SEI ASSET ALLOCATION TRUST, 497, 1996-04-08

SEI ASSET ALLOCATION TRUST
497, 1996-04-08

Previous: JWB AGGRESSIVE GROWTH FUND, 497, 1996-04-08

Next: AGE HIGH INCOME FUND INC, 497, 1996-04-09

<PAGE>

SEI ASSET ALLOCATION TRUST APRIL 1, 1996
- --------------------------------------------------------------------------------

DIVERSIFIED CONSERVATIVE INCOME FUND
DIVERSIFIED CONSERVATIVE FUND
DIVERSIFIED MODERATE GROWTH FUND
DIVERSIFIED GROWTH FUND
DIVERSIFIED U.S. STOCK FUND
- --------------------------------------------------------------------------------

This Prospectus sets forth concisely information about the above-referenced
Funds. Please read this Prospectus carefully before investing, and keep it on
file for future reference.

A Statement of Additional Information dated April 1, 1996, has been filed with
the Securities and Exchange Commission ("SEC") and may be obtained upon request
and without charge by writing the Distributor, SEI Financial Services Company
(the "Distributor"), at 680 East Swedesford Road, Wayne, Pennsylvania 19087-
1658, or by calling 1-800-342-5734. The Statement of Additional Information is
incorporated into this Prospectus by reference.

SEI Asset Allocation Trust (the "Trust") is an open-end management investment
company consisting of the following five separate diversified investment
portfolios (each a "Fund" and, together, the "Funds"): Diversified Conservative
Income Fund, Diversified Conservative Fund, Diversified Moderate Growth Fund,
Diversified Growth Fund and Diversified U.S. Stock Fund. Each Fund offers
investors a convenient means of investing in shares of certain mutual funds
(the "Underlying Portfolios") managed by SEI Financial Management Corporation
("SFM" or the "Adviser") within certain predetermined percentage ranges. Each
Fund offers two classes of shares, Class A Shares and Class D Shares. Class A
Shares are offered primarily to tax-advantaged retirement accounts. Class D
Shares are offered to tax-advantaged and other accounts through banks, broker-
dealers and other financial institutions that have entered into arrangements
with the Distributor to sell Class D Shares to their customers. Class D Shares
differ from Class A Shares primarily in the allocation of certain distribution,
shareholder servicing and transfer agent expenses, and in the range and types
of shareholder services offered to investors. This Prospectus offers both Class
A Shares and Class D Shares of the Funds.
- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE
FUNDS INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
<PAGE>

FUND EXPENSES (CLASS A SHARES) _________________________________________________

SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED DIVERSIFIED
CONSERVATIVE DIVERSIFIED MODERATE DIVERSIFIED DIVERSIFIED
INCOME CONSERVATIVE GROWTH GROWTH U.S. STOCK
FUND FUND FUND FUND FUND
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchase None None None None None
Maximum Sales Charge Imposed on Reinvested Dividends None None None None None
Maximum Contingent Deferred Sales Charge None None None None None
Wire Redemption Fees None None None None None
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES (DIRECT EXPENSES)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Management/Advisory Fees (after waivers) (1) .00% .00% .00% .00% .00%
12b-1 Fees None None None None None
Total Other Expenses (after expense
reimbursements) (2) (3) .12% .12% .12% .12% .12%
- --------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after waivers and
expense reimbursement) (3) .12% .12% .12% .12% .12%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) SFM is currently waiving its advisory and management fees. Absent fee
waivers, management and advisory fees for each Fund would be .30%. These
fee waivers are voluntary and may be discontinued by SFM at any time in its
sole discretion.
(2) Absent SFM's expense reimbursement, other expenses are estimated to be .14%
for the current fiscal year.
(3) Absent SFM's fee waivers and expense reimbursements, the total operating
expenses of each Fund's Class A Shares would be .44%.

EXPENSE RANGES (INCLUDING INDIRECT EXPENSES)
- --------------------------------------------------------------------------------
Based on the expense ratios of the Underlying Portfolios plus those of each
Fund, the range of average weighted combined operating expenses for Class A
shares of the Funds are expected to be as follows:
<TABLE>
<CAPTION>
RANGE OF
COMBINED
EXPENSES+
-------------
<S> <C>
Diversified Conservative Income Fund .67% to .89%
Diversified Conservative Fund .75% to 1.00%
Diversified Moderate Growth Fund .80% to 1.07%
Diversified Growth Fund .88% to 1.33%
Diversified U.S. Stock Fund .86% to 1.06%
- --------------------------------------------------------------------------------
</TABLE>
+ A range is provided since the average assets of each Fund invested in each of
the Underlying Portfolios may fluctuate.

EXAMPLE
- --------------------------------------------------------------------------------
Using the midpoint of the ranges set forth above, an investor in a Fund would
pay the following combined expenses on a $1,000 investment assuming: (1) a 5%
annual return, and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YR. 3 YRS.
----- ------
<S> <C> <C>
Diversified Conservative Income Fund $ 8 $25
Diversified Conservative Fund $ 9 $28
Diversified Moderate Growth Fund $10 $30
Diversified Growth Fund $11 $35
Diversified U.S. Stock Fund $10 $31
</TABLE>
- --------------------------------------------------------------------------------
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense tables and example is to assist the investor in understanding
the various costs and expenses that may be directly or indirectly borne by
investors in Class A Shares of each Fund. A person who purchases shares through
an account with a financial institution may be charged separate fees by that
institution in addition to those set forth above. The information set forth in
the foregoing table and example relates to the Class A Shares. Class A Shares
are subject to the same management and advisory expenses as Class D Shares, but
are subject to different distribution, shareholder servicing and transfer agent
expenses. Additional information may be found under "The Adviser and Manager of
the Funds" and "Distribution of Fund Shares and Shareholder Servicing."

2
<PAGE>

FUND EXPENSES (CLASS D SHARES) _________________________________________________

The purpose of the following table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly in connection with
an investment in each Fund's Class D Shares ("Direct Expenses"). In addition to
these Direct Expenses, Class D Shares of the Funds will indirectly bear their
pro rata share of the expenses of the Underlying Portfolios ("Indirect
Expenses"). See "Expense Ratios of the Underlying Portfolios."
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED DIVERSIFIED
CONSERVATIVE DIVERSIFIED MODERATE DIVERSIFIED DIVERSIFIED
INCOME CONSERVATIVE GROWTH GROWTH U.S. STOCK
FUND FUND FUND FUND FUND
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchase None None None None None
Maximum Sales Charge Imposed on Reinvested Dividends None None None None None
Maximum Contingent Deferred Sales Charge None None None None None
Wire Redemption Fees $10.00 $10.00 $10.00 $10.00 $10.00
Exchange Fees None None None None None
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES (DIRECT EXPENSES)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Management/Advisory Fees (after waivers) (1) .00% .00% .00% .00% .00%
12b-1 Fees .75% .75% .75% .75% .75%
Total other Expenses (after expense
reimbursements) (2)(3) .37% .37% .37% .37% .37%
Shareholder Service Fees .25% .25% .25% .25% .25%
- --------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after waivers and expense
reimbursements) (3) 1.12% 1.12% 1.12% 1.12% 1.12%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) SFM is currently waiving its advisory and management fees. Absent fee
waivers, management and advisory fees for each Fund would be .30%. These
fee waivers are voluntary and may be discontinued by SFM at any time in its
sole discretion.
(2) Absent SFM's expense reimbursement, other expenses are estimated to be .39%
for the current fiscal year. Each Fund's Shareholder Servicing Fees will be
reduced in an amount equal to the Fund's pro rata share of any Shareholder
Servicing Servicing Fees paid by any Underlying Portfolio in which such
Fund invests, but only to the extent necessary to comply with a condition
of the Trust's SEC exemptive order. See "General Investment Policies of the
Funds."
(3) Absent SFM's fee waivers and expense reimbursements, the total operating
expenses of each Fund's Class D Shares would be 1.44%.

EXPENSE RANGES (INCLUDING INDIRECT EXPENSES)
- --------------------------------------------------------------------------------
Based on the Expense Ratios of the Underlying Portfolios plus those of each
Fund, the range of average weighted combined operating expenses for Class D
Shares of the Funds are expected to be as follows:
<TABLE>
<CAPTION>
RANGE OF
COMBINED
EXPENSES+
--------------
<S> <C>
Diversified Conservative Income Fund 1.67% to 1.89%
Diversified Conservative Fund 1.75% to 2.00%
Diversified Moderate Growth Fund 1.80% to 2.07%
Diversified Growth Fund 1.88% to 2.33%
Diversified U.S. Stock Fund 1.86% to 2.06%
</TABLE>
- --------------------------------------------------------------------------------
+ A range is provided since the average assets of each Fund invested in each of
the Underlying Portfolios may fluctuate.

EXAMPLE
- --------------------------------------------------------------------------------
Using the midpoint of the ranges set forth above, an investor in a Fund would
pay the following combined expenses on a $1,000 investment assuming: (1) a 5%
annual return, and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YR. 3 YRS.
----- ------
<S> <C> <C>
Diversified Conservative Income Fund $18 $56
Diversified Conservative Fund $19 $59
Diversified Moderate Growth Fund $20 $61
Diversified Growth Fund $21 $66
Diversified U.S. Stock Fund $20 $62
</TABLE>
- --------------------------------------------------------------------------------
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense tables and example is to assist the investor in understanding
the various costs and expenses that may be directly or indirectly borne by
investors in Class D Shares of each Fund. A person who purchases shares through
an account with a financial institution may be charged separate fees by that
institution in addition to those set forth above. The information set forth in
the foregoing table and example relates to the Class D Shares. Class D Shares
are subject to the same management and advisory expenses as Class A Shares, but
are also subject to different distribution, shareholder servicing and transfer
agent expenses. Additional information may be found under "The Adviser and
Manager of the Funds" and "Distribution of Fund Shares and Shareholder
Servicing."

Long-term Class D shareholders may pay more than the economic equivalent of the
maximum front-end sales charges otherwise permitted by the Rules of Fair
Practice of the National Association of Securities Dealers ("NASD").

3
<PAGE>

INDIRECT EXPENSES ______________________________________________________________

Class A and Class D Shares of the Funds will indirectly bear their pro rata
share of fees and expenses incurred by the Underlying Portfolios, including
shareholder servicing expenses, and the investment returns of each Class of
Shares of the Funds will be net of the expenses of the Underlying Portfolios.
The charts set forth below provide the expense ratios for each of the
Underlying Portfolios in which the Funds will invest (based on information as
of December 31, 1995).
- --------------------------------------------------------------------------------
DIVERSIFIED CONSERVATIVE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERLYING PORTFOLIOS UNDERLYING PORTFOLIOS'
ELIGIBLE FOR PURCHASE EXPENSE RATIOS*
<S> <C>
SIMT Large Cap Growth Portfolio .85%
SIMT Large Cap Value Portfolio .82%
SIMT Small Cap Growth Portfolio 1.10%
SIMT Small Cap Value Portfolio 1.10%
SIMT Core Fixed Income Portfolio .55%
SLAT Prime Obligation Portfolio .44%
<CAPTION>
- --------------------------------------------------------------------------------
DIVERSIFIED CONSERVATIVE FUND
- --------------------------------------------------------------------------------
UNDERLYING PORTFOLIOS UNDERLYING PORTFOLIOS'
ELIGIBLE FOR PURCHASE EXPENSE RATIOS*
<S> <C>
SIMT Large Cap Growth Portfolio .85%
SIMT Large Cap Value Portfolio .82%
SIMT Small Cap Growth Portfolio 1.10%
SIMT Small Cap Value Portfolio 1.10%
SIT International Equity Portfolio 1.25%
SIMT Core Fixed Income Portfolio .55%
SIT International Fixed Income Portfolio 1.00%
SLAT Prime Obligation Portfolio .44%
<CAPTION>
- --------------------------------------------------------------------------------
DIVERSIFIED MODERATE GROWTH FUND
- --------------------------------------------------------------------------------
UNDERLYING PORTFOLIOS UNDERLYING PORTFOLIOS'
ELIGIBLE FOR PURCHASE EXPENSE RATIOS*
<S> <C>
SIMT Large Cap Growth Portfolio .85%
SIMT Large Cap Value Portfolio .82%
SIMT Small Cap Growth Portfolio 1.10%
SIMT Small Cap Value Portfolio 1.10%
SIT International Equity Portfolio 1.25%
SIMT Core Fixed Income Portfolio .55%
SIT International Fixed Income Portfolio 1.00%
SLAT Prime Obligation Portfolio .44%
</TABLE>

4
<PAGE>

- --------------------------------------------------------------------------------
DIVERSIFIED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERLYING PORTFOLIOS UNDERLYING PORTFOLIOS'
ELIGIBLE FOR PURCHASE EXPENSE RATIOS*
<S> <C>
SIMT Large Cap Growth Portfolio .85%
SIMT Large Cap Value Portfolio .82%
SIMT Small Cap Growth Portfolio 1.10%
SIMT Small Cap Value Portfolio 1.10%
SIT International Equity Portfolio 1.25%
SIT Emerging Markets Equity Portfolio 1.95%
SIMT Core Fixed Income Portfolio .55%
SIMT High Yield Bond Portfolio .85%
SIT International Fixed Income Portfolio 1.00%
SLAT Prime Obligation Portfolio .44%
<CAPTION>
- --------------------------------------------------------------------------------
DIVERSIFIED U.S. STOCK FUND
- --------------------------------------------------------------------------------
UNDERLYING PORTFOLIOS UNDERLYING PORTFOLIOS'
ELIGIBLE FOR PURCHASE EXPENSE RATIOS*
<S> <C>
SIMT Large Cap Growth Portfolio .85%
SIMT Large Cap Value Portfolio .82%
SIMT Small Cap Growth Portfolio 1.10%
SIMT Small Cap Value Portfolio 1.10%
SLAT Prime Obligation Portfolio .44%
- --------------------------------------------------------------------------------
</TABLE>
* The Funds will purchase only Class A Shares of the Underlying Portfolios. The
expense ratios of the Class A Shares of the Underlying Portfolios shown above
reflect existing fee waivers and expense reimbursement arrangements that may
be discontinued at any time. Absent these fee waivers on the Class A Shares
of the Underlying Portfolios, these expense ratios would be higher.

