[Graphic Omitted]
PROSPECTUS
MONEY MARKET FUNDS
U.S. TREASURY SECURITIES MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
PRIME OBLIGATION MONEY MARKET FUND
FIXED INCOME FUNDS
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
EQUITY AND BALANCED FUNDS
BALANCED FUND
EQUITY INCOME FUND
EQUITY INDEX FUND
EQUITY VALUE FUND
EQUITY GROWTH FUND
INTERNATIONAL EQUITY FUND
INVESTMENT ADVISOR
SUMMIT BANK
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CLASS A AND
CLASS B SHARES
APRIL 30, 2000
[PILLAR LOGO OMITTED]
<PAGE>
ABOUT 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
[box] Front-end sales charge (except for
the Money Market Funds)
[box] 12b-1 fees
[box] $1,000 minimum initial investment
CLASS B SHARES
[box] Contingent deferred sales charge
[box] Higher 12b-1 fees and shareholder
servicing fees
[box] $1,000 minimum initial investment
[box] Automatic conversion to Class A Shares
after 8 years
[LOGO OMITTED]
PROSPECTUS
<PAGE>
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. IN THE NEXT COLUMN, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
Page
U.S. TREASURY SECURITIES MONEY MARKET FUND ............... 2
TAX-EXEMPT MONEY MARKET FUND ............................. 4
PRIME OBLIGATION MONEY MARKET FUND ....................... 6
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND .................................... 9
FIXED INCOME FUND ........................................12
PENNSYLVANIA MUNICIPAL SECURITIES FUND ...................15
NEW JERSEY MUNICIPAL SECURITIES FUND .....................17
HIGH YIELD BOND FUND .....................................19
BALANCED FUND ............................................22
EQUITY INCOME FUND .......................................25
EQUITY INDEX FUND ........................................28
EQUITY VALUE FUND ........................................31
EQUITY GROWTH FUND .......................................34
INTERNATIONAL EQUITY FUND ................................37
MORE INFORMATION ABOUT RISK ..............................40
MORE INFORMATION ABOUT FUND INVESTMENTS ..................43
THE INVESTMENT ADVISOR,
AND PORTFOLIO MANAGERS .............................44
PURCHASING, SELLING AND
EXCHANGING FUND SHARES .............................46
DISTRIBUTIONS OF FUND SHARES .............................53
DIVIDENDS AND DISTRIBUTIONS ..............................53
TAXES ....................................................54
FINANCIAL HIGHLIGHTS .....................................55
HOW TO OBTAIN MORE INFORMATION
ABOUT THE PILLAR FUNDS .................... Back Cover
RISK/RETURN INFORMATION COMMON THE THE FUNDS
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 prices 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 sensitivity of a Fund's net asset value to a change in the
value of a single security depends upon what proportion the security is of the
Fund's entire investment portfolio.
PROSPECTUS
<PAGE>
U.S. TREASURY SECURITIES MONEY MARKET FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
U.S. TREASURY SECURITIES
MONEY MARKET FUND
[box][box][box]
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 increase the Fund's potential for current income
through analysis of the available yields among the Fund's permitted investments
and "positioning on the yield curve" - that is, balancing the desire to earn
attractive rates of interest with the need to maintain an appropriate maturity
level. The Advisor actively manages the maturity of the Fund based on current
market interest rates and its outlook on the various economic factors which
influence the market for short-term fixed income instruments and future interest
rate predictions.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE U.S. TREASURY SECURITIES
MONEY MARKET FUND
[box][box][box]
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.
[LOGO OMITTED]
2 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 2.21%
1994 3.17%
1995 4.80%
1996 4.27%
1997 4.28%
1998 4.43%
1999 4.07%
BEST QUARTER WORST QUARTER
1.23% 0.53%
(6/30/95) (6/30/93)
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 ENDED
DECEMBER 31, 1999.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------
U.S. TREASURY SECURITIES
MONEY MARKET FUND 4.07% 4.37% 3.75%*
- ----------------------------------------------------------
* SINCE 4/1/92
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES
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
(as a percentage of offering price) None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) None
- --------------------------------------------------------------------------------
Exchange Fee None
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
CLASS A SHARES
Management Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .29%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .89%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------
$91 $284 $493 $1,096
PROSPECTUS 3
<PAGE>
TAX-EXEMPT MONEY MARKET FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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 substantially all of its assets 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
[box][box][box]
INVESTMENT STRATEGY OF THE
TAX-EXEMPT MONEY MARKET FUND
[box][box][box]
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 rating 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 increase the Fund's
potential for current income through a strategy that takes advantage of pricing
inefficiencies that often occur in the market for municipal securities. The
Advisor actively manages the maturity of the Fund based on current market
interest rates and its outlook on the various economic factors which influence
the market for short-term municipal instruments 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 ongoing monitoring of the credit quality of each issuer and
any person or company providing credit support.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN
THE TAX-EXEMPT MONEY MARKET FUND
[box][box][box]
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.
[Logo omitted]
4 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 1.74%
1994 2.02%
1995 3.17%
1996 2.70%
1997 2.84%
1998 2.72%
1999 2.45%
BEST QUARTER WORST QUARTER
0.85% 0.38%
(6/30/95) (3/31/94)
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 ENDED
DECEMBER 31, 1999.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
TAX-EXEMPT
MONEY MARKET FUND 2.45% 2.78% 2.49%*
- --------------------------------------------------------------------------------
* SINCE 4/6/92
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES
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 (as a percentage of offering price) None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage of
amount redeemed, if applicable) None
- --------------------------------------------------------------------------------
Exchange Fee None
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES
Management Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .30%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .90%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
TAX-EXEMPT MONEY MARKET FUND - CLASS A .86%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same and you
reinvest all dividends and distributions. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------
$92 $287 $498 $1,108
PROSPECTUS 5
<PAGE>
PRIME OBLIGATION MONEY MARKET FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
PRIME OBLIGATION MONEY MARKET FUND
[box][box][box]
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
rating 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 increase the Fund's
potential for current income through (i) security selection; (ii) managing the
Fund's mix of government, corporate and bank obligations; and (iii) "positioning
on the yield curve" - that is, balancing the desire to earn attractive rates of
interest with the need to maintain an appropriate maturity level. 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 Advisor carefully evaluates and monitors the
creditworthiness of each issuer and any person or company providing credit
support.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE
PRIME OBLIGATION MONEY MARKET FUND
[box][box][box]
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.
[Logo omitted]
6 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
1993 2.40%
1994 3.40%
1995 5.14%
1996 4.58%
1997 4.75%
1998 4.76%
1999 4.39%
BEST QUARTER WORST QUARTER
1.29% 0.58%
(6/30/95) (6/30/93)
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 ENDED
DECEMBER 31, 1999.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------
PRIME OBLIGATION
MONEY MARKET FUND 4.39% 4.72% 4.04%*
- ----------------------------------------------------------
* SINCE 4/1/92
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ----------------------------------------------------------
PRIME OBLIGATION
MONEY MARKET FUND -1.89% 1.46%*
- ----------------------------------------------------------
* SINCE 12/30/97
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(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
- --------------------------------------------------------------------------------
* CLASS B SHARES OF THE FUND MAY BE OBTAINED ONLY THROUGH EXCHANGES. THIS SALES
CHARGE IS IMPOSED IF YOU SELL CLASS B SHARES WITHIN 1 YEAR OF YOUR PURCHASE AND
DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE "SELLING FUND
SHARES."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees .35% .35%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses .30% .30%
- --------------------------------------------------------------------------------
Total Annual Fund Operating
Expenses .90% 1.65%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
PRIME OBLIGATION MONEY MARKET FUND - CLASS A .89%
PRIME OBLIGATION MONEY MARKET FUND - CLASS B 1.63%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-ADVISOR"
AND "DISTRIBUTION OF FUND SHARES."
PROSPECTUS 7
<PAGE>
PRIME OBLIGATION MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
Class A Shares $ 92 $287 $ 498 $1,108
Class B Shares $718 $920 $1,097 $1,754
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
Class A Shares $ 92 $287 $ 498 $1,108
Class B Shares $168 $520 $ 897 $1,754
[Logo omitted]
8 PROSPECTUS
<PAGE>
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
[box][box][box]
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 actively manages the maturity of the Fund's
portfolio and purchases securities with competitive yields in relation to other
available 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, but in no event will it exceed ten years. The Advisor continually
monitors the securities held by the Fund and may sell a security to adjust the
maturity of the Fund or if better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
[box][box][box]
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.
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 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.
PROSPECTUS 9
<PAGE>
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND (CONTINUED)
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 7.94%
1994 -5.09%
1995 14.71%
1996 3.01%
1997 6.60%
1998 6.47%
1999 -1.18%
BEST QUARTER WORST QUARTER
4.90% -3.20%
(6/30/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------
INTERMEDIATE-TERM
GOVERNMENT
SECURITIES FUND -5.11% 4.92% 4.25%*
- ----------------------------------------------------------
LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/
CORPORATE BOND INDEX 0.39% 7.09% 6.42%**
- -----------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
- --------------------------------------------------------------------------------
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 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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES
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 (as a
percentage of offering price) None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None
- --------------------------------------------------------------------------------
Exchange Fee None
- --------------------------------------------------------------------------------
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
[Logo omitted]
10 PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES
Management Fees .60%
Distribution and Service (12b-1) Fees .25%
Other Expenses .37%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.22%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND - CLASS A 1.05%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------
$519 $772 $1,044 $1,818
PROSECTUS 11
<PAGE>
FIXED INCOME FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
FIXED INCOME FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in U.S. Treasury and
U.S. government agency obligations, including mortgage-backed securities, and
corporate debt securities that are rated in one of the three highest ratings
categories by a nationally recognized rating organization. The Advisor's
investment selection process begins with a top-down analysis of general economic
conditions to determine how the Fund's investments will be weighted among the
U.S. Treasury, government agency and corporate sectors. The Advisor conducts
credit analysis of the corporate issues to find companies which may be poised
for credit upgrades. In doing so, the Advisor considers not only the yields of
particular issues, but also the potential for price appreciation due to improved
credit standing of a security's issuer. The Advisor diversifies the Fund's
investments in corporate debt among the major industry sectors. The Advisor
continually monitors the sector weighting of the Fund and may sell a security
when there is a fundamental change in a company's or sector's prospects or
better investment opportunities become available. If a security's credit rating
is downgraded, the Advisor will immediately review that security and take
appropriate action, including the possible sale of that security. 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.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE FIXED
INCOME FUND
[box][box][box]
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 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.
[Logo omitted]
12 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 10.77%
1994 -5.90%
1995 17.36%
1996 2.68%
1997 7.41%
1998 7.54%
1999 -1.97%
BEST QUARTER WORST QUARTER
5.86% -4.19%
(6/30/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------
FIXED INCOME FUND -6.17% 5.49% 5.17%*
- ----------------------------------------------------------
LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/
CORPORATE BOND INDEX 0.39% 7.09% 6.42%**
- ----------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ----------------------------------------------------------
FIXED INCOME FUND -7.70% 2.38%*
- ----------------------------------------------------------
LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/
CORPORATE BOND INDEX 0.39% 5.63%**
- ----------------------------------------------------------
* SINCE 5/16/97 ** SINCE 5/31/97
- --------------------------------------------------------------------------------
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 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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
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 (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE
"SELLING FUND SHARES."
PROSPECTUS 13
<PAGE>
FIXED INCOME FUND (CONTINUED)
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees .60% .60%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses .31% .31%
- --------------------------------------------------------------------------------
Total Annual Fund Operating
Expenses 1.16% 1.91%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
FIXED INCOME FUND - CLASS A 1.05%
FIXED INCOME FUND - CLASS B 1.80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
Class A Shares $538 $ 778 $1,036 $1,723
Class B Shares $744 $1,000 $1,232 $2,011
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
Class A Shares $538 $ 778 $1,036 $1,723
Class B Shares $194 $ 600 $1,032 $2,011
[Logo omitted]
14 PROSPECTUS
<PAGE>
PENNSYLVANIA MUNICIPAL SECURITIES FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE PENNSYLVANIA
MUNICIPAL SECURITIES FUND
[box][box][box]
The Fund pursues its investment goal by investing 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 intends to invest as much
of its assets as possible in securities that are not subject to federal taxes,
but it may invest up to 20% of its total assets in taxable securities, including
those subject to alternative minimum tax. The Fund's Advisor will purchase
municipal securities rated in one of the three highest ratings categories by a
nationally recognized rating organization 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 creditworthiness, yield
relative to comparable issuers and maturities, appreciation potential and
liquidity. The Advisor continually monitors the securities held by the Fund and
may sell a security to adjust the maturity of the Fund or if better investment
opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE
PENNSYLVANIA MUNICIPAL SECURITIES FUND
[box][box][box]
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.
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'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
that adversely affect issuers of Pennsylvania obligations than a mutual fund
that does not have as great a concentration in Pennsylvania municipal
obligations.
The Fund is also subject to the risk that Pennsylvania municipal debt securities
may underperform other segments of the fixed income market or the fixed income
markets as a whole.
PROSPECTUS 15
<PAGE>
PENNSYLVANIA MUNICIPAL SECURITIES FUND (CONTINUED)
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1994 -2.83%
1995 11.15%
1996 3.74%
1997 6.63%
1998 4.58%
1999 -7.32%
BEST QUARTER WORST QUARTER
4.71% -3.37%
(3/31/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL BOND
INDEX.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------
PENNSYLVANIA MUNICIPAL
SECURITIES FUND -10.13% 2.93% 2.36%*
- -------------------------------------------------------------
LEHMAN BROTHERS 5-YEAR
MUNICIPAL BOND INDEX 0.74% 5.71% 4.84%**
- -------------------------------------------------------------
* SINCE 5/13/93 ** SINCE 5/31/93
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES
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
- --------------------------------------------------------------------------------
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES
Management Fees .60%
Distribution and Service (12b-1) Fees .25%
Other Expenses .34%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.19%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
PENNSYLVANIA MUNICIPAL SECURITIES FUND - CLASS A 1.05%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------
$418 $667 $935 $1,700
[Logo omitted]
16 PROSPECTUS
<PAGE>
NEW JERSEY MUNICIPAL SECURITIES FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE NEW JERSEY
MUNICIPAL SECURITIES FUND
[box][box][box]
The Fund pursues its investment goal by investing 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 intends to invest as much of its
assets as possible in securities that are not subject to federal taxes, but it
may invest up to 20% of its total assets in taxable securities, including those
subject to alternative minimum tax. The Fund's Advisor will purchase municipal
securities rated in one of the three highest ratings categories by a nationally
recognized rating organization 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 creditworthiness, yield relative to
comparable issuers and maturities, appreciation potential and liquidity. The
Advisor continually monitors the securities held by the Fund and may sell a
security to adjust the maturity of the Fund or if better investment
opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE
NEW JERSEY MUNICIPAL SECURITIES FUND
[box][box][box]
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.
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'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 that
adversely affect issuers of New Jersey obligations than a mutual fund that does
not have as great a concentration in New Jersey municipal obligations.
The Fund is also subject to the risk that New Jersey municipal debt securities
may underperform other segments of the fixed income market or the fixed income
markets as a whole.
PROSPECTUS 17
<PAGE>
NEW JERSEY MUNICIPAL SECURITIES FUND (CONTINUED)
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 10.09%
1994 -4.35%
1995 13.30%
1996 3.08%
1997 6.31%
1998 4.44%
1999 -1.87%
BEST QUARTER WORST QUARTER
5.37% -4.62%
(3/31/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR GENERAL
OBLIGATION BOND INDEX.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------
NEW JERSEY MUNICIPAL
SECURITIES FUND -4.84% 4.29% 4.19%*
- ----------------------------------------------------------
LEHMAN BROTHERS 5-YEAR
GENERAL OBLIGATION
BOND INDEX 0.72% 5.80% 5.47%**
- ----------------------------------------------------------
* SINCE 5/4/92 ** SINCE 5/31/92
- --------------------------------------------------------------------------------
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 GENERAL OBLIGATION BOND
INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED INDEX OF INTERMEDIATE
INVESTMENT GRADE GENERAL OBLIGATION BONDS WITH MATURITIES BETWEEN 4 AND 6 YEARS.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES
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
- --------------------------------------------------------------------------------
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES
Management Fees .60%
Distribution and Service (12b-1) Fees .25%
Other Expenses .31%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.16%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
NEW JERSEY MUNICIPAL SECURITIES FUND - CLASS A 1.05%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------
$415 $657 $919 $1,667
[Logo omitted]
18 PROSPECTUS
<PAGE>
HIGH YIELD BOND FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
INVESTMENT GOAL
Maximize total return
INVESTMENT FOCUS
High yield fixed income securities
("junk bonds")
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
[box][box][box]
INVESTMENT STRATEGY OF THE
HIGH YIELD BOND FUND
[box][box][box]
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 Advisor monitors the performance of the
SIMT Fund and may choose to invest the Fund's assets in another mutual fund or
manage the Fund directly if it determines that doing so would be in the best
interest of the shareholders.
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
generally will not exceed ten years, and there is no limit on the maturity or on
the credit quality of any security.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN
THE HIGH YIELD BOND FUND
[box][box][box]
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 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 not only on the
performance of the SIMT Fund, but also may be lower than other mutual funds that
pursue the same investment goal directly due to expenses deducted from Fund
assets at both the master and feeder levels.
PROSPECTUS 19
<PAGE>
HIGH YIELD BOND FUND (CONTINUED)
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1996 14.24%
1997 13.71%
1998 0.24%
1999 2.27%
BEST QUARTER WORST QUARTER
5.33% -5.59%
(9/30/97) (9/30/98)
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
ENDED DECEMBER 31, 1999 TO THOSE OF THE CS FIRST BOSTON HIGH YIELD INDEX.
SINCE
CLASS A SHARES 1 YEAR INCEPTION
- -----------------------------------------------------------
HIGH YIELD BOND FUND -2.05% 8.12%*
- -----------------------------------------------------------
CS FIRST BOSTON HIGH
YIELD INDEX 3.31% 9.01%**
- -----------------------------------------------------------
* SINCE 1/11/95 ** SINCE 1/31/95
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- -----------------------------------------------------------
HIGH YIELD BOND FUND -3.67% 8.57%*
- -----------------------------------------------------------
CS FIRST BOSTON HIGH
YIELD INDEX 3.31% 9.01%**
- -----------------------------------------------------------
* SINCE 1/11/95 ** SINCE 1/31/95
- --------------------------------------------------------------------------------
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 AN
UNMANAGED, TRADER PRICED PORTFOLIO CONSTRUCTED TO MIRROR THE PUBLIC HIGH YIELD
DEBT MARKET. REVISIONS TO THE INDEX ARE EFFECTED WEEKLY. THE INDEX REFLECTS THE
REINVESTMENT OF DIVIDENDS.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
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 (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE
"SELLING FUND SHARES."
[Logo Omitted]
20 PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees 1.09% 1.09%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses 1.30% 1.30%
- --------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 2.64% 3.39%
* THIS TABLE AND EXAMPLE INCLUDE BOTH THE FEES PAID BY THE FUND AND ITS SHARE OF
THE FEES OF THE SIMT FUND. 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 OTHER SERVICE PROVIDERS TO THE FUND WAIVED A PORTION OF
THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THIS
FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT THE ADVISOR
OR ANOTHER SERVICE PROVIDER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY
TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE
EXPECTED TO BE AS FOLLOWS:
HIGH YIELD BOND FUND - CLASS A 1.41%
HIGH YIELD BOND FUND - CLASS B 2.16%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT
ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
Class A Shares $ 681 $1,211 $1,766 $3,272
Class B Shares $ 892 $1,442 $1,965 $3,507
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
Class A Shares $ 681 $1,211 $1,766 $3,272
Class B Shares $ 342 $1,042 $1,765 $3,507
PROSPECTUS 21
<PAGE>
BALANCED FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF
THE BALANCED FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in a blended
portfolio of U.S. common stocks and fixed income securities rated in one of the
top three ratings categories by a nationally recognized rating organization. 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 seeks to buy equity
securities of companies that have consistently grown their earnings per share
above the Standard & Poor's 500 Index (S&P 500) earnings growth rate and are
attractively priced relative to their growth prospects based on analysis of
fundamental growth characteristics (such as return on equity, earnings growth
and consistency, and price/earnings ratio). For the fixed income portion of the
Fund, the Advisor conducts a top-down analysis of general economic conditions to
determine how the Fund's investments will be weighted among the government and
corporate sectors. The Advisor conducts credit analysis of the corporate issues
it buys and diversifies the Fund's investments in corporate debt among the major
industry sectors. The Advisor attempts to manage the Fund to minimize share
price declines during falling equity markets by reallocating assets from equity
investments to fixed income investments. The Advisor's allocation of investments
between equity securities and fixed income securities is designed to maintain a
portfolio which is not dependent on either the equity market or the fixed income
market alone to produce total return. The Advisor continually monitors the
securities held by the Fund and may sell a security when it achieves a
designated price target, there is a fundamental change in a company's prospects,
in an effort to adjust the weighting of the Fund's investments in equity or
fixed income securities, or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE BALANCED FUND
[box][box][box]
Since it purchases common stocks, 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 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
[Logo omitted]
22 PROSPECTUS
<PAGE>
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.
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.
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 7.62%
1994 -4.87%
1995 27.53%
1996 13.39%
1997 19.46%
1998 18.33%
1999 9.04%
BEST QUARTER WORST QUARTER
16.89% -9.50%
(12/31/98) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX, THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CORPORATE INDEX AND A 50/50 BLEND OF THOSE TWO INDICES.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ------------------------------------------------------------
BALANCED FUND 3.05% 16.06% 11.27%*
- ------------------------------------------------------------
S&P 500 INDEX 21.04% 28.55% 20.57%**
- ------------------------------------------------------------
LEHMAN BROTHERS
INTERMEDIATE
GOVERNMENT/
CORPORATE INDEX 0.39% 7.09% 6.42%**
- ------------------------------------------------------------
50/50 BLEND 10.46% 17.64% 13.50%**
- ------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------
BALANCED FUND 2.70% 13.27%*
- ------------------------------------------------------------
S&P 500 INDEX 21.04% 25.50%**
- ------------------------------------------------------------
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE INDEX 0.39% 5.63%**
- ------------------------------------------------------------
50/50 BLEND 10.46% 15.60%**
- ------------------------------------------------------------
* SINCE 5/8/97 ** SINCE 5/31/97
- --------------------------------------------------------------------------------
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. 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.
PROSPECTUS 23
<PAGE>
BALANCED FUND (CONTINUED)
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)* 5.50% 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 (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE
"SELLING FUND SHARES."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees .75% .75%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses .37% .37%
- -------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 1.37% 2.12%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
BALANCED FUND - CLASS A 1.20%
BALANCED FUND - CLASS B 1.95%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
Class A Shares $682 $960 $1,259 $2,106
Class B Shares $765 $1,064 $1,339 $2,261
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
Class A Shares $682 $960 $1,259 $2,106
Class B Shares $215 $664 $1,139 $2,261
[Logo omitted]
24 PROSPECTUS
<PAGE>
EQUITY INCOME FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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 S&P 500
INVESTOR PROFILE
Investors who want growth
of capital and income and
who can tolerate moderate
share price volatility
[box][box][box]
INVESTMENT STRATEGY OF
THE EQUITY INCOME FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in dividend-paying
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 ability to
grow both earnings and dividends. The Advisor's investment selection process
begins with a top-down analysis of general economic conditions to determine how
the investments will be weighted among industry sectors. The Fund normally
invests in all major industry sectors represented in the S&P 500. The Advisor
then conducts analysis of individual companies' historical earnings and dividend
trends and chooses those companies that have historical dividend yields which
are normally higher than the dividend yield of the average company in the S&P
500 or have the ability to grow their dividends in future years. The Advisor
continually monitors the securities held by the Fund and may sell a security
when it achieves a designated price target, there is a fundamental change in a
company's prospects or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN
THE EQUITY INCOME FUND
[box][box][box]
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 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 large capitalization income stocks may
underperform other segments of the equity market or the equity markets as a
whole.
PROSPECTUS 25
<PAGE>
EQUITY INCOME FUND (CONTINUED)
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 9.94%
1994 -4.56%
1995 35.21%
1996 20.70%
1997 24.68%
1998 11.12%
1999 5.50%
BEST QUARTER WORST QUARTER
13.84% -11.71%
(12/31/98) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ------------------------------------------------------------
EQUITY INCOME FUND -0.33% 17.65% 13.03%*
- ------------------------------------------------------------
S&P 500 INDEX 21.04% 28.55% 20.57%**
- ------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- -----------------------------------------------------------
EQUITY INCOME FUND -0.78% 9.99%*
- -----------------------------------------------------------
S&P 500 INDEX 21.04% 25.50%**
- -----------------------------------------------------------
* SINCE 5/8/97 ** SINCE 5/31/97
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)* 5.50% 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 (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE
"SELLING FUND SHARES."
[Logo omitted]
26 PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees .75% .75%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses .34% .34%
- --------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 1.34% 2.09%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
EQUITY INCOME FUND - CLASS A 1.19%
EQUITY INCOME FUND - CLASS B 1.94%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
Class A Shares $679 $ 951 $1,244 $2,074
Class B Shares $762 $1,055 $1,324 $2,229
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------
Class A Shares $679 $ 951 $1,244 $2,074
Class B Shares $212 $ 655 $1,124 $2,229
PROSPECTUS 27
<PAGE>
EQUITY INDEX FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
INVESTMENT GOAL
Investment results that
correspond to the
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
[box][box][box]
INVESTMENT STRATEGY OF
THE EQUITY INDEX FUND
[box][box][box]
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
Advisor monitors the performance of the SIF Fund and may choose to invest the
Fund's assets in another mutual fund or manage the Fund directly if it
determines that doing so would be in the best interest of the shareholders.
The SIF Fund invests exclusively in securities listed in the S&P 500, which is
comprised of 500 selected securities (mostly common stocks). The SIF Fund's
ability to replicate 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 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.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN
THE EQUITY INDEX FUND
[box][box][box]
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 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. 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
not only on the performance of the SIF Fund, but also may be lower than other
mutual funds that pursue the same investment goal directly due to expenses
deducted from Fund assets at both the master and feeder levels. The SIF Fund may
not be able to match the performance of the S&P 500.
[Logo omitted]
28 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1990 -3.70%
1991 29.20%
1992 6.75%
1993 9.20%
1994 0.40%
1995 36.55%
1996 21.90%
1997 32.90%
1998 21.67%
1999 19.27%
BEST QUARTER WORST QUARTER
19.38% -13.91%
(12/31/98) (9/30/90)
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
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
EQUITY INDEX
FUND 12.75% 24.71% 15.96% 16.40%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 28.55% 18.20% 18.45%*
- --------------------------------------------------------------------------------
* SINCE 7/31/85
SINCE
CLASS B SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
EQUITY INDEX
FUND 13.00% 25.85% 16.55% 16.81%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 28.55% 18.20% 18.45%*
- --------------------------------------------------------------------------------
* SINCE 7/31/85
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)* 5.50% 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
(as a percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
PROSPECTUS 29
<PAGE>
EQUITY INDEX FUND (CONTINUED)
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees .78% .78%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses 1.13% 1.13%
- --------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 2.16% 2.91%
* THIS TABLE AND EXAMPLE INCLUDE BOTH THE FEES PAID BY THE FUND AND ITS SHARE OF
THE FEES OF THE SIF FUND. 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 OTHER SERVICE PROVIDERS TO THE FUND WAIVED A PORTION OF THE FEES
IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THESE FEE
WAIVERS REMAIN IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT THE ADVISOR OR
ANOTHER SERVICE PROVIDER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY
TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE
EXPECTED TO BE AS FOLLOWS:
EQUITY INDEX FUND - CLASS A 1.05%
EQUITY INDEX FUND - CLASS B 1.80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A Shares $ 757 $1,189 $1,646 $2,906
Class B Shares $ 844 $1,301 $1,733 $3,056
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A Shares $ 757 $1,189 $1,646 $2,906
Class B Shares $ 294 $ 901 $1,533 $3,056
(LOGO)[GRAPHIC OMITTED]
30 PROSPECTUS
<PAGE>
EQUITY VALUE FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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 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
[box][box][box]
INVESTMENT STRATEGY OF
THE EQUITY VALUE FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in dividend-paying
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 buy companies that are fundamentally sound but have a market price
which the Advisor believes is less than a company's intrinsic value relative to
its growth prospects. The Advisor's investment selection process begins with a
top-down analysis of general economic conditions to determine how the
investments will be weighted among industry sectors. The Fund normally invests
in all major industry sectors represented in the S&P 500. The Advisor then
conducts analysis of fundamental value characteristics (such as price/earnings
ratios that are below a company's long-term earnings growth rate, price to book
value and return on equity) of the companies within those sectors to identify
stocks which represent "bargains" with the potential to appreciate in value in
the near-term. The Advisor continually monitors the securities held by the Fund
and may sell a security when it achieves a designated price target, there is a
fundamental change in a company's prospects or better investment opportunities
become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE EQUITY VALUE FUND
[box][box][box]
Since it purchases common stocks, 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 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 large capitalization value stocks may
underperform other segments of the equity market or the equity markets as a
whole.
PROSPECTUS 31
<PAGE>
EQUITY VALUE FUND (CONTINUED)
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1993 5.85%
1994 -5.82%
1995 36.35%
1996 21.15%
1997 25.51%
1998 27.18%
1999 13.77%
BEST QUARTER WORST QUARTER
22.52% -10.46%
(12/31/98) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- -----------------------------------------------------------
EQUITY VALUE FUND 7.49% 23.18% 15.44%*
- -----------------------------------------------------------
S&P 500 INDEX 21.40% 28.55% 20.57%**
- -----------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- -----------------------------------------------------------
EQUITY VALUE FUND 7.45% 18.42%*
- -----------------------------------------------------------
S&P 500 INDEX 21.04% 25.50%**
- -----------------------------------------------------------
* SINCE 5/12/97 ** SINCE 5/31/97
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)* 5.50% 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 (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed,
if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE
"SELLING FUND SHARES."
