enters into the commitment. Purchasing obligations on a
when-issued basis is a form of leveraging and can involve a risk that the yields
available in the market when the delivery takes place may actually be higher
than those obtained in the transaction itself. In that case there could be an
unrealized loss at the time of delivery.

Segregated accounts will be established with the Funds' custodian and the
Funds will maintain liquid assets and/or cash in an amount at least equal in
value to the Funds' commitments to purchase when-issued securities. If the value
of these assets declines, the Funds will place additional liquid assets in the
account on a daily basis so that the value of the assets in the account is at
all times equal to the amount of such commitments.

YANKEE OBLIGATIONS. Yankee obligations are U.S. dollar-denominated
instruments of foreign issuers who either register with the Securities and
Exchange Commission or issue under Rule 144A under the Securities Act of 1933.
These obligations consist of debt securities (including preferred or preference
stock of non-governmental issuers), certificates of deposit, fixed time deposits
and bankers' acceptances issued by foreign banks, and debt obligations of
foreign governments or their subdivisions, agencies and instrumentalities,
international agencies and supranational entities. Some securities issued by
foreign governments or their subdivisions, agencies and instrumentalities may
not be backed by full faith and credit of the foreign government.

ZERO COUPON SECURITIES. The Funds may invest in zero coupon securities.
STRIPS and receipts (TRs, TIGRs and CATS) are sold as zero coupons securities,
that is, fixed income securities that have been stripped of their unmatured
interest coupons. Zero coupon securities are sold at a (usually substantial)
discount and redeemed at face value at their maturity date without interim cash
payments of interest or principal. The amount of this discount is accreted over
the life of the security, and the accretion constitutes the income earned on the
security for both accounting and tax purposes. Because of these features, the
market prices of zero coupon securities are generally more volatile than the
market prices of securities that have similar maturity but that pay interest
periodically. Zero coupon securities are likely to respond to a greater degree
to interest rate changes than are non-zero coupon securities with similar
maturity and credit qualities.

S-34
<PAGE>
Corporate zero coupon securities are: (i) notes or debentures which do not
pay current interest and are issued at substantial discounts from par value, or
(ii) notes or debentures that pay no current interest until a stated date one or
more years into the future, after which the issuer is obligated to pay interest
until maturity, usually at a higher rate than if interest were payable from the
date of issuance and may also make interest payments in kind (e.g., with
identical zero coupon securities). Such corporate zero coupon securities, in
addition to the risks identified above, are subject to the risk of the issuer's
failure to pay interest and repay principal in accordance with the terms of the
obligation. A Fund must accrete the discount or interest on high-yield bonds
structured as zero coupon securities as income even though it does not receive a
corresponding cash interest payment until the security's maturity or payment
date. A Fund may have to dispose of its securities under disadvantageous
circumstances to generate cash, or may have to leverage itself by borrowing cash
to satisfy distribution requirements. A Fund accrues income with respect to the
securities prior to the receipt of cash payments.

INVESTMENT LIMITATIONS

I. INVESTMENT LIMITATIONS OF THE TRUST

The following investment limitations are fundamental policies of each Fund
which cannot be changed with respect to a Fund without the consent of the
holders of a majority of that Fund's outstanding shares. The term "majority of
the outstanding shares" means the vote of (i) 67% or more of a Fund's shares
present at a meeting, if more than 50% of the outstanding shares of a Fund are
present or represented by proxy, or (ii) more than 50% of a Fund's outstanding
shares, whichever is less.

Each Fund may not:

1. Each Fund may not acquire more than 5% of the voting securities of any one
issuer. The Equity Growth Fund, Equity Value Fund, Equity Income Fund, Mid
Cap Fund, Balanced Fund, International Equity Fund, Fixed Income Fund, New
Jersey Municipal Securities Fund and Pennsylvania Municipal Securities Fund
may not, with respect to 75% of the Fund's assets, acquire more than 10% of
any class of the outstanding voting securities of any one issuer (other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities).

2. Invest in companies for the purpose of exercising control; provided, that
this limitation does not apply to the Equity Growth Fund, International
Equity Fund, High Yield Bond Fund or Equity Index Fund.

3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of total assets. For the Equity Growth
Fund, Equity Value Fund, Equity Income Fund, Mid Cap Fund, Balanced Fund,
Fixed Income Fund, New Jersey Municipal Securities Fund and Pennsylvania
Municipal Securities Fund the amount borrowed may not exceed 33 1/3% of the
value of total assets. Any borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value of the Fund's assets,
asset coverage of at least 300% is required. In the event that such asset
coverage shall at any time fall below 300%, the Fund shall, within three
days thereafter or such longer period as the Securities and Exchange
Commission ("SEC") may prescribe by rules and regulations, reduce the amount
of its borrowings to such an extent that the asset coverage of such
borrowings shall be at least 300%. This borrowing provision is included for
temporary liquidity or emergency purposes. All borrowings in excess of 5% of
the value of a Fund's total assets will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.

4. Pledge, mortgage or hypothecate assets except to secure temporary borrowings
permitted by (3) above in aggregate amounts not to exceed 10% of total
assets taken at current value at the time of the incurrence of such loan,
except as permitted with respect to securities lending.

5. Purchase or sell real estate, real estate limited partnership interests,
futures contracts, commodities or commodities contracts; provided that this
shall not prevent a Fund from investing in readily marketable securities of
issuers which own or invest in real estate, or commodities or commodities
contracts;

S-35
<PAGE>
and provided that the Equity Growth, Equity Value, Equity Income, Equity
Index, Mid Cap, Balanced, Fixed Income, New Jersey Municipal Securities,
Pennsylvania Municipal Securities, High Yield Bond and International Equity
Funds can invest in futures contracts, commodities and commodities
contracts.

6. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits as
necessary for the clearance of security transactions.

7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a Fund security.

8. Purchase securities of other investment companies except as permitted by the
1940 Act, as amended, and the rules and regulations thereunder. Under these
rules and regulations, as currently in effect, a Fund is generally
prohibited from acquiring the securities of other investment companies if,
as a result of such acquisition, the Fund owns more than 3% of the total
voting stock of the company; securities issued by any one investment company
represent more than 5% of the Fund's total assets; or securities (other than
treasury stock) issued by all investment companies represent more than 10%
of the Fund's total assets. The 1940 Act and the rules and regulations
thereunder permit feeder funds to invest up to 100% of their assets in
corresponding master funds.

9. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.

10. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or any
investment advisor of the Trust owns beneficially more than 1/2 of 1% of
the shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 1/2 of 1% of such shares or
securities together own more than 5% of such shares or securities; provided
that limitation does not apply to the Equity Growth Fund, International
Equity, High Yield Bond and Equity Index Funds.

11. Make loans, except that a Fund may (a) purchase or hold debt instruments in
accordance with its investment objective and policies; (b) enter into
repurchase agreements; and (c) engage in securities lending.

Each Non-Money Market Fund may not:

1. Purchase securities of any issuer (except securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase
agreements involving such securities) if, as a result, more than 5% of the
total assets of the Fund would be invested in the securities of such issuer.
This restriction applies to 75% of each Fund's total assets. This
restriction does not apply to the New Jersey Municipal Securities and
Pennsylvania Municipal Securities Funds.

2. Purchase any securities which would cause more than 25% of the total assets
of any Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in the
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and repurchase agreements involving such securities or,
with respect to the Fixed Income Funds only, to investments in tax-exempt
securities issued by governments or political subdivisions of governments.
For purposes of this limitation, (i) utility companies will be classified
according to their services, for example, gas, gas transmissions, electric
and telephone will each be considered a separate industry; (ii) financial
services companies will be classified according to the end users of their
services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; (iii) with respect to
the Balanced and Equity Funds, only, supranational agencies will be deemed
to be issuers conducting their principal business activities in the same
industry; and (iv) with respect to the Equity

S-36
<PAGE>
and Balanced Funds only, governmental issuers within a particular country
will be deemed to be conducting their principal business activities in the
same industry.

Each Money Market Fund may not:

The foregoing percentage limitations apply at the time of the purchase of a
security.

Notwithstanding the foregoing, each of the High Yield Bond and Equity Index
Funds may invest up to 100% of its assets in another investment company, or
series thereof, with substantially similar investment objectives, policies and
limitations.

The investment objectives are fundamental policies of each Fund. In
addition, it is a fundamental policy of the New Jersey Municipal Securities and
Pennsylvania Municipal Securities Funds to invest at least 80% of their
respective total assets in municipal securities. It is a fundamental policy of
each Money Market Fund to use its best efforts to maintain a constant net asset
value of $1.00 per share although there can be no assurance the Fund will be
able to do so. It is also a fundamental policy of the Tax-Exempt Money Market
Fund to invest at least 80% of its assets in municipal securities.

NON-FUNDAMENTAL POLICIES. The following investment policies are
non-fundamental policies that may be changed by the Board of Trustees without
shareholder approval.

No Fund may:

1. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases; provided that this limitation does
not apply to the Equity Growth Fund.

2. Except for the High Yield Bond, Equity Index, Equity Growth and
International Equity, Equity Value, Equity Income, Mid Cap and Balanced
Funds, write or purchase puts, calls, options, warrants, or combinations
thereof; except that (i) the Tax-Exempt Money Market, New Jersey Municipal
Securities and Pennsylvania Municipal Securities Funds may purchase
securities subject to a put and (ii) the Equity Value, Equity Income, Mid
Cap and Balanced Funds may purchase warrants. However, the Equity Value,
Equity Income, Mid Cap and Balanced Funds each may not invest more than 5%
of its net assets in warrants; provided that of this 5%, no more than 2% may
be in warrants not listed on the New York Stock Exchange or the American
Stock Exchange.

The following non-fundamental policies are additional policies with respect
to the Equity Growth, International Equity, High Yield Bond and Equity Index
Funds only.

The Equity Growth, International Equity, High Yield Bond and Equity Index
Funds may not:

1. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or any
investment advisor of the Trust owns beneficially more than 1/2 of 1% of the
shares or securities of such issuer and all such officers, trustees,
partners and directors owning

S-37
<PAGE>
more than 1/2 of 1% of such shares or securities together own more than 5%
of such shares or securities.

2. Invest in companies for the purpose of exercising control.

The foregoing percentages apply at the time of the purchase of a security.

It is a non-fundamental policy of each Money Market Fund to invest no more
than 10% of its net assets in illiquid securities (as defined under "Description
of Permitted Investments"). It is a non-fundamental policy of each Non-Money
Market Fund to invest no more than 15% of its net assets in illiquid securities.

II. INVESTMENTS LIMITATIONS OF THE SIMT FUND

The following investment limitations are fundamental policies of the SIMT
Fund (or the "Portfolio") which cannot be changed without the consent of the
holders of a majority of the SIMT Fund's outstanding shares. The term "majority
of the outstanding shares" means the vote of (i) 67% or more of the SIMT Fund's
shares present at a meeting, if more than 50% of the outstanding shares of the
SIMT Fund are present or represented by proxy, or (ii) more than 50% of the SIMT
Fund's outstanding shares, whichever is less.

The SIMT Fund may not:

1. Make loans if, as a result, more than 33 1/3% of its total assets would be
loaned to other parties, except that the Portfolio may (i) purchase or hold
debt instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) lend its securities.

2. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the Portfolio may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.

3. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the SEC.

4. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

5. Invest in interests in oil, gas, or other mineral exploration or development
programs and oil, gas or mineral leases.

The foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess or deficiency
occurs immediately after or as a result of a purchase of such security. These
investment limitations and the investment limitations in SIMT's prospectus are
fundamental policies of SIMT and may not be changed without shareholder
approval.

NON-FUNDAMENTAL POLICIES. The following investment policies are
non-fundamental policies that may be changed by SIMT's Board of Trustees without
shareholder approval.

The SIMT Fund may not:

1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Portfolio's fundamental limitation on borrowing.

2. Invest in companies for the purpose of exercising control.

3. Purchase securities on margin or effect short sales, except that the
Portfolio may (i) obtain short term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin

S-38
<PAGE>
payments in connection with transactions involving futures contracts and
options on such contracts; and (iii) make short sales "against the box" or
in compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.

4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act or an order of exemption therefrom.

5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.

6. Purchase securities which are not readily marketable, if, in the aggregate,
more than 15% of its total assets would be invested in such securities.

Under rules and regulations established by the SEC, an investment company is
typically prohibited from acquiring the securities of other investment companies
if, as a result of such acquisition, the investment company owns more than 3% of
the total voting stock of the company; securities issued by any one investment
company represent more than 5% of the total investment company's assets; or
securities (other than treasury stock) issued by all investment companies
represent more than 10% of the total assets of the investment company. However,
certain investment companies may rely upon SEC exemptive orders which permit the
investment company to invest in other investment companies beyond these
percentage limitations. An investment company's purchase of such securities
results in the bearing of expenses such that shareholders would indirectly bear
a proportionate share of the operating expenses of such investment companies,
including advisory fees.

Each of the foregoing percentage limitations (except with respect to the
limitation on investing in illiquid securities) apply at the time of purchase.

III. INVESTMENT LIMITATIONS OF THE SIF FUND

The following investment limitations are fundamental policies of the SIF
Fund (or the "Portfolio") which cannot be changed without the consent of the
holders of a majority of the SIF Fund's outstanding shares. The term "majority
of the outstanding shares" means the vote of (i) 67% or more of the SIF Fund's
shares present at a meeting, if more than 50% of the outstanding shares of the
SIF Fund are present or represented by proxy, or (ii) more than 50% of the SIF
Fund's outstanding shares, whichever is less.

The SIF Fund may not:

1. Pledge, mortgage or hypothecate assets, except to secure temporary
borrowings as described in the SIF Fund prospectus in aggregate amounts not
to exceed 10% of the net assets of the Portfolio taken at current value at
the time of the incurrence of such loan and in connection with stock index
futures trading as provided in SIF's prospectus and Statement of Additional
Information.

2. Invest in companies for the purpose of exercising control.

3. Purchase or sell real estate, real estate limited partnership interests,
physical commodities or commodities contracts. However, subject to its
permitted investments, the Portfolio may purchase (i) obligations issued by
companies which invest in real estate, commodities or commodities contracts,
and (ii) commodities contracts related to financial instruments, such as
financial futures contracts.

4. Make short sales of securities, maintain a short position or purchase
securities on margin, except that SIF may obtain short-term credits as
necessary for the clearance of security transactions.

5. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

S-39
<PAGE>
6. Purchase securities of other investment companies except as permitted by the
1940 Act and the rules and regulations thereunder and may only purchase
securities of money market funds.

7. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described in the SIF S&P 500 Index Portfolio
prospectus and SIF's Statement of Additional Information or as permitted by
rule, regulation or order of the SEC.

8. Purchase or retain securities of an issuer if, to the knowledge of SIF, an
officer, trustee, partner or director of SIF or any investment advisor of
SIF owns beneficially more than 1/2 of 1% of the shares or securities of
such issuer and all such officers, trustees, partners and directors owning
more than 1/2 of 1% of such shares or securities together own more than 5%
of such shares or securities.

9. Purchase securities of any company which has (with predecessors) a record of
less than three years continuing operations if, as a result, more than 5% of
the total assets (taken at current value) would be invested in such
securities.

10. Purchase warrants, puts, calls, straddles, spreads or combinations thereof.

11. Invest in interests in oil, gas or other mineral exploration or development
programs.

12. Purchase restricted securities (securities which must be registered under
the Securities Act of 1933 before they may be offered or sold to the
public) or other illiquid securities except as described in SIF's
prospectus and Statement of Additional Information.

The foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of a purchase of such
security. These investment limitations and the investment limitations in SIF's
Prospectus are fundamental policies of SIF and may not be changed without
shareholder approval.

S-40
<PAGE>
MANAGEMENT OF THE TRUST

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select
Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Oak Associates Funds, The Parkstone Group of Funds, The PBHG Funds, Inc., PBHG
Advisor Funds, Inc., PBHG Insurance Series Fund, Inc., SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional International Trust, SEI Institutional Managed Trust,
SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic
Variable Trust and TIP Funds, each of which is an open-end management investment
company managed by SEI Investments Mutual Funds Services or its affiliates and,
except for PBHG Advisor Funds, Inc., distributed by SEI Investments Distribution
Co.

JAMES B. GRECCO--Trustee--Date of Birth: 02/17/33--President, Grecco Auto Body
Inc. (1986-present); President, Grecco Auto Imports, Inc. (1970-present);
President, Joyce Motor Corp. (1979-present); President, Grecco Auto Leasing Inc.
(1964-present); President, Grecco Lincoln Mercury Inc. (1964-present).

CHRISTINE H. YACKMAN--Trustee--Date of Birth: 12/30/61--Executive and Corporate
Officer, Edgeboro Disposal, Inc. and Affiliated Companies (1991-present); Office
Manager, Herbert Sand Co., Inc. (1981-1986).

ARTHUR L. BERMAN--Trustee--Date of Birth: 07/27/27--President of Bertek, Inc.
(1972-1994).

RAY KONRAD--Trustee--Date of Birth: 09/17/36--Chairman and Chief Executive
Officer of American Compressed Gases, Inc. (1961-present).

THOMAS D. SAYLES, JR.--Trustee*--Date of Birth: 01/16/32--Consultant
(1995-present); Chairman of Summit Bank (1971-1995).

ROBERT A. NESHER--Chairman of the Board of Trustees*--Date of Birth:
08/17/46--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Administrator and the
Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund, The Arbor
Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.

MARK E. NAGLE--President and Chief Executive Officer--Date of Birth: 10/20/59.
Vice President of Fund Accounting and Administration for SEI Fund Resources and
Vice President of the Administrator since 1996. Vice President of the
Distributor since December 1997. Vice President, Fund Accounting, BISYS Fund
Services, September 1995 to November 1996. Senior Vice President and Site
Manager, Fidelity Investments 1981 to September 1995.

KEVIN P. ROBINS--Vice President and Assistant Secretary--Date of Birth:
04/15/61--Senior Vice President and General Counsel of SEI Investments, the
Administrator and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Administrator and Distributor since
1994. Vice President, General Counsel and Assistant Secretary of the
Administrator and the Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius
LLP (law firm), 1988-1992.

S-41
<PAGE>
RICHARD W. GRANT--Secretary--Date of Birth: 10/25/45--1701 Market Street,
Philadelphia, PA 19103-2921, Partner of Morgan, Lewis & Bockius LLP (law firm),
counsel to the Trust, Administrator and Distributor.

SANDRA K. ORLOW--Vice President and Assistant Secretary--Date of Birth:
10/18/53--Vice President and Assistant Secretary of the Administrator and
Distributor since 1983.

TODD B. CIPPERMAN--Vice President and Assistant Secretary--Date of Birth:
02/14/66--Vice President and Assistant Secretary of SEI Investments, the
Administrator and the Distributor since 1995. Associate, Dewey Ballantine (law
firm) (1994-1995). Associate, Winston & Strawn (law firm) (1991-1994).

JOSEPH M. O'DONNELL--Vice President and Assistant Secretary--Date of Birth:
01/13/54--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Vice President and General Counsel, FPS Services, Inc.
(1993-1997). Staff Counsel and Secretary, Provident Mutual Family of Funds
(1990-1993).

LYDIA A. GAVALIS--Vice President and Assistant Secretary--Date of Birth:
06/5/64--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange (1989-1998).

LYNDA J. STRIEGEL--Vice President and Assistant Secretary--Date of Birth:
10/30/48--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.
(1997-1998). Partner, Groom and Nordberg, Chartered (1996-1997). Associate
General Counsel, Riggs Bank, N.A. (1991-1995).

KATHY HEILIG--Vice President and Assistant Secretary--Date of Birth:
12/21/58--Treasurer of SEI Investments Company since 1997; Assistant Controller
of SEI Investments Company since 1995; Vice President of SEI Investments Company
since 1991; Director of Taxes of SEI Investments Company 1987 to 1991; Tax
Manager--Arthur Andersen LLP prior to 1987.

JAMES R. FOGGO (DOB 06/30/64)--Vice President and Assistant Secretary--Date of
Birth: 06/30/64-- Vice President and Assistant Secretary of the Administrator
and the Distributor since 1998. Associate, Paul Weiss, Rifkind, Wharton &
Garrison (law firm), 1998. Associate, Baker & McKenzie (law firm), 1995-1998.
Associate, Battle Fowler L.L.P. (law firm), 1993-1995. Operations Manager, The
Shareholder Services Group, Inc., 1986-1990.