Investors in the Funds should recognize that they may invest directly in the
Underlying Portfolios and that, by investing in Underlying Portfolios through
the Funds, they will bear not only their proportionate share of the expenses of
the Funds (including operating costs and investment advisory and administrative
fees to the extent the Adviser has not elected to waive such fees), but will
also indirectly bear similar expenses of the Underlying Portfolios. Investors
that purchase shares of the Funds through managed account programs who pay
separate advisory fees for asset allocation services should recognize that the
combined expenses of the program and the Funds (including the expenses charged
by the Underlying Portfolios) may involve greater fees and expenses than those
present in other types of investments. In addition, a shareholder of a Fund's
Shares will indirectly bear expenses paid by an Underlying Portfolio related to
the distribution of its shares, if any. In the case of Class D Shares, any Fund
shareholder servicing fees will be reduced in an amount equal to the Fund's pro
rata portion of the shareholder servicing fees charged to any Underlying
Portfolio in which the Fund invests, but only to the extent necessary to comply
with a condition of the Trust's SEC exemptive Order. Currently, Class A Shares
of the Underlying Portfolios are subject to a shareholder servicing fee of up
to .25%. See "Distribution of Fund Shares and Shareholder Servicing."

5
<PAGE>

INVESTMENT
OBJECTIVES AND
POLICIES OF THE FUNDS __________________________________________________________
...........................
The Funds offer investors the .[SYMBOL APPEARS HERE]
opportunity to invest in certain . WHAT ARE
of the Underlying Portfolios, and . INVESTMENT
are designed primarily for . OBJECTIVES AND
tax-advantaged retirement and . POLICIES?
other long-term investment or .
savings accounts, including: . A Fund's investment
Individual Retirement Accounts . objective is a statement
("IRAs"), 403(b)(7) tax-sheltered . of what it seeks to
retirement accounts for employees . achieve. It is important
of certain non-profit . to make sure that the
organizations, 401(k) savings . investment objective
plans, profit-sharing and . matches your own
money-purchase pension plans, and . financial needs and
other employer-sponsored pension . circumstances. The
and savings plans. . investment policies
. section spells out the
In order to achieve its . types of mutual funds in
investment objective, each Fund . which each Fund invests
typically invests a percentage of . in attempting to meet
its assets within predetermined . its investment objective.
percentage ranges in certain of ...........................
the Underlying Portfolios, which
are separately-managed series of the following investment
companies: SEI Institutional Managed Trust ("SIMT"), SEI
International Trust ("SIT") and SEI Liquid Asset Trust ("SLAT"
and, together with SIMT and SIT, the "Underlying Trusts"). The
percentages reflect the extent to which each Fund will invest
in the particular market segment represented by each
Underlying Portfolio, and the varying degrees of potential
investment risk and reward represented by each Fund's
investments in those market segments and their corresponding
Underlying Portfolios. The Adviser may alter these percentage
ranges when it deems appropriate. The assets of each Fund will
be allocated among each of the Underlying Portfolios in
accordance with its investment objective, the Adviser's
outlook for the economy, the financial markets and the
relative market valuations of the Underlying Portfolios. In
addition, in order to meet liquidity needs or for temporary
defensive purposes, each Fund may invest its assets directly
in cash, money market securities, or other instruments,
including stock or bond index futures and options thereon. The
investment objective of each Fund is set forth below. Each
Fund's investment objective is a fundamental policy, and may
not be changed without shareholder approval. There can be no
assurance that the Funds will achieve their stated objectives.

6
<PAGE>

DIVERSIFIED The Diversified Conservative Income Fund seeks to provide
CONSERVATIVE current income and an opportunity for capital appreciation
INCOME FUND through limited participation in domestic equity markets. In
general, relative to the other Funds, the Diversified
Conservative Income Fund should offer investors the
potential for a medium to high level of income and the
potential for a medium level of capital growth, while
subjecting investors to a medium level of principal risk.
The Fund will invest in the following Underlying Portfolios
within the percentage ranges set forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE (PERCENT OF THE
UNDERLYING PORTFOLIO DIVERSIFIED CONSERVATIVE INCOME FUND'S ASSETS)
------------------------------------------------------------------------
<S> <C>
SIMT Large Cap Growth 5-20%
SIMT Large Cap Value 5-20%
SIMT Small Cap Growth 0-15%
SIMT Small Cap Value 0-15%
SIMT Core Fixed Income 50-65%
SLAT Prime Obligation 0-30%
------------------------------------------------------------------------
</TABLE>

DIVERSIFIED The Diversified Conservative Fund seeks to provide current
CONSERVATIVE FUND income with the opportunity for capital appreciation through
limited participation in the domestic and international
equity markets. In general, relative to the other Funds, the
Diversified Conservative Fund should offer investors the
potential for a medium level of income and the potential for
a low to medium level of capital growth, while subjecting
investors to a medium level of principal risk. The Fund will
invest in the following Underlying Portfolios within the
percentage ranges set forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE (PERCENT OF THE
UNDERLYING PORTFOLIO DIVERSIFIED CONSERVATIVE FUND'S ASSETS)
------------------------------------------------------------------------
<S> <C>
SIMT Large Cap Growth 5-20%
SIMT Large Cap Value 5-20%
SIMT Small Cap Growth 0-15%
SIMT Small Cap Value 0-15%
SIT International Equity 5-20%
SIMT Core Fixed Income 40-55%
SIT International Fixed Income 10-25%
SLAT Prime Obligation 0-30%
------------------------------------------------------------------------
</TABLE>

7
<PAGE>

DIVERSIFIED The Diversified Moderate Growth Fund seeks to provide long-
MODERATE term capital appreciation with a limited level of current
GROWTH FUND income. In general, relative to the other Funds, the
Diversified Moderate Growth Fund should offer investors the
potential for a medium level of income and the potential for
a medium level of capital growth, while subjecting investors
to a medium level of principal risk. The Fund will invest in
the following Underlying Portfolios within the percentage
ranges set forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE (PERCENT OF THE
UNDERLYING PORTFOLIO DIVERSIFIED MODERATE GROWTH FUND'S ASSETS)
------------------------------------------------------------------------
<S> <C>
SIMT Large Cap Growth 10-25%
SIMT Large Cap Value 10-25%
SIMT Small Cap Growth 0-15%
SIMT Small Cap Value 0-15%
SIT International Equity 10-25%
SIMT Core Fixed Income 25-40%
SIT International Fixed Income 5-20%
SLAT Prime Obligation 0-30%
------------------------------------------------------------------------
</TABLE>

DIVERSIFIED The Diversified Growth Fund seeks to provide long-term
GROWTH FUND capital appreciation. Current income is a secondary
consideration. In general, relative to the other Funds, the
Diversified Growth Fund should offer investors the potential
for a low to medium level of income and the potential for a
medium to high level of capital growth, while subjecting
investors to a higher level of principal risk. The Fund will
invest in the following Underlying Portfolios within the
percentage ranges set forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE (PERCENT OF THE
UNDERLYING PORTFOLIO DIVERSIFIED GROWTH FUND'S ASSETS)
---------------------------------------------------------------
<S> <C>
SIMT Large Cap Growth 15-30%
SIMT Large Cap Value 15-30%
SIMT Small Cap Growth 0-15%
SIMT Small Cap Value 0-15%
SIT International Equity 10-25%
SIT Emerging Markets Equity 5-20%
SIMT Core Fixed Income 5-20%
SIMT High Yield Bond 0-15%
SIT International Fixed Income 0-15%
SLAT Prime Obligation 0-30%
---------------------------------------------------------------
</TABLE>

8
<PAGE>

DIVERSIFIED The Diversified U.S. Stock Fund seeks to provide long-term
U.S. STOCK FUND capital appreciation through a diversified domestic equity
strategy. Current income is an incidental consideration. In
general, relative to the other Funds, the Diversified U.S.
Stock Fund should offer investors the potential for a lower
level of income and the potential for a high level of
capital growth, while subjecting investors to a medium to
high level of principal risk. The Fund will invest in the
following Underlying Portfolios within the percentage ranges
set forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE (PERCENT OF THE
UNDERLYING PORTFOLIO DIVERSIFIED U.S. STOCK FUND'S ASSETS)
--------------------------------------------------------------
<S> <C>
SIMT Large Cap Growth 30-45%
SIMT Large Cap Value 30-45%
SIMT Small Cap Growth 5-20%
SIMT Small Cap Value 5-20%
SLAT Prime Obligation 0-30%
--------------------------------------------------------------
</TABLE>

GENERAL INVESTMENT
POLICIES OF THE FUNDS __________________________________________________________

The Funds will attempt to achieve their investment
objectives by purchasing shares of the Underlying Portfolios
within the percentage ranges set forth above. The SEC has
issued an exemptive order to the Trust dated December 20,
1995 (the "Order"), permitting the Funds to acquire up to
100% of the Shares of any of the Underlying Portfolios under
certain conditions. Absent this Order, the Investment
Company Act of 1940 (the "1940 Act") would substantially
limit the ability of the Funds and Underlying Portfolios to
engage in these transactions.

In addition to purchasing shares of the Underlying
Portfolios, the Funds may use futures contracts and options
in order to remain effectively fully invested in proportions
consistent with SFM's current asset allocation strategy in
an efficient and cost effective manner. Specifically, each
Fund may enter into futures contracts and options thereon
provided that the aggregate deposits required on these
contracts do not exceed 5% of the Fund's total assets.

Futures contracts and options may also be used to
reallocate the Funds' assets among asset categories while
minimizing transaction costs, to maintain cash reserves
while simulating full investment, to facilitate trading or
to seek higher investment returns or simulate full
investment when a futures contract is priced attractively or
is otherwise considered more advantageous than the
underlying security or index. The Funds will not use futures
contracts or options to leverage their portfolios.

In order to meet liquidity needs, or for temporary
defensive purposes, the Funds may purchase money market
securities or other short-term debt instruments rated in one
of the top two categories by a nationally recognized
statistical rating organization ("NRSRO") at the time of
purchase or, if not rated, determined to be of comparable

9
<PAGE>

quality by the Adviser. To the extent that a Fund is engaged
in temporary defensive investing, it will not be pursuing
its investment objective. See "Description of Permitted
Investments and Risk Factors of the Underlying Portfolios."

RISK FACTORS
OF THE FUNDS ___________________________________________________________________

Prospective investors in the Funds should consider the
following risk factors:

. Any investment in a mutual fund involves risk and,
although the Funds invest in a number of Underlying
Portfolios, this practice does not eliminate investment
risk;

. Investing in the Underlying Portfolios through the Funds
involves certain additional expenses and tax results that
would not be present in a direct investment in the
Underlying Portfolios;

. Under certain circumstances, an Underlying Portfolio may
determine to make payment of a redemption request by a
Fund wholly or partly by a distribution in kind of
securities from its portfolio, instead of cash, in
accordance with the rules of the SEC. In such cases, the
Funds may hold securities distributed by an Underlying
Portfolio until the Adviser determines that it is
appropriate to dispose of such securities;

. Certain Underlying Portfolios may: invest a portion of
their assets in foreign securities; enter into forward
currency transactions; lend their portfolio securities;
enter into stock index, interest rate and currency futures
contracts, and options on such contracts; engage in other
types of options transactions; make short sales; purchase
zero coupon and payment-in-kind bonds; and engage in
various other investment practices. Further information
about these investment policies and practices can be found
under "Investment Objectives and Policies of the
Underlying Portfolios" and "Description of Permitted
Investments and Risk Factors of the Underlying Portfolios"
in this Prospectus and in the Trust's Statement of
Additional Information, and in the prospectuses of each of
the Underlying Portfolios;

. The Diversified Growth Fund can invest as much as 15% of
its assets in the SIMT High Yield Bond Portfolio. As a
result, this Fund will be subject to the risks associated
with high yield investing;

. Certain Funds invest at least 5% and can invest as much as
25% of their assets in the SIT International Fixed Income
Portfolio, which invests primarily in foreign fixed-income
securities. Certain other Funds invest at least 15% and
can invest as much as 45% of their assets in Underlying
Portfolios that invest primarily in foreign equity
securities. These investments will subject the Funds to
risks associated with investing in foreign securities; and

10
<PAGE>

. The officers and trustees of the Trust also serve as
officers and trustees of the Underlying Trusts. In
addition, the Adviser to each Fund serves as investment
adviser to certain of the Underlying Portfolios. Conflicts
may arise as these persons seek to fulfill their fiduciary
responsibilities at both levels.

INVESTMENT
LIMITATIONS OF
THE FUNDS ______________________________________________________________________

The following investment limitations are fundamental for
each Fund, and may not be changed without shareholder
approval.