[Logo omitted]
32 PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees .75% .75%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses .31% .31%
- --------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 1.31% 2.06%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
EQUITY VALUE FUND - CLASS A 1.19%
EQUITY VALUE FUND - CLASS B 1.95%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A Shares $676 $ 942 $1,229 $2,042
Class B Shares $759 $1,046 $1,308 $2,197
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A Shares $676 $ 942 $1,229 $2,042
Class B Shares $209 $ 646 $1,108 $2,197
PROSPECTUS 33
<PAGE>
EQUITY GROWTH FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
EQUITY GROWTH FUND
[box][box][box]
The Fund pursues its investment goal by investing 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 buy
companies that have consistently grown earnings above the S&P 500 earnings
growth rate and are attractively priced relative to their growth prospects. The
Advisor's investment selection process begins with a top-down analysis of
general economic conditions to determine how the investments will be weighted
among industry sectors. The Advisor then conducts analysis of fundamental growth
characteristics (such as return on equity, earnings growth and consistency, and
price/earnings ratio) of the companies within those sectors to identify stocks
which are likely to appreciate in value. The Advisor continually monitors the
securities held by the Fund and may sell a security when it achieves a
designated price target, there is a fundamental change in a company's prospects
or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE EQUITY GROWTH FUND
[box][box][box]
Since it purchases common stocks, 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 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 large capitalization growth stocks may
underperform other segments of the equity market or the equity markets as a
whole.
[Logo omitted]
34 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[CHART OMITTED, PLOT POINTS ARE AS FOLLOWS:]
1998 30.69%
1999 49.12%
BEST QUARTER WORST QUARTER
34.59% -11.33%
(12/31/99) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS A SHARES 1 YEAR INCEPTION
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND 40.92% 28.54%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 25.81%**
- --------------------------------------------------------------------------------
* SINCE 2/3/97 ** SINCE 1/31/97
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND 42.47% 31.49%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 25.50%**
- --------------------------------------------------------------------------------
* SINCE 5/21/97 ** SINCE 5/31/97
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)* 5.50% 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 (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE
"SELLING FUND SHARES."
PROSPECTUS 35
<PAGE>
EQUITY GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees .75% .75%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses .31% .31%
- --------------------------------------------------------------------------------
Total Annual Fund Operating
Expenses 1.31% 2.06%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
EQUITY GROWTH FUND - CLASS A 1.19%
EQUITY GROWTH FUND - CLASS B 1.97%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A Shares $676 $942 $1,229 $2,042
Class B Shares $759 $1,046 $1,308 $2,197
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Class A Shares $676 $942 $1,229 $2,042
Class B Shares $209 $646 $1,108 $2,197
[Logo omitted]
36 PROSPECTUS
<PAGE>
INTERNATIONAL EQUITY FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
INTERNATIONAL EQUITY FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in common stocks of
medium to large capitalization companies (in excess of $500 million) located in
Europe and the Pacific basin countries, including Japan. 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 intends to be well
diversified among industry sectors and have a low turnover ratio, generally
holding its core positions for at least two years. The Sub-Advisor continually
monitors the securities held by the Fund and may sell a security when it
achieves a designated price target, there is a fundamental change in a company's
or country's prospects or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE
INTERNATIONAL EQUITY FUND
[box][box][box]
Since it purchases common stocks, 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 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.
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 the Fund's investments. These currency
movements may happen separately from and in 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.
PROSPECTUS 37
<PAGE>
INTERNATIONAL EQUITY FUND (CONTINUED)
PRINCIPAL RISKS OF INVESTING IN THE
INTERNATIONAL EQUITY FUND (CONTINUED)
The medium capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these medium-sized companies may have limited product lines,
markets and financial resources, and may depend upon a relatively small
management group. Therefore, mid 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 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.
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
1996 10.88%
1997 0.00%
1998 8.69%
1999 45.09%
BEST QUARTER WORST QUARTER
31.79% -18.76%
(12/31/99) (9/30/98)
THE PERFORMANCE FOR THE PERIODS PRIOR TO 9/1/98 REPRESENTS THE PERFORMANCE OF
THE FUND'S PREVIOUS SUB-ADVISOR.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE MORGAN STANLEY EAFE INDEX.
SINCE
CLASS A SHARES 1 YEAR INCEPTION
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 37.13% 13.16%*
- --------------------------------------------------------------------------------
MORGAN STANLEY EAFE INDEX 26.96% 12.47%**
- --------------------------------------------------------------------------------
* SINCE 5/1/95 ** SINCE 4/30/95
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 38.63% 15.85%*
- --------------------------------------------------------------------------------
MORGAN STANLEY EAFE
INDEX 26.96% 18.34%**
- --------------------------------------------------------------------------------
* SINCE 5/7/97 ** SINCE 4/30/97
- --------------------------------------------------------------------------------
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, MARKET 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, AUSTRALASIA AND THE FAR EAST.
[Logo omitted]
38 PROSPECTUS
<PAGE>
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)* 5.50% 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 (as a
percentage of offering price) None None
- --------------------------------------------------------------------------------
Redemption Fee (as a percentage
of amount redeemed, if applicable) None None
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
* 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 AND DECREASES OVER TIME DEPENDING ON HOW LONG YOU OWN YOUR SHARES. SEE
"SELLING FUND SHARES."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Management Fees 1.00% 1.00%
Distribution and Service
(12b-1) Fees .25% 1.00%
Other Expenses .75% .75%
- -------------------------------------------------------------------------------
Total Annual Fund Operating
Expenses 2.00% 2.75%
* 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 WAIVED A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE
OF THE PROSPECTUS, BUT 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 EXPECTED TO BE AS FOLLOWS:
INTERNATIONAL EQUITY FUND - CLASS A 1.75%
INTERNATIONAL EQUITY FUND - CLASS B 2.50%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
If you sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
Class A Shares $742 $1,143 $1,568 $2,749
Class B Shares $828 $1,253 $1,654 $2,900
If you do not sell your shares at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
Class A Shares $742 $1,143 $1,568 $2,749
Class B Shares $278 $ 853 $1,454 $2,900
PROSPECTUS 39
<PAGE>
MORE INFORMATION ABOUT RISK
[box][box][box]
EQUITY RISK
BALANCED FUND
EQUITY INCOME FUND
EQUITY INDEX FUND
EQUITY VALUE FUND
EQUITY GROWTH FUND
INTERNATIONAL EQUITY FUND
[box][box][box]
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.
[box][box][box]
FIXED INCOME RISK
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
[box][box][box]
The market value of fixed income investments 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. 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:
[box] CALL RISK
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
During periods of falling interest rates, certain debt obligations 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.
[box] CREDIT RISK
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
The possibility that an issuer will be unable to make timely payments of
either principal or interest.
[Logo omitted]
40 PROSPECTUS
<PAGE>
[box] EVENT RISK
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
FIXED INCOME FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
Securities may suffer declines in credit quality and market value due to
issuer restructurings or other factors. This risk should be reduced because
of the Fund's multiple holdings.
[box] HIGH-YIELD, LOWER RATED SECURITIES
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:
[box] 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.
[box] 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.
[box] 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.
[box] The market for high-yield, lower rated securities may be adversely
affected by legislative and regulatory developments.
[box] MORTGAGE-BACKED SECURITIES
FIXED INCOME FUND
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
than 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.
PROSPECTUS 41
<PAGE>
[box][box][box]
MUNICIPAL ISSUER RISK
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
[box][box][box]
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 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.
[box][box][box]
FOREIGN SECURITY RISK
INTERNATIONAL EQUITY FUND
[box][box][box]
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 risk factors:
[Logo omitted]
42 PROSPECTUS
<PAGE>
[box] CURRENCY RISK
INTERNATIONAL EQUITY FUND
Investments in foreign securities denominated in foreign currencies
involve additional risks, including:
[box] 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.
[box] A Fund may incur substantial costs in connection with conversions
between various currencies.
[box] A Fund may be unable to hedge against possible variations in
foreign exchange rates or to hedge a specific security transaction or
portfolio position.
[box] Only a limited market currently exists for hedging transactions
relating to currencies in certain emerging markets.
[box][box][box]
TRACKING ERROR RISK
EQUITY INDEX FUND
[box][box][box]
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.
MORE INFORMATION ABOUT FUND 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.
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. Of course, we
cannot guarantee that any Fund will achieve its investment goal.
PROSPECTUS 43
<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
Management 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, 1999, Summit
Bank had approximately $10.8 billion in assets under management. For the year
ended December 31, 1999, Summit Bank received advisory fees as a percentage of
average daily net assets of:
U.S. TREASURY SECURITIES
MONEY MARKET FUND 0.35%
TAX-EXEMPT MONEY MARKET FUND 0.31%
PRIME OBLIGATION
MONEY MARKET FUND 0.35%
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND 0.43%
FIXED INCOME FUND 0.50%
PENNSYLVANIA MUNICIPAL
SECURITIES FUND 0.46%
NEW JERSEY MUNICIPAL
SECURITIES FUND 0.50%
HIGH YIELD BOND FUND 0.39%
BALANCED FUND 0.58%
EQUITY INCOME FUND 0.60%
EQUITY INDEX FUND 0.35%
EQUITY VALUE FUND 0.64%
EQUITY GROWTH FUND 0.64%
INTERNATIONAL EQUITY FUND 0.75%
Vontobel USA Inc. (Vontobel USA), 450 Park Avenue, New York, NY 10022, 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.
[Logo omitted]
44 PROSPECTUS
<PAGE>
Fabrizio Pierallini serves as the Chief Investment Officer and Senior Vice
President of Vontobel USA. He has managed the International Equity Fund since
September, 1998. He has more than 19 years of investment experience. Prior to
joining Vontobel USA in 1994, Mr. Pierallini served asAssociate-Director/
Portfolio Manager with Swiss Bank Corporation, New York.
Mr. Rajiv Jain serves as a First Vice President of Vontobel USA, and has served
as associate portfolio manager of the International Equity Fund since September,
1998. He has more than 9 years of investment experience. Prior to joining
Vontobel USA in 1994, Mr. Jain was an analyst with Swiss Bank Corporation, New
York.
SEI Investments Management Corporation (SEI), One Freedom Valley Drive, Oaks, PA
19456, is the advisor of the SIMT Fund and has engaged Credit Suisse Asset
Management (Credit Suisse) as sub-advisor to manage the SIMT Fund on a
day-to-day basis. Credit Suisse selects, buys and sells securities for the SIMT
Fund under the supervision of SEI and the SIMT Board of Trustees.
Richard J. Lindquist, C.F.A., serves as portfolio manager of the High Yield Bond
Fund. Mr. Lindquist joined Credit Suisse in 1995 as a result of Credit Suisse's
acquisition of CS First Boston Investment Management, and has had 16 years of
investment management experience, all of which were with high yield bonds. Prior
to joining CS First Boston, Mr. Lindquist was with Prudential Insurance Company
of America where he managed high yield funds totaling approximately $1.3
billion. Prior to joining Prudential, Mr. Lindquist managed high yield funds at
T. Rowe Price.
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.
All investment decisions for the SIF Fund are made by a committee of investment
professionals and no persons are primarily responsible for making
recommendations to that committee.
PORTFOLIO MANAGERS
Judith Tomo serves as a Vice President of the Advisor. She has managed the
U.S. Treasury Securities Money Market Fund and the Prime Obligation Money Market
Fund since June, 1996. Ms. Tomo also advises the U.S. Treasury Securities Plus
Money Market Fund and the Institutional Select Money Market Fund. Prior to
joining the Advisor in 1995, Ms. Tomo managed money market instruments for a
large regional bank for a number of years.
Charlene P. Palmer serves as a Vice President of the Advisor. She has managed
the Tax-Exempt Money Market Fund since June, 1996, the Pennsylvania Municipal
Securities Fund since November, 1999, and the New Jersey Municipal Securities
Fund since May, 1992. She joined the Advisor in 1981 and has managed investments
for the Advisor for the past 18 years, with an emphasis on tax-exempt bonds.
Sarah Krieger serves as a Vice President of the Advisor. She has managed the
Intermediate-Term Government Securities Fund since December, 1999. Prior to
joining the Advisor in 1997, Ms. Krieger managed fixed income portfolios for
Meredith, Martin & Kaye (MMK) during 1995 and 1996. Prior to joining MMK, Ms.
Krieger served as a sales associate for Freeman Securities in 1994. She has more
than 16 years of experience in the investment field.
Joseph Markovich serves as a Senior Vice President of the Advisor. He has
managed the Fixed Income Fund since January, 1997. He joined the Advisor in 1985
and has managed investments for the Advisor for the past 15 years.
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 managed
investments for the Advisor for the past 15 years.
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 1983
PROSPECTUS 45
<PAGE>
and has managed investments for the Advisor for the past 15 years. He has more
than 29 years of investment experience.
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
managed investments for the Advisor for the past 18 years.
Gregory S. Huning serves as a Senior Vice President of the Advisor. He has
co-managed the Equity Growth Fund since April, 1999. Prior to joining the
Advisor in 1995, Mr. Huning served as a senior equity portfolio manager for the
Robert Wood Johnson Foundation. Mr. Huning has more than 29 years of
experience in investment management.
Glen C. Corbitt serves as a Vice President of the Advisor. He has co-managed the
Equity Growth Fund since April, 1999. Prior to joining the Advisor in 1995, Mr.
Corbitt served as an accountant for Rockefeller Financial Services.
PURCHASING, SELLING
AND EXCHANGING
FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Class A and Class B Shares of the Funds.
The classes have different expenses and other characteristics.
CLASS A SHARES
[box] Front-end sales charge (except for the Money Market Funds)
[box] 12b-1 fees
[box] $1,000 minimum initial investment
CLASS B SHARES
[box] Contingent deferred sales charge
[box] Higher 12b-1 fees and shareholder servicing fees
[box] $1,000 minimum initial investment
[box] 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:
The Pillar Funds
P.O. Box 8523
Boston, MA 02266-8523
FOR OVERNIGHT DELIVERY:
The Pillar Funds
c/o Boston Financial Data Services
Two Heritage Drive
North Quincy, MA 02171-2144
[Logo omitted]
46 PROSPECTUS
<PAGE>
TELEPHONE:
1-800-932-7782
WIRE:
State Street Bank and Trust Company ABA #01100028 For Credit To DDA Account
#9905-150-0 For Further Credit To Account # (insert your name and account
number)
SHAREHOLDERS MUST CALL 1-800-932-7782 BEFORE WIRING FUNDS.
AUTOMATED CLEARING HOUSE (ACH):
Call 1-800-932-7782 to request a form to establish this option.
To purchase shares directly, complete and send in the enclosed application. If
you need an application or have questions, please call 1-800-932-7782. 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 broker
or institution may charge a fee for its services, in addition to the fees
charged by the Fund. You also generally will 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 (NYSE) and,
for the Money Market Funds, the Federal Reserve are open for business (a
Business Day).
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 NYSE (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 generally must receive both your
order 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 the net assets of
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, a Fund generally values its
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 market value of the Fund's investments
may change on days when you cannot buy or sell Fund shares.
PROSPECTUS 47
<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 a 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:
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
YOUR SALES CHARGE YOUR SALES CHARGE
IF YOUR AS A PERCENTAGE OF AS A PERCENTAGE OF
INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
- --------------------------------------------------------------------------------
$0-99,999 4.00% 4.17%
$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 0.00% 0.00%
and above*
FIXED INCOME FUND
HIGH YIELD BOND FUND
YOUR SALES CHARGE YOUR SALES CHARGE
IF YOUR AS A PERCENTAGE OF AS A PERCENTAGE OF
INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
- --------------------------------------------------------------------------------
$0-99,999 4.25% 4.44%
$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 0.00% 0.00%
and above*
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
YOUR SALES CHARGE YOUR SALES CHARGE
IF YOUR AS A PERCENTAGE OF AS A PERCENTAGE OF
INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
- --------------------------------------------------------------------------------
$0-249,999 3.00% 3.09%
$250,000-499,999 2.00% 2.04%
$500,000-999,999 1.00% 1.01%
$1,000,000 0.00% 0.00%
and above*
BALANCED AND EQUITY FUNDS
YOUR SALES CHARGE YOUR SALES CHARGE
IF YOUR AS A PERCENTAGE OF AS A PERCENTAGE OF
INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
- -------------------------------------------------------------------------------
$0-49,999 5.50% 5.82%
$50,000-99,999 4.75% 4.99%
$100,000-249,999 3.75% 3.90%
$250,000-499,999 2.75% 2.83%
$500,000-999,999 2.00% 2.04%
$1,000,000 0.00% 0.00%
and above*
*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.
[Logo omitted]
48 PROSPECTUS
<PAGE>
WAIVER OF FRONT-END SALES CHARGE -
CLASS A SHARES
The front-end sales charge will be waived on Class A Shares:
[box] issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which The Pillar Funds is a party;
[box] sold to dealers or brokers that have a sales arrangement with the
Distributor, for their own account or for retirement plans for their employees;
[box] 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;
[box] sold to present or retired employees of Summit Bancorp, or one of its
affiliates and/or the spouses of such employees;
[box] sold to present employees of service providers to The Pillar Funds;
[box] sold to any qualified customer who has entered into an agreement with
Summit Bank, its affiliates or correspondent banks;
[box] sold to present or retired Trustees of The Pillar Funds and their
immediate families;
[box] sold to present or retired Directors of Summit Bancorp or its affiliates,
and their immediate families;
[box] sold to beneficial owners of Class I Shares whose interests are converted
into Class A Shares;
[box] 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
[box] 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.
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.
[Logo omitted]
49 PROSPECTUS
<PAGE>
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, 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.
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.
CONTINGENT DEFERRED SALES CHARGE
YEAR SINCE AS A PERCENTAGE OF DOLLAR
PURCHASE AMOUNT SUBJECT TO CHARGE
- -------------------------------------------------------------------------------
First 5.50%
Second 5.00%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
Eighth 0.00%
The contingent deferred sales charge will be waived if you sell your Class B
Shares for the following reasons:
[box] to make certain required withdrawals from a retirement plan (including
IRAs);
[box] because of death or disability;
(Logo Omitted)
PROSPECTUS 50
<PAGE>
[box] 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);
[box] 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
[box] 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.
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.
The Distributor may provide cash or non-cash compensation as recognition for
past sales or encouragement for future sales that may include the following:
merchandise, travel expenses, prizes, meals, and lodgings, and gifts that do not
exceed $100 per year, per individual.
HOW TO SELL YOUR
FUND SHARES
If you own your shares directly, you may sell 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. Your broker or
institution may charge a fee for its services, in addition to the fees charged
by the Fund.
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 NAV next determined after a 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.
51 PROSPECTUS
<PAGE>
RECEIVING YOUR MONEY
Normally, the fund will send your sale proceeds within one Business Day after
the Fund receives 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 DAYS FROM YOUR DATE OF
PURCHASE).
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
If you own your shares directly, you may exchange your shares on any Business
Day by contacting the Fund directly by mail or telephone.
You may also exchange shares through your financial institution or an investment
professional by mail or telephone. Your broker or institution may charge a fee
for its services.
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 DAYS
FROM YOUR DATE OF PURCHASE).
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.
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 (i.e., 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 contingent deferred sales charge is imposed on redemptions of Class B
Shares you acquire in an exchange, including shares of the Prime Obligation
Money Market Fund, provided you hold your shares for at least 7 years from the
date of your initial purchase.
REDEMPTIONS IN KIND
A Fund generally pays sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders) the Fund might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were, you might have to pay transaction costs to
sell the securities distributed to you, as well as taxes on any capital gains
from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares
if the NYSE restricts trading, the SEC declares an emergency or for other
reasons. More information about this is in our Statement of Additional
Information.
(Logo omitted)
PROSPECTUS 52
<PAGE>
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not all 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 under Rule 12b-1 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:
CLASS A SHARES 0.25%
CLASS B SHARES 1.00%
The SIMT Fund has adopted a shareholder servicing plan under which its Class A
shares may pay a shareholder servicing fee of up to 0.25% of average daily net
assets. The SIF Fund has adopted a shareholder servicing plan under which its
Class E shares may pay a shareholder servicing fee of up to 0.25% of average
daily net assets. To the extent that a shareholder servicing fee is charged to
either the SIMT Fund or the SIF Fund, the Distributor will waive a corresponding
amount for the High Yield Bond Fund or the Equity Index Fund to limit the
distribution and shareholder service fees to a total of 1.00%.
SHAREHOLDER PROMOTIONAL PROGRAMS
The Distributor may from time to time provide incentives in the form of cash or
Fund shares to current or potential shareholders of The Pillar Funds. The
Distributor or Summit Bank may terminate any promotional program at any time
without prior notice. The Distributor will not be reimbursed by the Trust for
any payment made pursuant to promotional offers.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income as follows:
U.S. TREASURY SECURITIES
MONEY MARKET FUND MONTHLY
TAX-EXEMPT MONEY MARKET FUND
PRIME OBLIGATION
MONEY MARKET FUND
INTERMEDIATE-TERM
GOVERNMENT SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND QUARTERLY
EQUITY INCOME FUND
EQUITY INDEX FUND
EQUITY VALUE FUND
EQUITY GROWTH FUND
INTERNATIONAL EQUITY FUND ANNUALLY
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 30 days
PROSPECTUS 53
<PAGE>
prior to the date of the distribution. Your election will be effective for
dividends and distributions paid after the Fund receives your written notice.
If you invest through a broker or authorized institution, you may elect cash
payment or cancel your election by contacting your broker or institution
directly. Your broker or institution may have different requirements regarding
the timing of your 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 Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
The Tax-Exempt Money Market Fund intends to distribute federally tax-exempt
income. The Pennsylvania Municipal Securities Fund intends to distribute income
that is exempt from both federal taxes and Pennsylvania state taxes. The New
Jersey Municipal Securities Fund intends to distribute income that is exempt
from both federal taxes and New Jersey 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.
MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
(Logo omitted)
PROSPECTUS 54
<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.
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET RATIO
EXPENSES INVESTMENT OF NET
NET ASSET DISTRIBUTIONS TO AVERAGE INCOME TO RATIO OF INVESTMENT
VALUE NET FROM NET NET ASSET NET ASSETS NET ASSETS AVERAGE NET EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL END OF (EXCLUDING ASSETS (EX- TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN PERIOD (000) WAIVERS) CLUDING WAIVERS) NET ASSETS NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $0.04 $(0.04) $1.00 4.07% $118,486 0.89% 3.99% 0.89% 3.99%
1998 1.00 0.04 (0.04) 1.00 4.43 68,327 0.88 4.28 0.88 4.28
1997 1.00 0.04 (0.04) 1.00 4.28 12,492 0.90 4.22 0.90 4.22
1996 1.00 0.04 (0.04) 1.00 4.27 3,503 0.90 4.19 0.90 4.19
1995 1.00 0.05 (0.05) 1.00 4.80 3,532 0.90 4.66 0.90 4.66
- ---------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $1.00 $0.02 $(0.02) $1.00 2.45% $25,511 0.90% 2.40% 0.86% 2.44%
1998 1.00 0.03 (0.03) 1.00 2.72 16,346 0.94 2.65 0.90 2.69
1997 1.00 0.03 (0.03) 1.00 2.84 8,509 0.92 2.80 0.90 2.82
1996 1.00 0.03 (0.03) 1.00 2.70 3,852 0.93 2.62 0.90 2.65
1995 1.00 0.03 (0.03) 1.00 3.17 5,238 0.96 3.08 0.90 3.14
- ---------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATION MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $1.00 $0.04 $(0.04) $1.00 4.39% $ 3,507 0.89% 4.29% 0.89% 4.29%
1998 1.00 0.05 (0.05) 1.00 4.76 4,166 0.88 4.70 0.88 4.70
1997 1.00 0.05 (0.05) 1.00 4.75 17,514 0.91 4.66 0.90 4.67
1996 1.00 0.04 (0.04) 1.00 4.58 11,347 0.92 4.46 0.90 4.48
1995 1.00 0.05 (0.05) 1.00 5.14 6,925 0.91 5.00 0.90 5.01
CLASS B
1999 $1.00 $0.04 $(0.04) $1.00 3.61% $ 1,735 1.63% 3.79% 1.63% 3.79%
1998 1.00 0.04 (0.04) 1.00 3.99 146 1.63 3.84 1.63 3.84
1997(1) 1.00 -- -- 1.00 5.48* 10 3.01 7.17 1.65 8.53
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* ANNUALIZED
(1) COMMENCED OPERATIONS ON DECEMBER 30, 1997. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED.
55 PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
EXPENSES INVESTMENT
TO AVERAGE INCOME TO
NET ASSETS AVERAGE NET RATIO OF
REALIZED AND DISTRI- DISTRI- (EXCLUDING ASSETS (EX- RATIO OF NET PORT-
NET ASSET NET UNREALIZED BUTIONS BUTIONS NET ASSETS WAIVERS CLUDING EXPENSES INVESTMENT FOLIO
VALUE INVEST- GAINS OR FROM NET FROM NET ASSET END OF AND WAIVERS AND TO AVERAGE INCOME TURN-
BEGINNING MENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD REIMBURSE- REIM- NET TO AVERAGE OVER
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN(+) (000) MENTS) BURSEMENTS) ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.37 $0.50 $(0.62) $(0.50) $ -- $ 9.75 (1.18)% $ 945 1.14% 4.86% 1.05% 4.95% 49.64%
1998 10.26 0.54 0.11 (0.54) -- 10.37 6.47 1,253 1.22 5.02 1.05 5.19 43.42
1997 10.16 0.55 0.10 (0.55) -- 10.26 6.60 1,397 1.19 5.26 1.05 5.40 57.82
1996 10.37 0.52 (0.22) (0.51) -- 10.16 3.01 2,578 1.12 4.94 1.05 5.01 40.60
1995 9.51 0.51 0.86 (0.51) -- 10.37 14.71 3,665 1.30 4.83 1.05 5.08 68.29
- ----------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $10.51 $0.52 $(0.72) $ 0.52 $ -- $ 9.79 (1.97) %$3,794 1.06% 5.09% 1.05% 5.10% 34.42%
1998 10.36 0.55 0.21 (0.55) (0.06) 10.51 7.54 4,292 1.16 5.20 1.05 5.31 58.30
1997 10.20 0.57 0.16 (0.57) -- 10.36 7.41 4,526 1.16 5.49 1.05 5.60 80.34
1996 10.48 0.55 (0.28) (0.55) -- 10.20 2.68 4,830 1.17 5.23 1.05 5.35 40.56
1995 9.44 0.56 1.04 (0.56) -- 10.48 17.36 5,844 1.16 5.47 1.05 5.58 35.49
CLASS B
1999 $10.55 $0.45 $(0.72) $(0.44) $ -- $ 9.84 (2.57) $7,678 1.81% 4.34% 1.80% 4.35% 34.42%
1998 10.39 0.48 0.22 (0.48) (0.06) 10.55 6.84 6,835 1.91 4.33 1.80 4.44 58.30
1997(1) 10.11 0.31 0.28 (0.31) -- 10.39 9.41 1,268 1.86 4.96 1.80 5.02 80.34
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
(1) COMMENCED OPERATIONS ON MAY 16, 1997. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED.
(Logo omitted)
PROSPECTUS 56
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
RATIO RATIO OF NET
OF INVESTMENT
EXPENSES INCOME RATIO OF
REALIZED TO TO NET
AND DISTRI- DISTRI- AVERAGE AVERAGE RATIO OF INVESTMENT PORT-
NET ASSET NET UNREALIZED BUTIONS BUTIONS NET ASSETS NET NET EXPENSES INCOME FOLIO
VALUE INVEST- GAINS OR FROM NET FROM NET ASSET END OF ASSETS ASSETS TO AVERAGE TO TURN-
BEGINNING MENT (LOSSES)ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD (EXCLUDING (EXCLUDING NET AVERAGE OVER
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN(+) (000) WAIVERS) WAIVERS) ASSETS NET ASSETS RATE
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.23 $0.40 $(1.13) $(0.40) $(0.10) $ 9.00 (7.32)% $ 304 1.12% 4.01% 1.05% 4.08% 43.19%
1998 10.38 0.42 0.05 (0.42) (0.20) 10.23 4.58 433 1.21 3.87 1.05 4.03 56.48
1997 10.17 0.43 0.23 (0.43) (0.02) 10.38 6.63 404 1.21 4.02 1.05 4.18 71.89
1996 10.22 0.42 (0.05) (0.42) -- 10.17 3.74 344 1.74 3.39 0.94 4.19 25.88
1995 9.55 0.38 0.67 (0.38) -- 10.22 11.15 269 1.55 3.30 1.05 3.80 36.92
- -----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY MUNICIPAL SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $10.88 $0.44 $(0.63) $(0.44) $(0.03) $10.22 (1.87)% $11,549 1.06% 4.10% 1.05% 4.11% 9.00%
1998 10.89 0.44 0.03 (0.45) (0.03) 10.88 4.44 16,706 1.17 4.03 1.05 4.15 17.55
1997 10.70 0.49 0.17 (0.47) -- 10.89 6.31 18,651 1.19 4.21 1.05 4.35 22.85
1996 10.79 0.41 (0.09) (0.41) -- 10.70 3.08 20,247 1.18 3.62 0.92 3.88 13.93
1995 9.93 0.44 0.86 (0.44) -- 10.79 13.30 25,954 1.18 3.66 0.66 4.18 2.83
- -----------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $ 9.99 $0.79 $(0.56) $(0.76) $(0.01) $9.44 2.27% $ 207 1.85% 7.73% 1.41% 8.17% 18.01%*
1998(1) 10.00 0.17 0.01 (0.18) (0.02) 9.98 1.79 103 5.04 3.46 1.50 7.00 1.47
CLASS B
1999 $ 9.98 $0.70 $(0.55) $(0.69) $(0.01) $9.43 1.44% $ 5,572 2.60% 6.99% 2.16% 7.43% 18.01%*
1998(1) 10.00 0.16 -- (0.16) (0.02) 9.98 1.63 2,285 5.79 3.34 2.25 6.88 1.47
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* THE PORTFOLIO TURNOVER RATE FOR THE MASTER FUND, THE SEI INSTITUTIONAL
MANAGED TRUST HIGH YIELD BOND PORTFOLIO, IS 18.73% FOR THE TWELVE MONTH
PERIOD ENDING DECEMBER 31, 1999.
