<PAGE>
----------------
THE
MILESTONE
FUNDS
----------------
THE MILESTONE FUNDS
TREASURY OBLIGATIONS PORTFOLIO
ADVISER
Milestone Capital Management, L.P.
------------------
SEMI-ANNUAL REPORT
MAY 31, 2000
<PAGE>
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THE
MILESTONE
FUNDS
----------------
TABLE OF CONTENTS
Letter to Our Shareholders........................ 3
Portfolio of Investments.......................... 4
Statement of Assets and Liabilities............... 6
Statement of Operations........................... 7
Statement of Changes in Net Assets................ 8
Notes to Financial Statements..................... 9
Financial Highlights.............................. 12
2
<PAGE>
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MILESTONE
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----------------
TREASURY OBLIGATIONS PORTFOLIO
LETTER TO OUR SHAREHOLDERS
MAY 31, 2000
Dear Investors:
Disciplined liquidity management and technology-driven client solutions have
been two of the prominent themes for The Milestone Funds during the first six
months of our fiscal year. Throughout this period of economic transition and on-
going technological advancement, the Milestone team has worked in partnership
with our investors to anticipate changes in cash management needs, identify
relative value investment opportunities, and respond to a full range of client
service and systems-related assignments.
We are pleased to report that the Fund continues to be used more actively than
ever before by both current and new investors. Total assets averaged $2.5
billion for the first two quarters, reflecting an 8% increase over prior year
asset levels for the comparable period. Included in these figures are over 50
new investor accounts which have been opened fiscal year-to-date. In addition to
asset stability and investor base growth, the Fund has maintained consistently
competitive performance against all relevant money market fund benchmarks, while
strictly adhering to the requirements of S&P, Moody's, and Fitch for AAA-rated
funds.
Although Y2K proved to be a virtual non-event in terms of actual systems crises,
Milestone actively worked with many of our investors in preparing for and
managing emergency liquidity needs over the New Year. An extremely strong
annualized economic growth rate of 6% during early 2000 prompted the Federal
Reserve to tighten credit by 25 basis points in both February and March. April's
CPI and PPI reports set off inflationary fears (sparked by higher oil prices),
while the ECI report revealed tight labor markets and higher wages. Amid general
market sentiment that it had potentially fallen behind the curve, the Federal
Reserve responded with another tightening of 50 basis points in May, bringing
the Fed Funds rate to 6.5%. The cumulative effect of these moves on economic
growth appears to have been positive, as consumer spending and rate sensitive
sectors such as housing, autos, and retail sales have slowed from earlier year
levels. Looking ahead to the second half of this election year, the Federal
Reserve is expected to closely assess the full impact of 175 basis points of
tightening over the last 12 months.
Among the many client service assignments which we have completed for investors
in the Fund over the last six months are: a comprehensive performance
benchmarking and portfolio decision-making system for a major technology
company; a complete internet transaction and cash tracking solution for an
emerging growth company; a Bloomberg-based daily reporting system for a state
treasury; and technologically integrated sweep platforms for the trust divisions
of both regional and community-based banking companies. We welcome the
opportunity to work with our clients on value-added service projects and invite
you to contact our team directly to see how we can best be of service to you
throughout the remainder of 2000 and beyond.