1. Each Fund will concentrate its investments in mutual fund
shares.
2. Each Fund may borrow money in an amount up to 33 1/3% of
the value of its total assets, provided that, for purposes
of this limitation, investment strategies which either
obligate a Fund to purchase securities or require a Fund
to segregate assets are not considered to be borrowings.
Except where a Fund has borrowed money for temporary
purposes in amounts not exceeding 5% of its assets, asset
coverage of 300% is required for all borrowings.

Each Fund is subject to further fundamental and
non-fundamental limitations which are described in the Trust's
Statement of Additional Information.

PORTFOLIO TURNOVER
OF THE FUNDS ___________________________________________________________________

Each Fund's portfolio turnover rate (i.e., the rate at which
the Fund buys and sells shares of the Underlying Portfolios)
is not expected to exceed 10%. Asset reallocation decisions
typically will occur only once every quarter. However, if
market conditions warrant, SFM may make more frequent
reallocation decisions, which will result in a higher
portfolio turnover rate. The Funds will purchase or sell
shares of the Underlying Portfolios: (a) to accommodate
purchases and redemptions of each Fund's shares; (b) in
response to market or other economic conditions; and (c) to
maintain or modify the allocation of each Fund's assets
among the Underlying Portfolios within the percentage limits
described above or as altered by SFM from time to time. It
is important to note, however, that the portfolio turnover
rate of certain of the Underlying Portfolios (i.e., the rate
at which the Underlying Portfolios buy and sell securities),
may exceed 100%. Such a turnover rate may result in higher
transaction costs and may result in additional tax
consequences for shareholders (including the Funds).

11
<PAGE>

INVESTMENT GOALS
OF THE UNDERLYING
PORTFOLIOS _____________________________________________________________________

The following table describes the investment goal of each
Underlying Portfolio:

<TABLE>
<CAPTION>
UNDERLYING PORTFOLIO INVESTMENT GOAL
---------------------------------------------------------------------------
<S> <C>
SIMT Large Cap Growth Growth of Capital
SIMT Large Cap Value Growth of Capital and Income
SIMT Small Cap Growth Aggressive Growth of Capital
SIMT Small Cap Value Aggressive Growth of Capital and Income
SIT International Equity Growth of Capital
SIT Emerging Markets Equity Aggressive Growth of Capital
SIMT Core Fixed Income Income
SIMT High Yield Bond Aggressive Income
SIT International Fixed Income Income
SLAT Prime Obligation Price Stability
---------------------------------------------------------------------------
</TABLE>

INVESTMENT OBJECTIVES
AND POLICIES OF THE
UNDERLYING PORTFOLIOS __________________________________________________________

Set forth below are the investment objectives and policies
that apply to the Underlying Portfolios. The investment
objective of each Underlying Portfolio is a fundamental
policy of that Portfolio, and may not be changed without
approval of such Portfolio's shareholders, which may include
the Fund. Certain general investment policies that apply to
two or more of the Underlying Portfolios are set forth in
the "General Investment Policies of the Underlying
Portfolios" section, below. There can be no assurance that
the Underlying Portfolios will achieve their respective
investment objectives.

SIMT LARGE CAP The SIMT Large Cap Growth Portfolio seeks to provide capital
GROWTH PORTFOLIO appreciation. Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in equity
securities of large companies (i.e., companies with market
capitalizations of more than $1 billion) which, in the
advisers' opinion, possess significant growth potential. Any
remaining assets may be invested in fixed income securities
or in equity securities of smaller companies that the
Portfolio's advisers believe are appropriate in light of the
Portfolio's objective. Equity securities include common
stock, preferred stock, warrants or rights to subscribe to
common stock and, in general, any security that is
convertible into or exchangeable for common stock. Fixed
income securities must be rated investment grade or better,
i.e., rated at least BBB by Standard & Poor's Corporation
("S&P") or Baa by Moody's Investors Service, Inc.
("Moody's").

12
<PAGE>

SIMT LARGE CAP The SIMT Large Cap Value Portfolio seeks to provide long-
VALUE PORTFOLIO term growth of capital and income. Under normal market
conditions, the Portfolio will invest at least 65% of its
total assets in a diversified portfolio of high quality,
income-producing common stocks of large companies (i.e.,
companies with market capitalizations of more than $1
billion) which, in the advisers' opinion, are undervalued in
the marketplace at the time of purchase. In general, the
advisers characterize high quality securities as those that
have above-average reinvestment rates. The advisers also
consider other factors, such as earnings and dividend growth
prospects as well as industry outlook and market share.
Equity securities include common stock, preferred stock,
warrants or rights to subscribe to common stock and, in
general, any security that is convertible into or
exchangeable for common stock. Any remaining assets may be
invested in investment grade fixed income securities.

SIMT SMALL CAP The SIMT Small Cap Growth Portfolio seeks to provide long-
GROWTH PORTFOLIO term capital appreciation. Under normal market conditions,
the Portfolio will invest at least 65% of its total assets
in the equity securities of smaller growth companies (i.e.,
companies with market capitalizations of less than $1
billion) which, in the advisers' opinion, are in an early
stage or transitional point in their development and have
demonstrated or have the potential for above average capital
growth. The advisers will select companies that have the
potential to gain market share in their industry, achieve
and maintain high and consistent profitability or produce
increases in earnings. The advisers also seek companies with
strong company management and superior fundamental strength.

Small capitalization companies have the potential to show
earnings growth over time that is well above the growth rate
of the overall economy. Any remaining assets may be invested
in the equity securities of more established companies that
the advisers believe may offer strong capital appreciation
potential due to their relative market position, anticipated
earnings growth, changes in management or other similar
opportunities. Equity securities include common stock,
preferred stock, warrants and rights to subscribe to common
stock and, in general, any security that is convertible into
or exchangeable for common stock.

In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest all or a
portion of its assets in common stocks of larger, more
established companies, fixed income securities, cash or
money market securities. Fixed income securities will only
be purchased if they are rated investment grade or better.
Investment grade bonds include securities rated at least BBB
by S&P or Baa by Moody's. Money market securities will only
be purchased if they have been given one of the two top
ratings by a nationally recognized statistical rating
organization ("NRSRO"), or if not rated, determined to be of
comparable quality by the Portfolio's advisers.

SIMT SMALL CAP The SIMT Small Cap Value Portfolio seeks to provide capital
VALUE PORTFOLIO appreciation. Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in the equity
securities of smaller companies (i.e., companies with market
capitalizations of less than

13
<PAGE>

$1 billion) which, in the advisers' opinion, have prices
that appear low relative to certain fundamental
characteristics such as earnings, book value, or return on
equity. Any remaining assets may be invested in fixed income
securities or equity securities of larger, more established
companies that the Portfolio's advisers believe are
appropriate in light of the Portfolio's objective. Equity
securities include common stock, preferred stock, warrants
and rights to subscribe to common stock and, in general, any
security that is convertible into or exchangeable for common
stock. Fixed income securities must be rated investment
grade or better, i.e., rated at least BBB by S&P or Baa by
Moody's.

SIT INTERNATIONAL The SIT International Equity Portfolio seeks to provide
EQUITY PORTFOLIO long-term capital appreciation by investing primarily in a
diversified portfolio of equity securities of non-U.S.
issuers. Under normal circumstances, at least 65% of the
Portfolio's assets will be invested in equity securities of
non-U.S. issuers located in at least three countries other
than the United States. The Portfolio may enter into forward
foreign currency contracts as a hedge against possible
variations in foreign exchange rates. A forward foreign
currency contract is a commitment to purchase or sell a
specified currency, at a specified future date, at a
specified price. The Portfolio may enter into forward
foreign currency contracts to hedge a specific security
transaction or to hedge a portfolio position. These
contracts may be bought or sold to protect the Portfolio, to
some degree, against a possible loss resulting from an
adverse change in the relationship between foreign
currencies and the U.S. dollar. The Portfolio may also
invest in options on currencies.

Securities of non-U.S. issuers purchased by the Portfolio
may be purchased in foreign markets, on U.S. registered
exchanges, the over-the-counter market or in the form of
sponsored or unsponsored American Depositary Receipts
("ADRs") traded on registered exchanges or NASDAQ or
sponsored or unsponsored European Depositary Receipts
("EDRs"), Continental Depositary Receipts ("CDRs") or Global
Depositary Receipts ("GDRs"). The Portfolio will typically
invest in equity securities listed on recognized foreign
exchanges, but may also invest in securities traded in over-
the-counter markets. The Portfolio expects its investments
to emphasize both large and intermediate capitalization
companies.

The Portfolio expects to be fully invested in its primary
investments described above, but may invest up to 35% of its
total assets in U.S. or non-U.S. cash reserves; money market
instruments; swaps; options on securities, non-U.S. indices
and currencies; futures contracts, including stock index
futures contracts; and options on futures contracts.

Permissible money market instruments include securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities; securities issued or
guaranteed by non-U.S. governments, which are rated at time
of purchase A or higher by S&P or Moody's, or are determined
by the advisers to be of comparable quality; repurchase
agreements; certificates of deposit and bankers' acceptances
issued by banks or savings and loan associations having net
assets of at least $500 million as of the end of their most
recent fiscal year; high-grade commercial paper; and other
long- and

14
<PAGE>

short-term debt instruments which are rated at the time of
purchase A or higher by S&P or Moody's and which, with
respect to such long-term debt instruments, are within 397
days of their maturity.

The Portfolio is also permitted to acquire floating and
variable rate securities, purchase securities on a when-
issued or delayed delivery basis and invest up to 10% of its
total assets in illiquid securities. Although permitted to
do so, the Portfolio does not currently intend to invest in
securities issued by passive foreign investment companies or
to engage in securities lending.

For temporary defensive purposes, when an adviser
determines that market conditions warrant, the Portfolio may
invest up to 50% of its assets in the U.S. and non- U.S.
money market instruments described above and other U.S. and
non-U.S. long- and short-term debt instruments which are
rated BBB or higher by S&P or Baa or higher by Moody's at
the time of purchase, or are determined by the advisers to
be of comparable quality; may hold a portion of such assets
in cash; and may invest in securities of supranational
entities which are rated A or higher by S&P or Moody's at
the time of purchase, or are determined by the advisers to
be of comparable quality.

SIT EMERGING The SIT Emerging Markets Equity Portfolio seeks to provide
MARKETS EQUITY capital appreciation by investing primarily in a diversified
PORTFOLIO portfolio of equity securities of emerging market issuers.
Under normal circumstances, at least 65% of the Portfolio's
assets will be invested in equity securities of emerging
market issuers. Under normal market conditions, the
Portfolio maintains investments in at least six emerging
market countries and does not invest more than 35% of its
total assets in any one emerging market country. For these
purposes, the Portfolio defines an emerging market country
as any country the economy and market of which the World
Bank or the United Nations considers to be emerging or
developing. The Portfolio's advisers consider emerging
market issuers to be companies the securities of which are
principally traded in the capital markets of emerging market
countries: that derive at least 50% of their total revenue
from either goods produced or services rendered in emerging
market countries, regardless of where the securities of such
companies are principally traded; or that are organized
under the laws of and have a principal office in an emerging
market country. In addition to its primary investments,
described above, the Portfolio may invest up to 35% of its
total assets in debt securities, including up to 5% of its
total assets in debt securities rated below investment
grade. These debt securities will include debt securities of
emerging market companies. 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.

The Portfolio may invest in certain debt securities
issued by the governments of emerging market countries that
are or may be eligible for conversion into investments in
emerging market companies under debt conversion programs
sponsored by such governments.

15
<PAGE>

The Portfolio may invest up to 10% of its total assets in
illiquid securities. The Portfolio's advisers believe that
carefully selected investments in joint ventures,
cooperatives, partnerships, private placements, unlisted
securities and other similar situations (collectively,
"special situations") could enhance the Portfolio's capital
appreciation potential. Investments in special situations
may be illiquid, as determined by the Portfolio's advisers
based on criteria approved by the Portfolio's Board of
Trustees. To the extent these investments are deemed
illiquid, the Portfolio's investment in them will be
consistent with its 10% restriction on investment in
illiquid securities.

The Portfolio may invest up to 10% of its total assets in
shares of other investment companies.

The Portfolio may invest in futures contracts and
purchase securities on a when-issued or delayed delivery
basis. The Portfolio may also purchase and write options to
buy or sell futures contracts.

For temporary defensive purposes, when the advisers
determine that market conditions warrant, the Portfolio may
invest up to 20% of its total assets in the equity
securities of companies constituting the Morgan Stanley
Capital International Europe, Australia, Far East Index (the
"EAFE Index"). These companies typically have larger average
market capitalizations than the emerging market companies in
which the Portfolio generally invests.

The SIT Emerging Markets Equity Portfolio uses a
proprietary, quantitative asset allocation model created by
its sub-adviser. This model employs mean-variance
optimization, a process used in developed markets based on
modern portfolio theory and statistics. Mean-variance
optimization helps determine the percentage of assets to
invest in each country to maximize expected returns for a
given risk level. The Portfolio invests in those countries
that the advisers expect to have the highest risk/reward
tradeoff when incorporated into a total portfolio context.
The advisers attempt to construct a portfolio of emerging
market investments that approximates the risk level of an
internationally diversified portfolio of securities in
developed markets. This "top-down" country selection is
combined with "bottom-up" fundamental industry analysis and
stock selection based on original research, publicly
available information, and company visits.

