REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees of
The Pillar Funds and the
Securities and Exchange Commission:
We have examined management's assertion about the U.S. Treasury Securities
Money Market, Prime Obligation Money Market, Tax-Exempt Money Market, U.S.
Treasury Securities Plus Money Market, Institutional Select Money Market,
Fixed Income, High Yield Bond, New Jersey Municipal Securities,
Intermediate-Term Government Securities, Pennsylvania Municipal Securities,
Equity Growth, Equity Value, Equity Income, Equity Index, Mid Cap, and
Balanced Funds of the Pillar Funds' (the "Trust's") compliance with the
requirements of subsections (b) and (c) of Rule 17f-2 under the Investment
Company Act of 1940 as of June 30, 2000, included in the accompanying
Management Statement Regarding Compliance with Certain Provisions of the
Investment Company Act of 1940. Management is responsible for the Trust's
compliance with those requirements. Our responsibility is to express an
opinion on management's assertion about the Trust's compliance based on our
examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly,
included examining, on a test basis, evidence about the Trust's compliance
with those requirements and performing such other procedures as we
considered necessary in the circumstances. Included among our procedures
were the following tests performed as of June 30, 2000, and with respect to
agreement of security purchases and sales, for the period from December 31,
1999 (the date of our last examination) through June 30, 2000:
We agreed a sample of securities shown on the books and records of
The Pillar Funds as of June 30, 2000 to the safekeeping reports of
Summit Bank, the custodian, noting agreement of quantity and
description, except for those securities purchased/sold but not
received/delivered, pledged, or out for transfer on that date, as
to which we obtained documentation from the brokers.
For all securities shown on the safekeeping reports of Summit Bank
as of June 30, 2000 which were designated as being held by
institutions in book entry form (which include but are not limited
to securities owned by The Pillar Funds), we confirmed all such
securities with those institutions which use the book entry method
of accounting for securities (Bank of New York, Federal Reserve
Bank and The Depository Trust Company, the subcustodians). For a
sample of securities on the safekeeping reports of Summit Bank, we
noted that the quantities and descriptions of such securities
listed on the safekeeping reports agreed with the confirmations or
that discrepancies were resolved. We tested, on a sample basis,
the resolution of such reconciling items between the custodian and
subcustodians.
We confirmed all repurchase agreements shown on the books and
records of The Pillar Funds as of June 30, 2000 with brokers and
the application of alternative procedures with respect to
unsettled repurchase agreement transactions, noting agreement of
quantity and description. We also agreed underlying collateral for
such repurchase agreements, as confirmed by such brokers, with the
Summit Bank safekeeping reports, noting that such collateral was
held for the account of The Pillar Funds.
We agreed a sample of security purchases and security sales since
our last report from the books and records of the Trust to the
broker confirmations.
We believe that our examination provides a reasonable basis for our
opinion. Our examination does not provide a legal determination on the
Trust's compliance with specified requirements.
In our opinion, management's assertion that the U.S. Treasury Securities
Money Market, Prime Obligation Money Market, Tax-Exempt Money Market, U.S.
Treasury Securities Plus Money Market, Institutional Select Money Market,
Fixed Income, High Yield Bond, New Jersey Municipal Securities,
Intermediate-Term Government Securities, Pennsylvania Municipal Securities,
Equity Growth, Equity Value, Equity Income, Equity Index, Mid Cap, and
Balanced Funds of The Pillar Funds' were in compliance with the
requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
Company Act of 1940 as of June 30, 2000, with respect to securities
reflected in the investment account of the Trust is fairly stated, in all
material respects.
This report is intended solely for the information and use of management
and the Board of Trustees of The Pillar Funds and the Securities and
Exchange Commission and should not be used for any other purpose.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
August 25, 2000