<TABLE>
<S> <C> <C>
JANET TIEBOUT HANSON MARC H. PFEFFER MICHELLE TEITSCH
Chairman of the Board Co-CIO Senior Portfolio Manager
The Milestone Funds Milestone Capital Management Milestone Capital Management
President, CEO and Co-CIO
Milestone Capital Management
</TABLE>
3
<PAGE>
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THE
MILESTONE
FUNDS
----------------
TREASURY OBLIGATIONS PORTFOLIO
PORTFOLIO OF INVESTMENTS
MAY 31, 2000 (Unaudited)
($ in Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT INTEREST RATE MATURITY DATE (NOTE 1)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 12.4%
U.S. TREASURY NOTES - 11.6%
$35,000 6.25% 8/31/00 $35,054
15,000 4.50% 9/30/00 14,953
35,000 6.125% 9/30/00 35,074
25,000 5.75% 10/31/00 24,992
75,000 5.00% 2/28/01 74,233
50,000 6.375% 3/31/01 50,025
25,000 5.00% 4/30/01 24,608
15,000 6.50% 5/31/01 14,957
------------
273,896
------------
U.S. TREASURY BILL - 0.8%
20,000 5.725% 12/7/00 19,399
--------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (AMORTIZED COST $293,295) 293,295
--------------------------------------------------------------------------------------------------------------
</TABLE>
REPURCHASE AGREEMENTS - 87.9%
<TABLE>
<CAPTION>
ABN AMRO, Inc., dated 5/31/00, repurchase price $110,019 (U.S. Treasury Notes: $112,137, 4.625%-6.75%,
11/30/00-5/15/07; aggregate market value $112,200)
<S> <C> <C> <C>
110,000 6.37% 6/1/00 110,000
<CAPTION>
Barclays Capital, Inc., dated 5/31/00, repurchase price $110,019 (U.S. Treasury Bond: $109,716, 3.375%,
1/15/07; aggregate market value $112,200)
<S> <C> <C> <C>
110,000 6.37% 6/1/00 110,000
<CAPTION>
Bear, Stearns & Co., Inc., dated 5/31/00, repurchase price $510,091 (U.S. Treasury Bills: $78,035,
8/17/00-2/01/01; U.S. Treasury Bonds: $21,735, 7.625%-11.625%, 11/15/02-2/15/07; U.S. Treasury Notes:
$421,559, 5.00%-8.00%, 8/15/00-2/15/07; aggregate market value $523,740)
<S> <C> <C> <C>
510,000 6.39% 6/1/00 510,000
<CAPTION>
Chase Securities, Inc., dated 5/31/00, repurchase price $110,019 (U.S. Treasury Notes: $107,438,
5.875%-7.875%, 8/15/04-2/15/05; aggregate market value $112,205)
<S> <C> <C> <C>
110,000 6.37% 6/1/00 110,000
<CAPTION>
Credit Suisse First Boston Corp., dated 5/31/00, repurchase price $50,009 (U.S. Treasury Bills: $51,586,
6/15/00-11/09/00; aggregate market value $51,118)
<S> <C> <C> <C>
50,000 6.30% 6/1/00 50,000
<CAPTION>
Deutsche Bank Securities, Inc., dated 5/31/00, repurchase price $110,019 (U.S. Treasury Notes: $110,881,
5.50%-6.50%, 12/31/00-10/15/06; aggregate market value $112,200)
<S> <C> <C> <C>
110,000 6.37% 6/1/00 110,000
</TABLE>
4
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MILESTONE
FUNDS
----------------
TREASURY OBLIGATIONS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
MAY 31, 2000 (Unaudited)
($ in Thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRINCIPAL VALUE
AMOUNT INTEREST RATE MATURITY DATE (NOTE 1)
--------------------------------------------------------------------------------------------------------------
</TABLE>
REPURCHASE AGREEMENTS - 87.9% (CONT'D)
<TABLE>
<CAPTION>
Goldman Sachs & Co., dated 5/31/00, repurchase price $103,390 (U.S. Treasury Notes: $103,963, 5.125%-6.875%,
8/31/00-5/15/06; aggregate market value $105,439)
<S> <C> <C> <C>
103,372 6.36% 6/1/00 103,372
<CAPTION>
Greenwich Capital Markets, Inc., dated 5/31/00, repurchase price $100,020 (U.S. Treasury Bonds: $13,216,
9.375%-13.125%, 5/15/01-2/15/06; U.S. Treasury Notes: $96,479, 4.00%-8.00%, 6/30/00-2/15/07; aggregate market
value $112,201)
<S> <C> <C> <C>
110,000 6.40% 6/1/00 110,000
<CAPTION>
Paribas Corp., Inc., dated 5/31/00, repurchase price $525,093 (U.S. Treasury Bond: $45,189, 3.375%, 1/15/07;
U.S. Treasury Notes: $489,487, 5.50%-6.875%, 8/31/01-5/15/06, market value $535,500)
<S> <C> <C> <C>
525,000 6.40% 6/1/00 525,000
<CAPTION>
Salomon Smith Barney, Inc., dated 5/31/00, repurchase price $110,019 (U.S. Treasury Note: $121,020, 4.25%,