(+)TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
(1)COMMENCED OPERATIONS ON SEPTEMBER 10, 1998. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
57 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
RATIO RATIO OF NET
OF INVESTMENT
EXPENSES INCOME RATIO OF
REALIZED TO (LOSS) TO NET
NET AND DISTRI- DISTRI- AVERAGE AVERAGE RATIO OF INVESTMENT PORT-
NET ASSET INVEST- UNREALIZED BUTIONS BUTIONS NET ASSETS NET NET EXPENSES INCOME FOLIO
VALUE MENT GAINS OR FROM NET FROM NET ASSET END OF ASSETS ASSETS TO AVERAGE (LOSS) TURN-
BEGINNING INCOME (LOSSES)ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD (EXCLUDING(EXCLUDING NET TO AVERAGE OVER
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD RETURN(+)(000) WAIVERS) WAIVERS) ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $13.93 $0.23 $1.02 $(0.22) $(0.02) $14.94 9.04% $10,812 1.37% 1.39% 1.20% 1.56% 63.54%
1998 12.02 0.23 1.95 (0.22) (0.05) 13.93 18.33 11,352 1.43 1.43 1.05 1.81 43.77
1997 11.40 0.26 1.92 (0.29) (1.27) 12.02 19.46 9,901 1.39 2.10 1.05 2.44 93.85
1996 12.07 0.43 1.17 (0.44) (1.83) 11.40 13.39 9,095 1.36 3.12 1.05 3.43 43.80
1995 9.92 0.42 2.28 (0.42) (0.13) 12.07 27.53 8,452 1.36 3.33 1.05 3.64 41.63
CLASS B
1999 $31.84 $0.12 $1.01 $(0.12) $(0.12) $14.83 8.20% $37,340 2.13% 0.62% 1.75% 0.80% 63.54%
1998 11.97 0.15 1.92 (0.15) (0.05) 13.84 17.40 22,811 2.18 0.64 1.80 1.02 43.77
1997(1) 11.93 0.15 1.34 (0.18) (1.27) 11.97 19.45* 4,487 2.28 0.75 1.80 1.23 93.85
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $14.01 $0.18 $0.59 $(0.13) $(0.11) $14.54 5.50% $17,772 1.34% 1.06% 1.19% 1.21% 19.24%
1998 13.22 0.24 1.19 (0.25) (0.39) 14.01 11.12 18,159 1.36 1.49 1.05 1.80 40.30
1997 13.35 0.29 2.94 (0.28) (3.08) 13.22 24.68 16,686 1.34 1.76 1.05 2.05 76.67
1996 13.08 0.31 2.34 (0.29) (2.09) 13.35 20.70 12,444 1.34 2.01 1.05 2.30 85.47
1995 10.27 0.28 3.29 (0.28) (0.48) 13.08 35.21 9,612 1.35 2.06 1.05 2.36 42.97
CLASS B
1999 $13.94 $0.07 $0.59 $(0.03) $(0.11) $14.46 4.72% $19,162 2.09% 0.31% 1.94% 0.46% 19.24%
1998 13.17 0.17 1.15 (0.16) (0.39) 13.94 10.29 18,907 2.11 0.76 1.80 1.07 40.30
1997(2) 14.34 0.15 1.94 (0.18) (3.08) 13.17 22.87* 7,862 2.13 0.94 1.80 1.27 76.67
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* ANNUALIZED
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
(1) COMMENCED OPERATIONS ON MAY 8, 1997. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED.
(2) COMMENCED OPERATIONS ON MAY 8, 1997. ALL RATIOS INCLUDING TOTAL RETURNS FOR
THIS PERIOD HAVE BEEN ANNUALIZED.
(Logo omitted)
PROSPECTUS 58
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO
OF RATIO OF NET
EXPENSES INCOME
REALIZED TO (LOSS) TO RATIO OF
NET AND DISTRI- DISTRI- AVERAGE AVERAGE RATIO OF NET PORT-
NET ASSET INVEST- UNREALIZED BUTIONS BUTIONS NET ASSETS NET NET EXPENSES INCOME FOLIO
VALUE MENT GAINS OR FROM NET FROM NET ASSET END OF ASSETS ASSETS TO AVERAGE (LOSS) TO TURN-
BEGINNING INCOME (LOSSES)ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD (EXCLUDING(EXCLUDING NET AVERAGE OVER
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD RETURN(+) (000) WAIVERS) WAIVERS) ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY INDEX FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $11.93 $ 0.04 $2.26 $ -- $(0.03) $14.20 19.27% $ 1,511 1.65% (0.31)% 1.05% 0.29% 2.14%**
1998(1) 9.92 0.02 2.02 (0.02) (0.01) 11.93 20.59 482 4.21 (4.79) 1.05 (1.63) 9.35
CLASS B
1999 $11.94 $(0.02) $2.23 $ -- $(0.03) $14.12 18.50% $22,874 2.39% (1.02)% 1.80% (0.43)% 2.14%**
1998(2) 9.96 0.02 1.99 (0.02) (0.01) 11.94 20.19 5,207 4.96 (4.67) 1.80 (1.51) 9.35
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $15.91 $ 0.04 $2.15 $(0.04) $(0.19) $17.87 13.77% $20,025 1.31% 0.10% 1.19% 0.22% 18.58%
1998 12.90 0.11 3.36 (0.09) (0.37) 15.91 27.18 18,546 1.32 0.31 1.05 0.58 19.69
1997 13.35 0.15 3.20 (0.14) (3.66) 12.90 25.51 13,923 1.31 0.72 1.05 0.98 80.24
1996 12.83 0.19 2.51 (0.18) (2.00) 13.35 21.15 10,000 1.33 1.14 1.05 1.42 85.30
1995 10.21 0.21 3.47 (0.22) (0.84) 12.83 36.35 7,644 1.32 1.56 1.05 1.83 61.88
CLASS B
1999 $15.85 $ (0.07) $2.12 $ -- $(0.19) $17.71 12.95% $34,744 2.06% (0.66)% 1.95% (0.55)% 18.58%
1998 12.87 0.03 3.33 (0.01) (0.37) 15.85 26.33 19,577 2.07 (0.45) 1.80 (0.18) 19.69
1997(3) 14.81 0.04 1.73 (0.05) (3.66) 12.87 19.17* 5,072 2.07 (0.18) 1.80 0.09 80.24
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* ANNUALIZED
** THE PORTFOLIO TURNOVER RATE FOR THE MASTER FUND, THE SEI INDEX FUNDS S&P 500
INDEX PORTFOLIO, IS 5.91% FOR THE TWELVE MONTH PERIOD ENDING DECEMBER 31,
1999.
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES. (
(1) COMMENCED OPERATIONS ON SEPTEMBER 10, 1998. RATIOS FOR THE PERIOD HAVE BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
(2) COMMENCED OPERATIONS ON SEPTEMBER 8, 1998. RATIOS FOR THE PERIOD HAVE BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
(3) COMMENCED OPERATIONS ON MAY 12, 1997. RATIOS FOR THE PERIOD HAVE BEEN
ANNUALIZED.
59 PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO
OF RATIO OF NET
EXPENSES INCOME
REALIZED TO (LOSS) TO RATIO OF
AND DISTRI- DISTRI- AVERAGE AVERAGE RATIO OF NET PORT-
NET ASSET NET UNREALIZED BUTIONS BUTIONS NET ASSETS NET NET EXPENSES INCOME FOLIO
VALUE INVEST- GAINS OR FROM NET FROM NET ASSET END OF ASSETS ASSETS TO AVERAGE (LOSS) TO TURN-
BEGINNING MENT (LOSSES)ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD (EXCLUDING(EXCLUDING NET AVERAGE OVER
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN(+) (000) WAIVERS) WAIVERS) ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $11.52 $(0.07) $5.30 $ -- $(2.60) $14.15 49.12% $5,376 1.31% (0.68)% 1.19% (0.56)% 65.40%
1998 9.25 -- 2.73 -- (0.46) 11.52 30.69 3,634 1.32 (0.68) 1.05 (0.41) 88.28
1997(1) 10.00 (0.01) 1.24 -- (1.98) 9.25 14.13* 432 1.32 (0.55) 1.05 (0.28) 114.51
CLASS B
1999 $11.41 $(0.10) $5.15 $ -- $(2.60) $13.86 47.97% $23,446 2.07% (1.42)% 1.97% (1.32)% 65.40%
1998 9.18 (0.03) 2.72 -- (0.46) 11.41 30.47 6,061 2.08 (1.44) 1.80 (1.16) 88.28
1997(2) 10.41 (0.02) 0.77 -- (1.98) 9.18 13.01* 357 2.09 (1.37) 1.80 (1.08) 114.51
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $11.20 $0.08 $4.97 $ -- $ -- $16.25 45.09% $691 2.00% (0.18)% 1.75% 0.07% 37.62%
1998 10.33 0.01 0.88 (0.01) (0.01) 11.20 8.69 576 1.97 0.07 1.75 0.29 115.79
1997 11.22 0.05 (0.04) (0.05) (0.85) 10.33 0.00 665 1.95 0.50 1.75 0.70 71.22
1996 10.73 0.09 1.06 (0.04) (0.62) 11.22 10.88 788 1.98 0.47 1.75 0.70 67.03
1995(3) 10.00 0.01 0.75 (0.01) (0.02) 10.73 7.64 621 2.38 (0.18) 1.75 0.45 14.32
CLASS B
1999 $11.20 $0.07 $4.82 $ -- $ -- $15.97 44.13% $934 2.77% (0.82)% 2.50% (0.55)% 37.62%
1998 10.30 (0.06) 0.86 (0.01) (0.01) 11.08 7.84 312 2.70 (0.82) 2.50 (0.62) 115.79
1997(4) 11.45 (0.03) (0.23) (0.04) (0.85) 10.30 (2.39) 118 2.70 (0.80) 2.50 (0.60) 71.22
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* ANNUALIZED
(+) TOTAL RETURN DOES NOT REFLECT SALES LOADS ON CLASS A AND CLASS B SHARES.
(1) COMMENCED OPERATIONS ON FEBRUARY 3, 1997. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED..
(2) COMMENCED OPERATIONS ON MAY 21, 1997. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED..
(3) COMMENCED OPERATIONS ON MAY 1, 1995. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
(4) COMMENCED OPERATIONS ON MAY 7, 1997. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
(Logo omitted)
PROSPECTUS 60
<PAGE>
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.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
RATIO
OF RATIO OF NET
NET EXPENSES INVESTMENT RATIO OF
REALIZED DISTRI- TO INCOME NET
AND DIVI- BUTIONS AVERAGE TO AVERAGE RATIO OF INVESTMENT PORT-
NET ASSET NET UNREALIZED DENDS FROM NET ASSETS NET NET EXPENSES INCOME FOLIO
VALUE, INVEST- GAINS FROM NET REALIZED NET ASSET END OF ASSETS ASSETS TO AVERAGE TO TURN-
BEGINNING MENT (LOSSES)ON INVESTMENT CAPITAL VALUE, END TOTAL PERIOD (EXCLUDING(EXCLUDING NET AVERAGE OVER
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN(+) (000) WAIVERS) WAIVERS) ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.81 $1.02 $(0.64) $(1.02) $(0.06) $10.11 3.51% $507,218 0.89% 9.58% 0.85% 9.62% 17%
1998 11.66 1.04 (0.75) (1.04) (0.10) 10.81 2.25 314,937 0.89 8.90 0.85 8.94 56
1997 11.14 1.04 0.57 (1.04) (0.05) 11.66 15.30 236,457 0.91 9.28 0.86 9.33 68
1996 10.64 0.94 0.62 (1.03) (0.03) 11.14 15.46 107,545 0.94 8.94 0.87 9.01 55
1995(1) 10.00 0.67 0.55 (0.58) -- 10.64 17.72 23,724 0.86 9.83 0.67 10.02 56
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
( 1) HIGH YIELD BOND SHARES WERE OFFERED BEGINNING JANUARY 11, 1995. ALL RATIOS
INCLUDING TOTAL RETURN FOR THAT PERIOD HAVE BEEN ANNUALIZED.
AMOUNTS DESIGNATED AS "--" ARE ZERO OR HAVE BEEN ROUNDED TO ZERO.
61 PROSPECTUS
<PAGE>
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. 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.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MARCH 30,
<TABLE>
<CAPTION>
RATIO
OF RATION OF NET
NET EXPENSES INVESTMENT RATIO OF
REALIZED TO INCOME TO NET
NET AND DIVI- DISTRI- AVERAGE AVERAGE RATIO OF INVESTMENT PORT-
NET ASSET INVEST- UNREALIZED DENDS BUTIONS NET ASSETS NET NET EXPENSES INCOME FOLIO
VALUE, MENT GAINS OR FROM NET FROM NET ASSET END OF ASSETS ASSETS TO AVERAGE TO TURN-
BEGINNING INCOME (LOSSES)ON INVESTMENT CAPITAL VALUE, END TOTAL PERIOD (EXCLUDING (EXCLUDING NET AVERAGE OVER
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD RETURN (000) WAIVERS) WAIVERS) ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS E+
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $34.77 $0.57 $ 5.68 $(0.45) $(0.34) $40.23 18.29% $1,606,449 0.54% 0.97% 0.25% 1.26% 7%
1998 24.10 0.45 10.88 (0.45) (0.21) 34.77 47.62 1,300,924 0.54 1.26 0.25 1.55 4
1997 20.88 0.46 3.54 (0.45) (0.33) 24.10 19.46 835,889 0.54 1.74 0.25 2.03 2
1996 16.40 0.44 4.72 (0.37) (0.31) 20.88 31.88 630,566 0.35 2.21 0.25 2.31 3
1995 15.07 0.42 1.79 (0.42) (0.46) 16.40 15.26 458,012 0.35 2.59 0.25 2.69 4
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(+) ON JULY 31, 1997 THE BOARD OF TRUSTEES APPROVED THE RENAMING OF THE CLASS A
SHARES TO CLASS E SHARES.
(Logo omitted)
PROSPECTUS 62
<PAGE>
NOTES
PROSPECTUS 63
<PAGE>
NOTES
(Logo omitted)
PROSPECTUS 64
<PAGE>
NOTES
<PAGE>
[PILLAR LOGO OMITTED]
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
More information about The Pillar Funds is available without
charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, 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
and their impact on Fund performance. The reports also contain detailed
financial information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR 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 other information about The Pillar Funds, from the EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected].
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. PILLARFUNDS.COM IS A
SERVICE MARK OF SUMMIT BANK. REACH HIGHER, SUMMIT, SUMMIT BANK, SUMMIT FINANCIAL
SERVICES GROUP AND SUMMIT BANCORP ARE REGISTERED SERVICE MARKS OF SUMMIT
BANCORP.
PIL-F-025-04
<PAGE>
PROSPECTUS
MONEY MARKET FUNDS
U.S. TREASURY SECURITIES MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
PRIME OBLIGATION MONEY MARKET FUND
FIXED INCOME FUNDS
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
EQUITY AND BALANCED FUNDS
BALANCED FUND
EQUITY INCOME FUND
EQUITY INDEX FUND
EQUITY VALUE FUND
EQUITY GROWTH FUND
MID CAP FUND
INTERNATIONAL EQUITY FUND
INVESTMENT ADVISOR
SUMMIT BANK
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
CLASS I SHARES
APRIL 30, 2000
[PILLAR LOGO OMITTED]
<PAGE>
ABOUT 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.
[Logo Omitted]
PROSPECTUS
<PAGE>
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. IN THE NEXT COLUMN, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
Page
U.S. TREASURY SECURITIES MONEY MARKET FUND .............. 2
TAX-EXEMPT MONEY MARKET FUND ............................ 4
PRIME OBLIGATION MONEY MARKET FUND ...................... 6
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND ...................................... 8
FIXED INCOME FUND ....................................... 10
PENNSYLVANIA MUNICIPAL SECURITIES FUND .................. 12
NEW JERSEY MUNICIPAL SECURITIES FUND .................... 14
HIGH YIELD BOND FUND .................................... 16
BALANCED FUND ........................................... 18
EQUITY INCOME FUND ...................................... 20
EQUITY INDEX FUND ....................................... 22
EQUITY VALUE FUND ....................................... 24
EQUITY GROWTH FUND ...................................... 26
MID CAP FUND ............................................ 28
INTERNATIONAL EQUITY FUND ............................... 30
MORE INFORMATION ABOUT RISK ............................. 32
MORE INFORMATION ABOUT FUND INVESTMENTS ................. 35
THE INVESTMENT ADVISOR, SUB-ADVISOR
AND PORTFOLIO MANAGERS .............................. 35
PURCHASING, SELLING AND
EXCHANGING FUND SHARES .............................. 37
DISTRIBUTION OF FUND SHARES ............................. 39
DIVIDENDS AND DISTRIBUTIONS ............................. 40
TAXES ................................................... 40
FINANCIAL HIGHLIGHTS .................................... 41
HOW TO OBTAIN MORE INFORMATION ABOUT
THE PILLAR FUNDS ............................ Back Cover
RISK/RETURN INFORMATION COMMON TO THE FUNDS
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 prices 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 sensitivity of a Fund's net asset value to a change in the value
of a single security depends upon what proportion the security is of the Fund's
entire investment portfolio.
PROSPECTUS
<PAGE>
U.S. TREASURY SECURITIES MONEY MARKET FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF
THE U.S. TREASURY SECURITIES
MONEY MARKET FUND
[box][box][box]
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 increase the Fund's potential for current income
through analysis of the available yields among the Fund's permitted investments
and "positioning on the yield curve" - that is, balancing the desire to earn
attractive rates of interest with the need to maintain an appropriate maturity
level. The Advisor actively manages the maturity of the Fund based on current
market interest rates and its outlook on the various economic factors which
influence the market for short-term fixed income instruments and future interest
rate predictions.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE U.S. TREASURY SECURITIES
MONEY MARKET FUND
[box][box][box]
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.
[Logo Omitted]
2 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 2.46%
1994 3.44%
1995 5.05%
1996 4.53%
1997 4.55%
1998 4.70%
1999 4.33%
BEST QUARTER WORST QUARTER
1.29% 0.59%
(6/30/95) (6/30/93)
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, 1999.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
MONEY MARKET FUND 4.33% 4.63% 4.02%*
- --------------------------------------------------------------------------------
* SINCE 4/1/92
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .35%
Other Expenses .29%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .64%
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$65 $205 $357 $798
PROSPECTUS 3
<PAGE>
TAX-EXEMPT MONEY MARKET FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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 substantially all of its assets
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
[box][box][box]
INVESTMENT STRATEGY OF THE
TAX-EXEMPT MONEY MARKET FUND
[box][box][box]
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 rating 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 increase the Fund's
potential for current income through a strategy that takes advantage of pricing
inefficiencies that often occur in the market for municipal securities. The
Advisor actively manages the maturity of the Fund based on current market
interest rates and its outlook on the various economic factors which influence
the market for short-term municipal instruments 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 ongoing monitoring of the credit quality of each issuer and
any person or company providing credit support.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN
THE TAX-EXEMPT MONEY MARKET FUND
[box][box][box]
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.
[Logo Omitted]
4 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 1.99%
1994 2.27%
1995 3.42%
1996 2.94%
1997 3.10%
1998 2.98%
1999 2.70%
BEST QUARTER WORST QUARTER
0.91% 0.45%
(6/30/95) (3/31/94)
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, 1999.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
TAX-EXEMPT
MONEY MARKET FUND 2.70% 3.03% 2.74%*
- --------------------------------------------------------------------------------
* SINCE 4/6/92
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .35%
Other Expenses .30%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .65%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
TAX-EXEMPT MONEY MARKET FUND - CLASS I .62%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$66 $208 $362 $810
PROSPECTUS 5
<PAGE>
PRIME OBLIGATION MONEY MARKET FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
PRIME OBLIGATION MONEY MARKET FUND
[box][box][box]
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
rating 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 increase the Fund's
potential for current income through (i) security selection; (ii) managing the
Fund's mix of government, corporate and bank obligations; and (iii) "positioning
on the yield curve" - that is, balancing the desire to earn attractive rates of
interest with the need to maintain an appropriate maturity level. 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 Advisor carefully evaluates and monitors the
creditworthiness of each issuer and any person or company providing credit
support.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE
PRIME OBLIGATION MONEY MARKET FUND
[box][box][box]
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.
[Logo Omitted]
6 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 2.65%
1994 3.67%
1995 5.40%
1996 4.83%
1997 5.02%
1998 5.02%
1999 4.65%
BEST QUARTER WORST QUARTER
1.35% 0.64%
(6/30/95) (6/30/93)
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, 1999.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
PRIME OBLIGATION
MONEY MARKET FUND 4.65% 4.98% 4.30%*
- --------------------------------------------------------------------------------
* SINCE 4/1/92
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .35%
Other Expenses .30%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .65%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$66 $208 $362 $810
PROSPECTUS 7
<PAGE>
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
[box][box][box]
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 actively manages the maturity of the Fund's portfolio and
purchases securities with competitive yields in relation to other available
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, but in no event will it exceed ten years. The Advisor continually
monitors the securities held by the Fund and may sell a security to adjust
the maturity of the Fund or if better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE INTERMEDIATE-TERM
GOVERNMENT SECURITIES FUND
[box][box][box]
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.
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 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.
[Logo Omitted]
8 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 8.32%
1994 -4.85%
1995 15.00%
1996 3.26%
1997 6.96%
1998 6.60%
1999 -0.83%
BEST QUARTER WORST QUARTER
4.86% -3.14%
(6/30/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
INTERMEDIATE-TERM
GOVERNMENT
SECURITIES FUND -0.83% 6.07% 5.06%*
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/
CORPORATE BOND INDEX 0.39% 7.09% 6.42%**
- --------------------------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
- --------------------------------------------------------------------------------
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 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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .60%
Other Expenses .37%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .97%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND - CLASS I .80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$99 $309 $536 $1,190
PROSPECTUS 9
<PAGE>
FIXED INCOME FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
FIXED INCOME FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in U.S. Treasury and
U.S. government agency obligations, including mortgage-backed securities, and
corporate debt securities that are rated in one of the three highest ratings
categories by a nationally recognized rating organization. The Advisor's
investment selection process begins with a top-down analysis of general economic
conditions to determine how the Fund's investments will be weighted among the
U.S. Treasury, government agency and corporate sectors. The Advisor conducts
credit analysis of the corporate issues to find companies which may be poised
for credit upgrades. In doing so, the Advisor considers not only the yields of
particular issues, but also the potential for price appreciation due to improved
credit standing of a security's issuer. The Advisor diversifies the Fund's
investments in corporate debt among the major industry sectors. The Advisor
continually monitors the sector weighting of the Fund and may sell a security
when there is a fundamental change in a company's or sector's prospects or
better investment opportunities become available. If a security's credit rating
is downgraded, the Advisor will immediately review that security and take
appropriate action, including the possible sale of that security. 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.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE FIXED INCOME FUND
[box][box][box]
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.
[Logo Omitted]
10 PROSPECTUS
<PAGE>
PRINCIPAL RISKS OF INVESTING
IN THE FIXED INCOME FUND (CONTINUED)
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. 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.
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 11.06%
1994 -5.66%
1995 17.76%
1996 2.94%
1997 7.78%
1998 7.80%
1999 -1.71%
BEST QUARTER WORST QUARTER
6.03% -4.13%
(6/30/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
FIXED INCOME FUND -1.71% 6.72% 6.04%*
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/
CORPORATE BOND INDEX 0.39% 7.09% 6.42%**
- --------------------------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
- --------------------------------------------------------------------------------
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 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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .60%
Other Expenses .31%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .91%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
FIXED INCOME FUND - CLASS I .80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$93 $290 $504 $1,120
PROSPECTUS 11
<PAGE>
PENNSYLVANIA MUNICIPAL SECURITIES FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE PENNSYLVANIA MUNICIPAL SECURITIES FUND
[box][box][box]
The Fund pursues its investment goal by investing 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 intends to invest as much
of its assets as possible in securities that are not subject to federal taxes,
but it may invest up to 20% of its total assets in taxable securities, including
those subject to alternative minimum tax. The Fund's Advisor will purchase
municipal securities rated in one of the top three highest rating categories by
a nationally recognized rating organization 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 creditworthiness, yield
relative to comparable issuers and maturities, appreciation potential and
liquidity. The Advisor continually monitors the securities held by the Fund and
may sell a security to adjust the maturity of the Fund or if better investment
opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE PENNSYLVANIA MUNICIPAL SECURITIES FUND
[box][box][box]
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.
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.
[Logo Omitted]
12 PROSPECTUS
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE PENNSYLVANIA MUNICIPAL SECURITIES FUND
(CONTINUED)
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
that adversely affect issuers of Pennsylvania obligations than a mutual fund
that does not have as great a concentration in Pennsylvania municipal
obligations.
The Fund is also subject to the risk that Pennsylvania municipal debt securities
may underperform other segments of the fixed income market or the fixed income
markets as a whole.
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1994 -2.58%
1995 11.53%
1996 3.89%
1997 7.18%
1998 4.84%
1999 -7.05%
BEST QUARTER WORST QUARTER
4.77% -3.30%
(3/31/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL BOND
INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL
SECURITIES FUND -7.05% 3.89% 3.10%*
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
5-YEAR MUNICIPAL
BOND INDEX 0.74% 5.71% 4.84%**
- --------------------------------------------------------------------------------
* SINCE 5/3/92 ** SINCE 5/31/93
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .60%
Other Expenses .34%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .94%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
PENNSYLVANIA MUNICIPAL SECURITIES FUND - CLASS I .80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND
SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$96 $300 $520 $1,155
PROSPECTUS 13
<PAGE>
NEW JERSEY MUNICIPAL SECURITIES FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
NEW JERSEY MUNICIPAL SECURITIES FUND
[box][box][box]
The Fund pursues its investment goal by investing 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 intends to invest as much of its
assets as possible in securities that are not subject to federal taxes, but it
may invest up to 20% of its total assets in taxable securities, including those
subject to alternative minimum tax. The Fund's Advisor will purchase municipal
securities rated in one of the top three highest rating categories by a
nationally recognized rating organization 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 creditworthiness, yield
relative to comparable issuers and maturities, appreciation potential and
liquidity. The Advisor continually monitors the securities held by the Fund and
may sell a security to adjust the maturity of the Fund or if better investment
opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN THE
NEW JERSEY MUNICIPAL SECURITIES FUND
[box][box][box]
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.
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.
[Logo Omitted]
14 PROSPECTUS
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE NEW JERSEY
MUNICIPAL SECURITIES FUND (CONTINUED)
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 that
adversely affect issuers of New Jersey obligations than a mutual fund that does
not have as great a concentration in New Jersey municipal obligations.
The Fund is also subject to the risk that New Jersey municipal debt securities
may underperform other segments of the fixed income market or the fixed income
markets as a whole.
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 10.48%
1994 -4.12%
1995 13.57%
1996 3.42%
1997 6.76%
1998 4.79%
1999 -1.60%
BEST QUARTER WORST QUARTER
5.54% -4.56%
(3/31/95) (3/31/94)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR GENERAL
OBLIGATION BOND INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
NEW JERSEY MUNICIPAL
SECURITIES FUND -1.60% 5.28% 4.97%*
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
5-YEAR GENERAL
OBLIGATION BOND INDEX 0.72% 5.80% 5.47%**
- --------------------------------------------------------------------------------
* SINCE 5/4/92 ** SINCE 5/31/92
- --------------------------------------------------------------------------------
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 GENERAL OBLIGATION BOND
INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED INDEX OF INTERMEDIATE
INVESTMENT GRADE GENERAL OBLIGATION BONDS WITH MATURITIES BETWEEN 4 AND 6 YEARS.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .60%
Other Expenses .31%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .91%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
NEW JERSEY MUNICIPAL SECURITIES FUND - CLASS I .80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$93 $290 $504 $1,120
PROSPECTUS 15
<PAGE>
HIGH YIELD BOND FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
INVESTMENT GOAL
Maximize total return
INVESTMENT FOCUS
High-yield fixed income securities
("junk bonds")
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
[box][box][box]
INVESTMENT STRATEGY OF THE
HIGH YIELD BOND FUND
[box][box][box]
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 Advisor monitors the performance of the
SIMT Fund and may choose to invest the Fund's assets in another mutual fund or
manage the Fund directly if it determines that doing so would be in the best
interest of the shareholders.
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
generally will not exceed ten years, and there is no limit on the maturity or on
the credit quality of any security.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE HIGH YIELD BOND FUND
[box][box][box]
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 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 not only on the
performance of the SIMT Fund, but also may be lower than other mutual funds that
pursue the same investment goal directly due to expenses deducted from Fund
assets at both the master and feeder levels.
[LOGO OMITTED]
16 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1996 14.24%
1997 13.71%
1998 0.36%
1999 2.51%
BEST QUARTER WORST QUARTER
5.33% -5.53%
(9/30/97) (9/30/98)
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
ENDED DECEMBER 31, 1999 TO THOSE OF THE CS FIRST BOSTON HIGH YIELD INDEX.