CHRISTOPHER F. SALFI--Controller and Chief Financial Officer--Date of Birth:
11/28/63--Director, Fund Accounting, SEI Investments since January 1998; prior
to his current position, served most recently as Fund Accounting Manager of SEI
Investments from 1994 to 1997; Investment Accounting Manager, PFPC from 1993 to
1994; FPS Services, Inc. from 1986 to 1993.

- ------------------------

* "Interested person" within the meaning of the 1940 Act.

The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for Trustees who are not affiliated
with the Administrator. During the fiscal year ended December 31, 1998, the
Trust paid approximately $ in fees to the unaffiliated Trustees.
Compensation of officers and Trustees of the Trust affiliated with the
Administrator is paid by the Administrator.

S-42
<PAGE>
COMPENSATION TABLE

<TABLE>
<CAPTION>
TOTAL COMPENSATION FROM
ESTIMATED REGISTRANT AND FUND COMPLEX
PENSION OR ANNUAL PAID TO TRUSTEES FOR THE
AGGREGATE RETIREMENT BENEFITS BENEFITS FISCAL
COMPENSATION ACCRUED AS PART OF UPON YEAR ENDED DECEMBER 31,
NAME OF PERSON, POSITION FROM REGISTRANT(1) FUND EXPENSES RETIREMENT 1998(2)
- --------------------------------- --------------------- ------------------- ------------- ---------------------------
<S> <C> <C> <C> <C>
Arthur L. Berman, Trustee........ $ N/A N/A $ for services on 1
board
Ray Konrad, Trustee.............. $ N/A N/A $ for services on 1
board
James B. Grecco, Trustee......... $ N/A N/A $ for services on 1
board
Christine H. Yackman, Trustee.... $ N/A N/A $ for services on 1
board
Thomas D. Sayles, Jr., $ N/A N/A $ for services on 1
Trustee(3)....................... board
Robert A. Nesher, Trustee(3)..... $ 0 N/A N/A $0
</TABLE>

- ------------------------

(1) Amounts do not include travel expenses.

(2) There are no other investment companies in the "Fund Complex" (as that term
is defined in the Securities and Exchange Act of 1934, as amended).

(3) Messrs. Sayles and Nesher are "interested persons" as defined in the 1940
Act.

II. TRUSTEES AND OFFICERS OF SIMT AND SIF

The following individuals currently serve as the Trustees and Officers of
SIMT and SIF. For those executive officers who are also officers of the Trust,
only the name and office of the Trustee or officer is set forth below.

ROBERT A. NESHER--Chairman of the Board of Trustees.*

GEORGE J. SULLIVAN, JR.--Trustee--Date of Birth: 11/13/42--General Partner,
Teton Partners, L.P., since 1991; Chief Financial Officer, Noble Partners, L.P.,
since 1991; Treasurer and Clerk, Peak Asset Management, Inc. since 1991;
Trustee, Navigator Securities Lending Trust since 1995. Trustee of SEI Asset
Allocation Trust, SEI Liquid Asset Trust, SEI Daily Income Trust, SEI Tax Exempt
Trust, SEI Index Funds and SEI Institutional Investments Trust.

WILLIAM M. DORAN--Trustee*--Date of Birth: 05/06/40--1701 Market Street,
Philadelphia, PA 19103-2921. Partner, Morgan, Lewis & Bockius LLP (law firm),
counsel to the Trust, Manager and Distributor, Director and Secretary of SEI
Investments and Secretary of the Advisor, Manager and Distributor. Trustee of
The Arbor Fund, The Advisors' Inner Circle Fund, The Expedition Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid Asset
Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, and SEI Tax Exempt Trust.

F. WENDELL GOOCH--Trustee**--Date of Birth: 12/03/32--P.O. Box 190, Paoli, IN
47454. President, Orange County Publishing Co., Inc., since October 1981.
Publisher of the Paoli News and the Paoli Republican and Editor of the Paoli
Republican since January 1981, President, H & W Distribution, Inc. since July
1984. Trustee of STI Classic Funds.

FRANK E. MORRIS***--Trustee**--Date of Birth: 12/30/23--105 Walpole Street,
Dover, MA 02030. Retired since 1990. Peter Drucker Professor of Management,
Boston College, 1989-1990. President, Federal Reserve Bank of Boston, 1968-1988.
Trustee of The Arbor Fund, The Advisors' Inner Circle Fund,

S-43
<PAGE>
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid
Asset Trust, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI International Trust, and SEI Tax Exempt Trust.

JAMES M. STOREY--Trustee**--Date of Birth: 04/12/31--Retired; Partner, Dechert
Price & Rhoads, from September 1987-December 1993; Trustee of The Arbor Fund,
The Advisors' Inner Circle Fund, The Expedition Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, and SEI Tax Exempt Trust.

EDWARD D. LOUGHLIN--President and Chief Executive Officer--Date of Birth:
03/07/51--Executive Vice President and President--Asset Management Division of
SEI Investments since 1994. Senior Vice President, SEI Investments, 1986-1991;
Vice President, SEI Investments, 1981-1986.

CYNTHIA M. PARRISH--Vice President and Assistant Secretary--Date of Birth:
10/23/59--Vice President and Assistant Secretary of the SEI Investments and the
Distributor since August 1997. Branch Chief, Division of Enforcement, U.S.
Securities and Exchange Commission, January 1995-August 1997. Senior
Counsel--Division of Enforcement, U.S. Securities and Exchange Commission,
September 1992-
January 1995.

MARK E. NAGLE--Controller and Chief Financial Officer.

RICHARD W. GRANT--Secretary.

SANDRA K. ORLOW--Vice President and Assistant Secretary-Vice President,
Assistant Secretary.

KEVIN P. ROBINS--Vice President, Assistant Secretary.

TODD CIPPERMAN--Vice President, Assistant Secretary.

JOSEPH M. O'DONNELL--Vice President, Assistant Secretary.

LYDIA A. GAVALIS--Vice President, Assistant Secretary.

LYNDA J. STRIEGEL--Vice President, Assistant Secretary.

KATHY HEILIG--Vice President, Assistant Secretary.

JAMES R. FOGGO (DOB 06/30/64)--Vice President and Assistant Secretary.

- ------------------------

* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of SIMT as the term is defined in the 1940 Act.

** Messrs. Gooch, Storey, Morris and Sullivan serve as members of the Audit
Committee of the Trust.

[*** MR. MORRIS RETIRED FROM THE BOARD ON DECEMBER 30, 1998.]

S-44
<PAGE>
For the fiscal year ended September 30, 1998, SIMT paid the following
amounts to the Trustees:

<TABLE>
<CAPTION>
TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION PENSION OR REGISTRANT AND FUND COMPLEX
FROM SIMT FOR FISCAL RETIREMENT BENEFITS ESTIMATED PAID TO DIRECTORS FOR
YEAR END SEPTEMBER 30, ACCRUED AS PART OF FUND ANNUAL BENEFITS FISCAL YEAR END SEPTEMBER
NAME OF PERSON AND POSITION 1998 EXPENSES UPON RETIREMENT 30, 1998
- -------------------------------- ----------------------- ----------------------- --------------- ---------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee....... $ 0 $ 0 $ 0 $0
George J. Sullivan, Jr., $ $ 0 $ 0 $ for services on 8
Trustee......................... boards
William M. Doran, Trustee....... $ 0 $ 0 $ 0 $0
F. Wendell Gooch, Trustee....... $ $ 0 $ 0 $ for services on 8
boards
Frank E. Morris, Trustee*....... $ $ 0 $ 0 $ for services on 8
boards
James M. Storey, Trustee........ $ $ 0 $ 0 $ for services on 8
boards
</TABLE>

- ------------------------

* Mr. Morris retired from the Board effective December 30, 1998.

Mr. Edward W. Binshadler serves as a consultant to the Audit Committee and
receives as compensation $5,000 per Audit Committee meeting attended.

For the fiscal year ended March 31, 1998, SIF paid the following amounts to
the Trustees:

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION FROM PENSION OR ESTIMATED TOTAL COMPENSATION FROM
SIF FOR FISCAL RETIREMENT BENEFITS ANNUAL REGISTRANT AND FUND COMPLEX
YEAR END MARCH ACCRUED AS PART OF BENEFITS UPON PAID TO DIRECTORS FOR FISCAL
NAME OF PERSON AND POSITION 31, 1998 FUND EXPENSES RETIREMENT YEAR END MARCH 31, 1998
- ------------------------------- ----------------- ------------------- ------------- -------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee...... $ 0 $ 0 $ 0 $0
George J. Sullivan, Jr., $ $ 0 $ 0 $ for services on 8 boards
Trustee........................
William M. Doran, Trustee...... $ 0 $ 0 $ 0 $0
F. Wendell Gooch, Trustee...... $ $ 0 $ 0 $ for services on 8 boards
Frank E. Morris, Trustee*...... $ $ 0 $ 0 $ for services on 8 boards
James M. Storey, Trustee....... $ $ 0 $ 0 $ for services on 8 boards
</TABLE>

- ------------------------

* Mr. Morris retired from the Board effective December 30, 1998.

Mr. Edward W. Binshadler serves as a consultant to the Audit Committee and
receives as compensation $5,000 per Audit Committee meeting attended.

THE ADVISOR

The Trust and Summit Bank Investment Management Division, a division of
Summit Bank (the "Advisor"), have entered into an advisory agreement (the
"Advisory Agreement") for the Funds. Summit Bank, 210 Main Street, Hackensack,
New Jersey 07601, was chartered in 1899 and has been exercising trust powers and
managing money since 1916. The Investment Management Division began as a
separate operating division of the Bank in 1973. The Bank's investment
professionals have, on average, over 20 years of experience in investment
management. As of December 31, 1998, total assets under management were
approximately $9.5 billion.

S-45
<PAGE>
Summit Bank is a wholly-owned subsidiary of Summit Bancorp, an interstate
bank holding company with approximately $33 billion in assets and 440 banking
offices, predominantly in New Jersey, eastern Pennsylvania and southern
Connecticut, as of December 31, 1998.

The Advisory Agreement provides that the Advisor shall not be protected
against any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard of its obligations or duties thereunder.

The Advisor will not be required to bear expenses of the Trust to an extent
which would result in a Fund's inability to qualify as a regulated investment
company under provisions of the Code.

The continuance of the Advisory Agreement, after the first two years, must
be specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Funds by a majority of the outstanding shares of that Fund, on
not less than 30 days', nor more than 60 days', written notice to the Advisor,
or by the Advisor on 90 days' written notice to the Trust.

The Glass-Steagall Act restricts the securities activities of banks such as
Summit Bank, but federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds. Should this position be
challenged successfully in court or reversed by legislation, the Trust might
have to make other investment advisory arrangements.

For the fiscal years ended December 31, 1996, 1997 and 1998, the Funds paid
the following advisory fees:

<TABLE>
<CAPTION>
FEES PAID (000) FEES WAIVED (000)
---------------------------------- ------------------------------
FUND 1996 1997 1998 1996 1997 1998
- ---------------------------------------- ---------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market
Fund.................................. $1,483,256 $1,647,200 $ 13,685 $ 74,551
Prime Obligation Money Market Fund...... $1,249,323 $1,494,179 $ 59,285 $ 58,224
Tax-Exempt Money Market Fund............ $ 235,721 $ 249,145 $ 19,962 $ 13,948
Institutional Select Money Market
Fund.................................. * $ 9,681 * $ 9,249
U.S. Treasury Securities Plus Money
Market Fund........................... $ 35,739 $ 36,157 $ 65,612 $ 78,082
Fixed Income Fund....................... $ 548,757 $1,152,778 $132,719 $275,261
New Jersey Municipal Securities Fund.... $ 169,521 $ 629,451 $117,210 $193,912
Pennsylvania Municipal Securities
Fund.................................. $ 0 $ 173,734 $ 23,653 $ 55,630
Intermediate-Term Government Securities
Fund.................................. $ 164,062 $ 159,825 $ 20,823 $ 49,402
Equity Growth Fund...................... * $ 809,370 * $460,947
Equity Value Fund....................... $ 503,319 $1,149,769 $300,124 $610,793
Equity Income Fund...................... $ 282,807 $ 587,414 $181,061 $365,524
Mid Cap Fund............................ $ 228,182 $ 241,395 $149,082 $151,223
Balanced Fund........................... $ 161,262 $ 133,549 $110,920 $117,387
International Equity Fund............... $ 103,626 $ 129,179 $ 30,671 $ 31,555
High Yield Bond Fund.................... * * * *
Equity Index Fund....................... * * * *
</TABLE>

- ------------------------

* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.

S-46
<PAGE>
THE SUB-ADVISOR

The Advisor and Vontobel USA Inc., which acts as investment sub-advisor to
the International Equity Fund (the "Sub-Advisor"), have entered into a
sub-advisory agreement (the "Sub-Advisory Agreement"). The Sub-Advisor is a
wholly owned and controlled subsidiary of Vontobel Holding Ltd., a Swiss bank
holding company, having its registered offices in Zurich, Switzerland. As of
December 31, 1998, the Sub-Advisor managed in excess of $ billion. The
Sub-Advisor also acts as the advisor or Sub-Advisor to other mutual funds and to
three series of a Luxembourg fund organized by an affiliate of the Sub-Advisor.
That fund does not accept investments from the U.S.

The address of the Sub-Advisor is 450 Park Avenue, New York, N.Y. 10022.

Mr. Fabrizio Pierallini, who is a Senior Vice President of the Sub-Advisor,
is the portfolio manager of the International Equity Fund since September ,
1998 and has been a portfolio manager at the Sub-Advisor since April 1994. He is
currently in charge of portfolio management and research for the Sub-Advisor's
international and emerging market equity portfolios. From 1991 to 1994, Mr.
Pierallini was an Associate-Director/Portfolio Manager with Swiss Bank
Corporation, New York. From 1988 to 1991, he was a Vice President/Portfolio
Manager with SBC Portfolio Management, Zurich. Mr. Rajiv Jain, who is a Vice
President of the Sub-Advisor, is the associate portfolio manager of the Fund.
Mr. Jain joined the Sub-Advisor in November 1994 and serves as an assistant
portfolio manager for the Sub-Advisor's international and emerging markets
equity portfolios since September , 1998. From 1993 to 1994, Mr. Jain worked
as an analyst with Swiss Bank Corporation, New York.

The Sub-Advisor is entitled to a fee payable by the Advisor from the
Advisor's fee, which is calculated daily and paid monthly, at an annual rate of
.60% of the average daily net assets of the Fund up to and including $50
million, .45% of the average daily net assets of the Fund in excess of $50
million up to and including $150 million; and .30% of the average daily net
assets of the Fund in excess of $150 million. The Sub-Advisor may, from time to
time waive a portion of its fee in order to limit the operating expenses of the
Funds' shares. The Sub-Advisor reserves the right to terminate any such fee
waiver at any time in its sole discretion.

For the fiscal period from January 1, 1998 and ended August 31, 1998, the
Advisor paid Wellington Management Company, LLP, the Fund's prior sub-advisor, a
sub-advisory fee of % of the average daily net assets of the Fund. For the
fiscal period from September 1, 1998 and ended December 31, 1998, the Advisor
paid the Sub-Advisor a sub-advisory fee of % of the average daily net assets
of the Fund.

The Sub-Advisory Agreement provides that the Sub-Advisor shall not be
protected against any liability to the Trust or its shareholders by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder.

The continuance of the Sub-Advisory Agreement, after two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Sub-Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Fund by a majority of the outstanding shares of the Fund on not
less than 30 days', nor more than 60 days', written notice to the Sub-Advisor,
or by the Sub-Advisor on 90 days' written notice to the Trust.

S-47
<PAGE>
For the fiscal periods ended December 31, 1996, 1997 and the fiscal period
from January 1, 1998 and ended August 31, 1998, Wellington Management Company,
LLP, the Fund's prior sub-advisor, received the following fees from the Advisor:

<TABLE>
<CAPTION>
FEES PAID FEES WAIVED
------------------------- ------------------
FUND 1996 1997 1998 1996 1997 1998
- ------------------------------------ ------- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
International Equity Fund*.......... $81,600 $96,000 $ $0 $0 $
</TABLE>

- ------------------------

* Vontobel USA Inc. was appointed the Fund's sub-advisor on June 22, 1998 and
began managing the Fund on September 1, 1998.

For the fiscal period from September 1, 1998 and ended December 31, 1998,
Vontobel USA Inc. received $ from the Advisor.

SIMT FUND

SEI Investments Management Corporation ("SIMC") serves as investment advisor
to the SIMT Fund. SIMC is a wholly-owned subsidiary of SEI Investments Company
("SEI Investments"), a financial services company. The principal business
address of SIMC is Oaks, Pennsylvania 19456. SEI Investments was founded in 1968
and is a leading provider of investment solutions to banks, institutional
investors, investment advisers and insurance companies. Affiliates of SIMC have
provided consulting advice to institutional investors for more than 21 years,
including advice regarding the selection and evaluation of investment advisors.
SIMC currently serves as manager or administrator to more than investment
companies, including more than portfolios, which investment companies have
more than $ billion in assets as of September 30, 1998.

The advisory agreement and the sub-advisory agreement with respect to the
SIMT Fund provide that SIMC and each Money Manager shall not be protected
against any liability to SIMT or its shareholders by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard of its obligations or duties thereunder.

SIMC acts as the investment advisor to the SIMT Fund and operates as a
"manager of managers." As investment advisor, SIMC oversees the investment
advisory services provided to the SIMT Fund and manages the cash portion of the
SIMT Fund's assets. Pursuant to separate sub-advisory agreements with SIMC, and
under the supervision of SIMC and the Board of Trustees, the Money Managers are
responsible for the day-to-day investment management of all or a discrete
portion of the assets of the SIMT Fund. The Money Managers are selected based
primarily upon the research and recommendations of SIMC, which evaluates
quantitatively and qualitatively each of the sub-investment advisor's styles and
strategies. Subject to the SIMT Board's review, SIMC allocates and, when
appropriate, reallocates the SIMT Fund's assets among Money Managers, monitors
and evaluates Money Manager performance, and oversees Money Manager compliance
with the SIMT Fund's investment objective, policies and restrictions. SIMC HAS
THE ULTIMATE RESPONSIBILITY FOR THE INVESTMENT PERFORMANCE OF THE SIMT FUND DUE
TO ITS RESPONSIBILITY TO OVERSEE MONEY MANAGERS AND RECOMMEND THEIR HIRING,
TERMINATION AND REPLACEMENT.

For these advisory services, SIMC is entitled to a fee; which is calculated
daily and paid monthly, at an annual rate of .4875% of the SIMT Fund's average
daily net assets. SIMC pays the Money Managers out of its investment advisory
fee.

For the fiscal year ended September 30, 1998, SIMC received an advisory fee
of .4875% of the SIMT Fund's average daily net assets.

The continuance of the Advisory and Sub-Advisory Agreement must be
specifically approved at least annually (i) by the vote of a majority of the
outstanding shares of the SIMT Fund or by the SIMT Trustees, and (ii) by the
vote of a majority of the Trustees who are not parties to such Agreement or
"interested

S-48
<PAGE>
persons" of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. Each Advisory or Sub-Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the SIMT Trust or, with respect to the
SIMT Fund, by a majority of the outstanding shares of the SIMT Fund, on not less
than 30 days' nor more than 60 days' written notice to the SIMT Fund Advisor (or
Sub-Advisor) or by the SIMT Fund Advisor (or Sub-Advisor) on 90 days' written
notice to the SIMT Trust.

SIMC has obtained an exemptive order from the SEC that permits SIMC, with
the approval of the SIMT's Board of Trustees, to retain unaffiliated
sub-advisors for the SIMT Fund without submitting the sub-advisory agreement to
a vote of the SIMT Fund's shareholders. The exemptive relief permits the
non-disclosure of amounts payable by SIMC under such sub-advisory agreement. The
SIMT Trust will notify shareholders in the event of any change in the identity
of the sub-advisor for the SIMT Fund.