11/15/03; market value $112,257)
<S> <C> <C> <C>
110,000 6.36% 6/1/00 110,000
<CAPTION>
SG Cowen Securities Corp., dated 5/31/00, repurchase price $100,016 (U.S. Treasury Bond: $137, 9.375%,
2/15/06; U.S. Treasury Notes: $111,262, 4.25%-6.50%, 7/31/00-11/15/03; market value $112,314)
<S> <C> <C> <C>
110,000 6.35% 6/1/00 110,000
<CAPTION>
UBS Warburg LLC, dated 5/31/00, repurchase price $110,019 (U.S. Treasury Bonds: $17,911, 7.625%-13.75%,
8/15/04-2/15/07; U.S. Treasury Notes: $90,302, 4.875%-7.875%, 10/31/00-7/15/06; aggregate market value
$112,205)
<S> <C> <C> <C>
110,000 6.36% 6/1/00 110,000
--------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL REPURCHASE AGREEMENTS (COST $2,068,372) 2,068,372
--------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS (COST $2,361,667)--100.3% 2,361,667
LIABILITIES IN EXCESS OF OTHER ASSETS--(0.3)% (7,924)
-------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
NET ASSETS--100.0% $2,353,743
-------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
5
<PAGE>
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THE
MILESTONE
FUNDS
----------------
TREASURY OBLIGATIONS PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at amortized cost (note 1) $ 293,295,282
Repurchase agreements, at value and cost (note 1) 2,068,372,000
Cash 692
Interest receivable 3,173,520
Deferred organization costs and prepaid expenses 73,263
--------------
Total assets 2,364,914,757
--------------
LIABILITIES:
Advisory fee payable 165,589
Shareholder Service fee payable- Investor Shares 64,856
Shareholder Service fee payable- Institutional Shares 51,688
Shareholder Service fee payable- Financial Shares 35,878
Shareholder Service fee payable- Service Shares 8,330
Shareholder Service fee payable- Premium Shares 12,042
Distribution fee payable- Service Shares 864
Distribution fee payable- Premium Shares 9,907
Dividends payable 10,722,881
Accrued expenses 99,807
--------------
Total liabilities 11,171,842
--------------
NET ASSETS $2,353,742,915
==============
NET ASSETS BY CLASS OF SHARES:
Investor Shares $ 330,927,110
Institutional Shares 928,732,049
Financial Shares 970,400,437
Service Shares 64,390,656
Premium Shares 59,292,663
--------------
NET ASSETS $2,353,742,915
==============
SHARES OUTSTANDING
Investor Shares 330,928,070
==============
Institutional Shares 928,731,418
==============
Financial Shares 970,399,591
==============
Service Shares 64,390,531
==============
Premium Shares 59,292,606
==============
NET ASSET VALUE PER SHARE $1.00
==============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest $2,353,742,915
==============
NET ASSETS $2,353,742,915
==============
</TABLE>
See notes to financial statements.
6
<PAGE>
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THE
MILESTONE
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----------------
TREASURY OBLIGATIONS PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest $ 70,395,283
-------------
EXPENSES (note 2):
Advisory fees 1,230,476
Administration fees 52,521
Shareholder Service fees:
Investor Shares 409,562
Institutional Shares 360,618
Financial Shares 103,385
Service Shares 40,278
Premium Shares 79,401
Distribution fees:
Service Shares 4,918
Premium Shares 67,283
Custodian fees and expenses 97,855
Transfer agent fees and expenses 68,522
Publication expenses and rating service fees 45,339
Accounting service fees 30,163
Cash management fees 27,892
Legal fees 21,230
Reports to shareholders 20,773
Insurance expense 12,810
Audit fees 10,431
Trustees' fees 6,485
Amortization of organization costs 2,478
Other expenses 19,066
-------------
Net expenses 2,711,486
-------------
NET INVESTMENT INCOME 67,683,797
NET REALIZED GAIN ON INVESTMENTS 29,663
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 67,713,460
=============
</TABLE>
See notes to financial statements.