The Portfolio's investments in emerging markets can be
considered speculative, and therefore may offer higher
potential for gains and losses than developed markets of the
world. With respect to any emerging country, there is the
greater potential for nationalization, expropriation or
confiscatory taxation, political changes, government
regulation, social instability or diplomatic developments
(including war) which could affect adversely the economies
of such countries or investments in such countries. The
economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have
been and may continue to be adversely affected by trade
barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or
negotiated by the countries with which they trade.

16
<PAGE>

SIMT CORE FIXED The SIMT Core Fixed Income Portfolio seeks to provide
INCOME PORTFOLIO current income consistent with the preservation of capital.
Under normal market conditions, the Portfolio will invest at
least 65% of its total assets in fixed income securities
that are rated investment grade or better, i.e., rated in
one of the four highest rating categories by an NRSRO at the
time of purchase, or, if not rated, determined to be of
comparable quality by the advisers. Fixed income securities
in which the Portfolio may invest consist of: (i) corporate
bonds and debentures; (ii) obligations issued by the United
States Government, its agencies and instrumentalities; (iii)
municipal securities of issuers located in all fifty states,
the District of Columbia, Puerto Rico and other U.S.
territories and possessions, consisting of municipal bond,
municipal notes, tax-exempt commercial paper and municipal
lease obligations; (iv) receipts involving U.S. Treasury
obligations; (v) mortgage-backed securities; (vi) asset-
backed securities; and (vii) zero coupon, pay-in-kind or
deferred payment securities.

Any remaining assets may be invested in: (i) interest-
only and principal-only components of mortgage-backed
securities; (ii) mortgage dollar rolls; (iii) securities
issued on a when-issued and delayed-delivery basis,
including TBA mortgage-backed securities; (iv) warrants; (v)
money market securities; and (vi) Yankee obligations. In
addition, the Portfolio may purchase or write options,
futures (including futures on U.S. Treasury obligations and
Eurodollar instruments) and options on futures.

Duration is a measure of the expected life of a fixed
income security on a cash flow basis. Most debt obligations
provide interest payments and a final payment at maturity.
Some also have put or call provisions that allow the
security to be redeemed at specified dates prior to
maturity. Duration incorporates yield, coupon interest
payments, final maturity and call features into a single
measure. The advisers therefore consider it a more accurate
measure of a security's expected life and sensitivity to
interest rate changes than is the security's term to
maturity.

The Portfolio invests in a portfolio with a dollar-
weighted average duration that will, under normal market
conditions, stay within plus or minus 20% of what the
advisers believe to be the average duration of the domestic
bond market as a whole. The advisers base their analysis of
the average duration of the domestic bond market on bond
market indices which they believe to be representative. The
advisers currently use the Lehman Aggregate Bond Index for
this purpose.

SIMT HIGH YIELD The SIMT High Yield Bond Portfolio seeks to maximize total
BOND PORTFOLIO return. Under normal market conditions, the Portfolio will
invest at least 65% of its total assets in fixed-income
securities that are rated below investment grade (i.e.,
rated below the top four rating categories by an NRSRO at
the time of purchase), or, if not rated, are determined to
be of comparable quality by the Portfolio's advisers. Below
investment grade securities are commonly referred to as
"junk bonds," and generally entail increased credit and
market risk. The achievement of the Portfolio's investment
objective may be more dependent on the advisers' own credit
analysis than would be the case if the Portfolio invested in
higher

17
<PAGE>

rated securities. There is no bottom limit on the ratings of
high yield securities that may be purchased or held by the
Portfolio.

The Portfolio may invest in all types of fixed income
securities issued by domestic and 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 Portfolio not invested in the fixed
income securities described above may be invested in: (i)
convertible securities; (ii) preferred stocks; (iii) equity
securities; (vi) investment grade fixed income securities;
(v) money market securities; (vi) securities issued on a
when-issued and delayed-delivery basis, including TBA
mortgage-backed securities; (vii) forward foreign currency
contracts; and (viii) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures and options
on futures. The advisers may vary the average maturity of
the securities in the Portfolio without limit, and there is
no restriction on the maturity of any individual security.

The securities purchased by the Portfolio may be rated in
the lowest rating category for fixed income securities.
Bonds rated C by Moody's 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. Bonds are rated D by S&P when the issue
is in payment default, or the obligor has filed for
bankruptcy. The D rating is used when interest or principal
payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period.
The ratings established by each NRSRO represents its
opinions of the safety of principal and interest payments
(and not the market risk) of bonds and other debt securities
they undertake to rate at the time of issuance. Ratings are
not absolute standards of quality and may not reflect
changes in an issuer's creditworthiness. Accordingly,
although the Portfolio's advisers will consider ratings,
they will perform their own analyses and will not rely
principally on ratings. The advisers will consider, among
other things, the price of the security and the financial
history and condition, the prospects and the management of
an issuer in selecting securities for the Portfolio.

RISK FACTORS RELATING TO INVESTING IN LOWER RATED
SECURITIES--The SIMT High Yield Bond Portfolio may invest in
lower rated securities. Fixed income securities are subject
to the risk of an issuer's ability to meet principal and
interest payments on the obligation (credit risk), and may
also be subject to price volatility due to such factors as
interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity
(market risk). Lower rated or unrated (i.e., high yield)
securities are more likely to react to developments
affecting market and credit risk than are more highly rated
securities, which primarily react to movements in the
general level of interest rates. The market values of fixed-
income securities tend to vary inversely with the level of
interest rates. Yields and market values of high yield
securities will fluctuate over time,

18
<PAGE>

reflecting not only changing interest rates but the market's
perception of credit quality and the outlook for economic
growth. When economic conditions appear to be deteriorating,
medium to lower rated securities may decline in value due to
heightened concern over credit quality, regardless of the
prevailing interest rates. Investors should carefully
consider the relative risks of investing in high yield
securities and understand that such securities are not
generally meant for short-term investing.

The high yield market is relatively new and its growth
has paralleled a long period of economic expansion and an
increase in merger, acquisition and leveraged buyout
activity. Adverse economic developments can disrupt the
market for high yield securities, and severely affect the
ability of issuers, especially highly leveraged issuers, to
service their debt obligations or to repay their obligations
upon maturity which may lead to a higher incidence of
default on such securities. In addition, the secondary
market for high yield securities, which is concentrated in
relatively few market makers, may not be as liquid as the
secondary market for more highly rated securities. As a
result, the Portfolio could find it more difficult to sell
these securities or may be able to sell the securities only
at prices lower than if such securities were widely traded.
Furthermore, the Portfolio may experience difficulty in
valuing certain securities at certain times. Prices realized
upon the sale of such lower rated or unrated securities,
under these circumstances, may be less than the prices used
in calculating the Portfolio's net asset value.

Lower rated or unrated debt obligations also present
risks based on payment expectations. If an issuer calls an
obligation for redemption, the Portfolio may have to replace
the security with a lower yielding security, resulting in a
decreased return for investors. If the Portfolio experiences
unexpected net redemptions, it may be forced to sell its
higher rated securities, resulting in a decline in the
overall credit quality of the Portfolio's investment
portfolio and increasing the exposure of the Portfolio to
the risks of high yield securities.

SIT INTERNATIONAL The SIT International Fixed Income Portfolio seeks to
FIXED INCOME provide capital appreciation and current income through
PORTFOLIO investment primarily in high quality, non-U.S. dollar
denominated government and corporate fixed income securities
or debt obligations. Under normal circumstances, at least
65% of the Portfolio's assets will be invested in high
quality foreign government and foreign corporate fixed
income securities or debt obligations of issuers located in
at least three countries other than the United States.

The fixed income securities in which the SIT
International Fixed Income Portfolio may invest are: (i)
fixed income securities issued or guaranteed by a foreign
government or one of its agencies, authorities,
instrumentalities or political subdivisions; (ii) fixed
income securities issued or guaranteed by supranational
entities; (iii) fixed income securities issued by foreign
corporations; (iv) convertible securities; and (v) fixed
income securities issued by foreign banks or bank holding
companies. All such investments will be in high quality
securities denominated in various currencies, including the
European Currency Unit.

19
<PAGE>

High quality securities are rated in one of the highest four
rating categories by an NRSRO or, of comparable quality at
the time of purchase as determined by the adviser.

Any remaining assets of the Portfolio will be invested in
any of the fixed income securities described above,
obligations issued or guaranteed as to principal and
interest by the United States Government, its agencies or
instrumentalities ("U.S. Government Securities"), swaps,
options and futures. The Portfolio may also purchase and
write options to buy or sell futures contracts. The
Portfolio also may enter into forward currency contracts,
purchase securities on a when-issued or delayed delivery
basis and engage in short selling. Furthermore, although the
Portfolio will concentrate its investments in relatively
developed countries, the Portfolio may invest up to 5% of
its assets in similar securities or debt obligations that
are denominated in the currencies of developing countries
and that are of comparable quality to such securities and
debt obligations at the time of purchase as determined by
the adviser.

There are no restrictions on the average maturity of the
securities held by the Portfolio or the maturity of any
single instrument. Maturities may vary widely depending on
the adviser's assessment of interest rate trends and other
economic and market factors. In the event a security owned
by the Portfolio is downgraded below the rating categories
discussed above, the adviser will review the situation and
take appropriate action with regard to the security.

The Portfolio is a non-diversified investment company, as
defined in the 1940 Act, which means that more than 5% of
its assets may be invested in one or more issuers, although
the adviser does not intend to invest more than 5% of its
assets in any single issuer with the exception of securities
which are issued or guaranteed by a national government.
Since a relatively high percentage of assets of the
Portfolio may be invested in the obligations of a limited
number of issuers, the value of shares of the Portfolio may
be more susceptible to any single economic, political or
regulatory occurrence than the shares of a diversified
investment company would be. The Portfolio 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 Portfolio'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 Portfolio'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
Portfolio's total assets and to not more than 10% of the
outstanding voting securities of such issuer.

For temporary defensive purposes, when the adviser
determines that market conditions warrant, the Portfolio may
invest up to 100% of its assets in U.S. dollar denominated
fixed income securities or debt obligations and the
following domestic and foreign money market instruments:
government obligations, certificates of deposit,

20
<PAGE>

bankers' acceptances, time deposits, commercial paper,
short-term corporate debt issues and repurchase agreements.
The Portfolio may hold a portion of its assets in cash for
liquidity purposes.

SLAT PRIME The SLAT Prime Obligation Portfolio seeks to preserve
OBLIGATION principal value and maintain a high degree of liquidity
PORTFOLIO while providing current income. The Portfolio invests
exclusively in: (i) 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 Adviser to be of comparable
quality; (ii) obligations (including certificates of
deposit, time deposits, bankers' acceptances and bank notes)
of U.S. commercial banks that are members of the Federal
Reserve System or the Federal Deposit Insurance Corporation
or savings and loan institutions, which banks or
institutions have total assets of $500 million or more as
shown on their most recent public financial statements at
the time of investment, provided that such obligations are
rated in the top two short-term rating categories by two or
more NRSROs, or one NRSRO if only one NRSRO has rated the
security at the time of investment or, if not rated,
determined by the adviser to be of comparable quality; (iii)
short-term corporate obligations rated AAA or AA by S&P or
Aaa or Aa by Moody's at the time of investment or, if not
rated, determined by the adviser to be of comparable
quality; (iv) short-term obligations issued by state and
local governmental issuers, which are rated, at the time of
investment, by at least two NRSROs in one of the two highest
municipal bond rating categories, and which carry yields
that are competitive with those of other types of money
market instruments of comparable quality; (v) U.S. Treasury
obligations or obligations issued or guaranteed as to
principal and interest by agencies or instrumentalities of
the U.S. Government; and (vi) repurchase agreements
involving any of the foregoing obligations.

The Portfolio may invest in restricted securities and may
invest up to 10% of its net assets in illiquid securities.
Rule 144A Securities and Section 4(2) commercial paper that
meet the criteria established by the Board of Trustees of
the Trust may be considered liquid.

The Portfolio may only purchase securities with a
remaining maturity of 365 days or less, and, as a matter of
non-fundamental policy, will maintain a dollar-weighted
average portfolio maturity of 90 days or less. An investment
in the Portfolio is neither insured or guaranteed by the
U.S. Government and there can be no assurance that the
Portfolio will be able to maintain a stable net asset value
of $1.00 per share.

21
<PAGE>

GENERAL INVESTMENT
POLICIES OF THE
UNDERLYING PORTFOLIOS __________________________________________________________

Borrowing Each Underlying Portfolio, except the SLAT Prime Obligation
Portfolio, may borrow money to meet redemptions or for
temporary or emergency purposes. An Underlying Portfolio
will not purchase securities while its borrowings exceed 5%
of its total assets.

Common Stocks Each Underlying Portfolio, except the SLAT Prime Obligation,
SIMT Core Fixed Income, SIMT High Yield Bond and SIT
International Fixed Income Portfolios, will invest in common
stocks; provided, however, that the Underlying Portfolios
may only invest in such securities if they are listed on
registered exchanges or actively traded in the over-the-
counter market.

Forward Foreign The Underlying Portfolios, except the SIMT Core Fixed
Currency Income, SIMT Large Cap Growth, SIMT Small Cap Growth, SIMT
Contracts Large Cap Value, SIMT Small Cap Value, and SLAT Prime
Obligation Portfolios may purchase forward foreign currency
contracts.

Illiquid Each Underlying Portfolio's investment in illiquid
Securities securities will be limited to 15% of its net assets (10%
with respect to the SLAT Prime Obligation, SIT International
Equity, SIT Emerging Markets Equity, and SIT International
Fixed Income Portfolios).