For the fiscal year ended September 30, 1996, 1997 and 1998, the SIMT Fund
paid the following fees to SIMC:

<TABLE>
<CAPTION>
ADVISORY FEES ADVISORY FEES
PAID (000) WAIVED (000)
---------------- ------------------
1996 1997 1998 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SIMT Fund................................... $282 $812 $ $0 $0 $
</TABLE>

BEA Associates ("BEA" or the "Money Manager") currently serves as investment
sub-advisor to the SIMT Fund. BEA is a general partnership organized under the
laws of the State of New York which, together with its predecessor firms, have
been engaged in the investment advisory business for over 50 years.

For the fiscal year ended September 30, 1996, 1997 and 1998, the SIMT Fund
paid the following fees to BEA:

<TABLE>
<CAPTION>
SUB-ADVISORY SUB-ADVISORY FEES
FEES PAID (000) WAIVED (000)
---------------- ------------------
1996 1997 1998 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SIMT Fund................................... $195 $585 $ $0 $0 $
</TABLE>

SIF FUND

World Asset Management ("World") serves as investment advisor to the SIF S&P
500 Index Portfolio.

World is a general partnership organized by Munder Capital Management
("MCM"), a general partnership formed in December 1994, which engages in
investment management and advisory services. As of December 31, 1997, total
assets under management of World were $11.0 billion and assets under management
of MCM were $37.0 billion. The principal address for World is 255 Brown Street
Centre, 2nd Floor, Birmingham, Michigan 48009.

World provides certain record keeping and management services in connection
with the SIF Fund, including monitoring the indexing systems and determining
which securities to purchase and sell in order to keep the SIF Fund in balance
with its index.

The advisory agreement for the SIF Fund ("SIF Advisory Agreement") provides
that the investment advisor, World Asset Management ("World" or the "SIF
Advisor"), shall not be protected against any liability to SIF or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.

The continuance of the SIF Advisory Agreement, after the first two years,
must be specifically approved at least annually (i) by the vote of the Trustees,
and (ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The SIF Advisory
Agreement will terminate

S-49
<PAGE>
automatically in the event of its assignment, and is terminable at any time
without penalty by the Trustees of SIF or, with respect to the SIF Fund by a
majority of the outstanding shares of the SIF Fund, on not less than 30 days',
nor more than 60 days', written notice to World, or by World on 90 days' written
notice to SIF.

World is a general partnership organized by Munder Capital Management, a
general partnership formed in December, 1994, which engages in investment
management and advisory services.

World is entitled to a fee for its investment advisory services, which is
calculated daily and paid monthly, at an annual rate of 0.03% of the average
daily net assets of the SIF Fund. No monthly payment to World shall exceed the
payment actually made to SIMC pursuant to the management agreement between SIMC
and SIF.

For the fiscal years ended March 31, 1996, 1997 and 1998, the SIF Fund paid
the following advisory fees:

<TABLE>
<CAPTION>
ADVISORY FEES
ADVISORY FEES PAID WAIVED
------------------------ ------------------
1996 1997 1998 1996 1997 1998
-------- -------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SIF Fund.............................. $161,179 $234,127 $ $0 $0 $
</TABLE>

THE ADMINISTRATOR

The Trust and SEI Investments Mutual Fund Services (the "Administrator") are
parties to an Administration Agreement. SEI Investments Mutual Funds Services
(the "Administrator") serves as the Administrator of the Trust. The
Administrator provides the Trust with administrative services, other than
investment advisory services, including all regulatory reporting, necessary
office space, equipment, personnel and facilities.

The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .20% of the average daily net assets of each Fund
except: U.S. Treasury Securities Plus Money Market Fund, .35% of the average
daily net assets and Institutional Select Money Market Fund, .10% of the average
daily net assets. The Administrator has agreed to waive its fees for the High
Yield Bond Fund and Equity Index Fund to the extent necessary to maintain the
total operating expenses stated in the Fund Fees and Expenses in the Prospectus.

The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder. The
Administration Agreement shall remain in effect for a period of five years after
the date of the Agreement; thereafter shall continue in effect for a period of
three years; and thereafter for successive periods of two years subject to
review at least annually by the Trustees of the Trust. The Administration
Agreement is also subject to termination by either party on not less than 90
days' written notice to the other party.

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SIMC, a wholly-owned subsidiary of SEI
Investments Company ("SEI Investments"), is the owner of all beneficial interest
in the Administrator. SEI Investments and its subsidiaries and affiliates,
including the Administrator, are leading providers of funds evaluation services,
trust accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers. The Administrator and
its affiliates also serve as administrator or sub-administrator to the following
other mutual funds: The Achievement Funds Trust, The Advisors' Inner Circle
Fund, Alpha Select Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc.,

S-50
<PAGE>
First American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis
Fund, Oak Associates Funds, PBHG Advisor Funds, Inc., The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., SEI Asset Allocation Trust, SEI Daily Income Trust,
SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI Institutional International Trust, SEI Liquid Asset Trust, SEI Tax
Exempt Trust, STI Classic Funds, STI Classic Variable Trust and TIP Funds.

For the fiscal years ended December 31, 1996, 1997 and 1998, the Funds paid
the following administrative fees:

<TABLE>
<CAPTION>
FEES PAID FEES WAIVED
-------------------------- ----------------------
FUND 1996 1997 1998 1996 1997 1998
- --------------------------------------------- -------- -------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market Fund... $855,185 $984,420 $ 0 $ 0
Prime Obligation Money Market Fund........... $747,383 $887,094 $ 0 $ 0
Tax-Exempt Money Market Fund................. $146,103 $150,340 $ 0 $ 0
U.S. Treasury Securities Plus Money Market
Fund....................................... $235,806 $266,568 $ 0 $ 0
Institutional Select Money Market Fund....... * $ 19,094 * $ 0
Fixed Income Fund............................ $227,160 $476,002 $ 0 $ 0
New Jersey Municipal Securities Fund......... $ 86,863 $274,456 $8,714 $ 0
Pennsylvania Municipal Securities Fund....... $ 0 $ 76,478 $7,884 $6,505
Intermediate-Term Government Securities
Fund....................................... $ 61,629 $ 69,742 $ 0 $ 0
Equity Growth Fund........................... * $338,754 * $ 0
Equity Value Fund............................ $214,253 $469,484 $ 0 $ 0
Equity Income Fund........................... $123,705 $254,120 $ 0 $ 0
Mid Cap Fund................................. $100,599 $104,699 $ 0 $ 0
Balanced Fund................................ $ 72,586 $ 66,885 $ 0 $ 0
International Equity Fund.................... $ 26,860 $ 32,086 $ 0 $ 0
High Yield Bond Fund......................... * * * *
Equity Index Fund............................ * * * *
</TABLE>

* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.

THE TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT

State Street Bank and Trust Company (the "Transfer Agent"), 225 Franklin
Street, Boston, Massachusetts 02110 is the Trust's Transfer Agent.

Boston Financial Data Services, Two Heritage Drive, North Quincy,
Massachusetts 02171 is the Trust's dividend disbursing agent and shareholder
servicing agent.

THE SIMT FUND AND SIF FUND'S ADMINISTRATOR AND TRANSFER AGENT

SIMT and SIF each has entered into a "management agreement" ("Management
Agreement") with SEI Investments Fund Management ("SEI Management") to provide
administrative services. Each Management Agreement provides that SEI Management
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by SIMT or SIF, respectively, in connection with the matters to which
such Management Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of SEI Management in the
performance of its duties or from reckless disregard of its duties and
obligations thereunder.

The continuance of each Management Agreement must be specifically approved
at least annually (i) by the vote of a majority of the SIMT or SIF Trustees or
by the vote of a majority of the outstanding voting securities of the
appropriate Fund, and (ii) by the vote of a majority of the Trustees of SIMT or
SIF

S-51
<PAGE>
who are not parties to the Management Agreement or an "interested person" (as
that term is defined in the 1940 Act) of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. Each Management
Agreement is terminable at any time, as to the Fund, without penalty by the
Trustees of SIMT or SIF by a vote of a majority of the outstanding shares of a
Fund or by SEI Management on not less than 30 days' nor more than 60 days'
written notice.

For the fiscal years indicated, the SIMT Fund paid the following fees to SEI
Management:

<TABLE>
<CAPTION>
MANAGEMENT FEES MANAGEMENT FEES
PAID (000) WAIVED (000)
---------------- -------------------
1996 1997 1998 1996 1997 1998
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
SIMT Fund................................. $160 $501 $ $42 $82 $
</TABLE>

For the fiscal years indicated, the SIF Fund paid the following fees to SEI
Management:

<TABLE>
<CAPTION>
MANAGEMENT FEES MANAGEMENT FEES
WAIVED (000) PAID (000)
------------------ -----------------
1996 1997 1998 1996 1997 1998
---- ------ ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
SIF Fund.................................. $658 $1,271 $ $524 $446 $
</TABLE>

CUSTODIANS

Summit Bank has entered into a custodian agreement with the Trust, under
which it provides all securities safekeeping services as required by the Funds
and the 1940 Act. The Trust pays Summit Bank (referred to herein in its
custodial capacity as the "Custodian") a custodian fee, which is calculated
daily and paid monthly, at an annual rate of .025% of the average daily net
assets of the each Fund except the International Equity Fund, and .17% of the
International Equity Fund's average daily net assets. In addition, with respect
to the International Equity Fund, The Bank of California, N.A. serves as
sub-custodian for the Fund's assets maintained in foreign countries.

FUND TRANSACTIONS

TRADING PRACTICES AND BROKERAGE

I. THE TRUST

The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Advisor is responsible for placing the orders
to execute transactions for the Fund. In placing orders, it is the policy of the
Trust to seek to obtain the best net results taking into account such factors as
price (including the applicable dealer spread), the size, type and difficulty of
the transaction involved, the firm's general execution and operational
facilities, and the firm's risk in positioning the securities involved. While
the Advisor generally seeks reasonably competitive spreads or commissions, the
Trust will not necessarily be paying the lowest spread or commission available.

The money market securities in which the Funds invest are traded primarily
in the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Advisor
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.

S-52
<PAGE>
The Advisor selects brokers or dealers to execute transactions for the
purchase or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is to
have brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Advisor's determination of what are reasonably competitive
rates is based upon the professional knowledge of the Advisor's trading
department as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, the Trust pays a minimal share
transaction cost when the transaction presents no difficulty.

As described above, bonds, debentures and money market securities are bought
and sold directly with a dealer without payment of a brokerage commission. In
these instances, while there is no direct commission charged, there is a spread
(the difference between the buy and sell price) which is the equivalent of a
commission.

The Advisor may allocate, out of all commission business generated by all of
the funds and accounts under management by the Advisor, brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include advice, either directly or through publications or writings, as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends, assisting
in determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Advisor in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the fund
or account generating the brokerage.

As provided in the Securities Exchange Act of 1934, higher commissions may
be paid to brokers or dealers who provide brokerage and research services than
to brokers or dealers who do not provide such services if such higher
commissions are deemed reasonable in relation to the value of the brokerage and
research services provided. Although transactions are directed to brokers or
dealers who provide such brokerage and research services, the Trust believes
that the commissions paid to such brokers or dealers are not, in general, higher
than commissions that would be paid to brokers or dealers not providing such
services and that such commissions are reasonable in relation to the value of
the brokerage and research services provided. In addition, portfolio
transactions which generate commissions or their equivalent are directed to
brokers or dealers who provide daily portfolio pricing services to the Trust or
who have agreed to defray other Trust expenses such as custodian fees. Subject
to best price and execution, commissions used for pricing may or may not be
generated by the funds receiving the pricing service.

For the fiscal year ended December 31, 1998, the following commissions were
paid on brokerage transactions, pursuant to an agreement or understanding, to
brokers because of research services provided by the brokers:

<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT OF TRANSACTIONS
TOTAL DOLLAR AMOUNT OF BROKERAGE COMMISSIONS INVOLVING DIRECTED BROKERAGE COMMISSIONS
FOR RESEARCH SERVICES FOR RESEARCH SERVICES
- ---------------------------------------------- ----------------------------------------------
<S> <C>
$ $
</TABLE>

The Advisor may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. It is believed that the ability
of the accounts to participate in

S-53
<PAGE>
volume transactions generally will be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or trust may obtain, it is the opinion of the Advisor and the Trust's
Board of Trustees that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.

Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Advisor may,
at the request of the Distributor, give consideration to sales of shares of the
Trust as a factor in the selection of brokers and dealers to execute Trust
portfolio transactions.

It is expected that the Trust may execute brokerage or other agency
transactions through the Distributor or Summit Financial Services Group, a
separate non-bank affiliate of the Advisor, both of which are registered brokers
or dealers, for a commission in conformity with the 1940 Act, the Securities
Exchange Act of 1934, as amended, and rules promulgated by the SEC. Under these
provisions, the Distributor or Summit Financial Services Group is permitted to
receive and retain compensation for effecting portfolio transactions for the
Trust on an exchange if a written contract is in effect between the Distributor
and the Trust expressly permitting the Distributor or Summit Financial Services
Group to receive and retain such compensation. These rules further require that
commissions paid to the Distributor by the Trust for exchange transactions not
exceed "usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." The Trustees, including those who are not "interested persons"
of the Trust, have adopted procedures for evaluating the reasonableness of
commissions paid to the Distributor and will review these procedures
periodically.

S-54
<PAGE>
For the fiscal years ended December 31, 1996, 1997 and 1998, the Funds paid
the following brokerage commissions:

<TABLE>
<CAPTION>
AMOUNT PAID TO SEI
TOTAL BROKERAGE COMMISSIONS INVESTMENTS(1)
--------------------------- ------------------------
FUND 1996 1997 1998 1996 1997 1998
- --------------------------------------------- -------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market Fund... N/A N/A N/A $ 2,134
Prime Obligation Money Market Fund........... N/A N/A $53,399 $47,306
Tax-Exempt Money Market Fund................. N/A N/A N/A N/A
U.S. Treasury Securities Plus Money Market
Fund....................................... N/A N/A $16,774 $17,304
Institutional Select Money Market Fund....... * N/A * $ 2,625
Fixed Income Fund............................ N/A N/A N/A N/A
New Jersey Municipal Securities Fund......... N/A N/A N/A N/A
Pennsylvania Municipal Securities Fund....... N/A $ 5,987 N/A N/A
Intermediate-Term Government Securities
Fund....................................... N/A N/A N/A N/A
Equity Growth Fund........................... * $392,850 * N/A
Equity Value Fund............................ $289,752 $359,684 $ 6,360 N/A
Equity Income Fund........................... $194,728 $269,004 $ 1,000 N/A
Mid Cap Fund................................. $129,497 $127,629 N/A N/A
Balanced Fund................................ $ 50,970 $ 57,835 $ 1,008 N/A
International Equity Fund.................... $ 60,818 $ 61,452 N/A N/A
High Yield Bond Fund......................... * * * *
Equity Index Fund............................ * * * *
</TABLE>

- ------------------------

* An asterisk indicates that the Fund had not commenced operations for the
period indicated.

(1) The amounts paid to SEI Investments reflect fees paid in connection with
repurchase agreement transactions.

S-55
<PAGE>
For the fiscal years indicated, the Funds paid the following brokerage
commissions:

<TABLE>
<CAPTION>
% OF TOTAL
% OF TOTAL BROKERAGE
BROKERAGE TRANSACTIONS
TOTAL $ AMOUNT OF COMMISSIONS EFFECTED
BROKERAGE COMMISSIONS PAID TO THE THROUGH
TOTAL $ AMOUNT OF BROKERAGE PAID TO AFFILIATE AFFILIATED AFFILIATED
COMMISSIONS PAID BROKERS BROKERS BROKERS
--------------------------- --------------------- ----------- ------------
FUND 1996 1997 1998 1996 1997 1998 1998 1998
- --------------------------------------------- -------- -------- ------- ------- ----- ---- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market Fund... N/A N/A N/A N/A

Prime Obligation Money Market Fund........... N/A N/A N/A N/A

Tax-Exempt Money Market Fund................. N/A N/A N/A N/A

U.S. Treasury Securities Plus Money Market
Fund....................................... N/A N/A $16,774 N/A

Institutional Select Money Market Fund....... * N/A * N/A

Fixed Income Fund............................ $ 0 $ 0 $ 0 $ 0

New Jersey Municipal Securities Fund......... $ 0 $ 0 $ 0 $ 0

Pennsylvania Municipal Securities Fund....... $ 0 $ 5,987 $ 0 $ 0

Intermediate-Term Government Securities
Fund....................................... $ 0 $ 0 $ 0 $ 0

Equity Growth Fund........................... * $392,850 * $ 0

Equity Value Fund............................ $289,752 $359,684 $ 6,360 $ 0

Equity Income Fund........................... $194,728 $269,004 $ 1,000 $ 0

Mid Cap Fund................................. $129,497 $127,629 $ 0 $ 0

Balanced Fund................................ $ 50,970 $ 57,835 $ 1,008 $ 0

International Equity Fund.................... $ 60,818 $ 61,452 $ 0 $ 0

High Yield Bond Fund......................... * * * *

Equity Index Fund............................ * * * *
</TABLE>

- ------------------------

* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.

"Regular brokers or dealers" of the Trust are the ten brokers or dealers
that, during the most recent fiscal year, (i) received the greatest dollar
amounts of brokerage commissions from the Trust's portfolio transactions, (ii)
engaged as principal in the largest dollar amounts of portfolio transactions of
the Trust, or (iii) sold the largest dollar amounts of the Trust's shares. At
December 31, 1998 the held securities of the Trust's "regular
brokers or dealers" as follows:

II. SEI INSTITUTIONAL MANAGED TRUST

SIMT has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by SIMT's Trustees, the advisors are responsible for placing orders
to execute portfolio transactions. In placing orders, it is the SIMT's policy to
seek to obtain the best net results taking into account such factors as price
(including the applicable dealer spread), size,

S-56
<PAGE>
type and difficulty of the transaction involved, the firm's general execution
and operational facilities, and the firm's risk in positioning the securities
involved. While the advisors generally seek reasonably competitive spreads or
commissions, the SIMT will not necessarily be paying the lowest spread or
commission available. SIMT will not purchase portfolio securities from any
affiliated person acting as principal except in conformity with the regulations
of the SEC.

It is expected that the SIMT Fund may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934,
as amended, and rules and regulations of the SEC. Under these provisions, the
Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for the SIMT Fund on an exchange if a written contract is
in effect between the Distributor and the Trust expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the SIMT
Fund may direct commission business to one or more designated broker-dealers,
including the Distributor, in connection with such broker-dealer's payment of
certain of the SIMT Fund's expenses. The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review these
procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically.

In connection with transactions effected for SIMT Fund operating within the
"Manager of Managers" structure, SIMC and the various firms that serve as
sub-advisor to the SIMT Fund of the Trust, in the exercise of joint investment
discretion over the assets of the SIMT Fund, may direct a substantial portion of
the SIMT Fund's brokerage to the Distributor. All such transactions directed to
the Distributor must be accomplished in a manner that is consistent with the
Trust's policy to achieve best net results, and must comply with the Trust's
procedures regarding the execution of transactions through affiliated brokers.

For the fiscal years indicated, the SIMT Fund paid the following brokerage
fees:

<TABLE>
<CAPTION>
% OF TOTAL
% OF TOTAL BROKERAGE
BROKERAGE TRANSACTIONS
TOTAL $ AMOUNT OF COMMISSIONS EFFECTED
TOTAL $ AMOUNT OF COMMISSIONS PAID PAID TO THE THROUGH
BROKERAGE TO AFFILIATED AFFILIATED AFFILIATED
COMMISSIONS PAID BROKERS BROKERS BROKERS
------------------ ------------------ ----------- ------------
FUND 1996 1997 1998 1996 1997 1998 1998 1998
- ---------------------------------------- ---- ---- ---- ---- ---- ---- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

SIMT Fund............................... $0 $0 $ $0 $0 $ $ $
</TABLE>

The portfolio turnover rate for the SIMT Fund for the fiscal years indicated
were as follows:

<TABLE>
<CAPTION>
PORTFOLIO TURNOVER
RATE
------------------

<S> <C> <C> <C>
FUND 1996 1997 1998
- -------------------------------------------------------------- ---- ---- ----

High Yield Bond Portfolio..................................... 55% 57% %
</TABLE>

III. SEI INDEX FUNDS

SIF has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the SIF Advisor is responsible for

S-57
<PAGE>
placing orders to execute portfolio transactions. In placing orders, it is SIF's
policy to seek to obtain the best net results taking into account such factors
as price (including the applicable dealer spread), size, type and difficulty of
the transaction involved, the firm's general execution and operational
facilities, and the firm's risk in positioning the securities involved. While
the SIF Advisor generally seeks reasonably competitive spreads or commissions,
SIF will not necessarily be paying the lowest spread or commission available.
SIF's policy of investing in securities with short maturities will result in
high portfolio turnover. SIF will not purchase portfolio securities from any
affiliated person acting as principal except in conformity with the regulations
of the SEC.