7
<PAGE>
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MILESTONE
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----------------
TREASURY OBLIGATIONS PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
MAY 31, 2000 ENDED
(UNAUDITED) NOVEMBER 30, 1999
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 67,683,797 $ 111,250,483
Net realized gain on investments 29,663 31,662
--------------- ---------------
Net increase in net assets
resulting from operations 67,713,460 111,282,145
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income--Investor
Shares (8,736,529) (14,208,869)
Net investment
income--Institutional Shares (29,740,062) (64,901,816)
Net investment income--Financial
Shares (26,725,643) (26,644,144)
Net investment income--Service
Shares (856,310) (2,274,224)
Net investment income--Premium
Shares (1,625,253) (3,221,430)
Net realized gain on
investments--Investor Shares (3,077) (4,352)
Net realized gain on
investments--Institutional
Shares (13,691) (18,836)
Net realized gain on
investments--Financial Shares (11,196) (7,100)
Net realized gain on
investments--Service Shares (201) (429)
Net realized gain on
investments--Premium Shares (799) (945)
--------------- ---------------
Total distributions to
shareholders (67,712,761) (111,282,145)
--------------- ---------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST*:
Sale of shares--Investor Shares 838,028,036 1,688,702,990
Sale of shares--Institutional
Shares 2,771,185,805 7,809,424,119
Sale of shares--Financial Shares 4,608,656,274 4,949,618,119
Sale of shares--Service Shares 52,465,427 168,815,130
Sale of shares--Premium Shares 39,170,248 141,659,128
Reinvested dividends--Investor
shares 3,112,751 6,276,557
Reinvested
dividends--Institutional Shares 15,381,207 43,482,802
Reinvested dividends--Financial
Shares 14,853,094 16,920,776
Reinvested dividends--Service
Shares 48,341 104,680
Reinvested dividends--Premium
Shares 12,285 6,289
Cost of shares
repurchased--Investor Shares (853,993,767) (1,772,286,339)
Cost of shares
repurchased--Institutional
Shares (3,057,348,317) (8,340,229,339)
Cost of shares
repurchased--Financial Shares (4,253,057,981) (4,681,146,718)
Cost of shares
repurchased--Service Shares (28,039,811) (238,995,904)
Cost of shares
repurchased--Premium Shares (48,688,542) (158,804,282)
--------------- ---------------
Net increase (decrease) in net
assets from shares of
beneficial interest 101,785,050 (366,451,992)
--------------- ---------------
Total increase (decrease) 101,785,749 (366,451,992)
NET ASSETS:
Beginning of year 2,251,957,166 2,618,409,158
--------------- ---------------
End of period $ 2,353,742,915 $ 2,251,957,166
=============== ===============
</TABLE>
* Share transactions at net asset value of $1.00 per share.
See notes to financial statements.
8
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----------------
TREASURY OBLIGATIONS PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 (Unaudited)
NOTE 1. SUMMARY OF ORGANIZATION AND
SIGNIFICANT ACCOUNTING POLICIES
The Milestone Funds (the "Trust") was formed as a Delaware business trust on
July 14, 1994. The Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940. It currently has one
diversified investment portfolio, the Treasury Obligations Portfolio (the
"Portfolio") which is authorized to issue an unlimited number of shares of
beneficial interest without par value. The Portfolio is currently authorized to
issue five classes of shares: Investor Shares, Institutional Shares, Financial
Shares, Service Shares and Premium Shares. The Trust commenced the offering of
Investor Shares of the Portfolio on December 30, 1994, Institutional Shares on
June 20, 1995, Financial Shares on March 13, 1997, Service Shares on May 2, 1997
and Premium Shares on May 20, 1997. The Trust's financial statements are
prepared in accordance with generally accepted accounting principles.
VALUATION OF SECURITIES - Securities in which the Portfolio invests are valued
at amortized cost. Under the amortized cost method, a portfolio instrument is
valued at cost and any premium or discount is amortized on a constant basis to
maturity. Amortization of premium and accretion of market discount are charged
to income.
REPURCHASE AGREEMENTS - The Portfolio may purchase securities from financial
institutions subject to the seller's agreement to repurchase and the Portfolio's
agreement to resell the securities at par. The investment adviser only enters
into repurchase agreements with financial institutions that are primary dealers
and deemed to be creditworthy by the investment adviser in accordance with
procedures adopted by the Board of Trustees. Securities purchased subject to
repurchase agreements are maintained with a custodian of the Portfolio and must
have, at all times, an aggregate market value greater than or equal to the
repurchase price plus accrued interest. If the market value of the underlying
securities falls below 102% of the value of the repurchase price, the Portfolio
will require the seller to deposit additional collateral by the next Portfolio
business day. In the event that the seller under the agreement defaults on its
repurchase obligation or fails to deposit sufficient collateral, the Portfolio
has the contractual right, subject to the requirements of applicable bankruptcy
and insolvency laws, to sell the underlying securities and may claim any
resulting loss from the seller.