SINCE
CLASS I SHARES 1 YEAR INCEPTION
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND 2.51% 9.15%*
- --------------------------------------------------------------------------------
CS FIRST BOSTON HIGH YIELD INDEX 3.31% 9.01%**
- --------------------------------------------------------------------------------
* SINCE 1/11/95 ** SINCE 1/31/95
- --------------------------------------------------------------------------------
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 AN
UNMANAGED, TRADER PRICED PORTFOLIO CONSTRUCTED TO MIRROR THE PUBLIC HIGH YIELD
DEBT MARKET. REVISIONS TO THE INDEX ARE EFFECTED WEEKLY. THE INDEX REFLECTS THE
REINVESTMENT OF DIVIDENDS.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees 1.09%
Other Expenses 1.30%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 2.39%
* THIS TABLE AND EXAMPLE INCLUDE BOTH THE FEES PAID BY THE FUND AND ITS SHARE OF
THE FEES OF THE SIMT FUND. 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 OTHER SERVICE PROVIDERS TO THE FUND WAIVED A PORTION OF
THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THIS
FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT THE ADVISOR
OR ANOTHER SERVICE PROVIDER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY
TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE
EXPECTED TO BE AS FOLLOWS:
HIGH YIELD BOND FUND - CLASS I 1.16%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$242 $745 $1,275 $2,726
PROSPECTUS 17
<PAGE>
BALANCED FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF
THE BALANCED FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in a blended
portfolio of U.S. common stocks and fixed income securities rated in one of the
top three ratings categories by a nationally recognized rating organization. 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 seeks to buy equity
securities of companies that have consistently grown their earnings per share
above the Standard & Poor's 500 Index (S&P 500) earnings growth rate and are
attractively priced relative to their growth prospects based on analysis of
fundamental growth characteristics (such as return on equity, earnings growth
and consistency, and price/earnings ratio). For the fixed income portion of the
Fund, the Advisor conducts a top-down analysis of general economic conditions to
determine how the Fund's investments will be weighted among the government and
corporate sectors. The Advisor conducts credit analysis of the corporate issues
it buys and diversifies the Fund's investments in corporate debt among the major
industry sectors. The Advisor attempts to manage the Fund to minimize share
price declines during falling equity markets by reallocating assets from equity
investments to fixed income investments. The Advisor's allocation of investments
between equity securities and fixed income securities is designed to maintain a
portfolio which is not dependent on either the equity market or the fixed income
market alone to produce total return. The Advisor continually monitors the
securities held by the Fund and may sell a security when it achieves a
designated price target, there is a fundamental change in a company's prospects,
in an effort to adjust the weighting of the Fund's investments in equity or
fixed income securities, or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE BALANCED FUND
[box][box][box]
Since it purchases common stocks, 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 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 average maturity or duration of these securities
affects risk.
[LOGO OMITTED]
18 PROSPECTUS
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE
BALANCED FUND (CONTINUED)
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 during a 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.
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 7.89%
1994 -4.61%
1995 27.76%
1996 13.77%
1997 19.68%
1998 18.65%
1999 9.33%
BEST QUARTER WORST QUARTER
16.98% -9.45%
(12/31/98) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX, THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX, AND A 50/50 BLEND OF THOSE TWO
INDICES.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
BALANCED FUND 9.33% 17.68% 12.37%*
- --------------------------------------------------------------------------------
S&P500 INDEX 21.04% 28.55% 20.57%**
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/
CORPORATE BOND INDEX 0.39% 7.09% 6.42%**
- --------------------------------------------------------------------------------
50/50 BLEND 10.46% 17.64% 13.50%**
- --------------------------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .75%
Other Expenses .37%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.12%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
BALANCED FUND - CLASS I .95%
FOR MORE INFORMATION ABOUT THESE FEES, SEE
"INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$114 $356 $617 $1,363
PROSPECTUS 19
<PAGE>
EQUITY INCOME FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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 S&P 500
INVESTOR PROFILE
Investors who want growth of capital
and income and who can tolerate
moderate share price volatility
[box][box][box]
INVESTMENT STRATEGY OF
THE EQUITY INCOME FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in dividend-paying
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 ability to
grow both earnings and dividends. The Advisor's investment selection process
begins with a top-down analysis of general economic conditions to determine how
the investments will be weighted among industry sectors. The Fund normally
invests in all major industry sectors represented in the S&P 500. The Advisor
then conducts analysis of individual companies' historical earnings and dividend
trends and chooses those companies that have historical dividend yields which
are normally higher than the dividend yield of the average company in the S&P
500 or have the ability to grow their dividends in future years. The Advisor
continually monitors the securities held by the Fund and may sell a security
when it achieves a designated price target, there is a fundamental change in a
company's prospects or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE EQUITY INCOME FUND
[box][box][box]
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 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 large capitalization income stocks may
underperform other segments of the equity market or the equity markets as a
whole.
[LOGO OMITTED]
20 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 10.27%
1994 -4.41%
1995 35.55%
1996 21.01%
1997 25.04%
1998 11.42%
1999 5.77%
BEST QUARTER WORST QUARTER
13.94% -11.67%
(12/31/98) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
EQUITY INCOME FUND 5.77% 19.31% 14.15%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 28.55% 20.57%**
- --------------------------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .75%
Other Expenses .34%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.09%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
EQUITY INCOME FUND - CLASS I .94%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$111 $347 $601 $1,329
PROSPECTUS 21
<PAGE>
EQUITY INDEX FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
INVESTMENT GOAL
Investment results that correspond
to the 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
[box][box][box]
INVESTMENT STRATEGY OF
THE EQUITY INDEX FUND
[box][box][box]
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
Advisor monitors the performance of the SIF Fund and may choose to invest the
Fund's assets in another mutual fund or manage the Fund directly if it
determines that doing so would be in the best interest of the shareholders.
The SIF Fund invests exclusively in securities listed in the S&P 500, which is
comprised of 500 selected securities (mostly common stocks). The SIF Fund's
ability to replicate 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 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.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE EQUITY INDEX FUND
[box][box][box]
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 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.
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 not only on the performance of the
SIF Fund, but also may be lower than other mutual funds that pursue the same
investment goal directly due to expenses deducted from Fund assets at both the
master and feeder levels. The SIF Fund may not be able to match the performance
of the S&P 500.
[Logo Omitted]
22 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1990 -3.70%
1991 29.20%
1992 6.75%
1993 9.20%
1994 0.40%
1995 36.55%
1996 21.90%
1997 32.29%
1998 22.50%
1999 19.73%
BEST QUARTER WORST QUARTER
19.60% -13.91%
(12/31/98) (9/30/90)
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
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------------------------------------------------------------------
EQUITY INDEX
FUND 19.73% 26.43% 16.75% 16.94%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 28.55% 18.20% 18.45%*
- --------------------------------------------------------------------------------
* SINCE 7/31/85
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .78%
Other Expenses 1.13%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.91%
* THIS TABLE AND EXAMPLE INCLUDE BOTH THE FEES PAID BY THE FUND AND ITS SHARE OF
THE FEES OF THE SIF FUND. 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 OTHER SERVICE PROVIDERS TO THE FUND WAIVED A PORTION OF THE FEES
IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THESE FEE
WAIVERS REMAIN IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT THE ADVISOR OR
ANOTHER SERVICE PROVIDER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY
TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE
EXPECTED TO BE AS FOLLOWS:
EQUITY INDEX FUND - CLASS I .80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$194 $600 $1,034 $2,233
PROSPECTUS 23
<PAGE>
EQUITY VALUE FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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 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
[box][box][box]
INVESTMENT STRATEGY OF
THE EQUITY VALUE FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in dividend-paying
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 buy companies that are fundamentally sound but have a market price
which the Advisor believes is less than a company's intrinsic value relative to
its growth prospects. The Advisor's investment selection process begins with a
top-down analysis of general economic conditions to determine how the
investments will be weighted among industry sectors. The Fund normally invests
in all major industry sectors represented in the S&P 500. The Advisor then
conducts analysis of fundamental value characteristics (such as price/earnings
ratios that are below a company's long-term earnings growth rate, price to book
value and return on equity) of the companies within those sectors to identify
stocks which represent "bargains" with the potential to appreciate in value in
the near-term. The Advisor continually monitors the securities held by the Fund
and may sell a security when it achieves a designated price target, there is a
fundamental change in a company's prospects or better investment opportunities
become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE EQUITY VALUE FUND
[box][box][box]
Since it purchases common stocks, 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 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 large capitalization value stocks may
underperform other segments of the equity market or the equity markets as a
whole.
[LOGO OMITTED]
24 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 6.12%
1994 -5.61%
1995 36.71%
1996 21.69%
1997 25.71%
1998 27.58%
1999 14.12%
BEST QUARTER WORST QUARTER
22.58% -10.34%
(12/31/98) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
EQUITY VALUE FUND 14.12% 24.95% 16.60%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 28.55% 20.57%**
- --------------------------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .75%
Other Expenses .31%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.06%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
EQUITY VALUE FUND - CLASS I .94%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$108 $337 $585 $1,294
PROSPECTUS 25
<PAGE>
EQUITY GROWTH FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF
THE EQUITY GROWTH FUND
[box][box][box]
The Fund pursues its investment goal by investing 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 buy
companies that have consistently grown earnings above the S&P 500 earnings
growth rate and are attractively priced relative to their growth prospects. The
Advisor's investment selection process begins with a top-down analysis of
general economic conditions to determine how the investments will be weighted
among industry sectors. The Advisor then conducts analysis of fundamental growth
characteristics (such as return on equity, earnings growth and consistency, and
price/earnings ratio) of the companies within those sectors to identify stocks
which are likely to appreciate in value. The Advisor continually monitors the
securities held by the Fund and may sell a security when it achieves a
designated price target, there is a fundamental change in a company's prospects
or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE EQUITY GROWTH FUND
[box][box][box]
Since it purchases common stocks, 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 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 stocks, may underperform other equity market segments or
the equity markets as a whole.
[LOGO OMITTED]
26 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1998 31.81%
1999 49.62%
BEST QUARTER WORST QUARTER
34.73% -10.71%
(12/31/99) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
CLASS I SHARES 1 YEAR INCEPTION
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND 49.62% 31.59%*
- --------------------------------------------------------------------------------
S&P 500 INDEX 21.04% 25.81%*
- --------------------------------------------------------------------------------
* SINCE 1/31/97
- --------------------------------------------------------------------------------
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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .75%
Other Expenses .31%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.06%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
EQUITY GROWTH FUND - CLASS I .94%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$108 $337 $585 $1,294
PROSPECTUS 27
<PAGE>
MID CAP FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY
OF THE MID CAP FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in common stocks and
other equity securities of U.S. companies with medium and small market
capitalizations (between $700 million and $15 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 based
on analysis of fundamental growth characteristics (such as return on equity,
earnings growth and consistency, and price/earnings ratio). The Advisor's
investment selection process begins with a top-down analysis of general economic
conditions to determine which industry sectors have the best growth potential in
the current economic environment and how the investments will be weighted among
those industry sectors. The Fund normally invests in all major industry sectors
represented in the S&P 500. The Advisor continually monitors the securities held
by the Fund and may sell a security when it achieves a designated price target,
there is a fundamental change in a company's prospects or better investment
opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING
IN THE MID CAP FUND
[box][box][box]
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 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 small and medium 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 and medium-sized companies may have
limited product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small and mid 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 not pay dividends.
The Fund is also subject to the risk that medium and small capitalization growth
stocks may underperform other segments of the equity market or the equity
markets as a whole.
[LOGO OMITTED]
28 PROSPECTUS
<PAGE>
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 13.22%
1994 -9.34%
1995 19.49%
1996 13.56%
1997 20.49%
1998 7.77%
1999 4.03%
BEST QUARTER WORST QUARTER
27.42% -21.32%
(12/31/98) (9/30/98)
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 400 MID-CAP INDEX.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
MID CAP FUND 4.03% 12.88% 9.92%*
- --------------------------------------------------------------------------------
S&P400 MID-CAP INDEX 14.72% 23.04% 17.86%**
- --------------------------------------------------------------------------------
* SINCE 4/1/92 ** SINCE 4/30/92
- --------------------------------------------------------------------------------
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 400 MID-CAP INDEX IS A WIDELY-RECOGNIZED,
MARKET 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.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees .75%
Other Expenses .49%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.24%
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
MID CAP FUND - CLASS I .80%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$126 $393 $681 $1,500
PROSPECTUS 29
<PAGE>
INTERNATIONAL EQUITY FUND
[box][box][box]
FUND SUMMARY
[box][box][box]
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
[box][box][box]
INVESTMENT STRATEGY OF THE
INTERNATIONAL EQUITY FUND
[box][box][box]
The Fund pursues its investment goal by investing primarily in common stocks of
medium to large capitalization companies (in excess of $500 million) located in
Europe and the Pacific basin countries, including Japan. 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 intends to be well
diversified among industry sectors and have a low turnover ratio, generally
holding its core positions for at least two years. The Sub-Advisor continually
monitors the securities held by the Fund and may sell a security when it
achieves a designated price target, there is a fundamental change in a company's
or country's prospects or better investment opportunities become available.
[box][box][box]
PRINCIPAL RISKS OF INVESTING IN
THE INTERNATIONAL EQUITY FUND
[box][box][box]
Since it purchases common stocks, 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 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.
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 the Fund's investments. These currency
movements may happen separately from and in 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.
[LOGO OMITTED]
30 PROSPECTUS
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE
INTERNATIONAL EQUITY FUND (CONTINUED)
The medium capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these medium-sized companies may have limited product lines,
markets and financial resources, and may depend upon a relatively small
management group. Therefore, mid 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 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.
[box][box][box]
PERFORMANCE INFORMATION
[box][box][box]
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1996 11.17%
1997 0.25%
1998 8.98%
1999 45.46%
BEST QUARTER WORST QUARTER
31.96% -18.65%
(12/31/99) (9/30/98)
THE PERFORMANCE FOR THE PERIODS PRIOR TO 9/1/98 REPRESENTS 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, 1999 TO THOSE OF THE MORGAN STANLEY EAFE INDEX.
SINCE
CLASS I SHARES 1 YEAR INCEPTION
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 45.46% 14.83%*
- --------------------------------------------------------------------------------
MORGAN STANLEY EAFE INDEX 26.96% 12.47%*
- --------------------------------------------------------------------------------
* SINCE 4/30/95
- --------------------------------------------------------------------------------
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, MARKET 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, AUSTRALASIA AND THE FAR EAST.
[box][box][box]
FUND FEES AND EXPENSES
[box][box][box]
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- --------------------------------------------------------------------------------
CLASS I SHARES
Management Fees 1.00%
Other Expenses .75%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.75%
* 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 WAIVED A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE
OF THE PROSPECTUS, BUT 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 EXPECTED TO BE AS FOLLOWS:
INTERNATIONAL EQUITY FUND - CLASS I 1.50%
FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISOR AND SUB-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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$178 $551 $949 $2,062
PROSPECTUS 31
<PAGE>
MORE INFORMATION ABOUT RISK
[box][box][box]
EQUITY RISK
BALANCED FUND
EQUITY INCOME FUND
EQUITY VALUE FUND
EQUITY INDEX FUND
EQUITY GROWTH FUND
MID CAP FUND
INTERNATIONAL EQUITY FUND
[box][box][box]
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.
[box][box][box]
FIXED INCOME RISK
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
[box][box][box]
The market value of fixed income investments 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. 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:
[Box] CALL RISK
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
During periods of falling interest rates, certain debt obligations 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.
[LOGO OMITTED]
32 PROSPECTUS
<PAGE>
[Box] CREDIT RISK
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
The possibility that an issuer will be unable to make timely payments of
either principal or interest.
[Box] EVENT RISK
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND
Securities may suffer declines in credit quality and market value due to
issuer restructurings or other factors. This risk should be reduced
because of the Fund's multiple holdings.
[Box] HIGH-YIELD, LOWER RATED SECURITIES
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:
[Box] 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.
[Box] 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.
[Box] 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.
[Box] The market for high-yield, lower rated securities may be adversely
affected by legislative and regulatory developments.
[Box] MORTGAGE-BACKED SECURITIES
FIXED INCOME FUND
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
than 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.
PROSPECTUS 33
<PAGE>
[box][box][box]
MUNICIPAL ISSUER RISK
PENNSYLVANIA MUNICIPAL SECURITIES FUND
NEW JERSEY MUNICIPAL SECURITIES FUND
[box][box][box]
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 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.
[box][box][box]
FOREIGN SECURITY RISKS
INTERNATIONAL EQUITY FUND
[box][box][box]
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 risk factors:
[Box] CURRENCY RISK
INTERNATIONAL EQUITY FUND
Investments in foreign securities denominated in foreign currencies
involve additional risks, including:
[Box] 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.
[Box] A Fund may incur substantial costs in connection with conversions
between various currencies.
[Box] A Fund may be unable to hedge against possible variations in foreign
exchange rates or to hedge a specific security transaction or portfolio
position.
[Box] Only a limited market currently exists for hedging transactions
relating to currencies in certain emerging markets.
[LOGO OMITTED]
34 PROSPECTUS
<PAGE>
[box][box][box]
TRACKING ERROR RISK
EQUITY INDEX FUND
[box][box][box]
Factors such as Fund operating 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.
MORE INFORMATION ABOUT FUND 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. 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. Of course, we cannot guarantee that any Fund will
achieve its investment goal.
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
Management 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, 1999, Summit
Bank had approximately $10.8 billion in assets under management. For the year
ended December 31, 1999, Summit Bank received advisory fees as a percentage of
average daily net assets of:
U.S. TREASURY SECURITIES MONEY
MARKET FUND 0.35%
TAX-EXEMPT MONEY MARKET FUND 0.31%
PRIME OBLIGATION MONEY
MARKET FUND 0.35%
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND 0.43%
FIXED INCOME FUND 0.50%
PENNSYLVANIA MUNICIPAL
SECURITIES FUND 0.46%
NEW JERSEY MUNICIPAL
SECURITIES FUND 0.50%
HIGH YIELD BOND FUND 0.39%
BALANCED FUND 0.58%
EQUITY INCOME FUND 0.60%
EQUITY INDEX FUND 0.35%
EQUITY VALUE FUND 0.64%
EQUITY GROWTH FUND 0.64%
MID CAP FUND 0.31%
INTERNATIONAL EQUITY FUND 0.75%
PROSPECTUS 35
<PAGE>
Vontobel USA Inc. (Vontobel USA), 450 Park Avenue, New York, NY 10022, 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 the Chief Investment Officer and Senior Vice
President of Vontobel USA. He has managed the International Equity Fund since
September, 1998. He has more than 19 years of investment experience. Prior to
joining Vontobel USA in 1994, Mr. Pierallini served as Associate-Director/
Portfolio Manager with Swiss Bank Corporation, New York.
Mr. Rajiv Jain serves as a First Vice President of Vontobel USA, and has
served as associate portfolio manager of the International Equity Fund
since September, 1998. He has more than 9 years of investment experience.
Prior to joining Vontobel USA in 1994, Mr. Jain was an analyst with Swiss Bank
Corporation, New York.
SEI Investments Management Corporation (SEI), One Freedom Valley Drive, Oaks, PA
19456, is the advisor of the SIMT Fund and has engaged Credit Suisse Asset
Management (Credit Suisse) as sub-advisor to manage the SIMT Fund on a
day-to-day basis. Credit Suisse selects, buys and sells securities for the SIMT
Fund under the supervision of SEI and the SIMT Board of Trustees.
Richard J.Lindquist, C.F.A., serves as portfolio manager of the High Yield Bond
Fund. Mr. Lindquist joined Credit Suisse in 1995 as a result of Credit Suisse's
acquisition of CS First Boston Investment Management, and has had 15 years of
investment management experience, all of which were with high yield bonds. Prior
to joining CS First Boston, Mr. Lindquist was with Prudential Insurance Company
of America where he managed high yield funds totaling approximately $1.3
billion. Prior to joining Prudential, Mr. Lindquist managed high yield funds at
T. Rowe Price.
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.
All investment decisions for the SIF Fund are made by a committee of investment
professionals and no persons are primarily responsible for making recommenda-
tions to that committee.
PORTFOLIO MANAGERS
Judith Tomo serves as a Vice President of the Advisor. She has managed the U.S.
Treasury Securities Money Market Fund and the Prime Obligation Money Market Fund
since June, 1996. Ms. Tomo also advises the U.S. Treasury Securities Plus Money
Market Fund and the Institutional Select Money Market Fund. Prior to joining the
Advisor in 1995, Ms. Tomo managed money market instruments for a large regional
bank for a number of years.
Charlene P. Palmer serves as a Vice President of the Advisor. She has managed
the Tax-Exempt Money Market Fund since June, 1996, the Pennsylvania Municipal
Securities Fund since November, 1999 and the New Jersey Municipal Securities
Fund since May, 1992. She joined the Advisor in 1981 and has managed investments
for the Advisor for the past 18 years, with an emphasis on tax-exempt bonds.
Sarah Krieger serves as a Vice President of the Advisor. She has managed the
Intermediate-Term Government Securities Fund since December, 1999. Prior to
joining the Advisor in 1997, Ms. Krieger managed fixed income portfolios for
Meredith, Martin & Kaye (MMK) during 1995 and 1996. Prior to joining MMK, Ms.
Krieger served as a sales associate for Freeman Securities in 1994. She has more
than 16 years of experience in the investment field.
[LOGO OMITTED]
36 PROSPECTUS
<PAGE>
Joseph Markovich serves as a Senior Vice President of the Advisor. He has
managed the Fixed Income Fund since January, 1997. He joined the Advisor in 1985
and has managed investments for the Advisor for the past 15 years.
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 managed
investments for the Advisor for the past 15 years.
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 1983 and has
managed investments for the Advisor for the past 15 years. He has more than 29
years of investment experience.
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
managed investments for the Advisor for the past 18 years.
Gregory S. Huning serves as a Senior Vice President of the Advisor. He has
co-managed the Equity Growth Fund since April, 1999 and began co-managing the
Mid Cap Fund in November, 1999. Prior to joining the Advisor in 1995, Mr. Huning
served as a senior equity portfolio manager for the Robert Wood Johnson
Foundation. Mr. Huning has more than 29 years of experience in investment
management.
Glen C. Corbitt serves as a Vice President of the Advisor. He has co-managed the
Equity Growth Fund since April, 1999 and began co-managing the Mid Cap Fund in
November, 1999. Prior to joining the Advisor in 1995, Mr. Corbitt served as an
accountant for Rockefeller Financial Services.
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
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 your Summit Bank investment officer or
authorized institution.
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by wire. Contact your Summit Bank investment
officer for details. A Fund cannot 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 broker
or 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 broker or institution.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and,
for the Money Market Funds, the Federal Reserve are open for business (a
Business Day).
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.
PROSPECTUS 37
<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 NYSE (normally,
4:00 p.m., Eastern time). So, for you to receive the current Business Day's NAV,
generally a Fund 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 both your
order 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 the net assets of
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 market value of the Fund's investments
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 shares by following the procedures
established when they opened their account or accounts. If you have questions,
call your Summit Bank investment officer.
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares. Your broker or
institution may charge a fee for its services in addition to the fees charged by
the Fund.
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, the Fund will send your sale proceeds within one Business Day after
the Fund receives your request. Your proceeds can be wired to your bank account
and may be subject to a wire fee.
[LOGO OMITTED]
38 PROSPECTUS
<PAGE>
HOW TO EXCHANGE YOUR SHARES
If you own your shares directly, you may exchange your shares on any Business
Day by contacting your Summit Bank investment officer by mail or telephone.
You may also exchange shares through your financial institution or an investment
professional by mail or telephone. Your broker or institution may charge a fee
for its services.
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.
REDEMPTIONS IN KIND
A Fund generally pays sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders) the Fund might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were, you might have to pay transaction costs to
sell the securities distributed to you, as well as taxes on any capital gains
from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.
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
generally will bear the risk of any loss.
DISTRIBUTION OF FUND SHARES
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.
The SIMT Fund has adopted a shareholder servicing plan for its Class A Shares
under which a shareholder servicing fee of up to 0.25% of average daily net
assets may be paid to the Distributor. The SIF Fund has adopted a shareholder
servicing plan for its Class E Shares under which a shareholder servicing fee of
up to 0.25% of average daily net assets may be paid to the Distributor.
PROSPECTUS 39
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income as follows:
U.S. TREASURY SECURITIES
MONEY MARKET FUND MONTHLY
TAX-EXEMPT MONEY MARKET FUND
PRIME OBLIGATION
MONEY MARKET FUND
INTERMEDIATE-TERM GOVERNMENT
SECURITIES FUND
FIXED INCOME FUND
PENNSYLVANIA MUNICIPAL
SECURITIES FUND
NEW JERSEY MUNICIPAL
SECURITIES FUND
HIGH YIELD BOND FUND
BALANCED FUND QUARTERLY
EQUITY INCOME FUND
EQUITY INDEX FUND
EQUITY VALUE FUND
EQUITY GROWTH FUND
MID CAP FUND
INTERNATIONAL EQUITY FUND ANNUALLY
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 30 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.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
The Tax-Exempt Money Market Fund intends to distribute federally tax-exempt
income. The Pennsylvania Municipal Securities Fund intends to distribute income
that is exempt from both federal taxes and Pennsylvania state taxes. The New
Jersey Municipal Securities Fund intends to distribute income that is exempt
from both federal taxes and New Jersey 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.
MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
[LOGO OMITTED]
40 PROSPECTUS
<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.
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO OF NET
INVESTMENT RATIO OF RATIO
INCOME TO EXPENSES OF NET
NET ASSET DISTRIBUTIONS AVERAGE TO AVERAGE RATIO OF INVESTMENT
VALUE NET FROM NET NET ASSET NET ASSETS NET ASSETS NET ASSETS EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL END OF (EXCLUDING (EXCLUDING TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN PERIOD(000) WAIVERS) WAIVERS) NET ASSETS NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS I
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $0.04 $(0.04) $1.00 4.33% $838,350 4.21% 0.64% 0.64% 4.21%
1998 1.00 0.05 (0.05) 1.00 4.70 802,990 4.57 0.63 0.63 4.57
1997 1.00 0.04 (0.04) 1.00 4.55 487,196 4.44 0.65 0.65 4.45
1996 1.00 0.04 (0.04) 1.00 4.53 504,729 4.44 0.65 0.65 4.44
1995 1.00 0.05 (0.05) 1.00 5.05 463,531 4.92 0.65 0.65 4.92
- ----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS I
1999 $1.00 $0.03 $(0.03) $1.00 2.70% $137,733 2.63% 0.65% 0.62% 2.66%
1998 1.00 0.03 (0.03) 1.00 2.98 145,891 2.92 0.69 0.65 2.88
1997 1.00 0.03 (0.03) 1.00 3.10 75,097 3.05 0.67 0.65 3.03
1996 1.00 0.03 (0.03) 1.00 2.94 67,082 2.90 0.68 0.65 2.87
1995 1.00 0.03 (0.03) 1.00 3.42 63,628 3.37 0.72 0.65 3.30
- ----------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATION MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS I
1999 $1.00 $0.05 $(0.05) $1.00 4.65% $758,255 4.56% 0.65% 0.65% 4.56%
1998 1.00 0.05 (0.05) 1.00 5.02 599,844 4.89 0.63 0.63 4.89
1997 1.00 0.05 (0.05) 1.00 5.02 400,689 4.90 0.66 0.65 4.89
1996 1.00 0.05 (0.05) 1.00 4.83 401,423 4.73 0.67 0.65 4.71
1995 1.00 0.05 (0.05) 1.00 5.40 259,667 5.26 0.66 0.65 5.25
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS 41
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS NET ASSETS
VALUE NET GAINS OR FROM NET FROM NET ASSET END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN (000)
- ---------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
- ---------------------------------------------------------------------------------------------------------
CLASS I
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.37 $0.53 $(0.61) $(0.53) $ -- $ 9.76 (0.83)% $ 22,086
1998 10.27 0.56 0.10 (0.56) -- 10.37 6.60 31,441
1997 10.16 0.58 0.11 (0.58) -- 10.27 6.96 31,739
1996 10.37 0.53 (0.21) (0.53) -- 10.16 3.26 24,679
1995 9.51 0.54 0.86 (0.54) -- 10.37 15.00 28,877
- ---------------------------------------------------------------------------------------------------------
FIXED INCOME FUND
- ---------------------------------------------------------------------------------------------------------
CLASS I
1999 $10.53 $0.54 $(0.72) $(0.54) $ -- $ 9.81 (1.71)% $190,905
1998 10.38 0.58 0.21 (0.58) (0.06) 10.53 7.80 214,456
1997 10.21 0.60 0.17 (0.60) -- 10.38 7.78 206,810
1996 10.49 0.57 (0.28) (0.57) -- 10.21 2.94 100,129
1995 9.44 0.59 1.05 (0.59) -- 10.49 17.76 113,509
- ---------------------------------------------------------------------------------------------------------
</TABLE>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO RATIO OF
TO AVERAGE AVERAGE NET
NET ASSETS NET ASSETS RATIO OF INVESTMENT
(EXCLUDING (EXCLUDING EXPENSES INCOME PORTFOLIO
WAIVERS AND WAIVERS AND TO AVERAGE TO AVERAGE TURNOVER
REIMBURSEMENTS) REIMBURSEMENTS) NET ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
- -----------------------------------------------------------------------------
CLASS I
1999 0.97% 5.03% 0.80% 5.20% 49.64%
1998 0.97 5.26 0.80 5.43 43.42
1997 0.94 5.55 0.80 5.69 57.82
1996 0.87 5.19 0.80 5.26 40.60
1995 1.05 5.08 0.80 5.33 68.29
- -----------------------------------------------------------------------------
FIXED INCOME FUND
- -----------------------------------------------------------------------------
CLASS I
1999 0.91% 5.24% 0.80% 5.35% 34.42%
1998 0.91 5.43 0.80 5.54 58.30
1997 0.91 5.79 0.80 5.90 80.34
1996 0.92 5.48 0.80 5.60 40.56
1995 0.91 5.72 0.80 5.83 35.49
- ------------------------------------------------------------------------------
[LOGO OMITTED]
42 PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
REALIZED AND
NET ASSETS UNREALIZED DISTRIBUTIONS DISTRIBUTIONS NET ASSETS
VALUE NET GAINS OR FROM NET FROM NET ASSET END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN (000)
- --------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.26 $0.43 $(1.13) $(0.43) $(0.10) $ 9.03 (7.05)% $31,999
1998 10.41 0.44 0.05 (0.44) (0.20) 10.26 4.84 37,658
1997 10.17 0.45 0.26 (0.45) (0.02) 10.41 7.18 42,134
1996 10.23 0.44 (0.06) (0.44) -- 10.17 3.89 3,665
1995 9.55 0.40 0.68 (0.40) -- 10.23 11.53 3,345
- --------------------------------------------------------------------------------------------------------
NEW JERSEY MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
1999 $10.92 $0.47 $(0.63) $(0.47) $(0.03) $10.26 (1.60)% $99,133
1998 10.92 0.48 0.03 (0.48) (0.03) 10.92 4.79 119,816
1997 10.71 0.49 0.21 (0.49) -- 10.92 6.76 131,002
1996 10.79 0.44 (0.08) (0.44) -- 10.71 3.42 20,689
1995 9.93 0.47 0.86 (0.47) -- 10.79 13.57 28,080
- --------------------------------------------------------------------------------------------------------
HIGH YIELD BOND FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
1999 $9.99 $0.79 $(0.54) $(0.78) $(0.01) $ 9.45 2.51% $3,489
1998(1) 9.99 0.15 0.05 (0.18) (0.02) 9.99 1.99 493
</TABLE>
RATIO OF NET
RATIO OF INVESTMENT RATIO OF
EXPENSES INCOME TO NET
TO AVERAGE AVERAGE RATIO OF INVESTMENT
NET ASSETS NET ASSETS EXPENSES INCOME PORTFOLIO
(EXCLUDING (EXCLUDING TO AVERAGE TO AVERAGE TURNOVER
WAIVERS) WAIVERS) NET ASSETS NET ASSETS RATE
- ---------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL SECURITIES FUND
- ---------------------------------------------------------------------------
CLASS I
1999 0.94% 4.21% 0.80% 4.35% 43.19%
1998 0.96 4.12 0.80 4.28 56.48
1997 0.96 4.31 0.80 4.47 71.89
1996 1.49 3.62 0.69 4.42 25.88
1995 1.27 3.58 0.80 4.05 36.92
- ---------------------------------------------------------------------------
NEW JERSEY MUNICIPAL SECURITIES FUND
- ---------------------------------------------------------------------------
CLASS I
1999 0.91% 4.26% 0.80% 4.37% 9.00%
1998 0.92 4.28 0.80 4.40 17.55
1997 0.94 4.54 0.80 4.68 22.85
1996 0.93 3.87 0.67 4.13 13.93
1995 0.93 3.91 0.41 4.43 2.83
- ---------------------------------------------------------------------------
HIGH YIELD BOND FUND
- ---------------------------------------------------------------------------
CLASS I
1999 1.50% 8.10% 1.16% 8.44% 18.01%*
1998(1) 4.79 3.50 1.25 7.04 1.47
* THE PORTFOLIO TURNOVER RATE FOR THE MASTER FUND, THE SEI INSTITUTIONAL
MANAGED TRUST HIGH YIELD BOND PORTFOLIO, IS 18.73% FOR THE TWELVE MONTH
PERIOD ENDING DECEMBER 31, 1999.