SIF does not expect to use one particular dealer, but, subject to SIF's
policy of seeking the best net results, dealers who provide supplemental
investment research to the SIF Advisor may receive orders to transactions by
SIF. Information so received will be in addition to and not in lieu of the
services required to be performed by the SIF Advisor under its Advisory
Agreement, and the expenses of the SIF Advisor will not necessarily be reduced
as a result of the receipt of such supplemental information.

The money market securities in which the SIF Fund invests are traded
primarily in the over-the-counter market generally do not involve either
brokerage commissions or transfer taxes. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the SIF
Advisor will deal directly with the dealers who make a market in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. Such dealers usually are acting as principal for their own
account. On occasion, securities may be purchased directly from the issuer. The
cost of executing portfolio securities transactions of the SIF Fund will
primarily consist of dealer spreads and underwriting commissions.

The SIF Fund may execute brokerage or other agency transactions through the
Distributor, a registered broker-dealer, for a commission, in conformity with
the 1940 Act, the Securities Exchange Act of 1934 and the rules and regulations
thereunder. Under these provisions, the Distributor is permitted to receive and
retain compensation for effecting portfolio transactions for the SIF Fund on an
exchange if a written contract is in effect between the Distributor and SIF
expressly permitting the Distributor to receive and retain such compensation.
These provisions further require that commissions paid to the Distributor by SIF
for exchange transactions not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commissions, fee or other
remuneration received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." The Trustees, including
those who are not "interested persons" of SIF, have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor and will
review these procedures periodically.

Since SIF does not market its shares through intermediary brokers or
dealers, it is not SIF's practice to allocate brokerage or principal business on
the basis of sales of its shares which may be made through such firms. However,
the SIF Advisor may place portfolio orders with qualified broker-dealers who
recommend SIF to clients, and may, when a number of brokers and dealers can
provide best price and execution on a particular transaction, consider such
recommendations by a broker or dealer in selecting among broker-dealers.

It is expected that the portfolio turnover rate will normally not exceed
100% for the SIF Fund. The portfolio turnover rate would exceed 100% if all of
its securities, exclusive of U.S. Government securities and other securities
whose maturities at the time of acquisition are one year or less, are replaced
in the period of one year. Turnover rates may vary from year to year and may be
affected by cash requirements for redemptions and by requirements which enable
the Portfolio to receive favorable tax treatment.

S-58
<PAGE>
For the fiscal years indicated, the SIF Fund paid the following brokerage
commissions:

<TABLE>
<CAPTION>
% OF TOTAL
% OF TOTAL BROKERAGE TOTAL $
TOTAL $ AMOUNT OF BROKERAGE TRANSACTIONS AMOUNT OF
BROKERAGE COMMISSIONS EFFECTED BROKERAGE
COMMISSIONS PAID PAID TO THE THROUGH COMMISSIONS
TOTAL $ AMOUNT OF TO AFFILIATED AFFILIATED AFFILIATED PAID FOR
COMMISSIONS PAID BROKERS BROKERS BROKERS RESEARCH
---------------------- ------------------ ----------- ------------ -----------
FUND 1996 1997 1998 1996 1997 1998 1998 1998 1998
- ------------------------------------------ ------- ------- ---- ---- ---- ---- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

SIF Fund.................................. $36,384 $99,663 $ $0 $0 $ $0 $0 $
</TABLE>

The portfolio turnover rate for the SIF Fund for the fiscal years indicated
were as follows:

<TABLE>
<CAPTION>
PORTFOLIO TURNOVER
RATE
------------------

<S> <C> <C> <C>
FUND 1996 1997 1998
- -------------------------------------------------------------- ---- ---- ----

SIF Fund...................................................... 3% 2% %
</TABLE>

THE DISTRIBUTOR AND THE DISTRIBUTION PLANS OF THE TRUST

SEI Investments Distribution Co., (the "Distributor"), a wholly owned
subsidiary of SEI Investments, and the Trust are parties to: a distribution
agreement (the "Distribution Agreement") dated February 28, 1992 which applies
to Class A Shares and Class I Shares of the Funds; a distribution and service
agreement (the "Class B Distribution Agreement") dated February 20, 1997, which
applies to the Class B Shares of the Funds; and a distribution agreement dated
May 15, 1997 (the "Class S Distribution Agreement"), which applies to the Class
S Shares of the Funds. The Distributor has an obligation to use its best efforts
to distribute shares of the Fund on a continuous basis. The Distributor receives
no compensation for distribution of Class I shares, although it does receive
compensation pursuant to a distribution plan with respect to the U.S. Treasury
Securities Plus Money Market Fund as described below.

The Distribution Agreement, the Class B Distribution Agreement and the Class
S Distribution Agreement are renewable annually and may be terminated by the
Distributor, the Qualified Trustees, or by a majority vote of the outstanding
securities of the Trust upon not more than 60 days' written notice by either
party. "Qualified Trustees" are Trustees of the Trust who are not interested
persons and have no financial interest in the Distribution Agreement, Class B
Distribution Agreement, Class S Distribution Agreement or any related agreement
or plan.

The Distribution Plan adopted by the U.S. Treasury Securities Plus Money
Market Fund shareholders (the "Distribution Plan") provides that the Trust will
pay the Distributor a fee of up to .03% of the Portfolio's average daily net
assets which the Distributor can use to compensate brokers or dealers and
service providers, including Summit Bank and its affiliates, which provide
distribution related services to shareholders or their customers who
beneficially own shares of the Fund.

The distribution plan for Class A Shares (the "Class A Distribution Plan")
provides that the Trust will pay the Distributor a fee of up to .25% of the
Class A Shares average daily net assets which the Distributor can use to
compensate brokers or dealers and service providers, including Summit Bank and
its affiliates, which provide distribution related services to Class A
shareholders or their customers who beneficially own Class A Shares.

The distribution and service plan for Class B Shares (the "Class B
Distribution Plan") provides that the Trust will pay the Distributor a Rule
12b-1 fee of up to .75% of the Class B Shares' average daily net assets, which
the Distributor can use to compensate brokers or dealers and service providers,
including Summit Bank and its affiliates, that provide distribution-related
services to Class B shareholders or their customers who beneficially own Class B
Shares. In addition, the Class B Distribution Plan provides that the

S-59
<PAGE>
Trust will pay the Distributor a shareholder servicing fee of up to .25% of the
Class B Shares, average daily net assets, which the Distributor can use to
compensate service providers, including Summit Bank and its affiliates.

The distribution and service plan for Class S Shares (the "Class S
Distribution Plan") provides that the Trust will pay the Distributor a Rule
12b-1 fee of up to .60% of the Class S Shares' average daily net assets, which
the Distributor can use to compensate brokers or dealers, including Summit Bank
and its affiliates, that provide distribution-related services to Class S Shares
or their customers who beneficially own Class S Shares.

Services under the Distribution Plan, the Class A Distribution Plan, the
Class B Distribution Plan and the Class S Distribution Plan (collectively, the
"Plans") may include establishing and maintaining customer accounts and records;
aggregating and processing purchase and redemption requests from customers;
placing net purchase and redemption orders with the Distributor; automatically
investing customer account cash balances; providing periodic statements to
customers; arranging for wires; answering customer inquiries concerning their
investments; assisting customers in changing dividend options, account
designations, and addresses; performing sub-accounting functions; processing
dividend payments from the Trust on behalf of customers; and forwarding
shareholder communications from the Trust (such as proxies, shareholder reports,
and dividend distribution and tax notices) to these customers with respect to
investments in the Trust. Certain state securities laws may require those
financial institutions providing such distribution services to register as
dealers pursuant to state law.

Although banking laws and regulations prohibit banks from distributing
shares of open-end investment companies such as the Trust, according to an
opinion issued to the staff of the SEC by the Office of the Comptroller of the
Currency, financial institutions are not prohibited from acting in other
capacities for investment companies, such as providing shareholder services.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of financial institutions in connection with providing
shareholder services, the Trust may be required to alter materially or
discontinue its arrangements with such financial institutions.

The Trust has adopted each Plan in accordance with the provisions of Rule
12b-1 under the 1940 Act which regulates circumstances under which an investment
company may directly or indirectly bear expenses relating to the distribution of
its shares.

Continuance of each Plan must be approved annually by a majority of the
Trustees of the Trust and by a majority of the Qualified Trustees. Each Plan
requires that quarterly written reports of amounts spent under the respective
Plan and the purposes of such expenditures be furnished to and reviewed by the
Trustees. No Plan may be amended to increase materially the amount which may be
spent thereunder without approval by a majority of the outstanding shares of the
Trust. All material amendments of a Plan will require approval by a majority of
the Trustees of the Trust and of the Qualified Trustees.

S-60
<PAGE>
The following Funds imposed a front-end sales charge upon their Class A
shares in the amounts shown for the fiscal years ended December 31, 1996, 1997
and 1998:

<TABLE>
<CAPTION>
DOLLAR AMOUNT OF LOADS
RETAINED BY SEI
DOLLAR AMOUNT OF LOADS INVESTMENTS
------------------------- -----------------------
FUND 1996 1997 1998 1996 1997 1998
- --------------------------------------------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Fixed Income Fund............................ $45,951 $ 5,218 $ 6,252 $ 729
New Jersey Municipal Securities Fund......... $26,191 $17,033 $ 3,531 $1,995
Pennsylvania Municipal Securities Fund....... $ 648 $ 1,877 $ 72 $ 221
Intermediate-Term Government Securities
Fund....................................... $19,783 $ 0 $ 2,774 $ 0
Equity Growth Fund........................... * $ 1,275 * $ 122
Equity Value Fund............................ $57,084 $81,148 $ 8,140 $9,933
Equity Income Fund........................... $99,330 $75,235 $13,726 $8,933
Mid Cap Fund................................. $18,446 $ 1,495 $ 2,605 $ 215
Balanced Fund................................ $38,379 $27,532 $ 5,421 $3,510
International Equity Fund.................... $13,212 $ 830 $ 1,868 $ 91
High Yield Bond Fund......................... * * * *
Equity Index Fund............................ * * * *
</TABLE>

- ------------------------

* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.

The U.S. Treasury Securities Money Market Fund, Prime Obligation Money
Market Fund and Tax-Exempt Money Market Fund offer Class A Shares without a
sales charge, and therefore, no information is provided with respect to such
Funds. Class B Shares do not impose front-end sales charges. Class S Shares and
Class I Shares, the U.S. Treasury Securities Plus Money Market Fund and the
Institutional Select Money Market Fund do not impose sales charges.

The following Funds imposed a CDSC sales charge upon their Class B shares in
the amounts shown for the fiscal years ended December 31, 1996, 1997 and 1998:

<TABLE>
<CAPTION>
DOLLAR AMOUNT OF LOADS
RETAINED BY SEI
DOLLAR AMOUNT OF LOADS INVESTMENTS
---------------------- ----------------------
FUND 1996 1997 1998 1996 1997 1998
- --------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Prime Obligation Money Market Fund........... * $ 0 * * $
Fixed Income Fund............................ * $4,845 * * $
Equity Value Fund............................ * $4,796 * * $
Equity Income Fund........................... * $2,783 * * $
Balanced Fund................................ * $1,250 * * $
Equity Growth Fund........................... * $ 49 * * $
International Equity Fund.................... * $ 0 * * $
High Yield Bond Fund......................... * * * * $
Equity Index Fund............................ * * * * $
</TABLE>

- ------------------------

* An asterisk indicates that the Class B Shares of the Fund had not commenced
operations as of the period indicated.

S-61
<PAGE>
For the fiscal year ended December 31, 1998, the Class A Shares of the Funds
incurred the following distribution expenses:

<TABLE>
<CAPTION>
TOTAL
DISTRIBUTION
TOTAL EXPENSES (AS
DISTRIBUTION A % OF SALES PRINTING OTHER
FUND EXPENSES NET ASSETS) EXPENSES COSTS COSTS
- --------------------------------------------- ------------ ------------ -------- -------- -----
<S> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market Fund... $ .25% N/A N/A N/A
Prime Obligation Money Market Fund........... $ .25% N/A N/A N/A
Tax-Exempt Money Market Fund................. $ .25% N/A N/A N/A
Fixed Income Fund............................ $ .25% N/A N/A N/A
New Jersey Municipal Securities Fund......... $ .25% N/A N/A N/A
Pennsylvania Municipal Securities Fund....... $ .25% N/A N/A N/A
Intermediate-Term Government Securities
Fund....................................... $ .25% N/A N/A N/A
Equity Growth Fund........................... $ .25% N/A N/A N/A
Equity Value Fund............................ $ .25% N/A N/A N/A
Equity Income Fund........................... $ .25% N/A N/A N/A
Mid Cap Fund................................. $ .25% N/A N/A N/A
Balanced Fund................................ $ .25% N/A N/A N/A
International Equity Fund.................... $ .25% N/A N/A N/A
High Yield Bond Fund......................... $
Equity Index Fund............................ $
</TABLE>

- ------------------------

* An asterisk indicates that the Class A Shares of the Fund had not commenced
operations as of the period indicated.

For the fiscal year ended December 31, 1998, the Class B Shares of the Funds
incurred the following distribution expenses:

<TABLE>
<CAPTION>
TOTAL
DISTRIBUTION
TOTAL EXPENSES
DISTRIBUTION (AS A% OF SALES PRINTING OTHER
FUND EXPENSES NET ASSETS) EXPENSES COSTS COSTS
- --------------------------------------------- ------------ ------------ -------- -------- -----
<S> <C> <C> <C> <C> <C>
Prime Obligation Money Market Fund........... $ 1.00% N/A N/A N/A
Fixed Income Fund............................ $ 1.00% N/A N/A N/A
Equity Value Fund............................ $ 1.00% N/A N/A N/A
Equity Income Fund........................... $ 1.00% N/A N/A N/A
Balanced Fund................................ $ 1.00% N/A N/A N/A
Equity Growth Fund........................... $ 1.00% N/A N/A N/A
International Equity Fund.................... $ 1.00% N/A N/A N/A
High Yield Bond Fund......................... $ N/A N/A N/A
Equity Index Fund............................ $ N/A * N/A
</TABLE>

- ------------------------

* An asterisk indicates that the Class B Shares of the Fund had not commenced
operations as of the period indicated.

S-62
<PAGE>
For the fiscal year ended December 31, 1998, the Class S Shares of the Prime
Obligation Money Market Fund incurred the following distribution expenses:

Class I Shares do not have distribution expenses.

For the fiscal year ended December 31, 1998, the U.S. Treasury Securities
Plus Money Market Fund incurred the following distribution expenses:

DISTRIBUTION OF THE SIMT FUND AND SIF FUND

I. SIMT FUND

SEI Investments Distribution Co. also serves as the distributor for the
Class A Shares of the SIMT Fund pursuant to a distribution agreement with SIMT.

The Portfolio has also adopted a shareholder servicing plan for their Class
A Shares (the "Service Plan"). Under the Service Plan, the Distributor may
perform, or may compensate other service providers for performing, the following
shareholder services: maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services provided on investments;
assisting clients in changing dividend options, account designations and
addresses; sub-accounting; providing information on share positions to clients;
forwarding shareholder communications to clients; processing purchase, exchange
and redemption orders; and processing dividend payments. Under the Service Plan,
the SIMT Fund may pay the Distributor a negotiated fee at a rate of up to .25%
annually of the average daily net assets of the SIMT Fund attributable to Class
A Shares subject to the arrangement for provision of shareholder and
administrative services. The Distributor may retain as a profit any difference
between the fee it receives and the amount it pays to third parties.

Except to the extent that SIMC and Money Managers benefitted through
increased fees from an increase in the net assets of the Trust which may have
resulted in part from the expenditures, no interested person of the Trust nor
any Trustee of the Trust who is not an interested person of the Trust had a
direct or indirect financial interest in the operation of the Plan or related
agreements.

For the fiscal year ended September 30, 1998, the Class A Shares of the SIMT
Fund incurred the following distribution expenses:

S-63
<PAGE>
II. SIF FUND

SEI Investments Distribution Co. also serves as the distributor for the
Class E Shares of the SIF Fund pursuant to a distribution agreement with SIF.

Under the Class E Distribution Agreement, the Distributor has agreed to
perform all distribution services and functions of the SIF Fund to the extent
such services and functions are not provided to the SIF Fund pursuant to another
agreement. The Distribution Agreement provide that the shares of the SIF Fund
are distributed through the Distributor.

The Distributor receives no compensation for distribution of Class E shares.

The Distribution Agreement provides that it will continue in effect for a
period of more than one year from the date of their execution only so long as
such continuance is specifically approved at least annually by the vote of a
majority of the Board members of SIF and by the vote of the majority of those
board members of SIF who are not interested persons of SIF.

For the fiscal year ended March 31, 1999, the Class E Shares of the SIF Fund
incurred the following distribution expenses:

PERFORMANCE

COMPUTATION OF YIELD

MONEY MARKET FUNDS. From time to time the Money Market Funds advertise
their "current yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Funds refers to the income generated by an investment in a Fund
over a seven-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
a Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment.

The current yield of the Funds will be calculated daily based upon the seven
days ending on the date of calculation ("base period"). The yield is computed by
determining the net change (exclusive of capital changes) in the value of a
hypothetical pre-existing shareholder account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing such net change by the value
of the account at the beginning of the same period to obtain the base period
return and multiplying the result by (365/7). Realized and unrealized gains and
losses are not included in the calculation of the yield. The effective compound
yield of the Funds is determined by computing the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula: Effective Yield = [(Base
Period Return + 1)365/7)]-1. The current and the effective yields reflect the
reinvestment of net income earned daily on portfolio assets.

S-64
<PAGE>
The Tax-Exempt Money Market Fund may also calculate its tax equivalent yield
as described under "Other Yields" below.

For the 7-day period ended December 31, 1998, the Money Market Funds'
current, effective and tax-equivalent yields were as follows:

<TABLE>
<CAPTION>
TAX-EQUIVALENT
CURRENT YIELD EFFECTIVE YIELD YIELD
FUND CLASS (%) (%) (%)
- --------------------------------------------- ----- ------------- --------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities Money Market Fund... I N/A
A N/A
Prime Obligation Money Market Fund........... I N/A
A N/A
B N/A
S N/A
Tax-Exempt Money Market Fund................. I
A
U.S. Treasury Securities Plus Money Market
Fund....................................... N/A N/A
Institutional Select Money Market Fund....... N/A N/A
</TABLE>

OTHER YIELDS. The Funds may advertise a 30-day yield. These figures will be
based on historical earnings and are not intended to indicate future
performance. The yield of these Funds refers to the annualized income generated
by an investment in the Funds over a specified 30-day period and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:

Yield = 2[{(a-b)/cd + 1}6 - 1] where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of reimbursement); c
= the average daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share on
the last day of the period.

The tax equivalent yield for the Tax-Exempt Money Market, New Jersey
Municipal Securities and Pennsylvania Municipal Securities Funds is computed by
dividing that portion of the Fund's yield which is tax-exempt by one minus a
stated Federal and/or state income tax rate and adding the product to that
portion, if any, of the Fund's yield that is not tax-exempt. (Tax equivalent
yields assume the payment of Federal income taxes at a rate of 39.6% and, if
applicable, New Jersey income taxes at a rate of 6.37% and Pennsylvania income
taxes at a rate of 2.8%).

Yields are one basis upon which investors may compare the Funds with other
funds; however, yields of other funds and other investment vehicles may not be
comparable because of the factors set forth above and differences in the methods
used in valuing portfolio instruments.