Investment Each Underlying Portfolio, except the SLAT Prime Obligation
Company Portfolio, may purchase investment company securities, which
Securities will result in additional layering of expenses. However,
there are legal limits on the amount of such securities that
may be acquired by an Underlying Portfolio. As a condition
to the Order that was granted to the Trust by the SEC, no
Underlying Portfolio in which a Fund invests may purchase:
(i) more than 3 percent of the total outstanding voting
securities of another registered investment company; (ii)
securities issued by such investment company if such
securities have an aggregate value of more than 5 percent of
the total assets of such Underlying Portfolio; or (iii)
securities issued by such investment company and all other
investment companies if such securities have an aggregate
value of more than 10 percent of the total assets of such
Underlying Portfolio.

Investment Each Underlying Portfolio, except the SLAT Prime Obligation
Grade Debt Portfolio, may invest in investment grade debt securities.
Securities Interest payments and principal security for securities
rated in the fourth highest rating category (i.e., BBB by
S&P or Baa by Moody's) appear adequate for the present, but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Such securities lack outstanding investment characteristics
and in fact have speculative characteristics as well.

Money Market In order to meet liquidity needs or for temporary defensive
Instruments purposes, the Underlying Portfolios may hold cash reserves
and invest in money market instruments (including securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, repurchase agreements, certificates of
deposit and bankers' acceptances issued by banks or savings
and loan associations having net assets of at least $500
million as of the end of

22
<PAGE>

their most recent fiscal year, high-grade commercial paper
and other short-term debt securities) rated at the time of
purchase in the top two categories by an NRSRO, or, if not
rated, determined by the adviser to be of comparable quality
at the time of purchase. To the extent any Underlying
Portfolio is engaged in temporary defensive investing, it
will not be pursuing its investment objective.

Options and Each Underlying Portfolio, except the SLAT Prime Obligation
Futures Portfolio, may purchase or sell options, futures and options
on futures. Risks associated with investing in options and
futures may include lack of a liquid secondary market,
trading restrictions which may be imposed by an exchange and
government regulations which may restrict trading.

Securities Each Underlying Portfolio, except the SLAT Prime Obligation
Lending Portfolio, may lend its securities to qualified investors
for the purpose of realizing additional income.

U.S. Dollar Each Underlying Portfolio, except the SLAT Prime Obligation,
Denominated SIMT Small Cap Growth, and SIMT Core Fixed Income
Securities of Portfolios, may invest in U.S. dollar denominated securities
Foreign Issuers of foreign issuers, including American Depositary Receipts
that are traded on registered exchanges or listed on NASDAQ.

Warrants Consistent with any applicable state law limitations, each
Underlying Portfolio, except the SLAT Prime Obligation
Portfolio may purchase warrants in order to increase total
return.

When-Issued and The Underlying Portfolios may purchase securities on a when-
Delayed Delivery issued or delayed-delivery basis.
Securities
For additional information regarding the permitted
investments of the Underlying Portfolios see the
"Description of Permitted Investments and Risk Factors of
the Underlying Portfolios" in this Prospectus, the Trust's
Statement of Additional Information, the "Description of
Permitted Investments and Risk Factors" in the Underlying
Portfolios' Prospectuses and the "Description of Permitted
Investments" in the Underlying Portfolios' Statements of
Additional Information.

RISK FACTORS OF THE
UNDERLYING PORTFOLIOS __________________________________________________________

From time to time, the Underlying Portfolios may experience
relatively large purchases or redemptions due to asset
allocation decisions made by the Adviser for its clients,
including the Trust. These transactions may have a material
effect on the Underlying Portfolios, since Underlying
Portfolios that experience redemptions as a result of
reallocations may have to sell portfolio securities and
because Underlying 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 Underlying Portfolios 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,

23
<PAGE>

and such sales may also increase transaction costs. The
Adviser is committed to minimizing the impact of these
transactions on the Underlying Portfolios to the extent it
is consistent with pursuing the investment objectives of its
asset allocation clients. The Adviser will monitor the
impact of asset allocation decisions on the Underlying
Portfolios and, where practicable, a Fund will, at any one
time, only redeem shares of an Underlying Portfolio to
reduce its allocation to that particular Portfolio in
increments of up to 5% (e.g., from 20% to 15%), except where
such redemptions are to meet Fund shareholder redemption
requests. The Adviser will nevertheless face conflicts in
fulfilling its responsibilities because of the possible
differences between the interests of its asset allocation
clients (including shareholders of the Funds) and the
interests of the Underlying Portfolios.

FUNDAMENTAL
LIMITATIONS
OF THE UNDERLYING
PORTFOLIOS _____________________________________________________________________

Each Underlying Portfolio, except the SIT International
Fixed Income Fund, may not invest more than 5% of its assets
in the securities of a single issuer. (This limitation
applies to 75% of the assets of the SIMT and the other SIT
Portfolios, and does not apply to securities issued by the
U.S. Government, its agencies or instrumentalities.)

Each Underlying Portfolio may not purchase securities
which would cause more than 25% of such Portfolio's assets
to be invested in the securities of issuers conducting
business in the same industry. (This limitation does not
apply to investments in securities issued by the U.S.
Government, its agencies or instrumentalities and, with
respect to the SLAT Prime Obligation Portfolio, obligations
of domestic banks.)

The foregoing percentage limitations relating to the
Underlying Portfolios' investment limitations will apply at
the time of the purchase of the security by an Underlying
Portfolio. Additional fundamental and non-fundamental
investment limitations are set forth in the Underlying
Portfolios' Prospectuses and Statements of Additional
Information.

24
<PAGE>

THE ADVISER AND
MANAGER OF THE FUNDS ___________________________________________________________
...........................
Under an Investment Advisory .[SYMBOL APPEARS HERE]
Agreement with the Trust, SEI . INVESTMENT
Financial Management Corporation . ADVISER
("SFM" or the "Adviser") acts as .
the investment adviser to each . A Fund's investment
Fund. Under the Agreement, the . adviser manages the
Adviser provides its proprietary . investment activities
asset allocation services to the . and is responsible for
Funds, and exercises investment . the performance of the
discretion over the assets of the . Fund. The Adviser
Funds. The Adviser monitors the . executes investment
allocation of each Fund's assets, . strategies based on an
and is responsible for supervising . assessment of economic
compliance with each Fund's . and market conditions,
fundamental investment objective . and determines the
and policies. Although it is . appropriate allocation
expected that each Fund will . of the Fund's assets
typically be fully invested in the . among the Underlying
Underlying Portfolios, the Adviser . Portfolios.
may, from time to time, direct the ...........................
investment of each Fund's cash
balances in money market securities or in other instruments,
including stock or bond index futures and options thereon.

For its investment advisory services to the Trust, the
Adviser is entitled to a fee, which is calculated daily and
paid monthly, at an annual rate of .10% of each Fund's
average daily net assets. The Adviser has voluntarily agreed
to waive this fee for the foreseeable future. This waiver may
be terminated by the Adviser at any time in its sole
discretion.

Under an Administration Agreement with the Trust, SFM also
provides the Trust with overall management services,
regulatory reporting, all necessary office space, equipment,
personnel, and facilities, and acts as dividend disbursing
agent and shareholder servicing agent. For these services to
the Funds, SFM is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .20% of the
average daily net assets of each Fund. SFM has agreed to
waive its administration fee for the foreseeable future. This
waiver is voluntary and may be discontinued at any time in
SFM's sole discretion.

The Adviser is a wholly-owned subsidiary of SEI
Corporation ("SEI"), a financial services company located in
Wayne, Pennsylvania. The principal business address of the
Adviser is 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658. SEI was founded in 1968, and is a leading
provider of investment solutions to banks, institutional
investors, investment advisers and insurance companies.
Affiliates of the Adviser have provided consulting advice to
institutional investors for more than 20 years, including
advice regarding the selection and evaluation of investment
advisers and advice regarding asset allocation strategies.
The Adviser currently serves as manager or administrator to
more than 29 investment companies including more than 273
portfolios, which investment companies had more than $59
billion in assets as of February 29, 1996.

Investment and asset allocation decisions for the Funds
are made by a committee within SFM.

25
<PAGE>

THE ADVISERS AND
SUB-ADVISERS TO THE
UNDERLYING PORTFOLIOS __________________________________________________________
The following table sets forth information about the
advisers and sub-advisers to the Underlying Portfolios
approved by the Boards of Trustees of the Underlying Trusts
as of April 1, 1996:

<TABLE>
<CAPTION>
UNDERLYING PORTFOLIO INVESTMENT ADVISER SUB-ADVISER(S)
--------------------------------------------------------------------------------------
<S> <C> <C>
SIMT Large Cap Growth SFM Alliance Capital Management, L.P.
IDS Advisory Group Inc.
Provident Investment Counsel, Inc.
--------------------------------------------------------------------------------------
SIMT Large Cap Value SFM LSV Asset Management
Mellon Equity Associates
MERUS-UCA Capital Management
--------------------------------------------------------------------------------------
SIMT Small Cap Growth SFM Apodaca-Johnston Capital Management
Nicholas-Applegate Capital Management
Pilgrim Baxter & Associates, Ltd.
Wall Street Associates
--------------------------------------------------------------------------------------
SIMT Small Cap Value SFM Boston Partners Asset Management, L.P.
1838 Investment Advisors, L.P.
--------------------------------------------------------------------------------------
SIT International Equity SFM Acadian Asset Management, Inc.
Morgan Grenfell Investment Services,
Ltd.
Schroder Capital Management
International Ltd.
--------------------------------------------------------------------------------------
SIT Emerging Markets SFM Montgomery Asset Management, L.P.
Equity
--------------------------------------------------------------------------------------
SIMT Core Fixed Income SFM Western Asset Management Company
Firstar Investment Research &
Management Company
BlackRock Financial Management, Inc.
--------------------------------------------------------------------------------------
SIMT High Yield Bond SFM BEA Associates
--------------------------------------------------------------------------------------
SIT International Fixed Strategic Fixed None
Income Income, L.P.
--------------------------------------------------------------------------------------
SLAT Prime Obligation Wellington Management None
Company
--------------------------------------------------------------------------------------
</TABLE>

26
<PAGE>

SEI FINANCIAL In addition to serving as the Trust's Adviser, SFM serves
MANAGEMENT as investment adviser to each Underlying Portfolio except
CORPORATION the SIT International Fixed Income and SLAT Prime Obligation
Portfolios.

Under its advisory agreement with each Underlying
Portfolio for which it serves as investment adviser (an
"Underlying SEI Portfolio"), SFM is authorized to make
investment decisions for the assets of the Underlying SEI
Portfolio, and to continuously review, supervise and
administer the Underlying SEI Portfolio's investment
program.

In addition, SFM has general oversight responsibility for
the investment sub-advisory services provided to the
Underlying SEI Portfolios, including formulating investment
policies and analyzing economic trends affecting the
Underlying SEI Portfolios. SFM is also responsible, subject
to the review and approval of the Trust's Board of Trustees,
for setting each Underlying SEI Portfolio's overall
investment strategy, managing the allocation of assets among
the Underlying SEI Portfolio's sub-advisers, directing and
evaluating the investment services provided by the sub-
advisers, including their adherence to the investment
objectives and policies and investment performance of each
Underlying SEI Portfolio and determining when to hire or
replace a sub-adviser. In accordance with these investment
objectives and policies, and under the supervision of SFM
and the Trust's Board of Trustees, each sub-adviser is
responsible for the day-to-day investment management of all
or a discrete portion of the assets of an Underlying SEI
Portfolio. SFM and the sub-advisers are authorized to make
investment decisions for the Underlying SEI Portfolios and
place orders on behalf of the Underlying SEI Portfolios to
effect the investment decisions made.

SFM has applied for and expects to receive an exemptive
order from the SEC that will permit SFM, with the approval
of the Underlying Trusts' Boards of Trustees, to retain sub-
advisers for Underlying SEI Portfolios of SIMT and SIT
without submitting the sub-advisory agreements to a vote of
the Underlying SEI Portfolios' shareholders. The exemptive
relief will also permit the non-disclosure of amounts
payable by SFM under such sub-advisory agreements. Under
this exemptive order, if one of the sub-advisers is
terminated or departs from an Underlying SEI Portfolio with
multiple sub-advisers, the Underlying SEI Portfolio will
handle such termination or departure in one of two ways.
First, the Underlying SEI Portfolio may propose that a new
sub-adviser be appointed to manage that portion of the
Underlying SEI Portfolio's assets managed by the departing
sub-adviser. In this case, the Underlying SEI Portfolio
would be required to submit to the Underlying SEI
Portfolio's shareholders the investment sub-advisory
contract with the new sub-adviser only if such sub-adviser
was affiliated with SFM or SEI. In the alternative, the
Underlying SEI Portfolio may decide to allocate the
departing sub-adviser's assets among the remaining
sub-advisers. This allocation would not require a new
investment sub-advisory contract, and consequently, no
shareholder approval would be necessary.

27
<PAGE>

For its advisory services to the Underlying Portfolios,
SFM is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .40% of the average daily net
assets of the SIMT Large Cap Growth Portfolio, .35% of the
average daily net assets of the SIMT Large Cap Value
Portfolio, .65% of the average daily net assets of the SIMT
Small Cap Growth and Small Cap Value Portfolios, .505% of
the average daily net assets of the SIT International Equity
Portfolio, 1.05% of the average daily net assets of the SIT
Emerging Markets Equity Portfolio, .275% of the average
daily net assets of the SIMT Core Fixed Income Portfolio,
and .4875% of the average daily net assets of the SIMT High
Yield Bond Portfolio.