(1) COMMENCED OPERATIONS ON SEPTEMBER 22, 1998. RATIOS FOR THE PERIOD HAVE BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
PROSPECTUS 43
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS NET ASSETS
VALUE NET GAINS OR FROM NET FROM NET ASSET END OF
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN (000)
- --------------------------------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $13.91 $0.26 $1.03 $(0.26) $(0.02) $14.92 9.33% $30,537
1998 12.00 0.26 1.95 (0.25) (0.05) 13.91 18.65 29,495
1997 11.39 0.32 1.88 (0.32) (1.27) 12.00 19.68 24,362
1996 12.05 0.48 1.16 (0.47) (1.83) 11.39 13.77 19,243
1995 9.91 0.44 2.27 (0.44) (0.13) 12.05 27.76 32,145
- --------------------------------------------------------------------------------------------------------
EQUITY INCOME FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
1999 $13.98 $0.21 $0.59 $(0.16) $(0.11) $14.51 5.77% $85,479
1998 13.19 0.27 1.19 (0.28) (0.39) 13.98 11.42 94,615
1997 13.32 0.32 2.95 (0.32) (3.08) 13.19 25.04 131,968
1996 13.07 0.33 2.35 (0.34) (2.09) 13.32 21.01 58,035
1995 10.26 0.31 3.29 (0.31) (0.48) 13.07 35.55 44,202
- --------------------------------------------------------------------------------------------------------
EQUITY INDEX FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
1999 $12.01 $0.05 $2.32 $ -- $(0.03) $14.35 19.73% $6,497
1998(1) 10.00 0.03 2.01 (0.02) (0.01) 12.01 20.44 699
- --------------------------------------------------------------------------------------------------------
EQUITY VALUE FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
1999 $15.91 $0.08 $2.16 $(0.07) $(0.19) $17.89 14.12% $273,839
1998 12.89 0.14 3.37 (0.12) (0.37) 15.91 27.58 242,669
1997 13.35 0.18 3.20 (0.18) (3.66) 12.89 25.71 242,881
1996 12.81 0.22 2.54 (0.22) (2.00) 13.35 21.69 116,715
1995 10.19 0.25 3.46 (0.25) (0.84) 12.81 36.71 82,677
</TABLE>
RATIO OF NET
RATIO OF INVESTMENT RATIO OF
EXPENSES INCOME TO NET
TO AVERAGE AVERAGE RATIO OF INVESTMENT
NET ASSETS NET ASSETS EXPENSES INCOME PORTFOLIO
(EXCLUDING (EXCLUDING TO AVERAGE TO AVERAGE TURNOVER
WAIVERS) WAIVERS) NET ASSETS NET ASSETS RATE
- ----------------------------------------------------------------------------
BALANCED FUND
- ----------------------------------------------------------------------------
CLASS I
1999 1.12% 1.64% 0.95% 1.81% 63.54%
1998 1.18 1.68 0.80 2.06 43.77
1997 1.14 2.33 0.80 2.67 93.85
1996 1.11 3.37 0.80 3.68 43.80
1995 1.11 3.58 0.80 3.89 41.63
- ----------------------------------------------------------------------------
EQUITY INCOME FUND
- ----------------------------------------------------------------------------
CLASS I
1999 1.09% 1.31% 0.94% 1.46% 19.24%
1998 1.11 1.74 0.80 2.05 40.30
1997 1.09 2.05 0.80 2.34 76.67
1996 1.09 2.26 0.80 2.55 85.47
1995 1.10 2.31 0.80 2.61 42.97
- ----------------------------------------------------------------------------
EQUITY INDEX FUND
- ----------------------------------------------------------------------------
CLASS I
1999 1.37% 0.02% 0.80% 0.59% 2.14%*
1998(1) 3.96 (3.86) 0.80 (0.70) 9.35
- ----------------------------------------------------------------------------
EQUITY VALUE FUND
- ----------------------------------------------------------------------------
CLASS I
1999 1.06% 0.34% 0.94% 0.46% 18.58%
1998 1.07 0.56 0.80 0.83 19.69
1997 1.06 1.00 0.80 1.26 80.24
1996 1.08 1.39 0.80 1.67 85.30
1995 1.07 1.81 0.80 2.08 61.88
* THE PORTFOLIO TURNOVER RATE FOR THE MASTER FUND, THE SEI INDEX FUNDS
S&P 500 INDEX PORTFOLIO, IS 5.91% FOR THE PERIOD ENDING DECEMBER 31, 1999.
(1) COMMENCED OPERATIONS ON SEPTEMBER 3, 1998. RATIOS FOR THE PERIOD HAS BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
[LOGO OMITTED]
44 PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET NET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS NET ASSETS
VALUE INVESTMENT GAINS OR FROM NET FROM NET ASSET END OF
BEGINNING INCOME (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD RETURN (000)
- --------------------------------------------------------------------------------------------------------
EQUITY GROWTH FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $11.61 $(0.04) $5.37 $ -- $(2.60) $14.34 49.62% $289,471
1998 9.24 -- 2.83 -- (0.46) 11.61 31.81 199,975
1997(1) 10.00 $ 0.01 1.22 (0.01) (1.98) 9.24 14.17* 177,801
- --------------------------------------------------------------------------------------------------------
MID CAP FUND
- --------------------------------------------------------------------------------------------------------
CLASSI
1999 $10.70 $(0.05) $0.47 $ -- $(0.14) $10.98 4.03% $ 9,364
1998 14.80 0.01 0.32 -- (4.43) 10.70 7.77 11,029
1997 13.33 0.04 2.65 (0.04) (1.18) 14.80 20.49 46,125
1996 12.55 0.09 1.59 (0.09) (0.81) 13.33 13.56 45,556
1995 10.83 0.15 1.95 (0.15) (0.23) 12.55 19.49 42,375
- --------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------------------------------
CLASS I
1999 $11.24 $ 0.11 $5.00 $ -- $ -- $16.35 45.46% $33,008
1998 10.34 (0.01) 0.93 (0.01) (0.01) 11.24 8.98 18,912
1997 11.23 0.08 (0.04) (0.08) (0.85) 10.34 0.25 14,143
1996 10.74 0.08 1.11 (0.08) (0.62) 11.23 11.17 14,822
1995(2) 10.00 0.03 0.75 (0.02) (0.02) 10.74 7.81 9,990
- --------------------------------------------------------------------------------------------------------
</TABLE>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO RATIO OF
TO AVERAGE AVERAGE NET
NET ASSETS NET ASSETS RATIO OF INVESTMENT
(EXCLUDING (EXCLUDING EXPENSES INCOME (LOSS) PORTFOLIO
WAIVERS AND WAIVERS AND TO AVERAGE TO AVERAGE TURNOVER
REIMBURSEMENTS) REIMBURSEMENTS) NET ASSETS NET ASSETS RATE
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
- --------------------------------------------------------------------------------
CLASS I
1999 1.06% (0.43)% 0.94% (0.31)% 65.40%
1998 1.06 (0.41) 0.80 (0.15) 88.28
1997 1.07 (0.20) 0.80 0.07 114.51
- --------------------------------------------------------------------------------
MID CAP FUND
- --------------------------------------------------------------------------------
CLASS I
1999 1.24% (0.92)% 0.80% (0.48)% 120.07%
1998 1.21 (0.89) 0.80 (0.48) 32.88
1997 1.09 0.01 0.80 0.30 59.80
1996 1.10 0.36 0.80 0.66 41.41
1995 1.10 0.98 0.80 1.28 32.96
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
CLASS I
1999 1.75% 0.13% 1.50% 0.38% 37.62%
1998 1.72 0.19 1.50 0.41 115.79
1997 1.69 0.76 1.50 0.95 71.22
1996 1.73 0.62 1.50 0.85 67.03
1995(2) 2.11 0.18 1.50 0.79 14.32
- --------------------------------------------------------------------------------
* ANNUALIZED
(1) COMMENCED OPERATIONS ON FEBRUARY 3, 1997. RATIOS FOR THE PERIOD HAVE BEEN
ANNUALIZED.
(2) COMMENCED OPERATIONS ON MAY 1, 1995. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED. TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN
ANNUALIZED.
PROSPECTUS 45
<PAGE>
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.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
NET RATIO OF
REALIZED AND DISTRIBUTIONS EXPENSES
NET ASSET UNREALIZED DIVIDENDS FROM NET ASSETS TO AVERAGE
VALUE NET GAINS OR FROM NET REALIZED NET ASSET END OF NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD (EXCLUDING
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN (000) WAIVERS)
- -----------------------------------------------------------------------------------------------------------
HIGH YIELD BOND FUND
- -----------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $10.81 $1.02 $(0.64) $(1.02) $(0.06) $10.11 3.51% $507,218 0.89%
1998 11.66 1.04 (0.75) (1.04) (0.10) 10.81 2.25 314,937 0.89
1997 11.14 1.04 0.57 (1.04) (0.05) 11.66 15.30 236,457 0.91
1996 10.64 0.94 0.62 (1.03) (0.03) 11.14 15.46 107,545 0.94
1995(1) 10.00 0.67 0.55 (0.58) -- 10.64 17.72 23,724 0.86
- -----------------------------------------------------------------------------------------------------------
</TABLE>
RATIO OF
NET
INVESTMENT
INCOME RATIO OF NET
TO AVERAGE RATIO OF INVESTMENT
NET ASSETS EXPENSES INCOME TO PORTFOLIO
(EXCLUDING TO AVERAGE AVERAGE TURNOVER
WAIVERS) NET ASSETS NET ASSETS RATE
- ----------------------------------------------------
HIGH YIELD BOND FUND
- ----------------------------------------------------
CLASS A
1999 9.58% 0.85% 9.62% 17%
1998 8.90 0.85 8.94 56
1997 9.28 0.86 9.33 68
1996 8.94 0.87 9.01 55
1995(1) 9.83 0.67 10.02 56
- ----------------------------------------------------
(1) HIGH YIELD BOND SHARES WERE OFFERED BEGINNING JANUARY 11, 1995. ALL RATIOS
INCLUDING TOTAL RETURN FOR THAT PERIOD HAVE BEEN ANNUALIZED.
AMOUNTS DESIGNATED AS "--" ARE ZERO OR HAVE BEEN ROUNDED TO ZERO.
[LOGO OMITTED]
46 PROSPECTUS
<PAGE>
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. 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.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MARCH 31,
<TABLE>
<CAPTION>
NET RATIO OF
REALIZED AND DISTRIBUTIONS EXPENSES
NET ASSET UNREALIZED DIVIDENDS FROM NET ASSETS TO AVERAGE
VALUE NET GAINS OR FROM NET REALIZED NET ASSET END OF NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD (EXCLUDING
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN (000) WAIVERS)
- ------------------------------------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
CLASS E+
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $34.77 $0.57 $5.68 $(0.45) $(0.34) $40.23 18.29% $1,606,449 0.54%
1998 24.10 0.45 10.88 (0.45) (0.21) 34.77 47.62 1,300,924 0.54
1997 20.88 0.46 3.54 (0.45) (0.33) 24.10 19.46 835,889 0.54
1996 16.40 0.44 4.72 (0.37) (0.31) 20.88 31.88 630,566 0.35
1995 15.07 0.42 1.79 (0.42) (0.46) 16.40 15.26 458,012 0.35
- ------------------------------------------------------------------------------------------------------------
</TABLE>
RATIO OF
NET
INVESTMENT
INCOME RATIO OF NET
TO AVERAGE RATIO OF INVESTMENT
NET ASSETS EXPENSES INCOME TO PORTFOLIO
(EXCLUDING TO AVERAGE AVERAGE TURNOVER
WAIVERS) NET ASSETS NET ASSETS RATE
- --------------------------------------------------
S7P 500 INDEX PORTFOLIO
- --------------------------------------------------
CLASS E+
1999 0.97% 0.25% 1.26% 7%
1998 1.26 0.25 1.55 4
1997 1.74 0.25 2.03 2
1996 2.21 0.25 2.31 3
1995 2.59 0.25 2.69 4
- --------------------------------------------------
(+) ON JULY 31, 1997 THE BOARD OF TRUSTEES APPROVED THE RENAMING OF THE CLASS A
SHARES TO CLASS E SHARES.
PROSPECTUS 47
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
[PILLAR LOGO OMITTED]
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
More information about The Pillar Funds is available
without charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, 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 and
their impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR 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 other information about The Pillar Funds, from the EDGAR
Database on 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 on the operation of the Public Reference Room,
call 202-942-8090). 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 20549-0102. You may also obtain this information,
upon payment of a duplicating fee, by e-mailing the SEC at the
following address: [email protected].
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.
PILLARFUNDS.COM IS A SERVICE MARK OF SUMMIT BANK. REACH HIGHER, SUMMIT,
SUMMIT BANK, SUMMIT FINANCIAL SERVICES GROUP AND SUMMIT
BANCORP ARE REGISTERED SERVICE MARKS OF SUMMIT BANCORP.
PIL-F-022-04
<PAGE>
[Pillar Logo Omitted]
PROSPECTUS
APRIL 30, 2000
COMMERCIAL CASH
MANAGEMENT ACCOUNT
U.S. TREASURY SECURITIES
MONEY MARKET FUND
(CLASS I SHARES)
INSTITUTIONAL SELECT
MONEY MARKET FUND
TAX-EXEMPT
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 OR DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[PILLAR LOGO OMITTED]
APRIL 30, 2000
ABOUT 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 RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
Page
U.S. Treasury Securities Money Market Fund 3
Institutional Select Money Market Fund 5
Tax-Exempt Money Market Fund 7
Prime Obligation Money Market Fund 9
More Information About Fund Investments 11
The Investment Advisor and Portfolio Manager 11
Purchasing and Selling Fund Shares 11
Dividends and Distributions 14
Taxes 14
Financial Highlights 15
How to Obtain More Information About
The Pillar Funds Back Cover
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE FUNDS
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.
2
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
U.S. TREASURY SECURITIES 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 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
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 increase the Fund's potential for current income
through analysis of the available yields among the Fund's permitted investments
and "positioning on the yield curve" - that is, balancing the desire to earn
attractive rates of interest with the need to maintain an appropriate maturity
level. The Advisor actively manages the maturity of the Fund based on current
market interest rates and its outlook on the various economic factors which
influence the market for short-term fixed income instruments 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.
3
<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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 2.46%
1994 3.44%
1995 5.05%
1996 4.53%
1997 4.55%
1998 4.70%
1999 4.33%
BEST QUARTER WORST QUARTER
1.29% 0.59%
(6/30/95) (6/30/93)
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, 1999.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
MONEY MARKET FUND 4.33% 4.63% 4.02%*
- --------------------------------------------------------------------------------
* SINCE 4/1/92
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- -------------------------------------------------------------------------------
Management Fees .35%
Other Expenses .29%
- -------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .64%
- -------------------------------------------------------------------------------
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$65 $205 $357 $798
4
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
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
rating 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 increase the Fund's
potential for current income through (i) security selection; (ii) managing the
Fund's mix of government, corporate and bank obligations: and (iii) "positioning
on the yield curve" - that is, balancing the desire to earn attractive rates of
interest with the need to maintain an appropriate maturity level. 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 Advisor carefully evaluates and monitors the
creditworthiness of each issuer and any person or company providing credit
support.
PRINCIPAL RISKS OF INVESTING IN THE INSTITUTIONAL SELECT 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
5
<PAGE>
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.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND FROM YEAR TO YEAR.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1998 5.35%
1999 5.02%
BEST QUARTER WORST QUARTER
1.35% 1.16%
(12/31/99) (6/30/99)
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, 1999.
SINCE
1 YEAR INCEPTION
- --------------------------------------------------------------------------------
INSTITUTIONAL SELECT
MONEY MARKET FUND 5.02% 5.24%*
- --------------------------------------------------------------------------------
* SINCE 7/1/97
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSE
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
Management Fees .10%
Other Expenses .19%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .29%
- --------------------------------------------------------------------------------
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$30 $93 $163 $368
6
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 1999
TAX-EXEMPT MONEY MARKET FUND
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 substantially all of its assets 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 rating 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 increase the Fund's
potential for current income through a strategy that takes advantage of pricing
inefficiencies that often occur in the market for municipal securities. The
Advisor actively manages the maturity of the Fund based on current market
interest rates and its outlook on the various economic factors which influence
the market for short-term municipal instruments 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 ongoing monitoring of the credit quality of each issuer and
any person or company providing credit support.
PRINCIPAL RISKS OF INVESTING IN THE
TAX-EXEMPT 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.
7
<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
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.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 1.99%
1994 2.27%
1995 3.42%
1996 2.94%
1997 3.10%
1998 2.98%
1999 2.70%
BEST QUARTER WORST QUARTER
0.91% 0.45%
(6/30/95) (3/31/94)
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, 1999.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------
TAX-EXEMPT
MONEY MARKET FUND 2.70% 3.03% 2.74%*
- -------------------------------------------------------------------------------
* SINCE 4/6/92
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
CLASS I SHARES
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- -------------------------------------------------------------------------------
Management Fees .35%
Other Expenses .30%
- -------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .65%
- -------------------------------------------------------------------------------
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
TAX-EXEMPT MONEY MARKET FUND - CLASS I .62%
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$66 $208 $362 $810
8
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
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
rating 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 increase the Fund's
potential for current income through (i) security selection; (ii) managing the
Fund's mix of government, corporate and bank obligations; and (iii) "positioning
on the yield curve" -- that is, balancing the desire to earn attractive rates of
interest with the need to maintain an appropriate maturity level. 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 Advisor carefully evaluates and monitors the
creditworthiness 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
9
<PAGE>
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.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S CLASS I SHARES
FROM YEAR TO YEAR.
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1993 2.65%
1994 3.67%
1995 5.40%
1996 4.83%
1997 5.02%
1998 5.02%
1999 4.65%
BEST QUARTER WORST QUARTER
1.35% 0.64%
(6/30/95) (6/30/93)
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, 1999.
SINCE
CLASS I SHARES 1 YEAR 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
PRIME OBLIGATION
MONEY MARKET FUND 4.65% 4.98% 4.30%*
- --------------------------------------------------------------------------------
* SINCE 4/1/92
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
CLASS I SHARES
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
Management Fees .35%
Other Expenses .30%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .65%
- --------------------------------------------------------------------------------
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$66 $208 $362 $810
10
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
MORE INFORMATION ABOUT
FUND 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.
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.
Summit Bank serves as the Advisor to the Funds. As of December 31, 1999, Summit
Bank had approximately $10.8 billion in assets under management. For the year
ended December 31, 1999, Summit Bank received advisory fees as a percentage of
average daily net assets of:
U.S. TREASURY SECURITIES
MONEY MARKET FUND 0.35%
INSTITUTIONAL SELECT
MONEY MARKET FUND 0.10%
TAX-EXEMPT
MONEY MARKET FUND 0.31%
PRIME OBLIGATION
MONEY MARKET FUND 0.35%
PORTFOLIO MANAGER
Judith Tomo 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, and the Institutional Select Money Market Fund since its
inception. Ms. Tomo also advises the U.S. Treasury Securities Plus Money Market
Fund. Prior to joining the Advisor in 1995, Ms. Tomo managed money market
instruments for a large regional bank for a number of years.
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 managed investments for the Advisor for the past 18 years, with an
emphasis on tax-exempt bonds.
PURCHASING AND SELLING
FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
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
11
<PAGE>
Summit Bank. Cash management account shareholders should consult their cash
management account agreement or call 1-888-8SUMMIT for more information on
purchasing. A Fund generally will not accept checks, third-party checks, credit
cards, credit card checks or cash.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Federal Reserve are open for business (a Business Day).
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 generally must receive both your order 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 the net assets of
the Fund.
In calculating NAV, a Fund generally values its 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.
The sale price of each share will be the NAV next determined after the Fund
receives your request.
RECEIVING YOUR MONEY
Normally, the Fund will send your sale proceeds within one Business Day after
the Fund receives your request. Your proceeds will be wired to your bank
account.
12
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
AUTOMATIC EXCHANGE OF YOUR SHARES
If your account balance for the Institutional Select Money Market Fund drops
below $5,000,000 because of redemptions, your shares may 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.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the minimum level required in your cash
management account agreement with Summit Bank because of redemptions, your
shares in a Fund may be redeemed or you may be charged additional fees.
REDEMPTIONS IN KIND
A Fund generally pays sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders), the Fund might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were, you might have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.
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.
13
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
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 30 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.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. Each sale or exchange of Fund shares is a taxable event.
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 this
Fund may be taxable.
MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
14
<PAGE>
[PILLAR LOGO OMITTED]
APRIL 30, 2000
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.
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO RATIO OF
TO AVERAGE AVERAGE NET
NET ASSET DISTRIBUTIONS NET ASSETS NET ASSETS NET ASSETS RATIO OF INVESTMENT
VALUE NET FROM NET NET ASSET END OF (EXCLUDING (EXCLUDING EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL PERIOD WAIVERS AND WAIVERS AND TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) REIMBURSEMENTS) REIMBURSEMENTS) NET ASSETS NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS I
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $0.04 $(0.04) $1.00 4.33% $838,350 0.64% 4.21% 0.64% 4.21%
1998 1.00 0.05 (0.05) 1.00 4.70 802,990 0.63 4.57 0.63 4.57
1997 1.00 0.04 (0.04) 1.00 4.55 487,196 0.66 4.44 0.65 4.45
1996 1.00 0.04 (0.04) 1.00 4.53 504,729 0.65 4.44 0.65 4.44
1995 1.00 0.05 (0.05) 1.00 5.05 463,531 0.65 4.92 0.65 4.92
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
1999 $1.00 $0.05 $(0.05) $1.00 5.02% $339,572 0.29% 4.96% 0.29% 4.96%
1998 1.00 0.05 (0.05) 1.00 5.35 130,091 0.32 5.20 0.30 5.22
1997(1) 1.00 0.03 (0.03) 1.00 5.38 61,522 0.35 5.27 0.30 5.32
- ------------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS I
1999 $1.00 $0.03 $(0.03) $1.00 2.70% $137,733 0.65% 2.66% 0.62% 2.63%
1998 1.00 0.03 (0.03) 1.00 2.98 145,891 0.69 2.88 0.65 2.92
1997 1.00 0.03 (0.03) 1.00 3.10 75,097 0.67 3.03 0.65 3.05
1996 1.00 0.03 (0.03) 1.00 2.94 67,082 0.68 2.87 0.65 2.90
1995 1.00 0.03 (0.03) 1.00 3.42 63,628 0.72 3.30 0.65 3.37
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATION MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS I
1999 $1.00 $0.05 $(0.05) $1.00 4.65% $758,255 0.65% 4.56% 0.65% 4.56%
1998 1.00 0.05 (0.05) 1.00 5.02 599,844 0.63 4.89 0.63 4.89
1997 1.00 0.05 (0.05) 1.00 5.02 400,689 0.66 4.89 0.65 4.90
1996 1.00 0.05 (0.05) 1.00 4.83 401,423 0.67 4.71 0.65 4.73
1995 1.00 0.05 (0.05) 1.00 5.40 259,667 0.66 5.25 0.65 5.26
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commenced operations on July 1, 1997. Ratios for this period have been
annualized.
15
<PAGE>
[Pillar Logo Omitted]
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
More information about The Pillar Funds is available
without charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, 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 and
their impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT,
OR 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 other information about The Pillar Funds, from the EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected].
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. PILLARFUNDS.COM IS A SERVICE MARK
OF SUMMIT BANK. REACH HIGHER, SUMMIT, SUMMIT BANK, SUMMIT FINANCIAL SERVICES
GROUP AND SUMMIT BANCORP ARE REGISTERED SERVICE MARKS OF SUMMIT BANCORP.
PIL-022-04
<PAGE>
[Pillar Logo Omitted]
PROSPECTUS
APRIL 30, 2000
INSTITUTIONAL SELECT
MONEY MARKET FUND
INVESTMENT ADVISOR
SUMMIT BANK
THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES
OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[PILLAR LOGO OMITTED]
APRIL 30, 2000
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. FOR MORE DETAILED INFORMATION ABOUT THE FUND,
PLEASE SEE:
Page
Principal Investment Strategies and Risks,
Performance Information and Expenses 1
More Information About Risk 3
More Information About Fund Investments 3
The Investment Advisor 3
Portfolio Manager 4
Purchasing and Selling Fund Shares 4
Dividends and Distributions 6
Taxes 7
Financial Highlights 8
How to Obtain More Information About
The Pillar Funds Back Cover
<PAGE>
[BLANK PAGE]
<PAGE>
[PILLAR LOGO OMITTED]
APRIL 30, 2000
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
rating 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 increase the Fund's
potential for current income through (i) security selection; (ii) managing the
Fund's mix of government, corporate and bank obligations; and (iii) "positioning
on the yield curve" -- that is, balancing the desire to earn attractive rates of
interest with the need to maintain an appropriate maturity level. 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 Advisor carefully evaluates and monitors the
creditworthiness of each issuer and any person or company providing credit
support.
PRINCIPAL RISKS OF INVESTING IN THE INSTITUTIONAL SELECT 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.
1
<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 FROM YEAR TO YEAR.
[BAR CHART OMITTED]
PLOT POINTS FOLLOWS:
1998 5.35%
1999 5.02%
BEST QUARTER WORST QUARTER
1.35% 1.16%
(12/31/99) (6/30/99)
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, 1999.
1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
INSTITUTIONAL SELECT
MONEY MARKET FUND 5.02% 5.24%*
- --------------------------------------------------------------------------------
* SINCE 7/1/97
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
Management Fees .10%
Other Expenses .19%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .29%
- --------------------------------------------------------------------------------
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$30 $93 $163 $368
2
<PAGE>
[Pillar Logo]
APRIL 30, 2000
MORE INFORMATION
ABOUT RISK
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. 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. A Fund share is not a bank
deposit and it is not insured or guaranteed by the FDIC or any government
agency.
MORE INFORMATION ABOUT FUND 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.
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, 1999, Summit Bank had approximately $10.8 billion in assets
under management. For the year ended December 31, 1999, Summit Bank received
advisory fees as a percentage of average daily net assets of:
INSTITUTIONAL SELECT MONEY
MARKET FUND 0.10%
3
<PAGE>
PORTFOLIO MANAGER
Judith Tomo serves as a Vice President of the Advisor. She has managed the
Institutional Select Money Market Fund since its inception. Ms. Tomo also
advises the Prime Obligation Money Market Fund, the U.S. Treasury Securities
Money Market Fund and the U.S. Treasury Securities Plus Money Market Fund. Prior
to joining the Advisor in 1995, Ms. Tomo managed money market instruments for a
large regional bank for a number of years.
PURCHASING AND SELLING
FUND SHARES
This section tells you how to buy and sell (sometimes called "redeem") 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 management account customers of Summit Bank.