SECURITY TRANSACTIONS - Security transactions are recorded on the trade date.
Realized gains and losses are recorded on the identified cost basis. The cost of
investments for federal income tax purposes at May 31, 2000 is substantially the
same as shown on the accompanying portfolio of investments.
MULTIPLE CLASS ALLOCATIONS - Each share of the portfolio's five classes
represents an undivided, proportionate interest in the Portfolio. All income,
expenses (other than class specific expenses), and realized gains or losses are
allocated daily to each class of shares based on the relative value of the
shares of each class. The Portfolio's class specific expenses include
Shareholder Service fees, Distribution fees and certain registration fees that
are in accordance with procedures adopted by the Board of Trustees regarding the
offering of multiple classes of shares by open-end, management investment
companies. In addition, there are differences between the classes of shares with
respect to the minimum investment required and voting rights affecting each
class.
9
<PAGE>
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MILESTONE
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----------------
TREASURY OBLIGATIONS PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONT'D)
MAY 31, 2000 (Unaudited)
INCOME TAXES - It is the Portfolio's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its investment company taxable income and net realized gains,
if applicable, to its shareholders. Therefore, no provision has been made for
federal income taxes.
INTEREST INCOME AND DIVIDENDS TO SHAREHOLDERS - Interest income is accrued as
earned. Dividends to shareholders from each class of the Portfolio's net
investment income are declared daily and distributed monthly. Net realized
capital gains, unless offset by any available capital loss carryforwards, are
distributed at least annually.
ACCOUNTING ESTIMATES - The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
ORGANIZATION COSTS - Organization costs are being amortized on a straight line
basis over five years.
NOTE 2. INVESTMENT ADVISORY AND OTHER SERVICES
Milestone Capital Management, L.P. (the "Adviser") serves as investment adviser
to the Portfolio pursuant to an investment advisory agreement with the Trust.
For its services, the Adviser receives a fee at an annual rate equal to 0.10% of
the average daily net assets of the Portfolio.
The Trust had adopted a Shareholder Service Plan providing that the Trust may
obtain the services of the Adviser and other qualified financial institutions to
act as shareholder servicing agents for their customers. Under this plan, the
Trust has authorized the Adviser to enter into agreements pursuant to which the
shareholder servicing agents perform certain shareholder services. For these
services, the Adviser receives from the Trust a fee at an annual rate equal to
0.25% of the average daily net assets of the Investor Shares, Service Shares and
Premium Shares. For Institutional Shares, the Adviser receives from the Trust a
fee at an annual rate up to 0.10% of the average daily net assets. For the six
months ended May 31, 2000, the Adviser received a 0.05% shareholder service fee.
The Adviser pays the shareholder servicing agents these amounts with respect to
shares owned by investors for which the shareholder servicing agents maintain a
servicing relationship pursuant to the Shareholder Servicing Agreement.
10
<PAGE>
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THE
MILESTONE
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----------------
TREASURY OBLIGATIONS PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONT'D)
MAY 31, 2000 (Unaudited)
The Trust has adopted a Distribution Plan for the Service Shares and the Premium
Shares. The plan provides that the Portfolio may finance activities which are
primarily intended to result in the sale of the Service and Premium Shares,
including, but not limited to, advertising, printing of prospectuses and reports
for other than existing shareholders, preparation and distribution of
advertising material and sales literature and payments to dealers who enter into
agreements with the Trust of Underwriter. Pursuant to this plan, the Portfolio
may incur distribution expenses related to the sale of the Service and Premium
Shares of up to 0.25% and 0.35% of the average daily net assets of the Service
and Premium Shares, respectively. The plan will only make payment for expenses
actually incurred on a first-in, first-out basis. The plan may carry forward for
an unlimited number of years any unreimbursed expenses. As of May 31, 2000,
there were no unreimbursed expenses. For the six months ended May 31, 2000, the
Portfolio incurred 0.05% and 0.20% of these distribution expenses for the
Service and the Premium Shares.