STRATEGIC FIXED Strategic Fixed Income L.P. ("SFI") acts as the investment
INCOME L.P. adviser to the SIT International Fixed Income Portfolio. SFI
is a limited partnership formed in 1991 under the laws of
the State of Delaware to manage multi-currency fixed income
portfolios. The general partner of the firm is Kenneth
Windheim and the limited partner is Strategic Investment
Partners ("SIP"). As of March 1, 1996, SFI managed $5.4
billion of client assets. Together, SFI and SIP managed over
$10.2 billion in client assets as of that date. The
principal address of SFI is 1001 Nineteenth Street North,
16th Floor, Arlington, Virginia 22209.

SFI is entitled to a fee, which is calculated and paid
monthly, at an annual rate of .30% of the average daily net
assets of the SIT International Fixed Income Portfolio. SFI
has voluntarily agreed to waive all or a portion of its fee
in order to limit the total operating expenses of the
Portfolio. SFI reserves the right to terminate its voluntary
fee waiver at any time in its sole discretion.

WELLINGTON Wellington Management Company ("WMC"), 75 State street,
MANAGEMENT Boston, Massachusetts 02109, serves as the investment
COMPANY adviser to the SLAT Prime Obligation Portfolio.

As of March 1, 1996, WMC had investment management
authority with respect to approximately $109 billion of
assets. WMC is a professional investment counseling firm
which provides investment services to investment companies,
employee benefit plans, endowments, foundations, and other
institutions and individuals. WMC's predecessor
organizations have provided investment advisory services to
investment companies since 1933, and to investment
counseling clients since 1960. WMC is a Massachusetts
general partnership of which the following persons are
managing partners: Robert W. Doran, Duncan M. McFarland and
John R. Ryan.

WMC is entitled to a fee, which is calculated daily and
paid monthly, at an annual rate of .075% of the combined
average daily net assets of the various portfolios of SLAT
up to $500 million, and .02% of such average daily net
assets in excess of $500 million. Such fees are allocated
daily among the various portfolios of SLAT on the basis of
their relative net assets.

28
<PAGE>

ACADIAN ASSET Acadian Asset Management, Inc. ("Acadian") acts as an
MANAGEMENT, INC. investment sub-adviser to the SIT International Equity
Portfolio pursuant to a sub-advisory agreement with the
Adviser. In accordance with the Portfolio's investment
objectives and policies and under the supervision of the
Adviser and the Underlying Trust's Board of Trustees,
Acadian is responsible for the day-to-day investment
management of the portion of the Portfolio assigned to it by
the Board of Trustees and, with respect thereto, places
orders on behalf of the Portfolio to effect the investment
decisions made.

Acadian, a wholly-owned subsidiary of United Asset
Management Corporation, was founded in 1977, and manages
approximately $3 billion in assets invested globally.
Acadian's business address is Two International Place,
Boston, Massachusetts 02110.

Acadian is entitled to a fee from the Adviser calculated
on the basis of a percentage of the market value of the
assets assigned to it. That fee, which is paid monthly, is
based on an annual percentage rate of .325% of assets
managed up to $150 million; .25% of the next $150 million of
such assets; and .20% of such assets in excess of $300
million.

ALLIANCE CAPITAL Alliance Capital Management L.P. ("Alliance Capital") serves
MANAGEMENT L.P. as investment sub-adviser to a portion of the assets of the
SIMT Large Cap Growth Portfolio. Alliance is a registered
investment adviser organized as a Delaware limited
partnership which originated as Alliance Capital Management
Corporation in 1971. Alliance Capital Management
Corporation, an indirect wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States, is
the general partner of Alliance. As of March 1, 1996,
Alliance managed over $149 billion in assets. The principal
business address of Alliance is 1345 Avenue of the Americas,
New York, New York 10105.

The Adviser pays Alliance the greater of $125,000 or a
fee, which is calculated and paid monthly, based on an
annual percentage rate of .25% of the average monthly market
value of assets of the SIMT Large Cap Growth Portfolio
managed by Alliance. Alliance may waive all or a portion of
its fee in order to limit the operating expenses of the
Portfolio. Alliance reserves the right, in its sole
discretion, to terminate any such voluntary fee waiver at
any time.

APODACA-JOHNSTON Apodaca-Johnston Capital Management ("Apodaca") serves as an
CAPITAL investment sub-adviser to a portion of the assets of the
MANAGEMENT SIMT Small Cap Growth Portfolio. Apodaca is a California
corporation with its principal address at 50 California
Street, Suite 3315, San Francisco, California 94014. Apodaca
is owned equally by Scott Johnson, Jerry C. Apodaca, Jr.,
and Jerry Apodaca, Sr. Apodaca's predecessor was founded in
1985, and as of September 30, 1995, Apodaca had
approximately $290 million in assets under management.
Apodaca's clients include pension and profit sharing plans,
an endowment fund and an investment company portfolio.

The Adviser pays Apodaca a fee, which is calculated and
paid monthly, based on an annual percentage rate of .50% of
the average monthly market value of the assets of the SIMT
Small Cap Growth Portfolio managed by Apodaca.

29
<PAGE>

BEA ASSOCIATES BEA Associates ("BEA") serves as investment sub-adviser to
the SIMT High Yield Bond Portfolio. BEA is a general
partnership organized under the laws of the State of New
York and, together with its predecessor firms, has been
engaged in the investment advisory business for over 50
years. BEA's principal offices are located at One Citicorp
Center, 153 East 53rd Street, New York, New York 10022.
Credit Suisse Capital Corporation ("CS Capital") is an 80%
partner in BEA and CS Advisers Corp., a New York corporation
which is a wholly-owned subsidiary of CS Capital, is a 20%
partner in BEA. CS Capital is a wholly-owned subsidiary of
Credit Suisse Investment Corporation, which is a wholly-
owned subsidiary of Credit Suisse, the second largest Swiss
bank, which, in turn, is a subsidiary of CS Holding, a Swiss
corporation. BEA is registered as an investment adviser
under the Investment Advisers Act of 1940.

BEA is a diversified asset manager, handling global
equity, balanced, fixed income and derivative securities
accounts for private individuals, as well as corporate
pension and profit-sharing plans, state pension funds, union
funds, endowments and other charitable institutions. As of
March 1, 1996, BEA managed approximately $28 billion in
assets.

The Adviser pays BEA a fee, which is calculated and paid
monthly, based on an annual percentage rate of .3375% of the
average monthly market value of the assets of the SIMT High
Yield Bond Portfolio managed by BEA.

BLACKROCK BlackRock Financial Management, Inc. ("BlackRock") serves as
FINANCIAL an investment sub-adviser to a portion of the assets of the
MANAGEMENT, INC. SIMT Core Fixed Income Portfolio. BlackRock, a registered
investment adviser, is a Delaware corporation with its
principal business address at 345 Park Avenue, 30th Floor,
New York, New York 10154. BlackRock's predecessor was
founded in 1988, and as of March 1, 1996, BlackRock had
$36.5 billion in assets under management. BlackRock is
wholly-owned by PNC Asset Management Group, Inc., a wholly-
owned subsidiary of PNC Bank, N.A. PNC Bank, N.A.'s ultimate
parent is PNC Bank Corp., One PNC Plaza, Pittsburgh,
Pennsylvania 15265, a bank holding company. BlackRock
provides investment advice to investment companies, trusts,
charitable organizations, pension and profit sharing plans
and government entities.

The Adviser pays BlackRock a fee, which is calculated and
paid monthly, based on an annual percentage rate of .15% of
the average monthly market value of the assets of the SIMT
Core Fixed Income Portfolio managed by BlackRock.

BOSTON PARTNERS Boston Partners Asset Management, L.P. ("BPAM") serves as
ASSET MANAGEMENT, investment sub-adviser to a portion of the assets of the
L.P. SIMT Small Cap Value Portfolio. BPAM, a Delaware limited
partnership, is a registered investment adviser with its
principal business address at One Financial Center, 43rd
Floor, Boston, Massachusetts 02111. BPAM's general partner,
Boston Partners, Inc., One Financial Center, 43rd Floor,
Boston, Massachusetts 02111, whose sole shareholder is
Desmond J. Heathwood, Chief Investment Officer of BPAM, owns
approximately 20% of BPAM's partnership interests. BPAM was
founded in April, 1995, and as of December 31, 1995, it had
approximately $5.5 billion in assets

30
<PAGE>

under management. BPAM's clients include corporations,
endowments, foundations, pension and profit sharing plans
and two other investment companies.

The Adviser pays BPAM a fee, which is calculated and paid
monthly, based on an annual percentage rate of .50% of the
average monthly market value of the assets of the SIMT Small
Cap Value Portfolio managed by BPAM.

1838 INVESTMENT 1838 Investment Advisors, L.P. ("1838") serves as investment
ADVISORS, L.P. sub-adviser to a portion of the assets of the SIMT Small Cap
Value Portfolio. 1838 is a Delaware limited partnership
located at 100 Matsonford Road, Radnor, Pennsylvania. As of
March 1, 1996, 1838 managed $4.7 billion in assets in large
and small capitalization equity, fixed income and balanced
account portfolios. Clients include corporate employee
benefit plans, municipalities, endowments, foundations,
jointly trusteed plans, insurance companies and wealthy
individuals.

The Adviser pays 1838 a fee, which is calculated and paid
monthly, based on an annual percentage rate of .50% of the
average monthly market value of assets of the SIMT Small Cap
Value Portfolio managed by 1838.

FIRSTAR Firstar Investment Research & Management Company ("FIRMCO")
INVESTMENT serves as an investment sub-adviser to a portion of the
RESEARCH & assets of the SIMT Core Fixed Income Portfolio. FIRMCO is a
MANAGEMENT registered investment adviser with its principal business
COMPANY address at 777 East Wisconsin Avenue, Suite 800, Milwaukee,
Wisconsin 53202. FIRMCO was founded in 1986, and as of
December 31, 1995, it had approximately $15.6 billion in
assets under management. FIRMCO is a wholly-owned subsidiary
of Firstar Corporation, a bank holding company located at
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
FIRMCO's clients include pension and profit sharing plans,
trusts and estates and one other investment company.

The Adviser pays FIRMCO a fee, which is calculated and
paid monthly, based on an annual percentage rate of .10% of
the average monthly market value of the assets of the SIMT
Core Fixed Income Portfolio managed by FIRMCO.

IDS ADVISORY IDS Advisory Group Inc. ("IDS") serves as investment sub-
GROUP INC. adviser to a portion of the assets of the SIMT Large Cap
Growth Portfolio. IDS is a registered investment adviser and
wholly-owned subsidiary of American Express Financial
Corporation. As of March 1, 1996, IDS managed over $24
billion in assets, with $5 billion of this total in large
capitalization growth domestic equities. IDS was founded in
1972 to manage tax-exempt assets for institutional clients.
The principal business address of IDS is IDS Tower 10,
Minneapolis, Minnesota 55440.

The Adviser pays IDS the greater of $125,000 or a fee
which is calculated and paid monthly, based on an annual
percentage rate of .25% of the average monthly market value
of assets of the SIMT Large Cap Growth Portfolio managed by
IDS.

31
<PAGE>

LSV ASSET LSV Asset Management ("LSV") serves as investment sub-
MANAGEMENT adviser to a portion of the assets of the SIMT Large Cap
Value Portfolio. LSV is a registered investment adviser
organized as a Delaware general partnership. An affiliate of
the Adviser owns a majority interest of LSV. The principal
business address of LSV is 181 W. Madison Avenue, Chicago,
Illinois 60602.

LSV makes investment decisions based on a quantitative
computer model and, based on its ongoing research and
statistical analysis, make adjustments to the model.
Securities are identified for purchase or sale by the
Portfolio based upon the computer model and defined variance
tolerances. Purchases and sales are effected by LSV based
upon the output from the model.

The Adviser pays LSV a fee, which is calculated and paid
monthly, based on an annual percentage rate of .20% of the
average monthly market value of the assets of the SIMT Large
Cap Value Portfolio managed by LSV.

MELLON EQUITY Mellon Equity Associates ("Mellon Equity") serves as
ASSOCIATES investment sub-adviser to a portion of the assets of the
SIMT Large Cap Value Portfolio. Mellon Equity is a
Pennsylvania business trust founded in 1987, whose
beneficial owners are Mellon Bank, N.A. and MMIP, Inc.
Mellon Equity is a professional investment counseling firm
that provides investment management services to the equity
and balanced pension, public fund and profit-sharing
investment management markets, and is a registered
investment adviser under the Investment Advisers Act of
1940. Mellon Equity had discretionary management authority
with respect to approximately $8.8 billion of assets as of
December 31, 1995. Mellon Equity's predecessor organization
had managed domestic equity tax-exempt institutional
accounts since 1947. The business address for Mellon Equity
is 500 Grant Street, Suite 3700, Pittsburgh, Pennsylvania
15258.

The Adviser pays Mellon Equity a fee, which is calculated
and paid monthly, based on an annual percentage rate of .20%
of the average monthly market value of the assets of the
SIMT Large Cap Value Portfolio managed by Mellon Equity.