Cash management account shareholders should consult their cash management
account agreement or call 1-888-8SUMMIT for more information on purchasing
shares.
The Fund cannot 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 broker
or 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 broker or institution.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Federal Reserve are open for business (a Business Day).
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.
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 both your order and federal
funds (readily available funds) before 3:00 p.m., Eastern time.
4
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
In calculating NAV, the Fund generally values its 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. There is no minimum for subsequent purchases. The Fund may accept
investments of smaller amounts at its discretion.
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 through an account with a broker or other institution,
contact that broker or institution to sell your shares. Your broker or
institution may charge a fee for its services.
The sale price of each share will be the NAV next determined after the Fund
receives your request.
RECEIVING YOUR MONEY
Normally, the Fund will send your sale proceeds within one Business Day after
the Fund receives your request. Your proceeds will be wired to your bank account
and may be subject to a wire fee.
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 may 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.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the minimum level required in your cash
management account agreement with Summit Bank because of redemptions, you may be
required to sell your shares or you may be charged additional fees. But,
5
<PAGE>
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.
REDEMPTIONS IN KIND
A Fund generally pays sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders), the Fund might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were, you might have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in the Statement of Additional Information.
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 AND DISTRIBUTIONS
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 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 30 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.
6
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
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 Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from the Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. Each sale or exchange of Fund shares is a taxable event.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
7
<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.
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO RATIO OF
TO AVERAGE AVERAGE NET
NET ASSET DISTRIBUTIONS NET ASSETS NET ASSETS NET ASSETS RATIO OF INVESTMENT
VALUE NET FROM NET NET ASSET END OF (EXCLUDING (EXCLUDING EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL PERIOD WAIVERS AND WAIVERS AND TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) REIMBURSEMENTS) REIMBURSEMENTS) NET ASSETS NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $0.05 $(0.05) $1.00 5.02% $339,572 0.29% 4.96% 0.29% 4.96%
1998 1.00 0.05 (0.05) 1.00 5.35 130,091 0.32 5.20 0.30 5.22
1997(1) 1.00 0.03 (0.03) 1.00 5.38 61,522 0.35 5.27 0.30 5.32
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) COMMENCED OPERATIONS ON JULY 1, 1997. RATIOS FOR THIS PERIOD HAVE BEEN
ANNUALIZED.
8
<PAGE>
[Blank Page]
<PAGE>
[Pillar Logo Omitted]
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
More information about The Pillar Funds is available without
charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, 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 the Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends and
their impact on Fund performance. The reports also contain detailed financial
information about the Fund.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT,
OR 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 other information about The Pillar Funds, from the EDGAR Database on
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 on the
operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected].
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. PILLARFUNDS.COM IS A SERVICE MARK
OF SUMMIT BANK. REACH HIGHER, SUMMIT, SUMMIT BANK, SUMMIT FINANCIAL SERVICES
GROUP AND SUMMIT BANCORP ARE REGISTERED SERVICE MARKS OF SUMMIT BANCORP.
PIL-F-028-04
<PAGE>
[Pillar Logo Omitted]
PROSPECTUS
APRIL 30, 2000
U.S. TREASURY SECURITIES PLUS
MONEY MARKET FUND
INVESTMENT ADVISOR
SUMMIT BANK
THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[PILLAR LOGO OMITTED]
APRIL 30, 2000
ABOUT 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. FOR MORE DETAILED INFORMATION ABOUT THE FUND,
PLEASE SEE:
Page
Principal Investment Strategies and Risks,
Performance Information and Expenses 1
More Information About Risk 3
More Information About Fund Investments 3
Investment advisor 3
Portfolio manager 3
purchasing and selling fund shares 3
Distribution of Fund Shares 5
dividends and distributions 6
Taxes 6
Financial highlights 7
How to obtain more information about
The pillar funds back cover
<PAGE>
[Blank Page]
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
U.S. TREASURY SECURITIES PLUS 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 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
INVESTMENT STRATEGY OF THE
U.S. TREASURY SECURITIES PLUS
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 increase the Fund's potential for current income
through analysis of the available yields among the Fund's permitted investments
and "positioning on the yield curve" - that is, balancing the desire to earn
attractive rates of interest with the need to maintain an appropriate maturity
level. The Advisor actively manages the maturity of the Fund based on current
market interest rates and its outlook on the various economic factors which
influence the market for short-term fixed income instruments and future interest
rate predictions.
PRINCIPAL RISKS OF INVESTING IN THE
U.S. TREASURY SECURITIES PLUS 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.
1
<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 FROM YEAR TO YEAR.
[BAR CHART OMITTED]
PLOT POINTS FOLLOWS:
1994 3.60%
1995 5.40%
1996 4.82%
1997 4.89%
1998 4.79%
1999 4.41%
BEST QUARTER WORST QUARTER
1.36% 0.68%
(6/30/95) (3/31/94)
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 ENDED
DECEMBER 31, 1999.
SINCE
1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
PLUS MONEY MARKET FUND 4.41% 4.86% 4.45%*
- -------------------------------------------------------------------------------
* SINCE 5/3/93
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- -------------------------------------------------------------------------------
Management Fees .15%
Distribution and Service (12b-1) Fees .03%
Other Expenses .49%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .67%
- --------------------------------------------------------------------------------
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND .55%
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$68 $214 $373 $835
2
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
MORE INFORMATION
ABOUT RISK
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. 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. A Fund share is
not a bank deposit and it is not insured or guaranteed by the FDIC or any
government agency.
MORE INFORMATION ABOUT FUND 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.
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, 1999, Summit
Bank had approximately $10.8 billion in assets under management. For the year
ended December 31, 1999, Summit Bank waived the entire amount of its advisory
fees.
PORTFOLIO MANAGER
Judith Tomo serves as a Vice President of the Advisor. She has managed the U.S.
Treasury Securities Plus Money Market Fund since June, 1996. Ms. Tomo also
advises the Prime Obligation Money Market Fund, U.S. Treasury Securities Money
Market Fund and Institutional Select Money Market Fund. Prior to joining the
Advisor in 1995, Ms. Tomo managed money market instruments for a large regional
bank for a number of years.
PURCHASING AND SELLING
FUND SHARES
This section tells you how to purchase and sell (sometimes called "redeem")
shares of the Fund. Shares of the Fund are available only to customers of Summit
Bank's Money Desk.
3
<PAGE>
HOW TO PURCHASE FUND SHARES
To purchase shares directly, please call 1-800-243-8550. The Fund cannot 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 broker
or 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 broker or institution.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Federal Reserve are open for business (a Business Day).
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.
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 both your order 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 the net assets of
the Fund.
In calculating NAV, the Fund generally values its 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 $100,000 in the
Fund. There is no minimum for subsequent purchases. 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 your shares on any Business Day by
contacting the Money Desk directly by 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. Your broker or
institution may charge a fee for its services, in addition to the fees charged
by the Fund.
The sale price of each share will be the NAV next determined after the Fund
receives your request.
4
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
RECEIVING YOUR MONEY
Normally, the Fund will send your sale proceeds within one Business Day after
the Fund receives your request. Your proceeds will be credited to your account.
REDEMPTIONS IN KIND
The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders), the Fund might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were, you might have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Fund may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in our Statement of Additional Information.
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.
DISTRIBUTION OF
FUND SHARES
The Fund has adopted a distribution plan under Rule 12b-1 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.
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 from any sales charge it receives or from any other source available
to it. The Distributor may provide cash or non-cash compensation as recognition
for past sales or encouragement for future sales that may include the following:
merchandise, travel expenses, prizes, meals, and lodgings, and gifts that do not
exceed $100 per year, per individual.
5
<PAGE>
SHAREHOLDER PROMOTIONAL PROGRAMS
The Distributor may from time to time provide incentives in the form of cash or
Fund shares to current or potential shareholders of The Pillar Funds. The
Distributor or Summit Bank may terminate any promotional program at any time
without prior notice. The Distributor will not be reimbursed by the Trust for
any payment made pursuant to promotional offers.
DIVIDENDS AND DISTRIBUTIONS
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.
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.
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 Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from the Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
6
<PAGE>
[PILLAR LOGO OMITTED]
APRIL 30, 2000
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. 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.
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO OF NET
INVESTMENT RATIO OF
INCOME TO EXPENSES RATIO OF
AVERAGE TO AVERAGE NET
NET ASSET DISTRIBUTIONS NET ASSETS NET ASSETS NET ASSETS RATIO OF INVESTMENT
VALUE NET FROM NET NET ASSET END OF (EXCLUDING (EXCLUDING EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL PERIOD WAIVERS) AND WAIVERS) AND TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) REIMBURSEMENTS) REIMBURSEMENTS) NET ASSETS NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES PLUS MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $0.04 $(0.04) $1.00 4.41% $59,340 4.20% 0.67% 0.55% 4.32%
1998 1.00 0.05 (0.05) 1.00 4.78 63,222 4.54 0.70 0.55 4.69
1997 1.00 0.05 (0.05) 1.00 4.89 68,658 4.68 0.65 0.55 4.78
1996 1.00 0.05 (0.05) 1.00 4.82 65,173 4.62 0.65 0.55 4.72
1995 1.00 0.05 (0.05) 1.00 5.40 64,697 5.19 0.62 0.55 5.26
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
{This page intentionally left blank}
<PAGE>
[Blank Page]
<PAGE>
[Pillar Logo Omitted]
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
More information about The Pillar Funds is available without
charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, 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 the Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends
and their impact on Fund performance. The reports also contain detailed
financial information about the Fund.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT,
OR 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
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 EDGAR Database on
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 on the
operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected].
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. PILLARFUNDS.COM IS A SERVICE MARK
OF SUMMIT BANK. REACH HIGHER, SUMMIT, SUMMIT BANK, SUMMIT FINANCIAL SERVICES
GROUP AND SUMMIT BANCORP ARE REGISTERED SERVICE MARKS OF SUMMIT BANCORP.
PIL-F-024-04
<PAGE>
[GRAPHIC ART OMITTED]
PROSPECTUS
APRIL 30, 2000
RETAIL CASH
MANAGEMENT ACCOUNT
U.S.TREASURY SECURITIES
MONEY MARKET FUND
(CLASS A SHARES)
TAX-EXEMPT
MONEY MARKET FUND
(CLASS A SHARES)
PRIME OBLIGATION
MONEY MARKET FUND
(CLASS S SHARES)
INVESTMENT ADVISOR
SUMMIT BANK
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[PILLAR LOGO OMITTED]
<PAGE>
ABOUT 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 RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
Page
U.S. TREASURY SECURITIES MONEY MARKET FUND 2
TAX-EXEMPT MONEY MARKET FUND 4
PRIME OBLIGATION MONEY MARKET FUND 6
MORE INFORMATION ABOUT FUND INVESTMENTS 9
THE INVESTMENT ADVISOR AND PORTFOLIO MANAGERS 9
PURCHASING AND SELLING FUND SHARES 9
DISTRIBUTION OF FUND SHARES 11
DIVIDENDS AND DISTRIBUTIONS 12
TAXES 12
FINANCIAL HIGHLIGHTS 13
HOW TO OBTAIN MORE INFORMATION ABOUT
THE PILLAR FUNDS Inside Back cover
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
RISK/RETURN INFORMATION COMMON TO THE FUNDS
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.
1
<PAGE>
U.S. TREASURY SECURITIES 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 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
current income through a liquid investment
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 increase the Fund's potential for current income
through analysis of the available yields among the Fund's permitted investments
and "positioning on the yield curve" -- that is, balancing the desire to earn
attractive rates of interest with the need to maintain an appropriate maturity
level. The Advisor actively manages the maturity of the Fund based on current
market interest rates and its outlook on the various economic factors which
influence the market for short-term fixed income instruments 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.
2
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
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.
[BAR CHART OMITTED]
PLOT POINTS FOLLOWS:
1993 2.21%
1994 3.17%
1995 4.80%
1996 4.27%
1997 4.28%
1998 4.43%
1999 4.07%
BEST QUARTER WORST QUARTER
1.23% 0.53%
(6/30/95) (6/30/93)
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 ENDED
DECEMBER 31, 1999.
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
MONEY MARKET
FUND 4.07% 4.37% 3.75%*
- -------------------------------------------------------------------------------
* SINCE 4/1/92
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
CLASS A SHARES
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
Management Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .29%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .89%
- --------------------------------------------------------------------------------
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
$91 $284 $493 $1,096
3
<PAGE>
TAX-EXEMPT MONEY MARKET FUND
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 substantially all of its assets 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 rating 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 increase the Fund's
potential for current income through a strategy that takes advantage of pricing
inefficiencies that often occur in the market for municipal securities. The
Advisor actively manages the maturity of the Fund based on current market
interest rates and its outlook on the various economic factors which influence
the market for short-term municipal instruments 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 ongoing monitoring of the credit quality of each issuer and
any person or company providing credit support.
PRINCIPAL RISKS OF INVESTING IN THE TAX- EXEMPT 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.
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.
4
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
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.
[BAR CHART OMITTED]
PLOT POINTS FOLLOWS:
1993 1.74%
1994 2.02%
1995 3.17%
1996 2.70%
1997 2.84%
1998 2.72%
1999 2.45%
BEST QUARTER WORST QUARTER
0.85% 0.38%
(6/30/95) (3/31/94)
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 ENDED
DECEMBER 31, 1999.
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- -------------------------------------------------------------------------------
TAX-EXEMPT MONEY
MONEY MARKET
FUND 2.45% 2.78% 2.49%*
- ------------------------------------------------------------------------------
* SINCE 4/6/92
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
CLASS A SHARES
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- -------------------------------------------------------------------------------
Management Fees .35%
Distribution and Service (12b-1) Fees .25%
Other Expenses .30%
- -------------------------------------------------------------------------------
Total Annual Fund Operating Expenses .90%
- -------------------------------------------------------------------------------
*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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
TAX-EXEMPT MONEY FUND -- CLASS A SHARES .86%
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$92 $287 $498 $1,108
5
<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 TAX-EXEMPT 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
rating 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 increase the Fund's
potential for current income through (i) security selection; (ii) managing the
Fund's mix of government, corporate and bank obligations; and (iii) "positioning
on the yield curve" -- that is, balancing the desire to earn attractive rates of
interest with the need to maintain an appropriate maturity level. 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 Advisor carefully evaluates and monitors the
creditworthiness of each issuer and any person or company providing credit
support.
6
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
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.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S CLASS S SHARES
FROM YEAR TO YEAR.
[BAR CHART OMITTED]
PLOT POINTS FOLLOWS:
1998 4.66%
1999 4.28%
BEST QUARTER WORST QUARTER
1.17% 0.99%
(9/30/98) (6/30/99)
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 ENDED
DECEMBER 31, 1999.
CLASS S SHARES 1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
PRIME OBLIGATION
MONEY MARKET FUND 4.28% 4.51%*
- --------------------------------------------------------------------------------
* SINCE 8/18/97
7
<PAGE>
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
CLASS S SHARES
- -------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)*
- -------------------------------------------------------------------------------
Management Fees .35%
Distribution and Service (12b-1) Fees .60%
Other Expenses .30%
- -------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.25%
- -------------------------------------------------------------------------------
* 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 WAIVED A
PORTION OF ITS FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THIS FEE WAIVER REMAINS IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
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 EXPECTED TO BE AS
FOLLOWS:
PRIME OBLIGATION MONEY MARKET FUND --
CLASS S SHARES 1.00%
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.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
$127 $397 $686 $1,511
8
<PAGE>
[Pillar Logo Omitted]
APRIL 30, 2000
MORE INFORMATION ABOUT FUND 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.
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.
Summit Bank serves as the Advisor to the Funds. As of December 31, 1999, Summit
Bank had approximately $10.8 billion in assets under management. For the year
ended December 31, 1999, Summit Bank received advisory fees as a percentage of
average daily net assets of:
U.S. TREASURY SECURITIES
MONEY MARKET FUND 0.35%
TAX-EXEMPT MONEY MARKET FUND 0.31%
PRIME OBLIGATION
MONEY MARKET FUND 0.35%
PORTFOLIO MANAGERS
Judith Tomo 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. Ms. Tomo also advises the U.S. Treasury Securities Plus Money
Market Fund and the Institutional Select Money Market Fund. Prior to joining the
Advisor in 1995, Ms. Tomo managed money market instruments for a large regional
bank for a number of years.
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 managed investments for the Advisor for the past 18 years, with an
emphasis on tax-exempt bonds.
PURCHASING AND SELLING
FUND SHARES
This section tells you how to purchase and sell (sometimes called "redeem")
shares of the Funds.
HOW TO PURCHASE FUND SHARES
Shares of the Funds are for cash management account customers of Summit Bank.
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.
9
<PAGE>
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Federal Reserve are open for business (a Business Day).
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 generally must receive both your order 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 the net assets of
the Fund.
In calculating NAV, a Fund generally values its 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.
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.
The sale price of each share will be the NAV next determined after a Fund
receives your request.
RECEIVING YOUR MONEY
Normally, the Fund will send your sale proceeds within one Business Day after it
receives your request. Your proceeds will be wired to your bank account.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the minimum level required in your cash
management account agreement with Summit Bank because of redemptions, your
shares in a Fund may be redeemed or you may be charged additional fees.
REDEMPTIONS IN KIND
A Fund generally pays sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders), the Fund might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would
10
[Pillar Logo Omitted]
APRIL 30, 2000
<PAGE>
ever be redeemed in kind, but if they were, you might have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.
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.
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan under Rule 12b-1 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:
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%
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. The Distributor may provide cash or non-cash compensation as recognition
for past sales or encouragement for future sales that may include the following:
merchandise, travel expenses, prizes, meals, and lodgings, and gifts that do not
exceed $100 per year, per individual.
SHAREHOLDER PROMOTIONAL PROGRAMS
The Distributor may from time to time provide incentives in the form of cash or
Fund shares to current or potential shareholders of the Pillar Funds. The
Distributor or Summit Bancorp may terminate any promotional program at any time
without prior notice. The Distributor will not be reimbursed by the Trust for
any payment made pursuant to promotional offers.
11
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
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 30 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.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. Each sale or exchange of Fund shares is a taxable event.
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 this
Fund may be taxable.
MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
12
<PAGE>
[PILLAR LOGO OMITTED]
APRIL 30, 2000
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.
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
RATIO OF NET
INVESTMENT RATIO OF RATIO OF
INCOME TO EXPENSES NET
NET ASSET DISTRIBUTIONS NET ASSETS AVERAGE NET TO AVERAGE RATIO OF INVESTMENT
VALUE NET FROM NET NET ASSET END OF ASSETS NET ASSETS EXPENSES INCOME
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL PERIOD (EXCLUDING (EXCLUDING TO AVERAGE TO AVERAGE
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) WAIVERS) WAIVERS) NET ASSETS NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 $0.04 $(0.04) $1.00 4.07% $118,486 3.99% 0.89% 0.89% 3.99%
1998 1.00 0.04 (0.04) 1.00 4.43 68,327 4.28 0.88 0.88 4.28
1997 1.00 0.04 (0.04) 1.00 4.28 12,492 4.22 0.90 0.90 4.22
1996 1.00 0.04 (0.04) 1.00 4.27 3,503 4.19 0.90 0.90 4.19
1995 1.00 0.05 (0.05) 1.00 4.80 3,532 4.66 0.90 0.90 4.66
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
1999 $1.00 $0.02 $(0.02) $1.00 2.45% $25,511 2.40% 0.90% 0.86% 2.44%
1998 1.00 0.03 (0.03) 1.00 2.72 16,346 2.65 0.94 0.90 2.69
1997 1.00 0.03 (0.03) 1.00 2.84 8,509 2.80 0.92 0.90 2.82
1996 1.00 0.03 (0.03) 1.00 2.70 3,852 2.62 0.93 0.90 2.65
1995 1.00 0.03 (0.03) 1.00 3.17 5,238 3.08 0.96 0.90 3.14
- -----------------------------------------------------------------------------------------------------------------------------------
PRIME OBLIGATION MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS S
1999 $1.00 $0.04 $(0.05) $1.00 4.28% $186,767 4.00% 1.25% 1.00% 4.25%
1998 1.00 0.05 (0.05) 1.00 4.66 99,978 4.27 1.23 0.98 4.52
1997(1) 1.00 0.02 (0.02) 1.00 4.69* 30,520 4.65 1.02 1.00 4.67
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*ANNUALIZED
(1) COMMENCED OPERATIONS ON AUGUST 18, 1997. ALL RATIOS INCLUDING TOTAL RETURN
FOR THIS PERIOD HAVE BEEN ANNUALIZED.
13
<PAGE>
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<PAGE>
{This page intentionally left blank}
<PAGE>
{This page intentionally left blank}
<PAGE>
[Pillar Logo Omitted]
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
More information about The Pillar Funds is available without
charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, 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
and their impact on Fund Performance.
The reports also contain detailed financial information
about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR 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 other information about The Pillar Funds, from the EDGAR Database on
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 on the
operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: "[email protected].
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. PILLARFUNDS.COM IS A SERVICE MARK
OF SUMMIT BANK. REACH HIGHER, SUMMIT, SUMMIT FINANCIAL SERVICES GROUP AND SUMMIT
BANCORP ARE REGISTERED SERVICE MARKS OF SUMMIT BANCORP.
<PAGE>
Advisor:
[Summit Logo Omitted]
PROSPECTUS
Class A Shares and
Class S Shares
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)
April 30, 2000
Distributor:
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
1-800-932-7782
[Pillar Logo Omitted]
- NOT PART OF THE PROSPECTUS -
PIL-F-030-03
<PAGE>
1-WA/1364322.2
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, Tax-Exempt Money Market, Institutional Select
Money Market, Prime Obligation Money Market, Intermediate-Term Government
Securities, Fixed Income, Pennsylvania Municipal Securities, New Jersey
Municipal Securities, High Yield Bond, Balanced, Equity Income, Equity Index,
Equity Value, Equity Growth, Mid Cap, and International Equity Funds dated April
30, 2000, 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
The Trust....................................................................S-3
Additional Information About the Funds and their
Investment Objectives and Policies .......................................S-4
The Euro....................................................................S-18
Description of Permitted Investments........................................S-19
Investment Limitations......................................................S-42
The Trust..........................................................S-42
SIMT Fund High Yield Bond Portfolio................................S-47
SIF Fund S&P 500 Index Portfolio...................................S-49
Management of the Trust.....................................................S-51
Trustees and Officers of the Trust.................................S-51
Trustees and Officers of SIMT and SIF..............................S-54
The Advisor........................................................S-56
The Sub-Advisor....................................................S-58
SIMT Fund..........................................................S-60
SIF Fund...........................................................S-62
The Administrator..................................................S-63
The Transfer Agent and Shareholder Servicing Agent.................S-64
The Portfolios'Administrator and Transfer Agent....................S-64
Custodians.........................................................S-65
Code of Ethics.....................................................S-66
Fund Transactions...........................................................S-66
Trading Practices and Brokerage....................................S-66
The Trust..........................................................S-66
SIMT...............................................................S-71
SIF................................................................S-72
The Distributor and Distribution Plans of the Trust.........................S-74
Portfolio Distribution......................................................S-74
SIMT...............................................................S-79
SIF................................................................S-80
Performance.................................................................S-80
Computation of Yield...............................................S-80
Calculation of Total Return........................................S-82
<PAGE>
Purchase and Redemption of Shares...........................................S-87
Shareholder Services........................................................S-87
Determination of Net Asset Value............................................S-88
The Trust..........................................................S-88
SIMT and SIF.......................................................S-89
General Information and History.............................................S-90
Description of Shares..............................................S-91
Shareholder Liability..............................................S-98
Limitation of Trustees'Liability...................................S-98
Taxes.......................................................................S-99
Federal Taxes......................................................S-99
State Taxes.......................................................S-102
Legal Matters.....................................................S-103
Experts....................................................................S-103
Financial Statements.......................................................S-103
<PAGE>
1-WA/1364322.2
Appendix.....................................................................A-1
Description of Ratings..............................................A-1
April 30, 2000
PIL-F-027-05
The Pillar Funds, Pillar, the stylized "P" logo and Your Investment Foundation
are registered service marks of Summit Bank. pillarfunds.com is a service mark
of Summit Bank. Reach Higher, Summit, Summit Bank, Summit Financial Services
Group and Summit Bancorp are registered service marks 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.
<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:
- --------------------------------------------------------------------------------
FUND CLASS(ES)
- --------------------------------------------------------------------------------
U.S. Treasury Securities Plus Money Market Fund Not Applicable
- --------------------------------------------------------------------------------
U.S. Treasury Securities Money Market Fund I/A
- --------------------------------------------------------------------------------
Institutional Select Money Market Fund Not Applicable
- --------------------------------------------------------------------------------
Prime Obligation Money Market Fund I/A/B/S
- --------------------------------------------------------------------------------
Tax-Exempt Money Market Fund I/A
- --------------------------------------------------------------------------------
Intermediate-Term Government Securities Fund I/A
- --------------------------------------------------------------------------------
Pennsylvania Municipal Securities Fund I/A
- --------------------------------------------------------------------------------
New Jersey Municipal Securities Fund I/A
- --------------------------------------------------------------------------------
Fixed Income Fund I/A/B
- --------------------------------------------------------------------------------
High Yield Bond Fund I/A/B
- --------------------------------------------------------------------------------
Balanced Fund I/A/B
- --------------------------------------------------------------------------------
Equity Income Fund I/A/B
- --------------------------------------------------------------------------------
Equity Index Fund I/A/B
- --------------------------------------------------------------------------------
Equity Value Fund I/A/B
- --------------------------------------------------------------------------------
Equity Growth Fund I/A/B
- --------------------------------------------------------------------------------
Mid Cap Fund I
- --------------------------------------------------------------------------------
International Equity Fund I/A/B
- --------------------------------------------------------------------------------
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."
<PAGE>
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.
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
TAX-EXEMPT MONEY MARKET FUND
INSTITUTIONAL SELECT MONEY MARKET FUND
PRIME OBLIGATION 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. In addition, under these regulations, each Money Market Fund 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 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
<PAGE>
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.
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.
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 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.
INSTITUTIONAL SELECT MONEY MARKET FUND
PRIME OBLIGATION 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
<PAGE>
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.
THE FIXED INCOME FUNDS
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 expects to be fully invested in U.S. Treasury Obligations and U.S.
Government Agencies and in no event will it invest less than 65% of its total
assets in these securities.
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 three years; however, the
Advisor may vary this average maturity substantially in anticipation of a change
in the interest rate environment.
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.
<PAGE>
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.
<PAGE>
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.
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.
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 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
<PAGE>
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 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 is a non-diversified investment company.
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.
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
<PAGE>
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 SIMT
Fund 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.
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.
<PAGE>
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 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.
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.
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.
<PAGE>
THE EQUITY AND BALANCED FUNDS
THE BALANCED FUND
The Fund seeks growth of capital consistent with current income.
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.
EQUITY INCOME FUND
The Fund seeks growth of capital consistent with an emphasis on current income.
The Fund will normally be as fully invested as practicable and in no event will
it invest less than 65% of its total assets in equity securities consisting of
common stocks, warrants to purchase common stocks, debt securities and preferred
stocks convertible into common stocks and ADRs.
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.
<PAGE>
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.
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.
<PAGE>
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.
EQUITY VALUE FUND
The Fund seeks growth of both capital and income.
The Fund will normally be as fully invested as practicable and in no event will
it invest less than 65% of its total assets 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.
EQUITY GROWTH FUND
The Fund seeks long-term growth of capital.
The Fund will normally be as fully invested as practicable and in no event will
it invest less than 65% of its total assets 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.
<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.
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 large
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, Australasia 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.
<PAGE>
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 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 government bond yield 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.
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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.
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 Equity and Balanced 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.
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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 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 a 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 Fund
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.
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RISK FACTORS -MASTER-FEEDER STRUCTURE
Unlike other mutual funds which directly acquire and manage their own portfolio
securities, both the High Yield Bond Fund and the Equity Index Fund (each, a
"Feeder Fund") seek to achieve its investment objective by investing up to 100%
of its assets in the SIMT Fund and the SIF Fund (each, a "Master Fund"),
respectively, each of which is a separate registered investment company with
identical investment objectives. The investment objective of a Feeder Fund or a
Master Fund may not be changed without shareholder approval. In addition to
selling beneficial interests to the Feeder Funds, each Master Fund may sell
beneficial interests to other mutual funds or institutional investors. Such
investors will invest in a Master Fund on the same terms and conditions and will
pay a proportionate share of that Master Fund's expenses. However, other
investors investing in a Master Fund 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 Master Fund may obtain
different returns. Such differences in returns are also present in other mutual
fund structures.
Certain changes in a Master Fund'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 Master Fund). 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 Master Fund 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.
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 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).
<PAGE>
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 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.
<PAGE>
ASSET BACKED SECURITIES. Asset-backed securities include 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 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.
<PAGE>
CURRENCY TRANSACTIONS. Currency transactions may be used 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 movements 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.
<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 or 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.
<PAGE>
DELAYED DELIVERY SECURITIES. Delayed delivery basis transactions involve the
purchase of an instrument with payment and delivery taking place in the future.
Delivery of and payment for these securities may occur a month or more after the
date of the purchase commitment. A Fund will maintain with the custodian a
separate account with liquid assets and/or cash in an amount at least equal to
these commitments. The interest rate realized, if any, on these securities is
fixed as of the purchase date and no interest accrues to a Fund before
settlement. These securities may be subject to market fluctuation due to changes
in market interest rates and it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the general level
of interest rates has changed. Although a Fund generally purchases securities on
a when-issued or forward commitment basis with the intention of actually
acquiring securities, a Fund may dispose of a when-issued security or forward
commitment prior to settlement if it deems such action appropriate.
One form of a delayed-delivery security that a Fund may purchase is a "to be
announced" ("TBA") mortgage-backed security. A TBA mortgage-backed security
transaction arises when a mortgage-backed security, such as a GNMA pass-through
security, is purchased or sold with specific pools that will constitute that
GNMA pass-through security to be announced on a future settlement date.