The yield of these Funds fluctuates, and the annualization of a week's
dividend is not a representation by the Trust as to what an investment in the
Fund will actually yield in the future. Actual yields will depend on such
variables as asset quality, average asset maturity, the type of instruments the
Fund invests in, changes in interest rates on money market instruments, changes
in the expenses of the Fund and other factors.

S-65
<PAGE>
For the 30-day period ended December 31, 1998 the yields on the Fixed Income
Funds were as follows:

<TABLE>
<CAPTION>
TAX-EQUIVALENT
CURRENT YIELD YIELD
FUND CLASS (%) (%)
- ---------------------------------------------------------------------------- ----- --------------- -----------------
<S> <C> <C> <C>
Fixed Income Fund........................................................... I N/A
A N/A
B N/A
High Yield Bond Fund........................................................ I
A
B
New Jersey Municipal Securities Fund........................................ I
A
Pennsylvania Municipal Securities Fund...................................... I
A
Intermediate-Term Government Securities Fund................................ I N/A
A N/A
</TABLE>

- ------------------------

* Not in operation as of the period indicated.

CALCULATION OF TOTAL RETURN

From time to time, the Funds may advertise total return on an "average
annual total return" basis and on an "aggregate total return" basis for various
periods. Average annual total return reflects the average annual percentage
change in the value of an investment in a Fund over the particular measuring
period. Aggregate total return reflects the cumulative percentage change in
value over the measuring period. Aggregate total return is computed according to
a formula prescribed by the SEC. The formula can be expressed as follows: P (1 +
T)n = ERV, where P = a hypothetical initial payment of $1,000; T = average
annual total return; n = number of years; and ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the designated time period
as of the end of such period or the life of the fund. The formula for
calculating aggregate total return can be expressed as (ERV/P)-1.

The calculation of total return assumes reinvestment of all dividends and
capital gains distributions on the reinvestment dates during the period and that
the entire investment is redeemed at the end of the period. In addition, the
maximum sales charge for each Fund is deducted from the initial $1,000 payment.
Total return may also be shown without giving effect to any sales charges.

S-66
<PAGE>
Based on the foregoing, the average total returns for the Funds from
inception through December 31, 1998 were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------
FIVE TEN SINCE
FUND CLASS ONE YEAR YEAR YEAR INCEPTION(1)
- ------------------------------ ----------- -------- ----- ----- -----------
<S> <C> <C> <C> <C> <C>
Fixed Income Fund............. I
A (no load)
A (load)
B (no load)
B (load)
New Jersey Municipal
Securities Fund............. I
A (no load)
A (load)
Pennsylvania Municipal
Securities Fund............. I
A (no load)
A (load)
Intermediate-Term Government
Securities Fund............. I
A (no load)
A (load)
Equity Growth Fund............ I
A (no load)
A (load)
B (no load)
B (load)
Equity Value Fund............. I
A (no load)
A (load)
B (no load)
B (load)
Equity Income Fund............ I
A (no load)
A (load)
B (no load)
B (load)
Balanced Fund................. I
A (no load)
A (load)
B (no load)
B (load)
International Equity Fund..... I
A (no load)
A (load)
B (no load)
B (load)
Mid Cap Fund.................. I
A (no load)
A (load)
</TABLE>

- ------------------------

(1) Class I and Class A Shares of the Funds commenced operations on April 1,
1992, except: the New Jersey Municipal Securities Fund--Class I and Class A
Shares, commenced operations on May 4, 1992; the Pennsylvania Municipal
Securities Fund--Class I Shares and Class A Shares, commenced operations on
May 3, 1993 and May 13, 1993, respectively; the International Equity
Fund--Class I and

S-67
<PAGE>
Class A Shares, commenced operations on May 1, 1995 and May 4, 1995,
respectively; and the Equity Growth Fund--Class I and Class A Shares,
commenced operations on February 3, 1997. Class B Shares of the Funds
commenced operations as follows: Fixed Income Fund, May 16, 1997; the Equity
Growth Fund, May 21, 1997; Equity Value Fund, May 12, 1997; the Equity
Income Fund and Balanced Fund, May 8, 1997; and the International Equity
Fund, May 7, 1997.

** Not in operation during period.

Each Feeder Fund may advertise the performance of its corresponding
Portfolio adjusted to reflect applicable sales loads and operating expenses,
other than Rule 12b-1 fees. The data for the SIMT Fund and the SIF Fund set
forth below is adjusted to reflect estimated feeder level operating expenses of
[.40%] and [.55%], respectively. In the absence or reduction of current fee
waivers or reimbursements, total return would be reduced.

The following table shows total returns for the Class A Shares of the SIMT
Fund for inception through September 30, 1997 and the Class E Shares of the SIF
Fund for inception through March 31, 1998:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
-----------------------
CLASS/ ONE FIVE SINCE
FUND WITH/WITHOUT LOAD YEAR YEARS INCEPTION
- --------------------------------------------- ----------------- ----- ----- ---------
<S> <C> <C> <C> <C>
SIMT Fund (commenced operations on January Class A
11, 1995).................................. Without Load
SIF Fund (commenced operations on August l, Class E
1985)...................................... Without Load
</TABLE>

- ------------------------

* Not in operation during period.

The Funds' performance may from time to time be compared to other mutual
funds tracked by mutual fund rating services (such as Lipper Analytical
Services) or financial and business publications and periodicals, broad groups
of comparable mutual funds, unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs or to other investment alternatives. The Funds may quote
Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance. The Funds may quote Ibbotson Associates of Chicago,
Illinois, which provides historical returns of the capital markets in the U.S.
The Funds may use long term performance of these capital markets to demonstrate
general long-term risk versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The Funds may also quote
financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.

The Funds may quote various measures of volatility and benchmark correlation
in advertising and may compare these measures to those of other funds. Measures
of volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.

PURCHASE AND REDEMPTION OF SHARES

It is currently the Trust's policy to pay for each Fund's redemptions in
cash. The Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of securities held by
the Funds in lieu of cash. Shareholders may incur brokerage charges on the sale
of any such securities so received in payment of redemptions. However, a
shareholder will at all times be entitled to aggregate cash redemptions from all
Funds of the Trust during any 90-day period of up to the lesser of $250,000 or
1% of the Trust's net assets.

S-68
<PAGE>
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of
disposal or valuation of the Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of a Fund for any period during
which the New York Stock Exchange, the Advisor and/or Sub-Advisor, the
Administrator and/or the Custodian are not open for business. Additionally, the
Trust reserves the right to suspend sales of shares of a Feeder Fund for any
period during which the corresponding Master Fund is not open for business. The
New York Stock Exchange will not open when the following holidays are observed:
New Year's Day; Martin Luther King, Jr., Day; Presidents' Day; Good Friday;
Memorial Day; Independence Day; Labor Day; Thanksgiving; and Christmas. In
addition, as it relates to the Money Market Funds, the Federal Reserve will not
open when the following holidays are observed: Columbus Day and Veterans' Day.

SHAREHOLDER SERVICES

DISTRIBUTION INVESTMENT OPTION: Distributions of dividends and capital
gains made by the Funds may be automatically invested in shares of one of the
Funds if shares of the Funds are available for sale. Such investments will be
subject to initial investment minimums, as well as additional purchase minimums.
A shareholder considering the Distribution Investment Option should obtain and
read the prospectus of the other Funds and consider the differences in
objectives and policies before making any investment. This option is not
available for cash management account shareholders.

REINSTATEMENT PRIVILEGE: In addition to a similar Class A shares' sales
load waiver described in the prospectus, a shareholder who has redeemed his or
her shares of any of the Funds has a one-time right to reinvest the redemption
proceeds in shares of any of the Funds at their net asset value as of the time
of reinvestment. Such a reinvestment must be made within 30 days of the
redemption and is limited to the amount of the redemption proceeds. Although
redemptions and repurchases of shares are taxable events, a reinvestment within
such 30-day period in the same Fund is considered a "wash sale" and results in
the inability to recognize currently all or a portion of a loss realized on the
original redemption for Federal income tax purposes. The investor must notify
the transfer agent at the time the trade is placed that the transaction is a
reinvestment.

DETERMINATION OF NET ASSET VALUE

I. THE TRUST

The net asset value per share of the Money Market Funds is calculated by
adding the value of securities and other assets, subtracting liabilities and
dividing by the number of outstanding shares. Securities will be valued by the
amortized cost method which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which a security's value, as determined by this method, is higher or
lower than the price a Fund would receive if it sold the instrument. During
periods of declining interest rates, the daily yield of a Fund may tend to be
higher than a similar computation made by a company with identical investments
utilizing a method of valuation based upon market prices and estimates of market
prices for all of its portfolio securities. Thus, if the use of amortized cost
by a Fund resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in that Fund would be able to obtain a somewhat higher
yield than would result from investment in a company utilizing solely market
values, and existing investors in the Fund would experience a lower yield. The
converse would apply in a period of rising interest rates.

The Money Market Funds' use of amortized cost and the maintenance of each
Fund's net asset value at $1.00 are permitted by regulations promulgated by Rule
2a-7 under the 1940 Act, provided that certain

S-69
<PAGE>
conditions are met. The regulations also require the Trustees to establish
procedures which are reasonably designed to stabilize the net asset value per
share at $1.00 for the Funds. Such procedures include the determination of the
extent of deviation, if any, of the Funds current net asset value per share
calculated using available market quotations from the Funds amortized cost price
per share at such intervals as the Trustees deem appropriate and reasonable in
light of market conditions and periodic reviews of the amount of the deviation
and the methods used to calculate such deviation. In the event that such
deviation exceeds 1/2 of 1%, the Trustees are required to consider promptly what
action, if any, should be initiated, and, if the Trustees believe that the
extent of any deviation may result in material dilution or other unfair results
to shareholders, the Trustees are required to take such corrective action as
they deem appropriate to eliminate or reduce such dilution or unfair results to
the extent reasonably practicable. Such actions may include the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; redeeming shares in
kind; or establishing a net asset value per share by using available market
quotations. In addition, if the Funds incur a significant loss or liability, the
Trustees have the authority to reduce pro rata the number of shares of the Funds
in each shareholder's account and to offset each shareholder's pro rata portion
of such loss or liability from the shareholder's accrued but unpaid dividends or
from future dividends while each other Fund must annually distribute at least
90% of its investment company taxable income.

Shares will normally be issued for cash only. Transactions involving the
issuance of shares for securities or assets other than cash will be limited to a
bona fide reorganization, statutory merger or will be limited to other
acquisitions of portfolio securities (except for municipal debt securities
issued by state political subdivisions or their agencies or instrumentalities)
which: meet the investment objectives and policies of the investment company;
are acquired for investment and not for resale; are liquid securities which are
not restricted as to transfer either by law or liquidity of market; and have a
value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange, the New
York Stock Exchange or NASDAQ.

The securities of the Funds are valued by the Administrator. The
Administrator may use an independent pricing service to obtain valuations of
securities. The pricing service relies primarily on prices of actual market
transactions as well as trader quotations. However, the service may also use a
matrix system to determine valuations of fixed income securities, which system
considers such factors as security prices, yields, maturities, call features,
ratings and developments relating to specific securities in arriving at
valuations. The procedures of the pricing service and its valuations are
reviewed by the officers of the Trust under the general supervision of the
Trustees. Although the methodology and procedures are identical, the net asset
value per share of Class I, Class A, Class B and Class S shares of the Funds may
differ because of the distribution expenses and shareholders servicing fees
charged to Class A shares, Class B shares and/or Class S shares.

A pricing service values portfolio securities, which are primarily traded on
a domestic exchange, at the last sale price on that exchange or, if there is no
recent sale, at the last current bid quotation. A Fund security that is
primarily traded on a foreign securities exchange is generally valued at its
preceding closing value on the exchange, provided that if an event occurs after
the security is so valued that is likely to have changed its value, then the
fair value of those securities will be determined through consideration of other
factors by or under the direction of the Board of Trustees. A security that is
listed or traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for such security. For valuation
purposes, quotations of foreign securities in foreign currency are converted to
U.S. dollars equivalent at the prevailing market rate on the day of valuation.

Certain of the securities acquired by a Fund may be traded on foreign
exchanges or over-the-counter markets on days on which the Fund's net asset
value is calculated. In such cases, the net asset value of the Fund's shares may
be significantly affected on days when investors can neither purchase nor redeem
shares of the Fund.

S-70
<PAGE>
II. SIMT AND SIF

The purchase and redemption price of shares is the net asset value of each
share. A Portfolio's securities are valued by SIMC pursuant to valuations
provided by an independent pricing service (generally the last quoted sale
price). Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each day on
which the New York Stock Exchange is open for business or, if there is no such
reported sale, at the most recently quoted bid price. Unlisted securities for
which market quotations are readily available are valued at the most recently
quoted bid price. The pricing service may also use a matrix system to determine
valuations. This system considers such factors as security prices, yields,
maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of SIMT and SIF under the general
supervision of the Trustees.

GENERAL INFORMATION AND HISTORY

GENERAL INFORMATION

THE TRUST

The Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated September 9, 1991. The Declaration of Trust permits
the Trust to offer separate portfolios of shares and different classes of each
portfolio. The Trust currently consists of the U.S. Treasury Securities Plus
Money Market Fund, Institutional Select Money Market Fund, U.S. Treasury
Securities Money Market Fund, Prime Obligation Money Market Fund, Tax-Exempt
Money Market Fund, Fixed Income Fund, New Jersey Municipal Securities Fund,
Pennsylvania Municipal Securities Fund, Intermediate-Term Government Securities
Fund, High Yield Bond Fund, Equity Growth Fund, Mid Cap Fund, Equity Income
Fund, Equity Value Fund, International Equity Fund, Equity Index Fund and
Balanced Fund. Shares of the portfolios are offered through up to four separate
classes of shares (Class A, B, I and S). All consideration received by the Trust
for shares of any portfolio and all assets of such portfolio belong to that
portfolio and are subject to liabilities related thereto.

Each Fund pays its expenses, including fees of its service providers, audit
and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services, registering
the shares under federal laws and filing with state securities commissions,
pricing, insurance expenses, litigation and other extraordinary expenses,
brokerage costs, interest charges, taxes and organization expenses.

The Advisor, in addition to providing investment advice to the Trust,
provides investment advice to other clients. Some of these clients' funds are
managed under an asset allocation program and may be invested in the Funds. From
time to time, the Funds may experience relatively large purchases or redemptions
due to asset allocation decisions made by the Advisor for its clients. These
transactions may have a material effect on the Funds, since portfolios that
experience redemptions as a result of reallocations may have to sell portfolio
securities and because portfolios that receive additional cash will have to
invest it. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent that the Funds may be required to sell securities at times when
they would not otherwise do so, or receive cash that cannot be invested in an
expeditious manner. There may be tax consequences associated with purchases and
sales of securities, and such sales may also increase transaction costs. The
Advisor is committed to minimizing the impact of these transactions on the Funds
to the extent it is consistent with pursuing the investment objectives of its
asset allocation program.

SIMT and SIF are organized as Massachusetts business trusts. The Trustees
believe that neither the High Yield Bond Fund nor the Equity Index Fund will be
adversely affected by reason of investing in the SIMT Fund and the SIF Fund,
respectively.

S-71
<PAGE>
TRUSTEES OF THE TRUST

The management and affairs of the Trust are supervised by the Trustees under
the laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management services to the Trust.

VOTING RIGHTS

Each share held entitles a shareholder of record to one vote. The
shareholders of each portfolio or class will vote separately on matters relating
solely to that portfolio or class. As a Massachusetts business trust, the Trust
is not required to hold annual meetings of shareholders, but approval will be
sought for certain changes in the operation of the Trust and for the election of
Trustees under certain circumstances. In addition, a Trustee may be removed by
the remaining Trustees or by shareholders at a special meeting called upon
written request of shareholders owning at least 10% of the outstanding shares of
the Trust. In the event that such a meeting is requested the Trust will provide
appropriate assistance and information to the shareholders requesting the
meeting.

In the case of the High Yield Bond and Equity Index Funds, whenever a vote
is required on matters pertaining to the SIMT Fund or SIF Fund, respectively,
the Trust will either (a) seek instructions from the appropriate Fund's
shareholders with regard to the voting of the proxies and vote such proxies only
in accordance with such instructions; or (b) vote the shares held by it in the
same proportion as the vote of all the other shareholders of the particular
Fund. In either instance, other investors in the SIMT Fund or SIF Fund could
control the results of voting at the master level.

REPORTING

The Trust issues unaudited financial information semi-annually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to shareholders of record.

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to The Pillar Funds, P.O. Box 8523,
Boston, MA 02266-8523.

DIVIDENDS

Shareholders automatically receive all income dividends and capital gain
distributions in additional shares, as appropriate, at the net asset value next
determined following the record date, unless the shareholder has elected to take
such payment in cash. Shareholders may change their election by providing
written notice to the Administrator at least 15 days prior to the distribution.
If any capital gain is realized, substantially all of it will be distributed at
least annually.

Dividends and distributions of each Fund are paid on a per-share basis. The
value of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution.

The amount of dividends payable on Class A Shares and Class B Shares will be
less than the dividends payable on Class I Shares because of the distribution
expenses charged to Class A and Class B Shares.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of the Funds, each of which represents an equal proportionate interest in
that Fund with each other share. Shares are entitled upon liquidation to a pro
rata share in the net assets of the Funds; shareholders have no preemptive
rights. The Declaration of Trust provides that the Trustees of the Trust may
create additional series of shares or

S-72
<PAGE>
classes of a series. All consideration received by the Trust for shares of any
additional series and all assets in which such consideration is invested would
belong to that series and would be subject to the liabilities related thereto.
Share certificates representing shares will not be issued.

The names and addresses of the holders of 5% or more of the outstanding
shares of any Fund as of February 16, 1999 and the percentage of outstanding
shares of such Fund held by such shareholders as of such date are, to Trust
management's knowledge, as follows:

<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL
FUND NAME AND ADDRESS OWNERSHIP
- --------------------------------------------------- --------------------------------- -------------------
<S> <C> <C>
Institutional Select Money Market Fund............. Summit Bank 70.11%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0821
Acct # 1181
Summit Asset Management 29.89%
c/o Laurie Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2283

U.S. Treasury Securities Money Market Fund:........ Summit Bank 85.44%
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 1181
Summit Asset Management.......... 9.18%
c/o Laurie Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2283
Summit Asset Management.......... 5.37%
c/o Laurie Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2283

Prime Obligation Money Market Fund:................ Summit Bank 62.52%
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 1181
Summit Discount Brokerage 15.36%
Attn: Richard Jennings
1457 MacArthur Road
Whitehall, PA 18052-5787
Acct # 2016795
Summit Asset Management 14.90%
c/o Laurie Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2283
</TABLE>

S-73
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL
FUND NAME AND ADDRESS OWNERSHIP
- --------------------------------------------------- --------------------------------- -------------------
<S> <C> <C>
Summit Asset Management.......... 7.19%
c/o Laura Minervini
P.O. Box 821
Hackensack, NJ 07602-0821

Tax-Exempt Money Market Fund:...................... Summit Bank 77.98%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181
Summit Asset Management 11.55%
c/o Laurie Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2283
Summit Discount Brokerage 10.47%
Attn: Richard Jennings
P.O. Box 22227
Lehigh Valley, PA 18002-2227
Acct # 2016795

Equity Growth Fund:................................ Summit Bank 80.59%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 18.81%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118

Fixed Income Fund:................................. Summit Bank 39.94%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 31.00%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181
Summit Bank 28.87%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118
</TABLE>

S-74
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL
FUND NAME AND ADDRESS OWNERSHIP
- --------------------------------------------------- --------------------------------- -------------------
<S> <C> <C>
New Jersey Municipal Securities Fund:.............. Summit Bank 48.79%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 35.94%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181
Summit Bank 12.28%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118

Equity Value Fund:................................. Summit Bank 51.12%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 47.68%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118

Equity Income Fund:................................ Summit Bank 72.60%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 23.38%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118

Mid Cap Fund:...................................... Summit Bank 60.33%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118
Summit Bank 32.16%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
</TABLE>

S-75
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL
FUND NAME AND ADDRESS OWNERSHIP
- --------------------------------------------------- --------------------------------- -------------------
<S> <C> <C>
Balanced Fund:..................................... Summit Bank 75.52%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118
Summit Bank 12.39%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 12.06%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181

Pennsylvania Municipal Securities Fund:............ Summit Bank 33.40%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181
Summit Bank 16.11%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182

International Equity Fund:......................... Summit Bank 49.13%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 32.09%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118
Summit Bank 18.11%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181
</TABLE>

S-76
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
BENEFICIAL
FUND NAME AND ADDRESS OWNERSHIP
- --------------------------------------------------- --------------------------------- -------------------
<S> <C> <C>
Intermediate-Term Government Securities Fund:...... Summit Bank 41.44%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118
Summit Bank 36.77%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 21.22%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181

High Yield Bond Fund:.............................. Summit Bank 72.25%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 12.38%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118

Equity Index Fund:................................. Summit Bank 48.14%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182
Summit Bank 31.22%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118
Summit Bank (401k) 18.36%
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2070055
</TABLE>

Beneficial owners of 25% or more of a Fund may be deemed a "controlling
person" of such Fund within the meaning of the 1940 Act.