Effective December 7, 1998, Unified Fund Services, Inc. became the Trust's
transfer agent and dividend disbursing agent, replacing Countrywide Fund
Services, Inc. Effective December 7, 1998, Unified Management Corporation became
the Trust's Underwriter of the Portfolio's shares, replacing CW Fund
Distributors, Inc., pursuant to an Underwriting Agreement with the Trust and
serving under the same terms and conditions as the previous underwriter. The
Underwriter is an affiliate of the Trust's transfer agent. The Underwriter is
reimbursed for all costs and expenses incurred in this capacity but receives no
further compensation for its services under the Underwriting Agreement.
11
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TREASURY OBLIGATIONS PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INVESTOR
SHARES
--------------------------------------------------------------------------
FOR SIX MONTHS
ENDED FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
MAY 31, ENDED ENDED ENDED ENDED
2000 NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
(UNAUDITED) 1999 1998 1997 1996
-------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE FOR A SHARE
OUTSTANDING THROUGHOUT
THE PERIOD
Beginning net asset value
per share $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Net investment income 0.027 0.046 0.051 0.051 0.050
Dividends from net (0.027) (0.046) (0.051) (0.051) (0.050)
investment income ------ ------ ------ ------ ------
Ending net asset value per share $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
TOTAL RETURN 5.15%(a) 4.69% 5.23% 5.23% 5.11%
RATIOS/SUPPLEMENT DATA
Ratios to average net assets:
Expenses(b) 0.40%(a) 0.40% 0.40% 0.41% 0.45%
Net investment income 5.34%(a) 4.60% 5.08% 5.13% 4.99%
Net assets at the end of
the period (000's omitted) $330,927 $343,781 $421,088 $385,229 $ 82,915
</TABLE>
(a) Annualized
(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.00%, 0.00%, 0.00%, 0.00%, and 0.01%, for each of the
respective periods presented.
See notes to financial statements.
12
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TREASURY OBLIGATIONS PORTFOLIO
FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES
---------------------------------------------------------------------------
FOR SIX MONTHS
ENDED FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
MAY 31, ENDED ENDED ENDED ENDED
2000 NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
(UNAUDITED) 1999 1998 1997 1996
--------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE FOR A SHARE
OUTSTANDING THROUGHOUT
THE PERIOD
Beginning net asset value
per share $1.00 $1.00 $1.00 $1.00 $1.00
--------- -------- -------- ------ ------
Net investment income 0.028 0.048 0.053 0.053 0.052
Dividends from net (0.028) (0.048) (0.053) (0.053) (0.052)
--------- -------- -------- ------ ------
Ending net asset value per
share $1.00 $1.00 $1.00 $1.00 $1.00
========= ======== ======== ====== ======
TOTAL RETURN 5.36%(a) 4.91% 5.45% 5.46% 5.37%
RATIOS/SUPPLEMENT DATA
Ratios to average net assets:
Expenses(b) 0.20%(a) 0.20% 0.20% 0.20% 0.20%
Net investment income 5.51%(a) 4.79% 5.30% 5.32% 5.21%
Net assets at the end of
the period (000's omitted) $928,732 $1,199,513 $1,686,835 $1,183,905 $897,173
</TABLE>
(a) Annualized
(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.00%, 0.00%, 0.01%, 0.01%, and 0.02%, for each of the
respective periods presented.
See notes to financial statements.
13
<PAGE>
----------------
THE
MILESTONE
FUNDS
----------------
TREASURY OBLIGATIONS PORTFOLIO
FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
FINANCIAL
SHARES
--------------------------------------------------------------------------------
FOR SIX MONTHS FOR THE PERIOD
ENDED FOR THE YEAR FOR THE YEAR MARCH 13, 1997*
MAY 31, 2000 ENDED ENDED THROUGH
(UNAUDITED) NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
Beginning net asset value per
share $1.00 $1.00 $1.00 $1.00
--------- --------- ------- -------
Net investment income 0.028 0.049 0.054 0.038
Dividends from net investment
income (0.028) (0.049) (0.054) (0.038)
--------- --------- ------- -------
Ending net asset value per
share $1.00 $1.00 $1.00 $1.00
========= ========= ======= =======
TOTAL RETURN 5.42%(a) 4.97% 5.50% 5.52%(a)
RATIOS/SUPPLEMENT DATA
Ratios to average net assets:
Expenses(b) 0.15%(a) 0.14% 0.15% 0.14%(a)
Net investment income 5.58%(a) 4.90% 5.28% 5.45%(a)
Net assets at the end of the
period (000's omitted) $970,400 $599,948 $314,556 $90,465
</TABLE>
(a) Annualized
(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.03%, 0.00%, 0.00% and 0.00%, for each of the
respective periods presented.