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.
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.
<PAGE>
FOREIGN SECURITIES. Securities of foreign issuers 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, 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.
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. The value of the contract
usually will vary in direct proportion to the total face value. 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. 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 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 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.
<PAGE>
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. Positions in futures contracts may be closed only on
an exchange or board of trade providing a secondary market for such futures
contracts. 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.
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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.
ILLIQUID SECURITIES. 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.
INVESTMENT COMPANIES. Most Funds may invest up to 10% of their total assets in
shares of other open- or closed-ended investment companies. 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. 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. In addition, certain investment
companies may issue securities that are considered "structured investments;" for
more information, see "Structured Investments." Investments in close-ended
investment companies may involve the payment of substantial premiums above the
net asset value of such issuers' fund securities.
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.
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.
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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
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.
<PAGE>
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 accretes in a taxable year is treated as earned by a Fund and
therefore is subject to the distribution requirements of 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. Mortgage-backed securities include those 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.
<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.
<PAGE>
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 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.
<PAGE>
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 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 1,094 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.
<PAGE>
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 0.52 percent
and between 1990 and 1998, it accelerated slightly to .59 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 0.14 percent annual rate
of increase since 1990 and Pennsylvania's population has increased 0.13 percent
per year. Historically, New Jersey's average per capita income has been well
above the national average. In 1998 the State ranked second among all the states
in per capita personal income at $33,937, compared to a national average of
$26,412.
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 4.2% in December 1999 versus the national
average of 4.5% at that time.
In its eighth year of expansion, the State has benefited and will continue
to benefit from national growth. The latest national indicators show that gross
domestic product grew at 3.8% in 1999, which is a slight decrease from the 4.3%
rate of growth in 1998. However, the inflation rate remained low in 1999 at
2.1%.
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 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, 1999, the state's outstanding general obligation debt totaled $3.65
billion. The debt service obligation for such outstanding indebtedness was $496
million for fiscal year 1999.
<PAGE>
The State operates on a fiscal year beginning July 1 and ending June 30. On
January 24, 2000, Governor Whitman signed the New Jersey Legislature's $21
billion budget for fiscal year 2001. As part of the fiscal year 2001 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,
$143.9 million in 1998, $626 million in 1999. It is estimated that fiscal year
2000 will end with a surplus of $719 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,
11.99 million people in 1999, according to the U.S. Bureau of the Census,
represents a slight increase from the 1998 population of 11.89 million.
Approximately 16 percent of Pennsylvania's population is comprised of persons 65
and over.
<PAGE>
Non-agricultural employment in Pennsylvania over the ten years ending in 1998
increased at an annual rate of 0.75 percent, compared to a 0.29 percent rate for
the Middle Atlantic region and 1.72 percent for the U.S. during the period 1989
through 1998. For the five years ending with 1998, employment in the
Commonwealth has increased 7.0 percent, which is higher than the 2.7 percent
growth in the Middle Atlantic region during this period. Non-manufacturing
employment in Pennsylvania has increased in recent years to 82.8 percent of
total employment in 1998. Consequently, manufacturing employment constitutes a
diminished share of total employment within the Commonwealth.
From 1994 through 1998, 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 December 1999, the most recent month for which data is
available, the seasonally adjusted unemployment rate for the Commonwealth was
4.1 percent, equal to that of the United States.
Personal income in the Commonwealth for 1998 is $321.5 billion, an increase of
4.1 percent over the previous year. During the same period, national personal
income increased at a rate of 5.0 percent. Based on the 1998 personal income
estimates, per capita income for 1998 is at $26,792 in the Commonwealth compared
to per capita income in the United States of $26,412.
The Commonwealth ended the 1999 fiscal year with an unappropriated surplus
(prior to the transfer to the Tax Stabilization Reserve Fund) of $702.9 million,
an increase of $214.2 million from June 30, 1998. Transfers to the Tax
Stabilization Reserve Fund total $255.4 million for fiscal year 1999 consisting
of $105.4 million (representing the statutory 15 percent of the fiscal year-end
unappropriated surplus) and an additional $150 million authorized by the General
Assembly from the unappropriated surplus. The $447.5 million balance of the
unappropriated surplus was carried over to fiscal year 2000. The higher
unappropriated surplus was generated by tax revenues that were $712.0 million
(3.9 percent) above estimate and $61.0 million of non-tax revenue (18.4 percent)
above estimate. Revenues from taxes for the fiscal year rose 3.9 percent after
tax reductions enacted with the 1999 fiscal year budget that were estimated to
be $241.0 million for the fiscal year. Including the supplemental appropriations
and net of appropriation lapses, expenditures for fiscal 1999 totaled $18,144.9
million, a 5.9 percent increase over expenditures during fiscal 1998.
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. The General Fund budget
for the 2000 fiscal year included appropriations from Commonwealth revenues of
$19,061.5 million and estimated revenues (net of estimated tax refunds and
enacted tax changes) of $18,699.9 million. A partial draw down of the fiscal
1999 year-end balance is intended to fund the $361.6 million difference between
estimated revenues and projected spending. The level of proposed spending in the
budget as originally enacted represents an increase of 3.8 percent over the
spending authorized for fiscal 1999 of $18,367.5 million. Enacted tax changes
effective for fiscal 2000 total a net reduction of $380.2 million for the
General Fund.
All outstanding general obligation bonds of the Commonwealth are rated AA by
Standard and Poor's Corporation, Aa3 by Moody's Investors Service and AA by
Fitch IBCA. The ratings reflect only the views of the rating agencies.
<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.
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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.
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.
PAY-IN-KIND SECURITIES. Pay-in-kind securities pay interest in either cash or
additional securities, at the issuer's option, for a specified period.
Pay-in-kind bonds are designed to give an issuer flexibility in managing cash
flow. Pay-in-kind bonds are expected to reflect the market value of the
underlying debt plus an amount representing accreted interest since the last
payment. Pay-in-kind securities are securities that have interest payable by
delivery of additional securities. Upon maturity, the holder is entitled to
receive the aggregate par value of the securities.
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."
<PAGE>
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.
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 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.
<PAGE>
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 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.
STRUCTURED INVESTMENTS. Structured investments are a relatively new innovation
and may be designed to have various combinations of equity and fixed income
characteristics. Equity-linked securities are a form of structured investment
and generally consist of a conversion privilege to a single company's common
stock plus a fixed annual distribution to the holder. Equity-linked securities
have some derivative characteristics because the conversion feature is linked to
the price of the company's common stock. Equity-linked securities are designed
to provide investors with higher quarterly income than the dividend paid per
share on the common stock. However, equity-linked securities have decreased
potential for capital appreciation because of limitations of the conversion
feature.
<PAGE>
Equity-linked securities include issues such as "Structured Yield Product
Exchangeable for Stock" ("STRYPES"), "Trust Automatic Common Exchange
Securities" ("TRACES"), "Trust Issued Mandatory Exchange Securities" ("TIMES"),
"Trust Enhanced Dividend Securities" ("TRENDS") and other similar securities,
including those which may be developed in the future. The issuers of the above
listed examples of equity-linked securities generally purchase and hold a
portfolio of stripped U.S. Treasury securities maturing on a quarterly basis
through the conversion date, and a forward purchase contract with an existing
shareholder of the company relating to the common stock. Quarterly distributions
on equity-linked securities generally consist of the cash received from the U.S.
Treasury securities and equity-linked securities generally are not entitled to
any dividends that may be declared on the common stock.
Equity-linked securities may be issued by closed-end or other forms of
investment companies. To the extent that equity-linked securities are issued by
investment companies, a Fund's investments in equity-linked securities are
subject to the same limitations as investments in more traditional forms of
investment companies; for more information on these limitations, see "Investment
Limitations."
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.
<PAGE>
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 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. 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. Variable amount
master demand notes may or may not be backed by bank letters of credit.
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.
<PAGE>
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.
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 accretes income with respect to the securities
prior to the receipt of cash payments.
<PAGE>
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. Acquire more than 10% of the voting securities of any one issuer. The
Fixed Income Fund, Balanced Fund, Equity Income Fund, Equity Value
Fund, Equity Growth Fund, Mid Cap Fund, and International Equity 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). This restriction does not apply to
the Pennsylvania Municipal Securities Fund and New Jersey Municipal
Securities Fund.
2. Invest in companies for the purpose of exercising control; provided,
that this limitation does not apply to the Fixed Income Fund,
Pennsylvania Municipal Securities Fund, New Jersey Municipal Securities
Fund, High Yield Bond Fund, Balanced Fund, Equity Income Fund, Equity
Index Fund, Equity Value Fund, Equity Growth Fund, Mid Cap Fund, or
International Equity 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, except
that the Fixed Income Fund, Pennsylvania Municipal Securities Fund, New
Jersey Municipal Securities Fund, Balanced Fund, Equity Income Fund,
Equity Value Fund, Equity Growth Fund, and Mid Cap Fund, may borrow an
amount not exceeding 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; and provided that the Fixed
Income Fund, Pennsylvania Municipal Securities Fund, New Jersey
Municipal Securities Fund, High Yield Bond Fund, Balanced Fund, Equity
Income Fund, Equity Index Fund, Equity Growth Fund, Equity Value Fund,
Mid Cap Fund, and International Equity Fund 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.
<PAGE>
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 Fixed Income
Fund, Pennsylvania Municipal Securities Fund, New Jersey Municipal
Securities Fund, High Yield Bond Fund, Balanced Fund, Equity Income
Fund, Equity Index Fund, Equity Growth Fund, Equity Value Fund, Mid Cap
Fund, and International Equity Fund.
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
Pennsylvania Municipal Securities Fund and New Jersey Municipal
Securities Fund.
<PAGE>
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
Equity Funds and Balanced Fund, only, supranational agencies will be
deemed to be issuers conducting their principal business activities in
the same industry; and (iv) with respect to the Balanced Fund and
Equity 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:
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.
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, repurchase agreements involving such
securities and obligations issued by domestic branches of U.S. banks or
U.S. branches of foreign banks subject to the same regulation as U.S.
banks or to investments in tax exempt securities issued by governments
or political subdivisions of governments.
The foregoing percentage limitations apply at the time of the purchase of a
security.
Notwithstanding the foregoing, each of the High Yield Bond Fund and Equity Index
Fund 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 Pennsylvania Municipal Securities Fund and New
Jersey Municipal Securities Fund 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:
<PAGE>
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 Fund, Balanced Fund, Equity Income Fund,
Equity Index Fund, Equity Growth Fund Equity Value Fund, Mid Cap Fund,
and International Equity Fund, and write or purchase puts, calls,
options, warrants, or combinations thereof; except that (i) the
Tax-Exempt Money Market Fund, Pennsylvania Municipal Securities Fund,
and New Jersey Municipal Securities Fund may purchase securities
subject to a put and (ii) the Balanced Fund, Equity Income Fund, Equity
Value Fund andMid Cap Fund may purchase warrants. However, the Balanced
Fund, Equity Income Fund, Equity Value Fund, and Mid Cap Fund 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 Fixed Income Fund, Pennsylvania Municipal Securities Fund, New Jersey
Municipal Securities Fund, High Yield Bond Fund, Balanced Fund, Equity Income
Fund, Equity Index Fund, Equity Growth Fund, Equity Value Fund, Mid Cap Fund,
and International Equity Fund.
The 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 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.
<PAGE>
II. INVESTMENTS LIMITATIONS OF THE SIMT FUND
The following investment limitations are fundamental policies of the SIMT Fund
(or the "Fund") 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. With respect to 75% of its assets, (i) purchase the securities of any
issuer (except securities issued or guaranteed by the United States
Government, its agencies or instrumentalities) if, as a result, more
than 5% of its total assets would be invested in the securities of such
issuer; or (ii) acquire more than 10% of the outstanding voting
securities of any one issuer.
2. Purchase any securities which would cause more than 25% of the total
assets of the 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 obligations issued or guaranteed by the United States Government,
its agencies or instrumentalities.
3. Borrow money in an amount exceeding 33 1/3% of the value its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate the Fund to purchase securities or
require the Fund to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5% of its assets,
(i) all borrowings will be repaid before making additional investments
and any interest paid on such borrowings will reduce income; and (ii)
asset coverage of at least 300% is required.
4. Make loans if, as a result, more than 33 1/3% of its total assets would
be loaned to other parties, except that the Fund 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.
5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the Fund 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.
6. Issue senior securities (as defined in the 1940 Act) except as
permitted by rule, regulation or order of the SEC.
7. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.
<PAGE>
8. 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
Fund may (i) obtain short term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin
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.
<PAGE>
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 "Fund") 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. Purchase securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total
assets would be invested in the securities of such issuer. This
restriction applies to 75% of the Fund's total assets.
2. Purchase any securities which would cause more than 25% of the Fund's
total assets 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
obligations issued or guaranteed by the United States Government or its
agencies or instrumentalities.
3. Borrow money, except for temporary or emergency purposes and then only
in an amount not exceeding 10% of the value of the total assets of the
Fund. This borrowing provision is included solely to facilitate the
orderly sale of portfolio securities to accommodate substantial
redemption requests if they should occur, and is not for investment
purposes. All borrowings will be repaid before making additional
investments for the Fund and any interest paid on such borrowings will
reduce the Fund's income.
4. Make loans, except that the Fund, (i) may enter into repurchase
agreements, provided that repurchase agreements and time deposits
maturing in more than seven days, and other illiquid securities,
including securities which are not readily marketable or are
restricted, are not to exceed, in the aggregate, 10% of the Fund's
total assets, (ii) may engage in securities lending as described in
SIF's prospectus, and (iii) may purchase or hold debt instruments in
accordance with its investment objectives and policies.
<PAGE>
5. 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.
6. Invest in companies for the purpose of exercising control.
7. Purchase or sell real estate, real estate limited partnership
interests, physical commodities or commodities contracts. However,
subject to its permitted investments, the Fund 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.
8. 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.
9. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.
10. 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.
11. 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.
12. 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.
13. 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.
14. Purchase warrants, puts, calls, straddles, spreads or combinations
thereof.
15. Invest in interests in oil, gas or other mineral exploration or
development programs.
16. 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.
<PAGE>
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.
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, Amerindo Funds, Inc., The Arbor Fund, ARK Funds, Armada Funds, The Armada
Advantage Fund, Bishop Street Funds, CNI Charter Funds, CUFUND, The Expedition
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., Friends Ivory Funds, HighMark Funds, Huntington
Funds, Huntington VA Fund, The Nevis Fund, Inc., Oak Associates Funds, The PBHG
Funds, Inc., PBHG Insurance Series Fund, Inc., SEI Asset Allocation Trust, SEI
Daily Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust, TIP Funds, UAM Funds Trust, UAM Funds, Inc. II and UAM Funds, Inc.
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).
<PAGE>
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(R), 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 Investments Mutual
Funds Services 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.
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.
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.
<PAGE>
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, 1999, the
Trust paid approximately $51,000.00 in fees to the unaffiliated Trustees.
Compensation of officers and Trustees of the Trust affiliated with the
Administrator is paid by the Administrator.
Compensation Table
================================================================================
Name of Person, Aggregate Pension or Estimated Total Compensation
Position Compensation Retirement Annual From Registrant and
From Benefits Benefits Fund Complex Paid
Registrant 1 Accrued Upon to Fund Expenses
As Part of Retirement Trustees for the
Fiscal Year Ended
December 31, 1999 2
- --------------------------------------------------------------------------------
Arthur L. Berman, $12,000.00 N/A N/A $12,000 for service
Trustee on 1 board
- --------------------------------------------------------------------------------
Ray Konrad, $12,000.00 N/A N/A $12,000 for service
Trustee on 1 board
- --------------------------------------------------------------------------------
James B. Grecco, $12,000.00 N/A N/A $12,000 for service
Trustee on 1 board
- --------------------------------------------------------------------------------
Christine H. $12,000.00 N/A N/A $12,000 for service
Yackman, Trustee on 1 board
Thomas D. Sayles, $12,000.00 N/A N/A $12,000 for service
Jr., Trustee 3 on 1 board
Robert A. Nesher, $0 N/A N/A $0
Trustee 3
================================================================================
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.
<PAGE>
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, 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.
<PAGE>
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.
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 and Sullivan serve as members of the Audit
Committee of the Trust.
*** Mr. Morris retired from the Board on December 30, 1998.
For the fiscal year ended September 30, 1999, SIMT paid the following amounts to
the Trustees:
<TABLE>
<CAPTION>
========================================================================================================================
Aggregate Pension or Retirement Estimated Total Compensation from
Compensation Benefits Accrued as Annual Registrant and Fund Complex
From SIMT for Part of Fund Expenses Benefits Upon Paid to Directors for Fiscal
Name of Person and Fiscal Year End Retirement Year End September 30, 1999
Position September 30,
1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee $0 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------
George J. Sullivan, Jr. $28,483 $0 $0 $108,250 for services on 8
Trustee boards
- ------------------------------------------------------------------------------------------------------------------------
William M. Doran, Trustee $0 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $29,190 $0 $0 $108,250 for services on 8
boards
- ------------------------------------------------------------------------------------------------------------------------
Frank E. Morris, Trustee* $6,808 $0 $0 $25,750 for services on 8
boards
- ------------------------------------------------------------------------------------------------------------------------
James M. Storey, Trustee $28,502 $0 $0 $108,250 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, 1999, SIF paid the following amounts to the
Trustees:
<TABLE>
<CAPTION>
========================================================================================================================
Aggregate Pension or Retirement Estimated Total Compensation from
Compensation Benefits Accrued as Annual Registrant and Fund Complex
From SIF for Part of Fund Expenses Benefits Upon Paid to Directors for Fiscal
Name of Person and Fiscal Year End Retirement Year End March 31, 1999
Position March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee $0 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------
George J. Sullivan, Jr. $4,747 $0 $0 $104,750 for services on 8
Trustee boards
- ------------------------------------------------------------------------------------------------------------------------
William M. Doran, Trustee $0 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $4,747 $0 $0 $104,750 for services on 8
boards
- ------------------------------------------------------------------------------------------------------------------------
Frank E. Morris, Trustee* $3,551 $0 $0 $77,250 for services on 8
boards
- ------------------------------------------------------------------------------------------------------------------------
James M. Storey, Trustee $4,747 $0 $0 $104,750 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.
<PAGE>
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, 1999, total assets under management were approximately $10.8
billion. Summit Bank is a wholly-owned subsidiary of Summit Bancorp, a
registered bank holding company with approximately $36 billion in assets and
about 500 banking offices, predominantly in New Jersey, eastern Pennsylvania and
southern Connecticut, as of December 31, 1999.
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 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.
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.
<PAGE>
For the fiscal years ended December 31, 1997, 1998 and 1999, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Fees Paid (000) Fees Waived (000)
- --------------------------------------------------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money $1,647,200 $2,184,892 $3,146,714 $74,551 $0 $ 0
Market Fund
- --------------------------------------------------------------------------------------------------------------------
Prime Obligation Money Market $1,494,179 $1,909,572 $2,956,783 $58,224 $0 $589
Fund
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $249,145 $281,854 $515,177 $13,948 $39,766 $59,072
- --------------------------------------------------------------------------------------------------------------------
Institutional Select Money $9,681 $88,040 $249,001 $9,249 $26,549 $0
Market Fund
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Plus $36,157 $2,562 $24,384 $78,082 $97,115 $68,970
Money Market Fund
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $1,152,778 $1,067,263 $1,098,284 $275,261 $236,813 $219,700
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal Securities $629,451 $698,355 $629,034 $193,912 $171,106 $127,173
Fund
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal $173,734 $176,873 $162,390 $55,630 $64,111 $50,876
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
Intermediate-Term Government $159,825 $147,370 $118,880 $49,402 $58,742 $45,866
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund $809,370 $903,953 $1,552,926 $460,947 $493,857 $280,079
- --------------------------------------------------------------------------------------------------------------------
Equity Value Fund $1,149,769 $1,184,685 $1,948,639 $610,793 $666,888 $351,110
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund $587,414 $578,730 $774,556 $365,524 $398,029 $196,817
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Fund $241,395 $70,640 $28,273 $151,223 $89,547 $40,689
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $133,549 $190,140 $423,981 $117,387 $191,965 $126,955
- --------------------------------------------------------------------------------------------------------------------
International Equity Fund $129,179 $123,162 $175,413 $31,555 $35,303 $58,155
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund * $0 $26,264 * $2,664 $14,098
- --------------------------------------------------------------------------------------------------------------------
Equity Index Fund * $0 $64,761 * $4,998 $76,009
====================================================================================================================
</TABLE>
* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.
<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 AG, a Swiss bank holding company,
having its registered offices in Zurich, Switzerland. As of December 31, 1999,
the Sub-Advisor managed in excess of $2.1 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 and Chief Investment
Officer 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 markets 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 First Vice President of Vontobel, is the associate
portfolio manager of the Fund. Prioer to joining Vontobel in 1994, Mr. Jain was
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 .60% 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 .60% 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.
<PAGE>
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.
For the fiscal periods ended December 31, 1997, 1998 and 1999 the Sub-Adviser
received the following fees from the Advisor:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Fees Paid Fees Waived
--------------------------------------------------------------------
1997 1998* 1999* 1997 1998* 1999*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
International Equity Fund* $96,000 $60,300 $175,413 $0 $0 $0
====================================================================================================================
</TABLE>
* Vontobel USA Inc. began managing the Fund on September 1, 1998. The
Fund was previously managed by Wellington Management Company, LLP. For
the fiscal period from September 1, 1998 and ended December 31, 1998,
Vontobel USA Inc. received $34,800 from the Advisor. For the fiscal
period from January 1, 1998 to August 31, 1998, Wellington received
$25,500 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 46 investment
companies, including more than 387 funds, which investment companies have more
than $56 billion in assets as of December 31, 1999.
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.
<PAGE>
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 0.49% of the SIMT Fund's average
daily net assets. SIMC pays the Money Managers out of its investment advisory
fee.
For the fiscal years ended September 30, 1999, 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
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, 1997, 1998 and 1999, the SIMT Fund paid
the following fees to SIMC:
<TABLE>
<CAPTION>
========================================================================================================
Advisory Fees Paid (000) Advisory Fees Waived (000)
-----------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIMT Fund $812 $1,309 $2,014 $0 $0 $0
========================================================================================================
</TABLE>
Credit Suisse Asset Management ("Credit Suisse" or the "Money Manager")
currently serves as investment sub-advisor to the SIMT Fund. Credit Suisse 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.
<PAGE>
<TABLE>
<CAPTION>
For the fiscal years ended September 30, 1997, 1998 and 1999, SIMC paid the
following fees to Money Managers:
==============================================================================================================
Sub-Advisory Fees Paid (000) Sub-Advisory Fees Waived (000)
-----------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIMT Fund $585 $893 $1,372 $0 $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, 1999, 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 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.
<PAGE>
<TABLE>
<CAPTION>
For the fiscal years ended March 31, 1997, 1998 and 1999, the SIF Fund paid the
following advisory fees:
===============================================================================================================
Advisory Fees Paid Advisory Fees Waived
---------------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIF Fund $234,127 $398,677 $560,916 $0 $0 $0
===============================================================================================================
</TABLE>
THE ADMINISTRATOR
The Trust and SEI Investments Mutual Fund Services (the "Administrator") are
parties to an Administration Agreement dated September 1, 1999 (the "Agreement")
under which Administrator provides the Trust with administrative services, other
than investment advisory services, including all regulatory reporting, necessary
office space, equipment, personnel and facilities.
For all Funds except the Institutional Select Money Market and the U.S. Treasury
Securities Plus Money Market Fund, the Trust pays the Administrator a fee,
calculated daily and paid monthly, at the following annual rates based on the
aggregate average daily net assets of the Funds: 0.20% on the first $3.5 billion
of aggregate net assets; 0.16% on the next $1.5 billion of aggregate net assets;
0.14% on the next $1.5 billion of aggregate net assets; and 0.12% on the
aggregate net assets in excess of $6.5 billion. The Institutional Select Money
Market Fund pays the Administrator a fee at an annual rate based upon the
average daily net assets of the Fund as follows: 0.10% on the first $3.5 billion
of average daily net assets; 0.08% on the next $1.5 billion of average net
assets; 0.07% on the next $1.5 billion of average net assets; and 0.06% on the
average net assets in excess of $6.5 billion. The U.S. Treasury Securities Plus
Money Market Fund pays the Administrator a fee at an annual rate of 0.35% of the
average daily net assets of the Fund. The Administrator has voluntarily agreed
to waive its fees for the High Yield Bond and Equity Index Funds.
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 and thereafter for up to two successive periods each
of two years subject to review at least annually by the Trustees of the Trust.
The Agreement is also subject to termination by either party on not less than 90
days' written notice to the other party.
<PAGE>
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, Amerindo Funds, Inc., The Arbor Fund, ARK Funds,
Armada Funds, Bishop Street Funds, Boston 1784 Funds(R), CNI Charter Funds,
CUFUND, The Expedition Funds, First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., Friends Ivory
Funds, HighMark Funds, Huntington Funds, Huntington VA Fund, The Nevis Fund,
Inc., Oak Associates Funds, The Parkstone Advantage Fund, The Parkstone Group of
Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds,
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Inter-national Trust, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI
Classic Funds, STI Classic Variable Trust, TIP Funds, UAM Funds Trust, UAM
Funds, Inc. II and UAM Funds, Inc.
For the fiscal years ended December 31, 1997, 1998 and 1999, the Funds paid the
following administrative fees:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Fees Paid Fees Waived
-----------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Plus Money $266,568 $232,579 $217,828 $0 $0 $0
Market Fund
U.S. Treasury Securities Money $984,420 $1,247,080 $1,798,035 $0 $0 $0
Market Fund
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $150,340 $183,785 $328,146 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
Institutional Select Money Market $19,094 $114,589 $249,001 $0 $0 $0
Fund
Prime Obligation Money Market Fund $887,094 $1,091,198 $1,690,155 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $476,002 $434,695 $439,339 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
Intermediate-Term Government $69,742 $68,704 $54,916 $0 $0 $0
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Securities $76,478 $80,328 $71,089 $6,505 $0 $0
Fund
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal Securities Fund $274,456 $289,822 $252,070 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund * $0 $0 * $875 $13,454
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $66,885 $101,896 $146,918 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund $254,120 $260,472 $259,036 $0 $0 $0
Equity Index Fund * $0 $0 * $1,350 $37,539
Equity Value Fund $469,484 $493,758 $613,273 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund $338,754 $372,753 $488,807 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Fund $104,699 $42,717 $18,390 $0 $0 $0
- --------------------------------------------------------------------------------------------------------------------
International Equity Fund $32,086 $31,693 $46,714 $0 $0 $0
====================================================================================================================
</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 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 Paid (000) Management Fees Waived (000)
---------------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIMT Fund $501 $940 $1,287 $82 $105 $159
====================================================================================================================
</TABLE>
<PAGE>
For the fiscal years indicated, the SIF Fund paid the following fees to SEI
Management:
<TABLE>
<CAPTION>
====================================================================================================================
Management Fees Paid (000) Management Fees Waived (000)
----------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIF Fund $1,271 $2,404 $3,413 $446 $520 $700
====================================================================================================================
</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.
CODE OF ETHICS
The Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule
17j-1 under the Investment Company Act of 1940. In addition, the Investment
Advisor, Sub-Advisor and Distributor have adopted Codes of Ethics pursuant to
Rule 17j-1. These Codes of Ethics apply to the personal investing activities of
trustees, officers and certain employees ("access persons"). Rule 17j-1 and the
Codes are designed to prevent unlawful practices in connection with the purchase
or sale of securities by access persons. Under each Code of Ethics, access
persons are permitted to engage in personal securities transactions, but are
required to report their personal securities transactions for monitoring
purposes. In addition, certain access persons are required to obtain approval
before investing in initial public offerings or private placements. Copies of
these Codes of Ethics are on file with the Securities and Exchange Commission,
and are available to the public.
FUND TRANSACTIONS
TRADING PRACTICES AND BROKERAGE
I. THE TRUST
<PAGE>
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.
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.
<PAGE>
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, 1999, 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 Brokerage Commissions for Total Dollar Amount of Transactions Involving Directed
Research Services Brokerage Commissions for Research Services
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
$402,975 $0
====================================================================================================================
</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 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.
<PAGE>
For the fiscal years ended December 31, 1997, 1998 and 1999, the Funds paid the
following brokerage commissions:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Total Brokerage Commissions Amounts Paid to SEI Investments(1)
------------------------------------ ===================================
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities Plus Money N/A N/A $15,835 $17,304 N/A $15,835
Market Fund
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Money Market Fund N/A N/A $247,628 $2,134 N/A $247,628
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Institutional Select Money Market Fund N/A N/A $14,809 $2,625 N/A $14,809
- --------------------------------------------------------------------------------------------------------------------
Prime Obligation Money Market Fund N/A N/A $28,100 $47,306 N/A $28,100
- --------------------------------------------------------------------------------------------------------------------
Intermediate-Term Government Securities N/A N/A N/A N/A N/A N/A
Fund
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Securities Fund $5,987 N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal Securities Fund N/A N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund * N/A N/A * N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $57,835 $67,206 $71,942 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund $269,004 $137,889 $95,537 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Index Fund * N/A N/A * N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Value Fund $359,684 $103,821 $148,533 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund $392,850 $471,889 $388,600 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Fund $127,629 $121,969 $55,822 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
International Equity Fund $61,452 $75,402 $51,347 N/A N/A N/A
====================================================================================================================
</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.