The Trust believes that most of the shares referred to above held by Summit
Bank were held in accounts for its fiduciary, agency or custodial customers.

S-77
<PAGE>
SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust could,
under certain circumstances, be held personally liable as partners for the
obligations of the Trust. Even if, however, the Trust were held to be a
partnership, the possibility of the shareholders' incurring financial loss for
that reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any shareholder held personally liable for the
obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for
his or her own willful defaults and, if reasonable care has been exercised in
the selection of officers, agents, employees or investment advisors, shall not
be liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.

TAXES

The following is only a summary of certain additional Federal income tax
considerations generally affecting the Funds and their shareholders that are not
described in the Funds' prospectuses. No attempt has been made to present a
detailed explanation of the tax treatment of the Funds or their shareholders and
the discussion here and in the Funds' prospectuses is not intended as a
substitute for careful tax planning.

The following general discussion of certain Federal income tax consequences
is based on the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative charges or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transaction contemplated
herein.

Each Fund is generally treated as a separate corporation for Federal income
tax purposes, and thus the provisions of the Code generally will be applied to
each Fund separately.

FEDERAL INCOME TAX

QUALIFICATION AS A RIC. Each Fund intends to qualify and elect to be
treated for each taxable year as a "regulated investment company" ("RIC") under
Subchapter M of the Code. Accordingly, each Fund must distribute annually to its
shareholders at least the sum of 90% of its net interest income excludable from
gross income plus 90% of its investment company taxable income (generally, net
investment income plus the excess, if any, of net short-term capital gain over
net long-term capital loss) (the "Distribution Requirement") and also must meet
several additional requirements. Among these requirements are the following: (i)
at least 90% of the Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities or foreign currencies, or
certain other income; (ii) at the close of each quarter of the Fund's taxable
year, at least 50% of the value of its total assets must be represented by cash
and cash items, U.S. Government securities, securities of other RICs and other
securities, with such other securities limited, in

S-78
<PAGE>
respect to any one issuer, to an amount that does not exceed 5% of the value of
the Fund's assets and that does not represent more than 10% of the outstanding
voting securities of such issuer; and (iii) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its assets may be
invested in securities (other than U.S. Government securities or the securities
of other RICs) of any one issuer or of two or more issuers which the Fund
controls and which are engaged in the same, similar or related trades of
businesses. If a Fund meets all of the RIC requirements, it will not be subject
to Federal income tax on any of its net investment income or capital gains that
it distributes to shareholders.

Although each Fund intends to distribute substantially all of its net
investment income and may distribute its capital gains for any taxable year, a
Fund will be subject to Federal income taxation to the extent any such income or
gains are not distributed.

FUND DISTRIBUTIONS. Distributions of investment company taxable income will
be taxable to shareholders as ordinary income, regardless of whether such
distributions are paid in cash or are reinvested in additional Shares, to the
extent of a Fund's earnings and profits. Each Fund anticipates that it will
distribute substantially all of its investment company taxable income for each
taxable year.

Each Fund may either retain or distribute to shareholders its excess of net
long-term capital gains over net short-term capital losses ("net capital
gains"). If such gains are distributed as a capital gains distribution, they are
taxable to shareholders who are individuals at a maximum rate of 20%, regardless
of the length of time the shareholder has held shares.

In the case of corporate shareholders, distributions (other than capital
gains distributions) from a RIC generally qualify for the dividends-received
deduction only to the extent of the gross amount of qualifying dividends
received by a Fund for the year. Generally, and subject to certain limitations,
a dividend will be treated as a qualifying dividend if it has been received from
a domestic corporation. Accordingly, except for the Equity Growth Fund, Equity
Value Fund, Equity Income Fund and Mid Cap Fund, distributions from the Funds
generally will not be eligible for the corporate dividends-received deduction.

Each Fund will provide a statement annually to shareholders as to the
Federal tax status of distributions paid (or deemed to be paid) by a Fund during
the year, including the amount of dividends eligible for the corporate
dividends-received deduction.

SALE OR EXCHANGE OF FUND SHARES. Generally, gain or loss on the sale or
exchange of a Share will be capital gain or loss that will be long-term if the
Share has been held for more than twelve months and otherwise will be
short-term. For individuals, long-term capital gains are currently taxed at a
maximum rate of 20% and short-term capital gains are currently taxed at ordinary
income tax rates. However, if a shareholder realizes a loss on the sale,
exchange or redemption of a Share held for six months or less and has previously
received a capital gains distribution with respect to the Share (or any
undistributed net capital gains of a Fund with respect to such Share are
included in determining the shareholder's long-term capital gains), the
shareholder must treat the loss as a long-term capital loss to the extent of the
amount of the prior capital gains distribution (or any undistributed net capital
gains of a Fund that have been included in determining such shareholder's
long-term capital gains). In addition, any loss realized on a sale or other
disposition of Shares will be disallowed to the extent an investor repurchases
(or enters into a contract or option to repurchase) Shares within a period of 61
days (beginning 30 days before and ending 30 days after the disposition of the
Shares). This loss disallowance rule will apply to Shares received through the
reinvestment of dividends during the 61-day period.

FEDERAL EXCISE TAX. If a Fund fails to distribute in a calendar year at
least 98% of its ordinary income for the year and 98% of its capital gain net
income (the excess of short and long term capital gains over short and long term
capital losses) for the one-year period ending October 31 of that year (and any
retained amount from the prior calendar year), such Fund will be subject to a
nondeductible 4% Federal excise tax on the undistributed amounts. Each Fund
intends to make sufficient distributions to avoid imposition of this tax, or to
retain, at most its net capital gains and pay tax thereon.

S-79
<PAGE>
If a Fund fails to qualify for any taxable year as a RIC, all of its taxable
income will be subject to tax at regular corporate income tax rate (without any
deduction for distributions to Fund shareholders). In such event, all
distributions made by the Fund (whether or not derived from tax-exempt interest)
would be taxable to shareholders as dividends to the extent of the Fund's
earnings and profits, and such dividend distributions would be eligible for the
dividends- received deduction available to corporate shareholders.

ADDITIONAL CONSIDERATION FOR THE INTERNATIONAL EQUITY, EQUITY GROWTH AND
FIXED INCOME FUNDS. Dividends and interest received by a Fund may be subject to
income, withholding or other taxes imposed by foreign countries and United
States possessions that would reduce the yield on a Fund's securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these taxes. Foreign countries generally do not impose taxes on
capital gains on investments by foreign investors. If more than 50% of the value
of a Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, a Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
United States possessions income taxes paid by a Fund. Pursuant to an election,
a Fund will treat those taxes as dividends paid to its shareholders. Each
shareholder will be required to include a proportionate share of those taxes in
gross income as income received from a foreign source and must treat the amount
so included as if the shareholder had paid the foreign tax directly. The
shareholder may then either deduct the taxes deemed paid by him or her in
computing his or her taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit (subject to significant
limitations) against the shareholder's Federal income tax. If a Fund makes the
election, it will report annually to its shareholders the respective amounts per
share of the Fund's income from sources within, and taxes paid to, foreign
countries and United States possessions.

The Fixed Income Funds may make investments in securities (such as STRIPS)
that bear "original issue discount" or "acquisition discount" (collectively,
"OID Securities"). The holder of such securities is deemed to have received
interest income even though no cash payments have been received. Accordingly,
OID Securities may not produce sufficient current cash receipts to match the
amount of distributable net investment income a Fund must distribute to satisfy
the Distribution Requirement. In some cases, a Fund may have to borrow money or
dispose of other investments in order to make sufficient cash distributions to
satisfy the Distribution Requirement.

ADDITIONAL CONSIDERATIONS FOR THE TAX-EXEMPT MONEY MARKET, NEW JERSEY
MUNICIPAL SECURITIES AND PENNSYLVANIA MUNICIPAL SECURITIES FUNDS (THE
"TAX-EXEMPT FUNDS"). As noted in the prospectuses for the Tax-Exempt Money
Market, New Jersey Municipal Securities and Pennsylvania Municipal Securities
Funds, exempt-interest dividends are excludable from a shareholder's gross
income for regular Federal income tax purposes. Exempt-interest dividends may
nevertheless be subject to the alternative minimum tax (the "Alternative Minimum
Tax") imposed by Section 55 of the Code. The Alternative Minimum Tax is imposed
at a maximum rate of 28% in the case of non-corporate taxpayers and at the rate
of 20% in the case of corporate taxpayers, to the extent it exceeds the
taxpayer's regular tax liability. The Alternative Minimum Tax may be imposed in
two circumstances. First, exempt-interest dividends derived from certain
"private activity bonds" issued after August 7, 1986, will generally be an item
of tax preference (and therefore potentially subject to the Alternative Minimum
Tax) for both corporate and non-corporate taxpayers. Second, in the case of
exempt-interest dividends received by corporate shareholders, all exempt-
interest dividends, regardless of when the bonds from which they are derived
were issued or whether they are derived from private activity bonds, will be
included in the corporation's "adjusted current earnings," as defined in Section
56(g) of the Code, in calculating the corporation's alternative minimum taxable
income for purposes of determining the Alternative Minimum Tax.

Any loss recognized by a shareholder upon the sale or redemption of shares
of a Tax-Exempt Fund held for six months or less will be disallowed to the
extent of any exempt-interest dividends the shareholder has received with
respect to such shares. Interest on indebtedness incurred by shareholders to
purchase or carry shares of a Tax-Exempt Fund will not be deductible for Federal
income tax purposes. The deduction

S-80
<PAGE>
otherwise allowable to property and casualty insurance companies for "losses
incurred" will be reduced by an amount equal to a portion of exempt-interest
dividends received or accrued during any taxable year. Foreign corporations
engaged in a trade or business in the United States will be subject to a "branch
profits tax" on their "dividend equivalent amount" for the taxable year, which
will include exempt-interest dividends. Certain Subchapter S corporations may
also be subject to taxes on their "passive investment income," which could
include exempt-interest dividends. Up to 85% of the Social Security benefits or
railroad retirement benefits received by an individual during any taxable year
will be included in the gross income of such individual if the individual's
"modified adjusted gross income" (which includes exempt-interest dividends) plus
one-half of the Social Security benefits or railroad retirement benefits
received by such individual during that taxable year exceeds the base amount
described in Section 86 of the Code.

A Tax-Exempt Fund may not be an appropriate investment for persons
(including corporations and other business entities) who are "substantial users"
(or persons related to such users) of facilities financed by industrial
development or private activity bonds. A "substantial user" is defined generally
to include certain persons who regularly use a facility in their trade or
business. Such entities or persons should consult their tax advisors before
purchasing shares of a Tax-Exempt Fund.

Issuers of bonds purchased by a Tax-Exempt Fund (or the beneficiary of such
bonds) may have made certain representations or covenants in connection with the
issuance of such bonds to satisfy certain requirements of the Code that must be
met subsequent to the issuance of such bonds. Investors should be aware that
exempt-interest dividends derived from such bonds may become subject to Federal
income taxation retroactively to the date thereof if such representations are
determined to have been inaccurate or if the issuer of such bonds (or the
beneficiary of such bonds) fails to comply with such covenants.

STATE TAXES

A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for Federal income tax purposes. Distributions by the Funds
to shareholders and the ownership of shares may be subject to state and local
taxes. Shareholders are urged to consult their tax advisor as to the
consequences of these and other U.S., state and local tax rules regarding an
investment in a Fund.

LEGAL MATTERS

Morgan, Lewis & Bockius LLP serves as legal counsel to the Trust.

EXPERTS

The financial statements of the Trust, incorporated by reference into this
Statement of Additional Information, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.

The financial statements of SIMT (with respect to the SIMT High Yield Bond
Portfolio only), incorporated by reference into this Statement of Additional
Information have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

The financial statements of SIF (with respect to the SIF S&P 500 Index
Portfolio only), incorporated by reference into this Statement of Additional
Information, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.

S-81
<PAGE>
FINANCIAL STATEMENTS

The Trust's audited financial statements and the notes thereto and the
Report of the Independent Public Accountants dated , 1999 for the
fiscal year ended December 31, 1998, relating to the financial statements and
financial highlights of the Trust are incorporated by reference herein. A copy
of the Trust's 1998 Annual Report to Shareholders must accompany delivery of
this Statement of Additional Information.

SIMT's audited financial statements and the notes thereto and the Report of
the Independent Accountants dated , 1998 for the fiscal year ended
September 30, 1998, relating to the financial statements and financial
highlights of SIMT (each with respect to the SIMT High Yield Bond Portfolio
only) and unaudited financial statements for the period ended March 31, 1999 and
notes thereto are incorporated by reference herein. A copy of SIMT's 1998 Annual
Report to Shareholders must accompany delivery of this Statement of Additional
Information.

SIF's audited financial statements and the notes thereto and the Report of
the Independent Public Accountants dated , 1999 for the fiscal year ended
March 31, 1999, relating to the financial statements and financial highlights of
SIF (each with respect to the SIF S&P 500 Index Portfolio only) are incorporated
by reference herein. A copy of SIF's 1998 Annual Report to Shareholders must
accompany delivery of this Statement of Additional Information.

S-82
<PAGE>
APPENDIX

DESCRIPTION OF RATINGS

The following descriptions are summaries of published ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1 and 2, to indicate the relative degree of safety. Issues rated
A-1+ are those with an "overwhelming degree" of credit protection. Those rated
A-1 reflect a "very strong" degree of safety regarding timely payment. Those
rated A-2 have satisfactory capacity to meet its financial commitments.

Commercial paper issues rated Prime-1 by Moody's are judged by Moody's to be
of the "highest" quality on the basis of relative repayment capacity.

The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned
by Fitch Investors Services, Inc. ("Fitch"). Paper rated Fitch-1 is regarded as
having the strongest degree of assurance for timely payment. The rating Fitch-2
(Very Good Grade) is the second highest commercial paper rating assigned by
Fitch which reflects an assurance of timely payment only slightly less in degree
than the strongest issues.

The rating Duff-1 is the highest commercial paper rating assigned by Duff
and Phelps, Inc. ("Duff"). Paper rated Duff-1 is regarded as having very high
certainty of timely payment with excellent liquidity factors which are supported
by ample asset protection. Risk factors are minor. Paper rated Duff-2 is
regarded as having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals. Risk factors are
small.

The designation A1 by IBCA indicates that the obligation is supported by a
very strong capacity for timely repayment. Those obligations rated A1+ are
supported by the highest capacity for timely repayment, although such capacity
may be susceptible to adverse changes in business, economic or financial
conditions.

The rating TBW-1 by Thomson indicates a very high likelihood that principal
and interest will be paid on a timely basis.

DESCRIPTION OF CORPORATE BOND RATINGS

Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edged." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities. Bonds which
are rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Bonds which are rated Baa are considered as medium-grade obligations (I.E.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics

A-1
<PAGE>
as well. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class. Bonds which are rated B generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's bond ratings, where specified, are applied to senior bank
obligations and insurance company senior policyholder and claims obligations
with an original maturity in excess of one year. Obligations relying upon
support mechanisms such as letters-of-credit and bonds of indemnity are excluded
unless explicitly rated.

Obligations of a branch of a bank are considered to be domiciled in the
country in which the branch is located. Unless noted as an exception, Moody's
rating on a bank's ability to repay senior obligations extends only to branches
located in countries which carry a Moody's sovereign rating. Such branch
obligations are rated at the lower of the bank's rating or Moody's sovereign
rating for the bank deposits for the country in which the branch is located.

When the currency in which an obligation is denominated is not the same as
the currency of the country in which the obligation is domiciled, Moody's
ratings do not incorporate an opinion as to whether payment of the obligation
will be affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.

Moody's makes no representation that rated bank obligations or insurance
company obligations are exempt from registration under the U.S. Securities Act
of 1933 or issued in conformity with any other applicable law or regulation. Nor
does Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.

Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.

Bonds rated AAA have the highest rating S&P assigns to a debt obligation.
Such a rating indicates an extremely strong capacity to pay principal and
interest. Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree. Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. Debt rated BBB is regarded as
having an adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.

Debt rated BB, B, CCC, CC and C is regarded as having significant
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. Debt rated

A-2
<PAGE>
BB is less vulnerable to nonpayment than other speculative grade debt. However,
it faces major ongoing uncertainties or exposure to adverse business, financial,
or economic conditions that could lead to the obligor's inadequate capacity to
meet its financial commitment on the obligation. The BB rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BBB- rating. Debt rated B has greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions would likely impair the obligor's
capacity or willingness to meet its financial commitment on the obligation. The
B rating category also is used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.

Debt rated CCC has a currently identifiable vulnerability to nonpayment, and
is dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation. An
obligation rated CC is currently highly vulnerable to nonpayment. The C rating
may be used to cover a situation where a bankruptcy petition has been filed or
similar action has been taken, but payments on this obligation are being
continued.

An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.

Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated F-1+.

Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings. Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified, which
could assist the obligor in satisfying its debt service requirements. Bonds
rated B are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

Bonds rated CCC have certain identifiable characteristics that, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment. Bonds rated CC are minimally
protected. Default in payment of interest and/or principal seems probable over
time. Bonds rated C are in imminent default in payment of interest or principal.

Bonds rated DDD, DD and D are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the basis
of their ultimate recovery value in liquidation or

A-3
<PAGE>
reorganization of the obligor. DDD represents the highest potential for recovery
on these bonds, and D represents the lowest potential for recovery.

Bonds rated AAA by Duff are considered of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt. Bonds rated AA+, AA and AA- are considered to be of high credit
quality. Protection factors are strong. Risk is modest but may vary slightly
from time to time because of economic conditions. Bonds rated A+, A and A- have
protection factors that are average but adequate. However, risk factors are more
variable and greater in periods of economic stress.

Bonds rated BBB+, BBB and BBB- are considered to have below average
protection factors but are still considered sufficient for prudent investment.
There is considerable variability in risk during economic cycles. Bonds rated
BB+, BB and BB- are below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category. Bonds rated B+, B and B- are below
investment grade and possess risk that obligations will not be met when due.
Financial protection factors will fluctuate widely according to economic cycles,
industry conditions and/or company fortunes. Potential exists for frequent
changes in the rating within this category or into a higher or lower rating
grade.

Bonds rated CCC are well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable company
developments.

Bonds rated DD are defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.

Bonds rated AAA by IBCA are obligations for which there is the lowest
expectation of investment risk. Capacity for timely repayment of principal and
interest is substantial, such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk substantially.
Bonds rated AA are obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk, albeit not very significantly. Bonds rated A are
obligations for which there is low expectation of investment risk. Capacity for
timely repayment of principal and interest is strong although adverse changes in
business, economic or financial conditions may lead to increased investment
risk.

Bonds rated BBB are obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in other categories. Bonds rated BB are obligations for which
there is a possibility of investment risk developing. Capacity for timely
repayment of principal and interest exists, but is susceptible over time to
adverse changes in business, economic or financial conditions. Bonds rated B are
obligations for which investment risk exists. Timely repayment of principal and
interest is not sufficiently protected against adverse changes in business,
economic or financial conditions.

Bonds rated CCC are obligations for which there is a current perceived
possibility of default. Timely repayment of principal and interest is dependent
on favorable business, economic or financial conditions. Bonds rated CC are
obligations which are highly speculative or which have a high risk of default.
Bonds rated C are obligations which are currently in default.