MERUS-UCA CAPITAL MERUS-UCA Capital Management ("MERUS-UCA") serves as
MANAGEMENT investment sub-adviser to a portion of the assets of the
SIMT Large Cap Value Portfolio. MERUS-UCA is a division of
Union Bank of California, N.A., and provides equity and
fixed-income management services to a broad array of
corporate and municipal clients. As of December 31, 1995,
MERUS-UCA had discretionary management authority with
respect to approximately $11.9 billion of assets. The
principal business address of MERUS-UCA is 475 Sansome
Street, San Francisco, California 94111.

The Adviser pays MERUS-UCA a fee, which is calculated and
paid monthly, based on an annual percentage rate of .20% of
the average monthly market value of the assets of the SIMT
Large Cap Value Portfolio managed by MERUS-UCA.

MONTGOMERY ASSET Montgomery Asset Management, L.P. ("MAM") acts as the
MANAGEMENT L.P. investment sub-adviser to the SIT Emerging Markets Equity
Portfolio. In accordance with the Portfolio's investment

32
<PAGE>

objective and policies and under the supervision of the
Adviser and the Underlying Trust's Board of Trustees, MAM is
responsible for the day-to-day investment management of the
Portfolio and places orders on behalf of the Portfolio to
effect the investment decisions made.

MAM is an independent affiliate of Montgomery Securities,
a San Francisco-based investment banking firm. As of
February 29, 1996, MAM had approximately $7.1 billion in
assets under management. MAM has over four years experience
providing investment management services. The principal
address of MAM is 600 Montgomery Street, San Francisco,
California 94111.

MAM is entitled to a fee from the Adviser calculated on
the basis of a percentage of the market value of the assets
assigned to it. That fee, which is paid monthly, is based on
an annual percentage rate of .90% of the first $50 million
assets and .55% of the assets in excess of $50 million.

MORGAN GRENFELL Morgan Grenfell Investment Services Limited ("MG") acts as
INVESTMENT the investment sub-adviser to the SIT International Equity
SERVICES LIMITED Portfolio. MG, a subsidiary of Morgan Grenfell Asset
Management Limited, managed over $12 billion in assets as of
December 31, 1995. Morgan Grenfell Asset Management Limited,
a wholly-owned subsidiary of Deutsche Bank, A.G., a German
financial services conglomerate, managed over $94 billion in
assets as of December 31, 1995. MG has over 11 years
experience in managing international portfolios for North
American clients. Morgan Grenfell Asset Management employs
more than 15 European investment professionals. MG attempts
to exploit perceived inefficiencies present in the European
markets with original research and an emphasis on stock
selection. The principal address of MG is 20 Finsbury
Circus, London, England, EC2M 1NB.

MG is entitled to a fee from the Adviser calculated on
the basis of a percentage of the market value of assets
assigned to it. That fee, which is paid monthly, is based on
an annual percentage rate of .325%.

NICHOLAS- Nicholas-Applegate Capital Management ("Nicholas-Applegate")
APPLEGATE serves as investment sub-adviser to a portion of the assets
CAPITAL of the SIMT Small Cap Growth Portfolio. Nicholas-Applegate
MANAGEMENT has operated as an investment adviser which provides
investment services to employee benefit plans, endowments,
foundations, other institutions and investment companies
since 1984. As of December 31, 1995, Nicholas-Applegate had
discretionary management authority with respect to
approximately $29 billion of assets. The principal business
address of Nicholas-Applegate is 600 West Broadway, 29th
Floor, San Diego, California 92101. Nicholas-Applegate,
pursuant to a partnership agreement, is controlled by its
general partner Nicholas-Applegate Capital Management
Holdings, L.P., a limited partnership controlled by Arthur
E. Nicholas.

The Adviser pays Nicholas-Applegate a fee, which is
calculated and paid monthly, based on an annual percentage
rate of .50% of the average monthly market value of assets
of the SIMT Small Cap Growth Portfolio managed by Nicholas-
Applegate.

33
<PAGE>

PILGRIM BAXTER & Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") serves
ASSOCIATES, LTD. as investment sub-adviser to a portion of the assets of the
SIMT Small Cap Growth Portfolio. Pilgrim Baxter is a
professional investment management firm and registered
investment adviser that, along with its predecessors, has
been in business since 1982. The controlling shareholder of
the Pilgrim Baxter is United Asset Management Corporation
("UAM"). UAM's corporate headquarters are located at One
International Place, Boston, Massachusetts 02110. Pilgrim
Baxter currently has discretionary management authority with
respect to approximately $9.0 billion in assets. In addition
to advising the Portfolio, Pilgrim Baxter provides advisory
services to pension and profit-sharing plans, charitable
institutions, corporations, individual investors, trusts,
private investment limited partnerships, and other
investment companies. The principal business address of
Pilgrim Baxter is 1255 Drummers Lane, Suite 300, Wayne,
Pennsylvania 19087.

The Adviser pays Pilgrim Baxter a fee, which is
calculated and paid monthly, based on an annual percentage
rate of .50% of the average monthly market value of assets
of the SIMT Small Cap Growth Portfolio managed by Pilgrim
Baxter.

PROVIDENT Provident Investment Counsel, Inc. ("Provident"), is a
INVESTMENT registered investment adviser with its principal business
COUNSEL, INC. address at 300 North Lake Avenue, Pasadena, California
91101. Provident, which, through its predecessors, has been
in business since 1951, and is a wholly-owned subsidiary of
UAM. Provident provides investment advice to corporations,
public entities, foundations and labor unions, as well as to
other investment companies. As of December 31, 1995,
Provident had over $16 billion in client assets under
management.

Provident is entitled to a fee from the Adviser, which is
calculated and paid monthly, at an annual rate of .25% of
the average monthly market value of the assets of the SIMT
Large Cap Growth Portfolio managed by Provident.

SCHRODER CAPITAL Schroder Capital Management International Limited ("SC")
MANAGEMENT acts as the investment sub-adviser to the SIT International
INTERNATIONAL Equity Portfolio. SC was founded in January, 1989 and is a
LIMITED wholly-owned indirect subsidiary of Schroders plc, the
holding company parent of an investment banking and
investment management group of companies (the "Schroder
Group"). The investment management operations of the
Schroder Group are located in 17 countries worldwide,
including ten in Asia. As of December 31, 1995, the Schroder
Group had over $110 billion in assets under management. As
of that date, SC had over $7 billion in assets under
management.

The Schroder Group has research resources throughout the
Asian region, consisting of offices in Tokyo, Hong Kong,
Singapore, Kuala Lumpur, Seoul, Taipei, Sydney, Bangkok,
Shanghai, and Jakarta, staffed by 41 investment
professionals. SC's investment process emphasizes individual
stock selection and company research conducted by
professionals at each local office which is integrated into
SC's global research network by the manager of research in
London. The principal address of SC is 33 Gutter Lane,
London EC2V 8AS, England.

34
<PAGE>

SC is entitled to a fee from the Adviser calculated on
the basis of a percentage of the market value of assets
assigned to it. That fee, which is paid monthly, is based on
an annual percentage rate of .50% of the first $100 million
in assets, .30% of the next $50 million in assets, and .20%
of assets in excess of $150 million.

WALL STREET Wall Street Associates ("WSA") serves as investment sub-
ASSOCIATES adviser to a portion of the assets of the SIMT Small Cap
Growth Portfolio. WSA is organized as a corporation with its
principal business address at 1200 Prospect Street, Suite
100, La Jolla, California 92037. WSA was founded in 1987,
and as of December 31, 1995, had approximately $900 million
in assets under management. WSA is owned equally by William
Jeffery III, Kenneth F. McCain, and Richard S. Coons. WSA
provides investment advisory services for institutional
clients, an investment partnership for which it serves as
general partner, a group trust, for which it serves as sole
investment manager, and an offshore fund for foreign
investors for which it serves as the sole investment
manager.

WSA is entitled to a fee from the Adviser, which is
calculated on the basis of a percentage of the market value
of the assets assigned to it. That fee, which is paid
monthly, is based on an annual percentage rate of .50% of
the Portfolio's average net assets.

WESTERN ASSET Western Asset Management Company ("Western") serves as an
MANAGEMENT investment sub-adviser to a portion of the assets of the
COMPANY SIMT Core Fixed Income Portfolio. Western is located at 117
East Colorado Boulevard, Pasadena, California 91105, and is
a wholly owned subsidiary of Legg Mason, Inc., a financial
services company located in Baltimore, Maryland. Western was
founded in 1971, and specializes in the management of fixed
income portfolios. As of March 1, 1996, Western managed
approximately $19.7 billion in client assets, including $2
billion of investment company assets.

The Adviser pays Western a fee, which is calculated and
paid monthly, based on an annual percentage rate of .125% of
the average monthly market value of assets of the SIMT Core
Fixed Income Portfolio managed by Western.

Information regarding the portfolio managers employed by
the advisers and sub-advisers to the Underlying Portfolios
is set forth in the Trust's Statement of Additional
Information.

TRANSFER AGENT _________________________________________________________________

The Trust and DST Systems, Inc. (the "Transfer Agent"), 210
West 10th Street, Kansas, City, Missouri 64105, have entered
into a transfer agent agreement with respect to the Trust's
Class A and Class D shares.

35
<PAGE>

DISTRIBUTION OF FUND
SHARES AND SHAREHOLDER SERVICING________________________________________________

SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Fund's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. The Trustees of
the Trust have adopted a distribution plan for the Trust's
Class D shares (the "Class D Plan") pursuant to Rule 12b-1
under the 1940 Act.

The Class D Plan provides for payments to the Distributor
for distribution-related services at an annual rate of .75%
of each Fund's average daily net assets attributable to
Class D Shares. In addition, pursuant to a Shareholder
Service Plan and Agreement (the "Service Plan"), each Fund
is authorized to pay the Distributor a fee in connection
with the ongoing servicing of shareholder accounts owning
such Class D Shares, which is calculated and payable
monthly, at the annual rate of .25% of the value of the
average daily net assets attributable to Class D Shares of
the Fund.

The distribution-related payments under the Class D Plan
may be used by the Distributor to provide initial and
ongoing sales compensation to its investment executives and
to other broker-dealers and financial intermediaries in
respect of sales of Class D Shares, to compensate third
parties for the provision of distribution-related services
relating to Class D Shares, and to pay for advertising and
promotional expenses in connection with the distribution of
Class D Shares. These advertising and promotional expenses
may include: costs of printing and mailing prospectuses,
statements of additional information and shareholder reports
to prospective investors; preparation and distribution of
sales literature; advertising of any type; an allocation of
other expenses of the Distributor related to the
distribution of Class D Shares; and payments to, and
expenses of, officers, employees or representatives of the
Distributor, of other broker-dealers, banks or other
financial institutions, and of any other persons who provide
support services in connection with the distribution of Fund
Shares.

The service fees payable to the Distributor under the
Service Plan are intended to compensate the Distributor for
the provision of shareholder services, and may be used by
the Distributor to provide compensation to financial
intermediaries for ongoing service and/or maintenance of
shareholder accounts with respect to Class D Shares of the
applicable Funds. Such shareholder services may include:
telephone service to shareholders; acceptance and processing
of written correspondence, new account applications and
subsequent purchases by check; mailing of confirmations,
statements and tax forms directly to shareholders;
maintenance of customer accounts, and acceptance of payment
for trades by check, Federal Reserve wire or Automatic
Clearing House payment. The Distributor shall perform or
supervise the performance by others of other shareholder
services in connection with the operation of the Funds, as
agreed from time to time.

36
<PAGE>

Payments under the Class D Plan are not tied exclusively
to the expenses for distribution activities actually
incurred by the Distributor or third parties, so that such
payments may exceed expenses actually incurred by the
Distributor. Similarly, payments to the Distributor under
the Service Plan are not directly tied to shareholder
servicing expenses incurred. The Trust's Board of Trustees
will evaluate the appropriateness of the Class D Plan and
the Service Plan and their payment terms on a continuing
basis and, in doing so, will consider all relevant factors,
including expenses borne by the Distributor and amounts it
receives under the Class D Plan and the Service Plan.

Periodically, the Distributor may waive a portion of the
fees payable to it under the Service Plan in order to keep
within certain limits imposed by the Trust's SEC Order.
Specifically, any Fund's shareholder servicing fees will be
reduced in an amount equal to the Fund's pro rata portion of
any shareholder servicing fees paid by any Underlying
Portfolio in which the Fund invests, but only to the extent
necessary to comply with the Trust's SEC Order.

It is possible that an institution may offer different
categories of shares to its customers and thus receive
different compensation with respect to the different
categories. These financial institutions may also charge
separate fees to their customers.

The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Funds. Such promotional incentives will be offered uniformly
to all shares of the Funds and also will be offered
uniformly to all dealers, predicated upon the amount of
shares of the Funds sold by such dealer.

PERFORMANCE ____________________________________________________________________

From time to time, the Funds may advertise yield and total
return. These figures will be based on historical earnings
and are not intended to indicate future performance. The
yield of a Fund refers to the annualized income generated by
an investment in the Fund over a specified 30-day period.
The yield is calculated by assuming that the same amount of
income generated by the investment during that period is
generated in each 30-day period over one year and is shown
as a percentage of the investment.

The total return of a Fund refers to the average
compounded rate of return to a hypothetical investment for
designated time periods (including but not limited to, the
period from which the Fund commenced operations through the
specified date), assuming that the entire investment is
redeemed at the end of each period and assuming the
reinvestment of all dividend and capital gain distributions.
The total return of a Fund may also be quoted as a dollar
amount or on an aggregate basis or an actual basis, without
inclusion of any front-end or contingent sales charges, or
with a reduced sales charge in advertisements distributed to
investors entitled to a reduced sales charge.