<PAGE>
For the fiscal years indicated, the Funds paid the following brokerage
commissions:
<TABLE>
<CAPTION>
====================================================================================================================
Total $ Amount of Brokerage Total $ Amount Brokerage % of Total % of Total
Commissions Paid Commissions Paid to Brokerage Brokerage
Fund Affiliated Brokers Commissions Transactions
Paid to the Effected
Affiliated Through
Brokers Affiliated
Brokers
-----------------------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999 1999 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury N/A N/A $15,835 N/A N/A $15,835 100% 100%
Securities Plus Money
Market Fund
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury N/A N/A $247,628 N/A N/A $247,628 100% 100%
Securities Money Market
Fund
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market N/A N/A N/A N/A N/A N/A N/A N/A
Fund
- --------------------------------------------------------------------------------------------------------------------
Institutional Select N/A N/A $14,809 N/A N/A $14,809 100% 100%
Money Market Fund
- --------------------------------------------------------------------------------------------------------------------
Prime Obligation Money N/A N/A $28,100 N/A N/A $28,100 100% 100%
Market Fund
- --------------------------------------------------------------------------------------------------------------------
Intermediate-Term $0 $0 N/A $0 $0 N/A N/A N/A
Government Securities
Fund
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $0 $0 N/A $0 $0 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal $5,987 $0 N/A $0 $0 N/A N/A N/A
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal $0 $0 N/A $0 $0 N/A N/A N/A
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund * N/A N/A * N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $57,835 $67,206 $71,942 $0 $0 $0 0% 0%
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund $269,004 $137,889 $95,537 $0 $646 $34 0% 0%
- --------------------------------------------------------------------------------------------------------------------
Equity Index Fund * N/A N/A * N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Value Fund $359,684 $103,821 $148,533 $0 $216 $4,151 3% 3%
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund $392,850 $471,889 $388,600 $0 $900 $6,515 2% 2%
- --------------------------------------------------------------------------------------------------------------------
International Equity $61,452 $75,402 $51,347 $0 $0 $0 0% 0%
Fund
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Fund $127,629 $121,969 $55,822 $0 $4,972 $570 1% 1%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.
<PAGE>
"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,
1999, the following Funds held securities of the Trust's "regular brokers or
dealers":
U.S. Treasury Securities Plus Money Market Fund: $2,466,000 in repurchase
agreements with Barclays; $1,573,000 in repurchase agreements with Morgan
Stanley; and $7,079,000 in repurchase agreements with J.P. Morgan; U.S. Treasury
Securities Money Market Fund: $30,792,000 in repurchase agreements with Lehman
Brothers; $31,226,000 in repurchase agreements with Morgan Stanley; $21,142,000
in repurchase agreements with Merrill Lynch; $12,426,000 in repurchase
agreements with Prudential Securities; and $41,365,000 in repurchase agreements
with J.P. Morgan; Tax Exempt Money Market Fund: $7,906,000 in cash equivalents
issued by Goldman Sachs; Institutional Select Money Market Fund: $4,985,000 in
commercial paper issued by Bank of America; $12,906,000 in commercial paper
issued by Goldman Sachs; $10,266,000 in repurchase agreements with Lehman
Brothers; $14,715,000 in commercial paper issued by Merrill Lynch; $4,985,000 in
commerical paper issued by Bank of America; $4,989,000 in commerical paper
issued by Deutsche Bank; $1,995,000 in commercial paper with J.P. Morgan; and
$3,745,000 in repurchase agreements issued by J.P. Morgan; Prime Obligation
Money Market Fund: $19,897,000 in commercial paper issued by Merrill Lynch;
$2,661,000 in repurchase agreements with Barclays; $13,968,000 in commercial
paper issued by Bank of America; $39,724,000 in commercial paper with Goldman
Sachs; $4,989,000 in commerical paper with Deutsche Bank; $4,616,000 in
repurchase agreements with Morgan Stanley; $34,872,000 in commercial paper
issued by J.P. Morgan; and $3,183,000 in repurchase agreements with J.P. Morgan;
Fixed Income Fund: $2,850,000 in corporate bonds issued by Bear Stearns;
Balanced Fund: $1,656,000 in stocks issued by Bank of America; $771,000 in
corporate bonds issued by Bear Stearns; $895,000 in corporate bonds issued by
J.P. Morgan; $698,000 in corporate bonds issued by Goldman Sachs; $714,000 in
stocks issued by Morgan Stanley; and $895,000 in corporate bonds issued by
Merrill Lynch; $584,000 in stocks issued by Merrill Lynch; Equity Income Fund:
$1,255,000 in stocks issued by Bank of America; and $1,393,000 in stocks issued
by J.P. Morgan; and Equity Value Fund: $3,513,000 in stocks issued by Bank of
America; and $5,698,000 in stocks issued by J.P. Morgan.
<PAGE>
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 Fund'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 advisors generally seek reasonably competitive spreads or commissions, the
SIMT Fund will not necessarily be paying the lowest spread or commission
available. The SIMT Fund 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 Total $
Total $ Amount of Brokerage Brokerage Amount of
Fund Total $ Amount of Brokerage Commissions Commissions Paid Transactions Brokerage
Brokerage Commissions Paid to Affiliated to the Effected Commissions
Paid Brokers Affiliated Through Paid for
Brokers Affiliated Research
Brokers
--------------------------------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999 1999 1999 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SIMT Fund $0 $0 $0 $0 $0 $0 0% 0% $0
====================================================================================================================
</TABLE>
<PAGE>
The portfolio turnover rate for the SIMT Fund for the fiscal years indicated
were as follows:
<TABLE>
<CAPTION>
====================================================================================================================
Portfolio Turnover Rate
Fund
------------------------------------------------------------------------------
1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SIMT Fund 68% 56% 17%
====================================================================================================================
</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 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.
<PAGE>
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.
For the fiscal years indicated, the SIF Fund paid the following brokerage
commissions:
<TABLE>
<CAPTION>
=====================================================================================================================
% of Total % of Total Total $ Amount
Total $ Amount of Total $ Amount of Brokerage Brokerage of Brokerage
Fund Brokerage Commissions Paid Brokerage Commissions Commissions Transactions Commissions Paid
Paid to Affiliated Paid to the Effected for Research
Brokers Affiliated Through
Brokers Affiliated
Brokers
--------------------------------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999 1999 1999 1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SIF Fund $99,663 $89,956 $0 $0 $0 $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
Fund
----------------------------------------------------------------------------
1997 1998 1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SIF Fund 2% 4% 7%
=====================================================================================================================
</TABLE>
<PAGE>
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 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. Pursuant to an agreement
between the Distributor and Summit Financial Services Group ("SFSG"), SFSG
provides the Distributor with the initial financing to compensate dealers
selling Class B Shares. The Distributor subsequently repays SFSG out of the
compensation the Distributor receives under the Trust's Class B Distribution
Plan or through the receipt of any contingent deferred sales charge. During the
first year of the repayment term, the Distributor pays SFSG at an annualized
rate of 1.00% of a Fund's net assets attributable to Class B Shares, and in
subsequent years at an annualized rate of .75% of a Fund's net assets
attributable to Class B Shares.
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.
<PAGE>
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.
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, 1997, 1998 and
1999:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Dollar Amount of Loads Dollar Amount of Loads Retained
by SEI Investments
----------------------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Intermediate-Term Government $0 $7,775 $834 $0 $788 $113
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $5,218 $40,912 $2,874 $729 $3,562 $177
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal $1,877 $3,942 $219 $221 $445 $23
Securities Fund
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal Securities $24,509 $25,913 $1,995 $2,859 $2,890
Fund
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund * $7,891 $1,801 * $775 $180
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $27,532 $71,968 $40,323 $3,510 $7,297 $4,308
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund $75,235 $71,178 $28,315 $8,933 $7,505 $3,111
- --------------------------------------------------------------------------------------------------------------------
Equity Index Fund * $4,488 $29,111 * $461 $2,988
- --------------------------------------------------------------------------------------------------------------------
Equity Value Fund $81,148 $99,124 $58,708 $9,933 $10,614 $6,314
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund $1,275 $43,030 $23,425 $122 $4,393 $2,502
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Fund $1,495 $0 $0 $215 $0 $0
- --------------------------------------------------------------------------------------------------------------------
International Equity Fund $830 $373 $440 $91 $40 $45
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* An asterisk indicates that the Fund had not commenced operations as of the
period indicated.
The U.S. Treasury Securities Money Market Fund, Tax-Exempt Money Market Fund and
Prime Obligation 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 contingent deferred sales charge ("CDSC") upon
their Class B shares in the amounts shown for the fiscal years ended December
31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
=======================================================================================================
Fund Dollar Amount of Loads Dollar Amount of Loads Retained
by SEI Investments
--------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Prime Obligation Money Market $0 $0 $0 * $0 $0
Fund
- -------------------------------------------------------------------------------------------------------
Fixed Income Fund $4,845 $6,546 $85,390 * $0 $0
- -------------------------------------------------------------------------------------------------------
High Yield Bond Fund * $0 $40,606 * $0 $0
- -------------------------------------------------------------------------------------------------------
Balanced Fund $1,250 $21,942 $159,100 * $0 $0
- -------------------------------------------------------------------------------------------------------
Equity Income Fund $2,783 $58,426 $136,775 * $0 $0
- -------------------------------------------------------------------------------------------------------
Equity Index Fund * $0 $77,601 * $0 $0
- -------------------------------------------------------------------------------------------------------
Equity Value Fund $4,796 $55,676 $108,587 * $0 $0
- -------------------------------------------------------------------------------------------------------
Equity Growth Fund $49 $6,813 $56,996 * $0 $0
- -------------------------------------------------------------------------------------------------------
International Equity Fund $0 $70 $1,012 * $0 $0
=======================================================================================================
</TABLE>
* An asterisk indicates that the Class B Shares of the Fund had not commenced
operations as of the period indicated.
For the fiscal year ended December 31, 1999, the Class A Shares of the Funds
incurred the following distribution expenses:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Total Total
Distribution Distribution Sales Printing Other
Expenses Expenses (as Expenses Costs Costs
a % of net
assets)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury Securities Money Market Fund $238,677 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $57,993 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Prime Obligation Money Market Fund $9,301 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Intermediate-Term Government Securities Fund $2,662 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $10,351 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund $491 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Securities Fund $953 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal Securities Fund $35,156 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $27,863 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund $45,344 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Index Fund $2,837 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Value Fund $47,564 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund $10,512 .25% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
International Equity Fund $1,436 .25% N/A N/A N/A
====================================================================================================================
*An asterisk indicates that the Class A Shares of the Fund had not commenced
operations as of the period indicated.
</TABLE>
<PAGE>
For the fiscal year ended December 31, 1999, the Class B Shares of the Funds
incurred the following distribution expenses:
<TABLE>
<CAPTION>
====================================================================================================================
Total Total
Distribution Distribution Sales Printing Other
Fund Expenses Expenses (as Expenses Costs Costs
a % of net
assets)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime Obligation Money Market Fund $8,236 1.00% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $80,944 1.00% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund $44,841 1.00% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund $310,950 1.00% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund $190,876 1.00% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Index Fund $141,612 1.00% N/A * N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Value Fund $271,486 1.00% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund $130,747 1.00% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
International Equity Fund $4,885 1.00% N/A 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.
For the fiscal year ended December 31, 1999, the Class S Shares of the Prime
Obligation Money Market Fund incurred the following distribution expenses:
<TABLE>
<CAPTION>
====================================================================================================================
Total Total
Distribution Distribution Sales Expenses Printing Other Costs
Expenses Expenses (as a Costs
% of net assets)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime Obligation Money
Market Fund $509,114 .35% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Class I Shares do not have distribution expenses.
</TABLE>
For the fiscal year ended December 31, 1999, the U.S. Treasury Securities Plus
Money Market Fund incurred the following distribution expenses:
<TABLE>
<CAPTION>
====================================================================================================================
Total Total
Distribution Distribution Sales Expenses Printing Other Costs
Expenses Expenses (as a Costs
% of net assets)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury Securities Plus
Money Market Fund $18,670 .03% N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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.
Under the Class A 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 SIMT Fund pursuant to another
agreement. The Distribution Agreement provide that the shares of the SIMT Fund
are distributed through the Distributor. The Distributor receives no
compensation for distribution of Class A 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 SIMT and by the vote of the majority of those board
members of SIMT who are not interested persons of 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 0.25%
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.
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.
The Portfolio has also adopted a shareholder servicing plan for their Class E
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 SIF Fund may pay the Distributor a negotiated fee at a rate of up to 0.25%
annually of the average daily net assets of the SIF Fund attributable to Class E
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.
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.
<PAGE>
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.
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, 1999, the Money Market Funds' current,
effective and tax-equivalent yields were as follows:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Class Current Yield Effective Yield Tax-Equivalent
(%) (%) Yield
(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities Plus Money Market Fund N/A 4.30 4.39 N/A
- --------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Money Market Fund I 4.17 4.25 N/A
---------------------------------------------------------------
A 3.92 3.99 N/A
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund I 3.76 3.83 6.23
---------------------------------------------------------------
A 3.51 3.57 5.81
- --------------------------------------------------------------------------------------------------------------------
Institutional Select Money Market Fund N/A 5.59 5.74 N/A
- --------------------------------------------------------------------------------------------------------------------
Prime Obligation Money Market Fund I 5.27 5.41 N/A
---------------------------------------------------------------
A 5.02 5.14 N/A
---------------------------------------------------------------
B 4.27 4.36 N/A
---------------------------------------------------------------
S 4.92 5.04 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%).
<PAGE>
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.
For the 30-day period ended December 31, 1999 the yields on the Fixed Income
Funds were as follows:
<TABLE>
<CAPTION>
====================================================================================================================
Fund Class Current Tax Equivalent
Yield Yield
(%) (%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fixed Income Fund I 6.25 N/A
-------------------------------------------------------------------------------------
A 5.73 N/A
-------------------------------------------------------------------------------------
B 5.23 N/A
- --------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund I 8.29 N/A
-------------------------------------------------------------------------------------
A 8.04 N/A
-------------------------------------------------------------------------------------
B 7.26 N/A
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal I 4.96 8.61
Securities Fund
-------------------------------------------------------------------------------------
A 4.56 7.92
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal I 4.32 8.00
Securities Fund
-------------------------------------------------------------------------------------
A 3.94 7.29
- --------------------------------------------------------------------------------------------------------------------
Intermediate-Term Government I 6.00 N/A
Securities Fund
-------------------------------------------------------------------------------------
A 5.48 N/A
====================================================================================================================
* Not in operation as of the period indicated.
</TABLE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
Based on the foregoing, the average total returns for the Funds from inception
through December 31, 1999 were as follows:
====================================================================================================================
FUND CLASS AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------------------------------------------
ONE YEAR FIVE TEN SINCE
YEAR YEAR INCEPTION(1)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Intermediate-Term Government
Securities Fund I -0.83 6.07 N/A 5.06
-----------------------------------------------------------------------
A (no load) -1.18 5.79 N/A 4.79
-----------------------------------------------------------------------
A (load) -5.11 4.92 N/A 4.24
- --------------------------------------------------------------------------------------------------------------------
Fixed Income Fund I -1.71 6.72 N/A 6.04
-----------------------------------------------------------------------
A (no load) -1.97 6.41 N/A 5.76
-----------------------------------------------------------------------
A (load) -6.17 5.49 N/A 5.17
-----------------------------------------------------------------------
B (no load) -2.57 N/A N/A 3.79
-----------------------------------------------------------------------
B (load) -7.70 N/A N/A 2.38
- --------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Securities Fund I -7.05 3.89 N/A 3.10
-----------------------------------------------------------------------
A (no load) -7.32 3.57 N/A 2.83
-----------------------------------------------------------------------
A (load) -10.13 2.93 N/A 2.36
- --------------------------------------------------------------------------------------------------------------------
New Jersey Municipal Securities Fund I -1.60 5.28 N/A 4.97
-----------------------------------------------------------------------
A (no load) -1.87 4.94 N/A 4.61
-----------------------------------------------------------------------
A (load) -4.84 4.29 N/A 4.19
- --------------------------------------------------------------------------------------------------------------------
Balanced Fund I 9.33 17.68 N/A 12.37
-----------------------------------------------------------------------
A (no load) 9.04 17.38 N/A 12.08
-----------------------------------------------------------------------
A (load) 3.05 16.06 N/A 11.27
-----------------------------------------------------------------------
B (no load) 8.20 N/A N/A 14.49
-----------------------------------------------------------------------
B (load) 2.70 N/A N/A 13.27
- --------------------------------------------------------------------------------------------------------------------
Equity Income Fund I 5.77 19.31 N/A 14.15
-----------------------------------------------------------------------
A (no load) 5.50 18.99 N/A 13.86
-----------------------------------------------------------------------
A (load) -0.33 17.65 N/A 13.03
-----------------------------------------------------------------------
B (no load) 4.72 N/A N/A 11.27
-----------------------------------------------------------------------
B (load) -0.78 N/A N/A 9.99
- --------------------------------------------------------------------------------------------------------------------
Equity Value Fund I 14.12 24.95 N/A 16.60
-----------------------------------------------------------------------
A (no load) 13.77 24.57 N/A 16.29
-----------------------------------------------------------------------
A (load) 7.49 23.18 N/A 15.44
-----------------------------------------------------------------------
B (no load) 12.95 N/A N/A 19.56
-----------------------------------------------------------------------
B (load) 7.45 N/A N/A 18.42
- --------------------------------------------------------------------------------------------------------------------
Equity Growth Fund I 49.62 N/A N/A 31.59
-----------------------------------------------------------------------
A (no load) 49.12 N/A N/A 31.05
-----------------------------------------------------------------------
A (load) 40.92 N/A N/A 28.54
-----------------------------------------------------------------------
B (no load) 47.97 N/A N/A 32.47
-----------------------------------------------------------------------
B (load) 42.47 N/A N/A 31.49
- --------------------------------------------------------------------------------------------------------------------
Mid Cap Fund I 4.03 12.88 N/A 9.92
- --------------------------------------------------------------------------------------------------------------------
International Equity Fund I 45.46 N/A N/A 14.83
-----------------------------------------------------------------------
A (no load) 45.09 N/A N/A 14.54
-----------------------------------------------------------------------
A (load) 37.13 N/A N/A 13.16
-----------------------------------------------------------------------
B (no load) 44.13 N/A N/A 17.02
-----------------------------------------------------------------------
B (load) 38.63 N/A N/A 15.85
====================================================================================================================
(1) Class I and Class A Shares of the Funds commenced operations on April 1,
1992, except:the Pennsylvania Municipal Securities Fund -Class I Shares and
Class A Shares, commenced operations on May 3, 1993 and May 13, 1993,
respectively; the New Jersey Municipal Securities Fund - Class I and Class A
Shares, commenced operations on May 4, 1992; the Equity Growth Fund-Class I and
Class A Shares, commenced operations on February 3, 1997; and the International
<PAGE>
Equity Fund - Class I and Class A Shares, commenced operations on May 1, 1995
and May 4, 1995, respectively.
Class B Shares of the Funds commenced operations as follows: the Fixed Income
Fund, May 16, 1997; the Balanced Fund, May 8, 1997; the Equity Growth Fund, May
21, 1997; the Equity Value Fund, May 12, 1997; the Equity Income Fund and and
the International Equity Fund, May 7, 1997.
** Not in operation during period.
Each Feeder Fund may advertise the performance of its corresponding Master Fund
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 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.
</TABLE>
<TABLE>
<CAPTION>
The following table shows total returns for the Class A Shares of the SIMT Fund
for inception through September 30, 1999 and the Class E Shares of the SIF Fund
for inception through March 31, 1999:
====================================================================================================================
AVERAGE ANNUAL TOTAL RETURN
--------------------------------------------------
CLASS/
FUND WITH/WITHOUT
LOAD
- --------------------------------------------------------------------------------------------------------------------
ONE YEAR FIVE TEN YEARS SINCE
YEARS INCEPTION
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SIMT Fund (commenced operations on Class A 3.51 * * 10.24
January 11, 1995) Without Load
- --------------------------------------------------------------------------------------------------------------------
SIF Fund (commenced operations on Class E 28.34 23.77 18.95 17.76
August l, 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.
<PAGE>
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.
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
<PAGE>
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 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.
<PAGE>
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.
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
<PAGE>
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.
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.
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%
<PAGE>
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 Feeder
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 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.
<PAGE>
The names and addresses of the holders of 5% or more of the outstanding shares
of any Fund as of April 3, 2000 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
Fund Name and Address Beneficial
Ownership
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Institutional Select Money Summit Bank 74.47%
Market Fund: Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0821
Acct #1181-1
- --------------------------------------------------------------------------------------------------------------
Summit Asset Management 25.53%
c/o Lori Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct #2283-9
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Summit Bank 80.60%
Money Market Fund - Attn: Patricia Kyritz
Class I: P.O. Box 821
Hackensack, NJ 07602-0821
Acct #1181-1
- --------------------------------------------------------------------------------------------------------------
Summit Asset Management 18.75%
c/o Lori Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct #2283-9
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Money Market Summit Asset Management 98.09%
Fund - c/o Lori Minervini
Class A: P.O. Box 821
Hackensack, NJ 07602-0821
Acct #2283-9
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Plus Money Integrated Packaging Corporation 9.34%
Market Fund: c/o Dannie Warren
122 Quentin Road New Brunswick, NJ
08901-3263 Acct # 6135-3
- --------------------------------------------------------------------------------------------------------------
Pedtricktown Cogeneration 13.99%
Limited Parternship
13880 Dulles Corner Ln
Herndon, VA 20171-4600
Acct # 401780-8
- --------------------------------------------------------------------------------------------------------------
Prime Obligation Summit Bank 59.40%
Money Market Fund - Attn: Patricia Kyritz
Class I: P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 1181-1
- --------------------------------------------------------------------------------------------------------------
Summit Asset Management 26.34%
c/o Lori Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct #2283-9
- --------------------------------------------------------------------------------------------------------------
Summit Financial Services Group (FBO) 14.16%
Attn: Richard Jennings
1457 MacArthur Road
Whitehall, PA 18052-5787
Acct # 2016795-2
- --------------------------------------------------------------------------------------------------------------
Prime Obligation Money Market Summit Asset Management 100.00%
Fund - Class S: c/o Lori Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct #2283-9
- --------------------------------------------------------------------------------------------------------------
Prime Obligation Money Market Summit Bank (401K) 12.88%
Fund - Class A: c/o Summit Bank
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Ellen Silver & Adam Silver JTTEN 5.02%
59 Ueland Road
Red Bank, NJ 07701-5260
- --------------------------------------------------------------------------------------------------------------
Prime Obligation Money Market Summit Financial Services Group (FBO) 12.62%
Fund - Class B: V Schepis
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 799000018-4
Summit Financial Services Group (FBO) 5.08%
Paul Cheety
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 799000104-4
Summit Financial Services Group (FBO) 7.92%
Ruth E. Bryant
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 799000119-6
Summit Financial Services Group (FBO) 6.58%
Gary K Plefka
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 799000132-9
- --------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund - Summit Bank 91.42%
Class I: Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
Summit Financial Services Group (FBO) 8.52%
Attn: Richard Jennings
P.O. Box 22227
Lehigh Valley, PA 18002-2227
Acct # 2016795-2
- --------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund - Summit Asset Management 96.58%
Class A: c/o Lori Minervini
P.O. Box 821
Hackensack, NJ 07602-0821
Acct #2283-9
- --------------------------------------------------------------------------------------------------------------
Equity Growth Fund - Class I: Summit Bank 21.22%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 76.74%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Equity Growth Fund - Class A: Summit Financial Services Group (FBO) 8.36%
Pepter J Peff IRA
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 7980000038-3
Summit Financial Services Group (FBO) 7.01%
Frances Putman IRA
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 7980000130-8
- --------------------------------------------------------------------------------------------------------------
Fixed Income Fund - Class I: Summit Bank 25.29%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 28.87%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
- - Summit Bank 43.62%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Fixed Income Fund - Class A Summit Bank (401K) 13.74%
c/o Summit Bank
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2070055-5
Summit Financial Services Group (FBO) 5.23%
Rochford H Ern IRA
One Bethlehem Plaza
Bethlehem, PA 18018-5786
- --------------------------------------------------------------------------------------------------------------
New Jersey Municipal Summit Bank 11.59%
Securities Fund - Class I: Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 37.33%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
Summit Bank 48.73%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Equity Value Fund - Class I: Summit Bank 46.68%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 50.99%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Equity Income Fund - Class I: Summit Bank 21.68%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 73.96%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Equity Income Fund - Summit Bank 11.08%
Class A: Attn: Patricia Kyritz
P.O. Box 8211
Hackensack, NJ 07602-0821
Acct # 2070055-5
- --------------------------------------------------------------------------------------------------------------
Mid Cap Fund - Class I: Summit Bank 44.95%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 48.32%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Balanced Fund - Class I: Summit Bank 71.18%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 10.90%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
Summit Bank 17.89%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Balanced Fund - Class A: Summit Bank 6.68%
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2070055-5
- --------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Summit Bank 67.49%
Securities Fund - Class I: Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
Summit Bank 31.34%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Securities D. Lorraine Warner 7.41%
Fund - Class A 14 Shagbark Ct. W
Harleysville, PA 19438-2948
Acct # 2070232-0
Margarett A. Wernett 34.55%
16 1/2 3rd Avenue Lehighton, PA
18235-2645 Acct # 60045005-0
James Dalsasso & 8.09%
Barbara J. Dalsasso JTTEN
1934 Windsor Road
Bethlehem, PA 18017-3357
Acct # 60060459-2
Summit Financial Services Group (FBO) 15.02%
William A. Bernhardt
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 7240000001-0
Summit Financial Services Group (FBO) 16.60%
Elisabeth Kotlar
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 7240000003-6
Summit Financial Services Group (FBO) 6.45%
Robert B. Fratta
One Bethlehem Plaza
Bethlehem, PA 18018-5786
Acct # 7240000008-1
- --------------------------------------------------------------------------------------------------------------
International Equity Fund - Summit Bank 29.44%
Class I: Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 12.37%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
Summit Bank 56.51%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Intermediate-Term Government Summit Bank 36.80%
Securities Fund - Class I: Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 18.24%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
Summit Bank 41.77%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
- --------------------------------------------------------------------------------------------------------------
Intermediate-Term Government SEI Trust Company Cust. FBO 6.19%
Securities Fund - Class A: George Schmid
47 A Broadway
Woodcliff Ln, NJ 07675-8004
Summit Bank (401K) 6.19%
c/o Summit Bank
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2041962-6
Summit Bank (401K) 11.06%
c/o Summit Bank
Attn: Patricia Kyritz
P.O. Box 821
Hackensack, NJ 07602-0821
Acct # 2070055-5
Elsie K. Giordano 10.66%
495 Main Street Bldg 13 Apt #B-1
Orange, NJ 07050-1501
Acct # 60017266-8
SEI Trust Company Cust. FBO 7.90%
George F. Fescko IRA
346 Willow Grove Street
Hackettstown, NJ 07840-1854
Acct # 60022743-2
Stanley Hayes & Grace Hayes JTTEN 5.53%
10 Lumsden Court
Holiday City, NJ 08757-6130
Acct # 60022743-2
Sherry E. Grosky 6.81%
710 Falcon St.
Bridgewater, NJ 08807-1624
Acct # 60078988-6
- --------------------------------------------------------------------------------------------------------------
High Yield Bond Fund - Class I: Summit Bank 6.03%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 17.06%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
Summit Bank 17.06%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1181-1
- --------------------------------------------------------------------------------------------------------------
High Yield Bond Fund - Class A Summit Financial Services Group (FBO) 7.04%
Helen G. Shetz
One Bethlehem Plaza
Bethlehem, PA 18018-7586
Summit Financial Services Group (FBO) 20.88%
Carl M. Sabol
One Bethlehem Plaza
Bethlehem, PA 18018-7586
Summit Financial Services Group (FBO) 18.10%
Aase L. Hansen
One Bethlehem Plaza
Bethlehem, PA 18018-7586
Summit Financial Services Group (FBO) 42.62%
Marcelino Morales IRA
One Bethlehem Plaza
Bethlehem, PA 18018-7586
Summit Financial Services Group (FBO) 6.21%
c/f IRA of
Rona Schuster
One Bethlehem Plaza
Bethlehem, PA 18018-7586
- --------------------------------------------------------------------------------------------------------------
Equity Index Fund - Class I: Summit Bank 64.46%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 118-0
Summit Bank 35.02%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 1182-4
Summit Bank (401K) 32.89%
Attn: Patricia Kyritz
P.O. Box 547
Hackensack, NJ 07602-0547
Acct # 2070055-5
==============================================================================================================
</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.
<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 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.
<PAGE>
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 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.
<PAGE>
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.
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said report.
FINANCIAL STATEMENTS
The Trust's audited financial statements and the notes thereto and the Report of
the Independent Public Accountants dated February 18, 2000 for the fiscal year
ended December 31, 1999, relating to the financial statements and financial
highlights of the Trust are incorporated by reference herein. A copy of the
Trust's 1999 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 November 24, 1999 for the fiscal year ended
September 30, 1999, 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, 2000 and
notes thereto are incorporated by reference herein. A copy of SIMT's 1999 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 May 3,1999 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 1999 Annual Report to Shareholders must
accompany delivery of this Statement of Additional Information.
<PAGE>
A-1
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.
A-2
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
<PAGE>
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 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.
<PAGE>
A-3
1-WA/1364322.2
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 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
<PAGE>
A-4
1-WA/1364322.2
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 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.
<PAGE>
A-5
1-WA/1364322.2
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
<PAGE>
A-6
1-WA/1364322.2
timely basis, with limited incremental risk compared to issues rated in the
highest category. Bonds rated A 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.
<PAGE>
THE PILLAR FUNDS
SUPPLEMENT DATED APRIL 30, 2000 TO THE
COMMERCIAL CASH MANAGEMENT ACCOUNT PROSPECTUS DATED APRIL 30, 2000
THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT PROVIDED IN
THE PROSPECTUS AND SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS.
Shares of the Tax-Exempt Money Market Fund (the "Fund") will not be available
for purchase through your cash management account until on or about June 1,
2000. If you would like to purchase shares of the Fund outside of your
commercial cash management account, please contact your Summit Bank investment
officer.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