Bonds rated AAA by Thomson indicate that the ability to repay principal and
interest on a timely basis is very high. Bonds rated AA indicate a superior
ability to repay principal and interest on a timely basis, with limited
incremental risk compared to issues rated in the highest category. Bonds rated A

A-4
<PAGE>
indicate the ability to repay principal and interest is strong. Issues rated A
could be more vulnerable to adverse developments (both internal and external)
than obligations with higher ratings.

Bonds rated BBB indicate an acceptable capacity to repay principal and
interest. Issues rated BBB are, however, more vulnerable to adverse developments
(both internal and external) than obligations with higher ratings. Bonds rated
BBB are the lowest investment grade category.

While not investment grade, the BB rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there are
significant uncertainties that could affect the ability to adequately service
debt obligations. Issues rated B show a higher degree of uncertainty and
therefore greater likelihood of default than higher-rated issues. Adverse
developments could well negatively affect the payment of interest and principal
on a timely basis.

Issues rated CCC clearly have a high likelihood of default, with little
capacity to address further adverse changes in financial circumstances. CC is
applied to issues that are subordinate to other obligations rated CCC and are
afforded less protection in the event of bankruptcy or reorganization. Issues
rated D are in default.

A-5
<PAGE>
PART C: OTHER INFORMATION

POST-EFFECTIVE AMENDMENT NO. 19

ITEM 23. EXHIBITS:

<TABLE>
<S> <C>
(a) Registrant's Declaration of Trust dated September 9, 1991 originally filed
with Registrant's Registration Statement on Form N-1A (File No. 33-44712),
filed with the Securities and Exchange Commission on December 23, 1991.*
(b) Registrant's By-laws originally filed with Registrant's Registration
Statement on Form N-1A (File No. 33-44712), with the Securities and
Exchange Commission on December 23, 1991.*
(c) Not Applicable.
(d)(1) Investment Advisory Agreement between Registrant and United Jersey Bank
Investment Management Division dated April 28, 1996.**
(d)(2) Investment Advisory Agreement dated April 28, 1996 between Registrant and
United Jersey Bank Investment Management Division (the "Advisor") with
respect to the International Growth Portfolio.**
(d)(3) Investment Sub-Advisory Agreement dated April 28, 1996 between the Advisor
and Wellington Management Company, LLP.**
(d)(4) Amended and Restated Schedule to the Investment Advisory Agreement dated
April 28, 1996 is filed herewith.
(d)(5) Investment Sub-Advisory Agreement dated August 31, 1998 between the Advisor
and Vontobel USA Inc.******
(e)(1) Distribution Agreement between Registrant and SEI Financial Services Company
dated February 28, 1992, as amended May 25, 1993, originally filed with
Post-Effective Amendment No. 1 to Registrant's Registration Statement on
Form N-1A (File No. 33-44712) with the Securities and Exchange Commission
on September 24, 1992.*
(e)(2) Distribution and Agreement-Class B Shares between Registrant and SEI
Financial Services Company dated February 20, 1997.***
(f) Not Applicable.
(g)(1) Custodian Agreement dated February 28, 1992 between Registrant and United
Jersey Bank originally filed with Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 33-44712), with
the Securities and Exchange Commission on September 24, 1992.*
(g)(2) Custodian Agreement dated April 22, 1992 between United Jersey Bank and The
Bank of California, National Association originally filed with
Post-Effective Amendment No. 5 to Registrant's Registration Statement on
Form N-1A (File No. 33-44712), with the Securities and Exchange Commission
on February 10, 1995.*
(h)(1) Administration Agreement between Registrant and SEI Financial Management
Corporation dated February 28, 1992 as amended May 25, 1996 and December 1,
1996.**
(h)(2) Amended and Restated Schedule to the Administration Agreement dated February
28, 1992 is filed herewith.
(h)(3) Registrant's Consent to Assignment and Assumption dated June 1, 1996 of the
Administration Contract dated February 28, 1992, as amended May 25, 1993.**
(h)(4) Transfer Agent Agreement originally filed with Post-Effective Amendment No. 1
to Registrant's Registration Statement on Form N-1A (File No. 33-44712)
with the Securities and Exchange Commission on September 24, 1992.*
(h)(5) Transfer Agent Agreement between Registrant and State Street Bank and Trust
Company is filed herewith.
</TABLE>

C-1
<PAGE>

<TABLE>
<S> <C>
(i)(1) Opinion and Consent of Counsel originally filed with Pre-Effective Amendment
No. 2 to Registrant's Registration Statement on Form N-1A (File No.
33-44712), with the Securities and Exchange Commission on March 27, 1992.*
(j)(1) Consent of Arthur Andersen LLP is filed herewith.
(j)(2) Not applicable.
(j)(3) Not applicable.
(k) Not Applicable.
(l) Not Applicable.
(m)(1) Distribution Plan-Class A (formerly Class B)**
(m)(2) Distribution Plan-U.S. Treasury Securities Plus Money Market Fund originally
filed
with Post-Effective Amendment No. 2 to Registrant's Registration Statement
on Form N-1A (File No. 33-44712), filed with the Securities and Exchange
Commission on March 1, 1993.**
(m)(3) Distribution Plan-Class B Shares dated February 20, 1997.***
(n) To be filed by Amendment.
(o) Amended and Restated Rule 18f-3 Multiple Class Plan dated August 11,
1998*******
(p) Powers of Attorney for Robert A. Nesher, Ray Konrad, Arthur L. Berman,
Christine H. Yackman, James B. Grecco, Thomas D. Sayles, Jr. and Mark E.
Nagle.****
</TABLE>

- ------------------------

* Incorporated by reference to Post-Effective Amendment No. 9, as filed on
November 13, 1996.

** Incorporated by reference to Post-Effective Amendment No. 10, as filed on
February 28, 1997.

*** Incorporated by reference to Post-Effective Amendment No. 11, as filed on
April 30, 1997.

**** Incorporated by reference to Post-Effective Amendment No. 15, as filed on
January 30, 1998.

***** Incorporated by reference to Post-Effective Amendment No. 16, as filed on
April 30, 1998.

****** Incorporated by reference to Post-Effective Amendment No. 18, as filed on
September 1, 1998.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

See the Statement of Additional Information regarding the Trust's control
relationships. The Administrator is a subsidiary of SEI Corporation which also
controls the distributor of the Registrant, SEI Investments Distribution Co.,
and other corporations engaged in providing various financial and record keeping
services, primarily to bank trust departments, pension plan sponsors, and
investment managers.

ITEM 25. INDEMNIFICATION:

Article VIII of the Declaration of Trust filed as Exhibit 1 to the
Registration Statement is incorporated by reference. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
trustees, directors, officers and controlling persons of the Registrant by the
Registrant pursuant to the Declaration of Trust or otherwise, the Registrant is
aware that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and, therefore,
is unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by trustees, directors, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suit or proceeding) is
asserted by such trustees, directors, officers or controlling persons in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act will be
governed by the final adjudication of such issues.

C-2
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR:

Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of the Advisor is or has been, at
any time during the last two fiscal years, engaged for his own account or in the
capacity of a director, officer, employee, partner or trustee are as follows:

<TABLE>
<CAPTION>
NAME AND POSITION NAME OF CONNECTION WITH
WITH INVESTMENT ADVISOR OTHER COMPANY OTHER COMPANY
- ------------------------------------------ ------------------------------------------ -------------------------
<S> <C> <C>
DIRECTORS:
T. Joseph Semrod, Chairman, Chief
Executive Officer & Director Summit Bancorp Chairman & CEO

Robert G. Cox, President & Director Summit Bancorp President

John G. Collins, Vice Chairman & Director Summit Bancorp Vice Chairman

Bjorn Ahlstrom, Director Volvo North America Corporation, Retired --

Robert L. Boyle, Director William H. Hintelmann Firm Representative

James C. Brady, Director Mill House Associates, L.P. Partner

Barry D. Brown, Director Princeton Insurance Co. Chairman

T.J. Dermot Dunphy, Director Sealed Air Corporation Chairman & CEO

Anne Evans Estabrook, Director Elberon Development Co. Owner

Elinor J. Ferdon, Director Girl Scouts of the USA National President

Samuel Gerstein, Esq., Director Gerstein & Grayson Partner

Richard H. Goldberger, Director Linda's Diversified Holdings Inc. Chairman

Robert S. Hekemian, Director Hekemian & Co., Inc. Chairman & CEO

Thomas C. Jamieson, Jr., Esq., Director Jamieson, Moore, Peskin & Spicer, PA Chairman & President

Vincent P. Langone, Director Formica Corporation Chairman & CEO

Francis J. Mertz, Director Fairleigh Dickinson University President

George L. Miles, Jr., Director WQED Pittsburgh President & CEO

Bertram B. Miller, Director B.B. Miller & Company President

Raymond Silverstein, Director Alloy, Silverstein, Shapiro, Adams,
Mulford & Co. Consultant

Orin R. Smith, Director Engelhard Corp. Chairman & CEO

Sylvester L. Sullivan, Director Car Rentals, Inc. President

Joseph M. Tabak, Director Jersey Paper Company, Inc. Chairman & CEO

Robert A. Woodruff, Director Woodruff Oil Company President
</TABLE>

Vontobel USA Inc. ("Vontobel") is the investment sub-advisor for the
International Equity Fund. The principal address of Vontobel is 450 Park Avenue,
New York, NY 10022.

The list required by this Item 26 of officers and directors of the Adviser,
together with information as to any other business, profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by the Adviser pursuant to the Advisers Act (SEC File No.
801-15908).

C-3
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS:

(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or investment
adviser.

Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:

SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Fund, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 1998

The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").

C-4
<PAGE>
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456.

<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President &
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President &
Assistant
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President &
Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President &
Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President President
Joanne Nelson Vice President --
</TABLE>

C-5
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President &
Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President &
Assistant Secretary
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Kathryn L. Stanton Vice President & Assistant Secretary --
Lynda J. Striegel Vice President & Assistant Secretary Vice President &
Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:

Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:

(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records are maintained
at the offices of Registrant's Custodian:

Summit Bank
210 Main Street
Hackensack, NJ 07601

Union Bank of California Global Custody
475 Sansome Street
11th Floor
San Francisco, CA 94111

(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1), (4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books
and records are maintained at the offices of Registrant's Administrator:

SEI Investments Mutual Funds Services
Oaks, PA 19456

(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f),
the required books and records are maintained at the principal offices of
the Registrant's Advisor or Sub-Advisor:

Summit Bank Investment Management Division,
a division of Summit Bank
210 Main Street
Hackensack, NJ 07601

Vontobel USA Inc.
450 Park Avenue
New York, NY 10022

C-6
<PAGE>
ITEM 29. MANAGEMENT SERVICES:

None.

ITEM 30. UNDERTAKINGS:

Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940, as amended
(the "1940 Act"), inform the Board of Trustees of their desire to communicate
with shareholders of the Trust, the Trustees will inform such shareholders as to
the approximate number of shareholders of record and the approximate costs of
mailing or afford said shareholders access to a list of shareholders.

Registrant undertakes to call a meeting of shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the 1940 Act relating to shareholder communications.

Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest Annual Report to Shareholders,
upon request and without charge.

NOTICE

A copy of the Agreement and Declaration of Trust for The Pillar Funds is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this Registration Statement has been executed on behalf of
the Trust by an officer of the Trust as an officer and by its Trustees as
trustees and not individually and the obligations of or arising out of this
Registration Statement are not binding upon any of the Trustees, officers, or
shareholders individually but are binding only upon the assets and property of
the Trust.

C-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Amendment No. 19 to the Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Oaks, Commonwealth
of Pennsylvania on the 26th day of February, 1999.

THE PILLAR FUNDS

By: /s/ MARK E. NAGLE
-----------------------------------------
Mark E. Nagle
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacity and on the dates indicated.

*
- ------------------------------ Trustee February 26, 1999
Arthur L. Berman

*
- ------------------------------ Trustee February 26, 1999
Ray Konrad

*
- ------------------------------ Trustee February 26, 1999
Robert A. Nesher

*
- ------------------------------ Trustee February 26, 1999
Christine H. Yackman

*
- ------------------------------ Trustee February 26, 1999
James B. Grecco

*
- ------------------------------ Trustee February 26, 1999
Thomas D. Sayles, Jr.

/s/ MARK E. NAGLE
- ------------------------------ President February 26, 1999
Mark E. Nagle

/s/ CHRISTOPHER F. SALFI
- ------------------------------ Controller & Chief February 26, 1999
Christopher F. Salfi Financial Officer

*By: /s/ MARK E. NAGLE
-------------------------
Mark E. Nagle
ATTORNEY-IN-FACT

C-8
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NAME
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.A Registrant's Declaration of Trust dated September 9, 1991 originally filed with
Registrant's Registration Statement on Form N-1A (File No. 33-44712), filed with
the Securities and Exchange Commission on December 23, 1991.*

EX-99.B Registrant's By-laws originally filed with Registrant's Registration Statement on
Form N-1A (File No. 33-44712), with the Securities and Exchange Commission on
December 23, 1991.*

EX-99.D1 Investment Advisory Agreement between Registrant and United Jersey Bank Investment
Management Division dated April 28, 1996.**

EX-99.D2 Investment Advisory Agreement dated April 28, 1996 between Registrant and United
Jersey Bank Investment Management Division (the "Advisor") with respect to the
International Growth Portfolio.**

EX-99.D3 Investment Sub-Advisory Agreement between the Advisor and Wellington Management
Company, LLP.**

EX-99.D4 Amended and Restated Schedule to the Investment Advisory Agreement dated April 28,
1996 is filed herewith.

EX-99.D5 Investment Sub-Advisory Agreement dated August 31, 1998 between the Advisor and
Vontobel USA Inc.******

EX-99.E1 Distribution Agreement between Registrant and SEI Financial Services Company dated
February 28, 1992, as amended May 25, 1993, originally filed with Post-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No.
33-44712) with the Securities and Exchange Commission on September 24, 1992.*

EX-99.E2 Distribution Agreement-Class B Shares between Registrant and SEI Financial Services
Company dated February 20, 1997.***

EX-99.G1 Custodian Agreement dated February 28, 1992 between Registrant and United Jersey
Bank originally filed with Post-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 33-44712), with the Securities and
Exchange Commission on September 24, 1992.*

EX-99.G2 Custodian Agreement dated April 22, 1992 between United Jersey Bank and The Bank of
California, National Association originally filed with Post-Effective Amendment
No. 5 to Registrant's Registration Statement on Form N-1A (File No. 33-44712),
with the Securities and Exchange Commission on February 10, 1995.*

EX-99.H1 Administration Agreement between Registrant and SEI Financial Management
Corporation dated February 28, 1992, as amended May 25, 1996 and December 1,
1996.**

EX-99.H2 Amended and Restated Schedule to the Administration Agreement dated February 28,
1992 is filed herewith.

EX-99.H3 Registrant's Consent to Assignment and Assumption dated June 1, 1996 of the
Administration Contract dated February 28, 1992, as amended May 25, 1993.**

EX-99.H4 Transfer Agent Agreement originally filed with Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 33-44712) with the
Securities and Exchange Commission on September 24, 1992.**
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NAME
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.H5 Transfer Agent Agreement between Registrant and State Street Bank and Trust Company
is filed herewith.

EX-99.I Opinion and Consent of Counsel originally filed with Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form N-1A (File No. 33-44712) with the
Securities and Exchange Commission on March 27, 1992.*

EX-99.J1 Consent of Arthur Andersen LLP is filed herewith.

EX-99.J2 Not applicable.

EX-99.J3 Not applicable.

EX-99.M1 Distribution Plan-Class A (formerly Class B).**

EX-99.M2 Distribution Plan-U.S. Treasury Securities Plus Money Market Fund originally filed
with Post-Effective Amendment No. 2 to Registrant's Registration Statement on
Form N-1A (File No. 33-44712), filed with the Securities and Exchange Commission
on March 1, 1993.**

EX-99.M3 Distribution Plan-Class B Shares dated February 20, 1997.***

EX-27.N To be filed by Amendment.

EX-99.O Amended and Restated Rule 18f-3 Multiple Class Plan dated August 11, 1998.******

EX-99.P Powers of Attorney for Robert A. Nesher, Ray Konrad, Arthur L. Berman, Christine H.
Yackman, James B. Grecco, Thomas D. Sayles, Jr. and Mark E. Nagle.****
</TABLE>

- ------------------------

* Incorporated by reference to Post-Effective Amendment No. 9, as filed on
November 13, 1996.

** Incorporated by reference to Post-Effective Amendment No. 10, as filed on
February 28, 1997.

*** Incorporated by reference to Post-Effective Amendment No. 11, as filed on
April 30, 1997.

**** Incorporated by reference to Post-Effective Amendment No. 15, as filed on
January 30, 1998.

***** Incorporated by reference to Post-Effective Amendment No. 16, as filed on
April 30, 1998.

****** Incorporated by reference to Post-Effective Amendment No. 18, as filed on
September 1, 1998.

<PAGE>

AMENDED AND RESTATED
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED APRIL 28, 1996
BETWEEN
THE PILLAR FUNDS
AND
SUMMIT BANK INVESTMENT MANAGEMENT DIVISION,
A DIVISION OF SUMMIT BANK

Pursuant to Article 3, the Trust shall pay the Advisor compensation at an annual
rate as follows:

PORTFOLIO FEE (IN BASIS POINTS)
<S> <C>
Prime Obligation Money Market Fund .35%
U.S. Treasury Securities Money Market Fund .35%
Tax-Exempt Money Market Fund .35%
U.S. Treasury Securities Plus Money Market Fund .15%
Institutional Select Money Market Fund .10%

Fixed Income Fund .60%
New Jersey Municipal Securities Fund .60%
Pennsylvania Municipal Securities Fund .60%
Intermediate-Term Government Securities Fund .60%
High Yield Bond Fund .60%

Mid Cap Fund .75%
Equity Growth Fund .75%
Equity Value Fund .75%
Equity Income Fund .75%
Equity Index Fund .75%
Balanced Fund .75%

</TABLE>

<PAGE>

AMENDED AND RESTATED
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED FEBRUARY 28, 1992
BETWEEN
THE PILLAR FUNDS
AND
SEI INVESTMENTS MUTUAL FUNDS SERVICES
(FORMERLY KNOWN AS SEI FUND RESOURCES)

Pursuant to the Agreement, the Administrator shall provide services to the
following Portfolios:

U.S. Treasury Securities Money Market Fund
Prime Obligation Money Market Fund
Tax-Exempt Money Market Fund
Fixed Income Fund
New Jersey Municipal Securities Fund
Intermediate-Term Government Securities
Equity Growth Fund
Equity Income Fund
Equity Value Fund (formerly, Equity Aggressive Growth Fund)
Equity Index Fund
High Yield Bond Fund
Balanced Fund (formerly, Balanced Growth Fund)
U.S. Treasury Securities Plus Money Market Fund
Pennsylvania Municipal Securities Fund

Pursuant to Article 10, the Administrator shall provide services to the
following additional Portfolios (collectively, with the foregoing Portfolios):

International Equity Fund (formerly, International Growth Fund)
Institutional Select Money Market Fund
Mid Cap Fund

Pursuant to Article 6, Section A, the Trust shall pay the Administrator
compensation for the Portfolios which is calculated daily and paid monthly at an
annual rate as follows:

.20% of average daily net assets of each of the Portfolios, except:

.10% of average daily net assets of the Institutional Select Money Market Fund;
and .35% of average daily net assets of the U.S. Treasury Securities Money Plus
Money Market Fund.

<PAGE>

TRANSFER AGENCY AND SERVICE AGREEMENT

between

THE PILLAR FUNDS

and

STATE STREET BANK AND TRUST COMPANY

1E-Domestic/Trust

<PAGE>

TABLE OF CONTENTS

PAGE

1. Terms of Appointment: Duties of the Bank................................ 1

2. Fees and Expenses....................................................... 4

3. Representations and Warranties of the Bank.............................. 4

4. Representations and Warranties of the Fund.............................. 5

5. Wire Transfer Operating Guidelines...................................... 5

6. Data Access and Proprietary Information................................. 7

7. Indemnification......................................................... 8

8. Standard of Care........................................................10

9. Covenants of the Fund and the Bank .....................................10

10. Termination of Agreement................................................11

11. Assignment..............................................................11

12. Amendment...............................................................12

13. Massachusetts Law to Apply..............................................12

14. Force Majeure...........................................................12

15. Consequential Damages...................................................12

16. Merger of Agreement.....................................................12

17. Limitations of Liability of the Trustees & Shareholders.................12

18. Counterparts............................................................13

19. Reproduction of Documents...............................................13

<PAGE>

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the lst day of May, 1998, by and between THE PILLAR FUNDS,
having its principal office and place of business at 210 Main Street,
Hackensack, New Jersey 07062 (the "Fund") and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").