* Commencement of operations.
See notes to financial statements.
14
<PAGE>
----------------
THE
MILESTONE
FUNDS
----------------
TREASURY OBLIGATIONS PORTFOLIO
FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
SERVICE
SHARES
--------------------------------------------------------------------------------
FOR SIX MONTHS FOR THE PERIOD
ENDED FOR THE YEAR FOR THE YEAR MAY 2, 1997*
MAY 31, 2000 ENDED ENDED THROUGH
(UNAUDITED) NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
Beginning net asset value per
share $1.00 $1.00 $1.00 $1.00
--------- --------- ------- ---------
Net investment income 0.026 0.046 0.051 0.030
Dividends from net investment
income (0.026) (0.046) (0.051) (0.030)
Ending net asset value per
share $1.00 $1.00 $1.00 $1.00
========= ========= ======= =========
TOTAL RETURN 5.10%(a) 4.65% 5.19% 5.21%(a)
RATIOS/SUPPLEMENT DATA
Ratios to average net assets:
Expenses 0.45%(a) 0.45% 0.45% 0.45%(a)
Net investment income 5.32%(a) 4.50% 5.07% 5.15%(a)
Net assets at the end of the
period (000's omitted) $64,391 $39,917 $109,993 $242,068
</TABLE>
(a) Annualized
* Commencement of operations.
See notes to financial statements.
15
<PAGE>
----------------
THE
MILESTONE
FUNDS
----------------
TREASURY OBLIGATIONS PORTFOLIO
FINANCIAL HIGHLIGHTS (CONT'D)
<TABLE>
<CAPTION>
PREMIUM
SHARES
--------------------------------------------------------------------------------
FOR SIX MONTHS FOR THE PERIOD
ENDED FOR THE YEAR FOR THE YEAR MAY 20, 1997*
MAY 31, 2000 ENDED ENDED THROUGH
(UNAUDITED) NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
Beginning net asset value per
share $1.00 $1.00 $1.00 $1.00
--------- --------- ------- -------
Net investment income 0.026 0.044 0.049 0.027
Dividends from net investment
income (0.026) (0.044) (0.049) (0.027)
--------- --------- ------- -------
Ending net asset value per
share $1.00 $1.00 $1.00 $1.00
========= ========= ======= =======
TOTAL RETURN 4.94%(a) 4.49% 5.03% 5.06%(a)
RATIOS/SUPPLEMENT DATA
Ratios to average net assets:
Expenses 0.60%(a) 0.60% 0.60% 0.60%(a)
Net investment income 5.12%(a) 4.40% 4.92% 5.01%(a)
Net assets at the end of the
period (000's omitted) $59,293 $68,799 $85,937 $84,239
</TABLE>
(a) Annualized
* Commencement of operations.
See notes to financial statements.
16
<PAGE>
----------------
THE
MILESTONE
FUNDS
----------------
Adviser
-------------------------------------------------------------------------
Milestone Capital Management, L.P.
One Executive Boulevard
Yonkers, NY 10701
Underwriter / Transfer Agent
-------------------------------------------------------------------------
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806
800-363-7660
Primary Dealer
-------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Administrator / Custodian
-------------------------------------------------------------------------
The Bank of New York
90 Washington Street
New York, NY 10286
Legal Counsel
-------------------------------------------------------------------------
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Independent Auditors
-------------------------------------------------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
This report is authorized for distribution
only to current shareholders and to others
who have received a copy of The Milestone Funds prospectus.
The Milestone Funds
One Executive Boulevard, Yonkers, New York 10701
800-941-MILE