WHEREAS, the Fund desires to appoint the Bank as its transfer agent, dividend
disbursing agent, custodian of certain retirement plans and agent in connection
with certain other activities, and the Bank desires to accept such appointment;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

1. TERMS OF APPOINTMENT; DUTIES OF THE BANK

1.1 Subject to the terms and conditions set forth in this Agreement, the Fund
hereby employs and appoints the Bank to act as, and the Bank agrees to act
as its transfer agent for the Fund's authorized and issued units of its
beneficial interest, of each class of each of the funds listed on Schedule
A, each an open-end investment company registered under the Investment
company Act of 1940, as amended ("Shares"), dividend disbursing agent,
custodian of certain retirement plans and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of
the Fund ("Shareholders") and set out in the currently effective
prospectuses and statement of additional information ("prospectus") of the
Fund, including, without limitation, any periodic investment plan or
periodic withdrawal program.

1.2 The Bank agrees that it will perform the following services in accordance
with the Fund's then current prospectuses:

(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:

(i) Receive for acceptance, orders for the purchase or exchange of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund (the
"Custodian");

(ii) Pursuant to purchase, orders, issue the appropriate number of
Shares, hold such Shares in the appropriate Shareholder account
and, with respect to exchange orders, redeem the appropriate

<PAGE>

number of Shares;

(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to
the Custodian;

(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly and
broker-dealers authorized by the Fund, calculate front-end sales
loads, contingent deferred sales charges and dealer commissions
and reallowances as set forth in the Fund's then current
prospectus, and provide periodic reports relating to the same to
the Fund or its designee;

(v) At the appropriate time as and when it receives monies paid to it
by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;

(vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;

(vii) Prepare and transmit payments (or where appropriate credit a
Shareholder account) for dividends and distributions declared by
the Fund:

(viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protesting the Bank
and the Fund, and the Bank at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;

(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing;

(x) Record the issuance of Shares of the Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of Shares of
the Fund which are authorized, based upon data provided to it by
the Fund, and issued and outstanding. The Bank shall also provide
the Fund on a regular basis with the total number of Shares which
are authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund; and

<PAGE>

(xi) In the event any check or other order for the transfer of money
is returned unpaid, the Bank shall cancel the purchase of Shares
and take such other steps as the Fund may instruct to protect the
Fund and the Bank from financial loss.

(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment
plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts, preparing, filing and mailing to Shareholders U.S.
Treasury Department Forms 1099 and other appropriate forms required
with respect to dividends, distributions and Share transactions for
any and all Shareholders, preparing and mailing confirmation forms and
statements of accounts to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in
Shareholders accounts, responding to Shareholder telephone calls and
Shareholder correspondence, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information and
(ii) provide a system which will enable the Fund to monitor the total
number of Shares sold in each State.

(c) In addition, the Fund or its administrator shall (i) identify to the
Bank in writing those transactions and assets to be treated as exempt
from blue sky reporting for each State and (ii) verify the
establishment of transactions for each State on the system prior to
activation and thereafter monitor the daily activity for each State.
The responsibility of the Bank for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.

(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund and the Bank per the attached service responsibility
schedule. The Bank may at times perform only a portion of these
services and the Fund or its agent may perform these services on the
Fund's behalf.

(e) The Bank shall make reports to the Fund and its Trustees concerning
the performance of its services hereunder as the parties may
reasonably agree upon.

<PAGE>

(f) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.

2. FEES AND EXPENSES

2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees
to pay the Bank an annual maintenance fee for each Shareholder account as
set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.2 below may
be changed from time to time subject to mutual written agreement between
the Fund and the Bank.

2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees to
reimburse the Bank for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm, microfiche,
mailing and tabulating proxies, records storage, or advances incurred by
the Bank for the items set out in the fee schedule attached hereto. In
addition, any other expenses incurred by the Bank at the request or with
the consent of the Fund, will be reimbursed by the Fund.

2.3 The Fund agrees to pay all fees and reimbursable expenses within five days
following the receipt of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all Shareholder
accounts shall be advanced to the Bank by the Fund at least seven (7) days
prior to the mailing date of such materials.

3. REPRESENTATIONS AND WARRANTIES OF THE BANK

The Bank represents and warrants to the Fund that:

3.1 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.

3.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.

3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.

3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.

<PAGE>

3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.

3.6 It is, and shall continue to be, duly registered as a transfer agent
pursuant to Section 17A of the Securities and Exchange Act of 1934 and such
other provisions of law as required and shall continue to be so for the
term of this Agreement; and shall comply with all applicable federal and
state laws in the performance of its services under this Agreement.

3.7 It will not accept or process any checks (commonly known as "third party
checks") made payable to prospective or existing Shareholders tendered to
the Bank for the purchase of Shares.

4. REPRESENTATIONS AND WARRANTIES OF THE FUND

The Fund represents and warrants to the Bank that:

4.1 It is a business trust duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.

4.2 It is empowered under applicable laws and by its Declaration of Trust and
By-Laws to enter into and perform this Agreement.

4.3 All corporate proceedings required by said Declaration of Trust and By-Laws
have been taken to authorize it to enter into and perform this Agreement.

4.4 It is an open-end and diversified management investment company registered
under the Investment Company Act of 1940, as amended.

4.5 A registration statement under the Securities Act of 1933, as amended is
currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.

5. WIRE TRANSFER OPERATING GUIDELINES/ARTICLES 4A OF THE UNIFORM COMMERCIAL
CODE

5.1 The Bank is authorized to promptly debit the appropriate Fund accounts(s)
upon the receipt of a payment order in compliance with the selected
security procedure (the "Security Procedure") chosen for funds transfer and
in the amount of money that the Bank has been instructed to transfer. The
Bank shall execute payment orders in compliance with the Security Procedure
and with the Fund instructions on the execution date provided that such
payment order is received by the customary deadline for processing such
request, unless the

5
<PAGE>

payment order specifies a later time. All payment order and communications
received after this the customary deadline will be deemed to have been
received the next business day.

5.2 The Fund acknowledges that the Security Procedure it has designated on the
Fund Selection Form was selected by the Fund from security procedures
offered by the Bank. The Fund shall restrict access to confidential
information relating to the Security Procedure to authorized persons as
communicated to the Bank in writing. The Fund must notify the Bank
immediately if it has reason to believe unauthorized persons may have
obtained access to such information or of any change in the Fund's
authorized personnel. The Bank shall verify the authenticity of all Fund
instructions according to the Security Procedure.

5.3 The Bank shall process all payment orders on the basis of the account
number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account number, the
account number shall take procedure and govern.

5.4 The Bank reserves the right to decline to process or delay the processing
of a payment order which (a) is in excess of the collected balance in the
account to be charged at the time of the Bank's receipt of such payment
order; (b) if initiating such payment order would cause the Bank, in the
Bank's sole judgement, to exceed any volume, aggregate dollar, network,
time, credit or similar limits which are applicable to the Bank; or (c) if
the Bank, in good faith, is unable to satisfy itself that the transaction
has been properly authorized.

5.5 The Bank shall use reasonable efforts to act on all authorized requests to
cancel or amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely manner
affording the Bank reasonable opportunity to act. However, the Bank assumes
no liability if the request for amendment or cancellation cannot be
satisfied.

5.6 The Bank shall assume no responsibility for failure to detect any erroneous
payment order provided that the Bank complies with the payment order
instructions as received and the Bank complies with the Security Procedure.
The Security Procedure is established for the purpose of authenticating
payment orders only and not for the detection of errors in payment orders.

5.7 The Bank shall assume no responsibility for lost interest with respect to
the refundable amount of any unauthorized payment order, unless the Bank is
notified of the unauthorized payment order with thirty (30) days of
notification by the Bank of the acceptance of such payment order. In no
event (including failure to execute a payment order) shall the Bank be
liable for special, indirect or consequential damages, even if advised of
the possibility of such damages.

<PAGE>

5.8 When the Fund initiates or receives Automated Clearing House ("ACH") credit
and debit entries pursuant to these guidelines and the rules of the
National Automated Clearing House Association and the New England Clearing
House Association, the Bank will act as an Originating Depository Financial
Institution and/or Receiving Depository Financial Institution, as the case
may be, with respect to such entries. Credits given by the Bank with
respect to an ACH credit entry are provisional until the Bank receives
final settlement for such entry from the Federal Reserve Bank. If the Bank
does not receive such final settlement, the Fund agrees that the Bank shall
receive a refund of the amount credited to the Fund in connection with such
entry, and the party making payment to the Fund via such entry shall not be
deemed to have paid the amount of the entry.

5.9 Confirmation of Bank's execution of payment orders shall ordinarily be
provided within twenty four (24) hours, notice of which may be delivered
through the Bank's proprietary information systems, or by facsimile or
call-bank. Fund must report any objections to the execution of an order
within thirty (30) days.

6. DATA ACCESS AND PROPRIETARY INFORMATION

6.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank or other third
party ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. It is expressly
understood, however, that Customer Data, which includes data provided to
the Bank by or on behalf of the Fund and records belonging to the Fund
pursuant to Section 31 of the Investment Company Act of 1940, as amended
(and the Rules thereunder), will not be deemed to be part of the Data
Access Services or Proprietary Information. The Fund agrees to treat all
Proprietary Information as proprietary to the Bank and further agrees that
it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:

(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation;

(b) to refrain from copying or duplication in any way the Proprietary
Information;

<PAGE>

(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Bank's instructions;

(d) to refrain from causing or allowing the data acquired hereunder from
being retransmitted to any other computer facility or other location,
except with the prior written consent of the Bank and except Customer
Data;

(e) that the Fund shall have access only to Customer Data Except as
otherwise agreed upon by the parties;

(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under other
federal or state law.

Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 6. The obligations of this Section shall
survive any earlier termination of this Agreement.

6.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain
certain data include in the Data Access Services are solely responsible for
the contents of such data and the Fund agrees to make no claim against the
Bank arising out of the contents of such third-party data, including, but
not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS (PROVIDED THAT THE BANK SHALL
CONTINUE TO BE RESPONSIBLE FOR ANY DELAY IN OR OTHER FAILURE OF PERFORMANCE
THAT ARISES AS A RESULT OF A MATTER REASONABLY WITHIN THE BANK'S CONTROL.
THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

6.3 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or
other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity
with the Security Procedure established by the Bank from time to time and
selected by the Fund.

8
<PAGE>

7. INDEMNIFICATION

7.1 Provided that the Bank has met the standard of care set forth in Section
7.2, the Bank shall not be responsible for, and the Fund shall indemnify
and hold the Bank harmless from and against, any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability arising out
of or attributable to:

(a) All actions of the Bank or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct.

(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation of warranty of the Fund
hereunder.

(c) The reasonable reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which
(i) are received by the Bank or its agents or subcontractors and
furnished or performed by or on behalf of the Fund, and (ii) have been
prepared, maintained or performed by the Fund or any other person or
firm on behalf of the Fund including but not limited to any previous
transfer agent or registrar.

(d) The reliance on any instructions or requests of the Fund.

(e) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be
registered or in violation of any stop order or other determination or
ruling by any federal or any state agency with respect to the offer or
sale of such Shares.

7.2 Any time the Bank may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services in to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall be liable
and shall be indemnified by the Fund for any action taken or omitted by it
in reliance upon such instructions or upon the opinion of such counsel
(provided such counsel is reasonably satisfactory to the Fund). The Bank
and such agents and subcontractors shall be protected and indemnified in
acting upon any paper or document, reasonable believed to be genuine and to
have been signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or such agents or
subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt

9
<PAGE>

of written notice thereof from the Fund. The Bank, and such agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar, or of a
co-transfer agent or co-registrar.

7.3 In order that the indemnification provisions contained in this Section 7
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank or any agent or subcontractor, the Bank
shall promptly notify the Fund of such assertion, and shall keep the Fund
advised with respect to all developments concerning such claim. The Fund
shall have the option to either (i) participate in the defense of such
claim, or (ii) assume the full defense of such claim and defend against
said claim in its own name or in the name of the Bank or the agent or
subcontractor involved, in which case the Fund shall not bear the fees and
expenses of any additional counsel retained by the Bank or any agent or
subcontract. The Bank and such agents and subcontractors shall in no case
confess any claim or make any compromise in any case in which the Fund may
be required to indemnify the Bank or such agents or subcontractors except
with the Fund's prior written consent.

8. STANDARD OF CARE

The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not
be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct or that of its employees.

9. COVENANTS OF THE FUND AND THE BANK

9.1 The Fund shall promptly furnish to the Bank the following:

(a) A certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.

(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.

9.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates,
check forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms
and devices.

<PAGE>

9.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner required by law and as it may deem
advisable. To the extent required by Section 31 of the Investment Company
Act of 1940, as amended, and the Rules thereunder, the Bank agrees that all
such records prepared or maintained by the Bank relating to the services to
be performed by the Bank hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such Section
and Rules, and will be surrendered promptly to the Fund on and in
accordance with its request. Additionally, the Bank will make reasonably
available to the Fund and its authorized representatives records maintained
by the Bank pursuant to this Agreement for reasonable inspection, use and
audit, and will take all reasonable action to assist the Fund's independent
accountants in rendering their opinion.

9.4 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except as may be required by law.

Except as provided in Section 9.5 hereof, the Bank agrees on behalf of
itself and its directors, officers, employees and agents to treat
confidentially and as proprietary information of the Fund all records and
other information relative to the Fund and prior, present or potential
Shareholders of the Fund (and clients of said Shareholders), and not to use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder.

9.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.

10. TERMINATION OF AGREEMENT

10.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other, and may be terminated immediately
by the Fund if the Bank ceases to be qualified as the Fund's transfer agent
in accordance with applicable law.

10.2 Should the Fund exercise its right to terminate, and provided that the Bank
has not breached this agreement, all out-of-pocket expenses associated with
the movement of records and material will be borne by the Fund.
Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated

<PAGE>

with such termination that the parties may mutually agree upon.

11. ASSIGNMENT

11.1 Except as provided in Section 11.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without the
written consent of the other party.

11.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.

11.3 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc., a
Massachusetts corporation ("BFDS") which is duly registered as a transfer
agent pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934,
as amended ("Section 17A(c)(2)"), (ii) a BFDS affiliate: provided, however,
that the Bank shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as its is for its own acts and omissions.

12. AMENDMENT

This Agreement may be amended or modified by a written agreement executive
by both parties and authorized or approved by a resolution of the Board of
Trustees of the Fund.

13. MASSACHUSETTS LAW TO APPLY

This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.

14. FORCE MAJEURE

In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonable beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform
or otherwise from such causes.

15. CONSEQUENTIAL DAMAGES

Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.

<PAGE>

16. MERGER OF AGREEMENT

This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.

17. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS

A copy of the Declaration of Trust of the Fund is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Fund as
Trustees and not individually and that the obligations of this instrument
are not binding upon any of the Trustees, officers or Shareholders of the
Fund individually but are binding only upon the assets and property of the
Fund.

18. COUNTERPARTS

This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.

19. REPRODUCTION OF DOCUMENTS

This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilms,
micro-card, miniature photographic or other similar process. The parties
hereto each agree that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not
such reproduction was made by a party in the regular course of business,
and that any enlargement, facsimile or further reproduction shall likewise
be admissible in evidence.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.

THE PILLAR FUNDS

BY:[illegible signature]
----------------------------------

ATTEST:

[illegible signature]
- ----------------------------

STATE STREET BANK AND TRUST COMPANY

BY:[illegible signature]
-----------------------------
Executive Vice President

ATTEST:

[illegible signature]
- ---------------------------

<PAGE>

STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES

SERVICE PERFORMED RESPONSIBILITY

BANK FUND
<S> <C> <C>
1. Receives orders for the purchase of Shares. X

2. Issue Shares and hold Shares in Shareholders accounts. X

3. Receive redemption requests. X

4. Effect transactions 1-3 above directly with broker-dealers. X

5. Pay over monies to redeeming Shareholders. X

6. Effect transfers of Shares. X

7. Prepare and transmit dividends and distributions. X

8. Issue Replacement Certificates. X

9. Reporting of abandoned property. X

10. Maintain records of account. X

11. Maintain and keep a current and accurate
control book for each issue of securities. X

12. Mail proxy materials. X

13. Mail Shareholder reports. X

14. Mail prospectuses to current Shareholders. X

15. Withhold taxes on U.S. resident and
non-resident alien accounts. X

16. Prepare and file U.S. Treasury Department forms. X

17. Prepare and mail account and confirmation statements
for Shareholders. X

18. Provide Shareholder account information. X

19. Blue sky reporting. X X

* Such services are more fully described in Section 1.2(a), (b) and (c) of
the Agreement.
</TABLE>

<PAGE>

THE PILLAR FUNDS

BY:[illegible signature]
------------------------------

ATTEST:

[illegible signature]
- -----------------------------

STATE STREET BANK AND TRUST COMPANY

BY:[illegible signature]
------------------------------
Executive Vice President

ATTEST:

[illegible signature]
- ---------------------------

<PAGE>

SCHEDULE A

THE PILLAR FUNDS

PRIME OBLIGATION MONEY MARKET FUND-CLASS S
U.S. TREASURY SECURITIES MONEY MARKET FUND-INSTITUTIONAL
U.S. TREASURY SECURITIES MONEY MARKET FUND-CLASS A
PRIME OBLIGATION MONEY MARKET FUND-INSTITUTIONAL
PRIME OBLIGATION MONEY MARKET FUND-CLASS A
TAX-EXEMPT MONEY MARKET FUND-INSTITUTIONAL
TAX-EXEMPT MONEY MARKET FUND-CLASS A
SHORT-TERM INVESTMENT FUND-INSTITUTIONAL
SHORT-TERM INVESTMENT FUND-CLASS A
FIXED INCOME FUND-INSTITUTIONAL
FIXED INCOME FUND-CLASS A
NEW JERSEY MUNICIPAL SECURITIES FUND-INSTITUTIONAL
NEW JERSEY MUNICIPAL SECURITIES FUND-CLASS A
EQUITY VALUE FUND-INSTITUTIONAL
EQUITY VALUE FUND-CLASS A
EQUITY INCOME FUND-INSTITUTIONAL
EQUITY INCOME FUND-CLASS A
MID CAP FUND-INSTITUTIONAL
MID CAP FUND-CLASS A
BALANCED FUND-INSTITUTIONAL
BALANCED FUND-CLASS A
PENNSYLVANIA MUNICIPAL SECURITIES FUND-INSTITUTIONAL
PENNSYLVANIA MUNICIPAL SECURITIES FUND-CLASS A
GNMA FUND-INSTITUTIONAL
GNMA FUND-CLASS A
U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND
INTERNATIONAL GROWTH FUND-INSTITUTIONAL
INTERNATIONAL GROWTH FUND-CLASS A
EQUITY GROWTH FUND-INSTITUTIONAL
EQUITY GROWTH FUND-CLASS A
PRIME OBLIGATION MONEY MARKET FUND-CLASS B
FIXED INCOME FUND-CLASS B
EQUITY VALUE FUND-CLASS B
EQUITY INCOME FUND-CLASS B
BALANCED FUND-CLASS B
INTERNATIONAL GROWTH FUND-CLASS B
EQUITY GROWTH FUND-CLASS B
INSTITUTIONAL SELECT MONEY MARKET FUND

<PAGE>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our firm name
included in the Post-Effective Amendment No. 19 to the Registration Statement on
Form N-1A of The Pillar Funds (File No. 33-44712), and to all references to our
firm included in this Registration Statement.

/s/ Arthur Andersen LLP

Philadelphia, Pennsylvania
February 24, 1999