37
<PAGE>

A Fund may periodically compare its performance to that of:
(i) other mutual funds tracked by mutual fund rating services
(such as Lipper Analytical), financial and business
publications and periodicals; (ii) broad groups of comparable
mutual funds; (iii) unmanaged indices which may assume
investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Fund may quote Morningstar,
Inc., a service that ranks mutual funds on the basis of risk-
adjusted performance, and Ibbotson Associates of Chicago,
Illinois, which provides historical returns of the capital
markets in the U.S. The Fund 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
Fund may also quote financial and business publications and
periodicals as they relate to fund management, investment
philosophy, and investment techniques. The Fund 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.

For each Fund, the performance of Class A Shares will
normally be higher than the performance of the Class D shares
of that Fund because of the additional distribution,
shareholder servicing and transfer agent expenses charged to
Class D Shares.

TAXES __________________________________________________________________________

The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial, or administrative action. No
attempt has been made to present a detailed explanation of the
federal, state, or local tax treatment of the Funds or their
shareholders. In addition, state and local tax consequences of
an investment in a Fund may differ from the federal income tax
consequences described below. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state, and local taxes. Additional
information concerning taxes is set forth in the Statement of
Additional Information.
...........................
IRAs and participants in other .[SYMBOL APPEARS HERE]
tax-qualified retirement plans . TAXES
generally will not be subject to .
federal tax liability on either . You must generally pay
dividend and capital gain . taxes on your Fund's
distributions from the Funds or . earnings, whether you
redemption of shares of the Funds. . take your payments in
Rather, participants in such plans . cash or additional
will be taxed when they begin . shares.
taking distributions from their ...........................
IRAs and/or the plans. There are
various restrictions under the Code on eligibility,
contributions and withdrawals, depending on the type of
tax-deferred account or tax-qualified retirement plan. The
rules governing tax-deferred accounts and tax-qualified
retirement plans are complex, and failure to comply

38
<PAGE>

with the governing rules and regulations may result in a
substantial cost to you, including the loss of tax advantages
and the imposition of additional taxes and penalties by the
IRS. You should consult with a tax professional on the
specific rules governing your own plan.

TAX STATUS OF Each Fund is treated as a separate entity for federal income
THE FUNDS tax purposes and is not combined with the Trust's other
Funds. Each Fund intends to continue to qualify for the
special tax treatment afforded regulated investment companies
("RICs") under Subchapter M of the Code, so as to be relieved
of federal income tax on net
investment income and net capital ...........................
gain (the excess of net long-term .[SYMBOL APPEARS HERE]
capital gain over net short-term . DISTRIBUTIONS
capital loss) distributed to .
shareholders. . A Fund distributes income
. dividends and capital
TAX STATUS OF Each Fund will distribute . gain. Income dividends
DISTRIBUTIONS substantially all of its net . represent the earnings
investment income (including net . from the Fund's
short-term capital gain) and net . investments; capitaL gain
capital gain to shareholders. . distributions occur when
Dividends from a Fund's net . the Fund's investments
investment income will be taxable . are sold for more than
to its shareholders as ordinary . their original purchase
income, whether received in cash . price.
or in additional shares, to the ...........................
extent of the Fund's earnings and
profits. Dividends from a Fund's net investment income will
qualify for the dividends received deduction for corporate
shareholders to the extent such dividends are derived from
dividends paid by Underlying Portfolios that qualify for such
deduction. Distributions of net capital gain are taxable to
shareholders as long-term capital gain regardless of how long
the shareholders have held shares or whether the distributions
are received in cash or in additional shares. Each Fund will
make annual reports to shareholders of the federal income tax
status of all distributions. Each Fund intends to make
sufficient distributions to avoid liability for the federal
excise tax applicable to RICs. Dividends declared by a Fund in
October, November or December of any year and payable to
shareholders of record on a date in such a month will be
deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if paid by the Fund
at any time during the following January.

Investment income received by the Funds from sources
within foreign countries may be subject to foreign income
taxes withheld at the source. The Funds will not be able to
treat shareholders as having paid their proportionate share
of such taxes for foreign tax credit purposes.

Each sale, exchange, or redemption of a Fund's shares is a
taxable transaction to the shareholder.

39
<PAGE>

PURCHASE AND REDEMPTION OF SHARES_______________________________________________
...........................
The Funds have been designed .[SYMBOL APPEARS HERE]
primarily for tax-advantaged . BUY, EXCHANGE AND
retirement and other long-term . SELL REQUESTS ARE IN
investment and savings accounts. . "GOOD ORDER" WHEN:
Class A Shares of the Funds are .
sold on a continuous basis and may . .The account number and
be purchased directly from the . portfolio name are shown
Trust's Distributor, SEI Financial . .The amount of the
Services Company. Class D Shares . transaction is specified
may be purchased through the . in dollars or shares
Distributor or through financial . .Signatures of all owners
institutions, broker-dealers, or . appear exactly as they
other organizations which have . are registered on the
established a dealer agreement or . account
other arrangement with SEI . .Any required signature
Financial Services Company . guarantees (if
("Intermediaries"). This section . applicable) are included
describes the purchase, exchange . .Other supporting legal
and redemption services available . documents (as necessary)
to investors. Please note that the . are present
services available will vary ...........................
depending upon the class of shares
in which you are investing and the Intermediary, if any,
through which you are purchasing shares of the Trust.
...........................
PURCHASING Financial institutions may acquire .[SYMBOL APPEARS HERE]
SHARES THROUGH Class A Shares of the Funds for . WHAT IS AN
INTERMEDIARIES their own account or as record . INTERMEDIARY?
AND RETIREMENT owner on behalf of fiduciary, .
ACCOUNTS agency or custody accounts by . Any entity, such as a
placing orders with the Transfer . bank, broker-dealer,
Agent. Class D shares of the Funds . other financial
may be purchased through . institution,
Intermediaries which provide . association or
various levels of shareholder . organization which
services to their customers. . has entered into an
Contact your Intermediary for . arrangement with the
information about the services . Distributor to sell
available to you, and for . Class D shares to its
specific instructions on how to . customers.
buy, sell and exchange shares. ...........................

Both Class A and Class D shares are offered to tax-
advantaged retirement accounts. If you are investing in a Fund
through a 401(k) or other retirement plan, you should contact
your plan sponsor for the services and procedures which
pertain to your account.

State securities laws may require financial institutions
and Intermediaries purchasing shares for their customers to
register as dealers pursuant to state laws. To allow for
processing and transmittal of orders to the Transfer Agent on
the same day, financial institutions and Intermediaries may
impose earlier cut-off times for receipt of purchase orders
directed through them. Certain financial institutions and
Intermediaries may charge separate customer account fees.
Information concerning shareholder services and any charges
will be provided to the customer by the Intermediary.

40
<PAGE>

The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should
call the Intermediary to request this change.

GENERAL INFORMATION

Business Days You may buy, sell or exchange shares on days on which the
New York Stock Exchange is open for business (a "Business
Day"). Shares of the Funds are offered only to residents of
states in which the shares are eligible for purchase.

Class D purchase, exchange and redemption requests
received in "good order" will be effective as of the
Business Day received by the Transfer Agent as long as the
Transfer Agent receives the order and, in the case of a
purchase request, payment before 4:00 p.m. Eastern time.
Otherwise the purchase will be effective when payment is
received.

Class A investors who desire to purchase or redeem shares
for cash must place their orders with the Transfer Agent
prior to 4:00 p.m. Eastern time on any Business Day for the
order to be accepted on that Business Day. Generally, cash
investments must be transmitted or delivered in federal
funds to the wire agent by 12 noon on the next Business Day
following the day the order is placed.

Net Asset Value An order to buy shares will be executed at a per share price
equal to the net asset value next determined after the
receipt of the purchase order by the Transfer Agent. No
certificates representing shares will be issued.

An order to sell shares will be executed at the net asset
value per share next determined after receipt and
effectiveness of a request for redemption in good order. Net
asset value per share is determined daily as of the close of
business of the New York Stock Exchange (currently, 4:00
p.m. Eastern time) on any Business Day. Payment to
shareholders for shares redeemed will be made within 7 days
after receipt by the Transfer Agent of the redemption order.

At various times, a Fund may be requested to redeem
shares for which it has not yet received good payment. In
such circumstances, redemption proceeds will be forwarded
upon collection of payment for the shares; collection of
payment may take 10 or more days. Each Fund intends to pay
cash for all shares redeemed, but under abnormal conditions
that make payment in cash unwise, payment may be made wholly
or partly in portfolio securities with a market value equal
to the redemption price. In such cases, an investor may
incur brokerage costs in converting such securities to cash.

How the Net The net asset value per share of each Fund is determined by
Asset Value is dividing the total market value of such Fund's investments
Determined and other assets, less any liabilities, by the total number
of outstanding shares of that Fund. The assets of each Fund
consist primarily of shares of the Underlying Portfolios,
which are valued at their respective net asset values. The
Underlying Portfolios value their portfolio securities at
the last quoted sales price for such securities, or, if
there is no such reported sales price on the valuation date,
at the most

41
<PAGE>

recent quoted bid price. An Underlying Portfolio may also
use a pricing service to obtain the last sale price of each
equity or fixed income security held in its portfolio.
Unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price.
Net asset value per share is determined daily as of the
close of business of the New York Stock Exchange (currently,
4:00 p.m. Eastern time) on each Business Day. Purchases will
be made in full and fractional shares of a Fund calculated
to three decimal places. Although the methodology and
procedures for determining net asset value per share are
identical for both Classes of a Fund, the net asset value
per share of one Class may differ from that of another Class
because of the different distribution and shareholder
servicing fees charged to each Class.

Minimum The Class A shares are not subject to a minimum initial
Investments investment.

The minimum initial investment in a Fund's Class D shares
is $1,000, however, the minimum investment may be waived at
the Distributor's discretion. All subsequent purchases must
be at least $100 ($25 for payroll deductions authorized
pursuant to pre-approved payroll deduction plans).

With respect to both Class A and Class D shares, the
Trust reserves the right to reject a purchase order when the
Distributor determines that it is not in the best interest
of the Trust or its shareholders to accept such order. In
addition, because excessive trading (including short-term
"market timing" trading) can hurt a Fund's performance, each
Fund may refuse purchase orders from any shareholder account
if the accountholder has been advised that previous purchase
and redemption transactions were considered excessive in
number or amount. Accounts under common control or
ownership, including those with the same taxpayer
identification number and those administered so as to redeem
or purchase shares based upon certain predetermined market
indicators, will be considered one account for this purpose.

Maintaining a Due to the relatively high cost of handling small
Minimum Account investments, a Fund reserves the right to redeem, at net
Balance asset value, the Class D Shares any shareholder if, because
of redemptions of shares by or on behalf of the shareholder,
the account of such shareholder in a Fund has a value of
less than $1,000, the minimum initial purchase amount.
Accordingly, an investor purchasing shares of a Fund in only
the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any
of these shares. Before a Fund exercises its right to redeem
such shares and to send the proceeds to the shareholder, the
shareholder will be given notice that the value of the
shares in his or her account is less than the minimum
account and will allowed 60 days to make an additional
investment in a Fund in an amount that will increase the
value of the account to at least $1,000. See "Purchase and
Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may
be suspended.

42
<PAGE>

HOW TO PURCHASE
SHARES THROUGH
THE TRANSFER
AGENT

Opening an Account Application forms may be obtained by calling 1-800-
Account 342-5734.

By Mail Both Class A and Class D Shares may be purchased by mailing
a completed application and a check (or other negotiable
bank instrument or money order) payable to "Class D Shares
(Fund Name)" to DST Systems, Inc., P.O. Box 419240, Kansas
City, Missouri 64141-6240. If you send a check that does not
clear, the purchase will be canceled and you could be liable
for any losses or fees incurred by the Funds.

By Telephone Class A Shares may be purchased by telephone. To buy shares
by telephone, call toll free at 1-800-342-5734.

Class D Shares may not be purchased by telephone.

By Fed Wire Both Class A and Class D Shares may be purchased by Fed
Wire. To buy shares by Fed Wire, call toll free at 1-800-
342-5734.

Automatic Class A Shares may not be purchased through an Automatic
Investment Plan Investment Plan.
("AIP")
Class D Shares may be purchased systematically through
deductions from your checking or savings accounts, provided
these accounts are maintained through banks which are part
of the Automated Clearing House ("ACH") system. You may
purchase shares on a fixed schedule (semi-monthly or
monthly) with amounts as low as $25, or as high as $100,000.
The AIP enables you to achieve dollar-cost averaging with
respect to investments in Funds with fluctuating net asset
values through regular purchases of a fixed dollar amount of
shares in the Funds. Dollar-cost averaging brings discipline
to your investing. Dollar-cost averaging results in more
shares being purchased when a Fund's net asset value is
relatively low and fewer shares being purchased when a
Fund's net asset value is relatively high, thereby helping
to decrease the average price of your shares. Through the
AIP, shares are purchased by transferring monies (minimum of
$25 per transaction per Fund) from your designated checking
or savings account. Your systematic investment in the
Fund(s) designated by you will be processed on a regular
basis at your option beginning on or about either the first
or fifteenth day of the month or quarter you select. Upon
notice, the amount you commit to the AIP may be changed or
canceled at any time. The AIP is subject to account minimum
initial purchase amounts and minimum maintained balance
requirements.

HOW TO EXCHANGE Exchange privileges are available to both Class A and Class D
SHARES THROUGH shareholders.
THE TRANSFER
AGENT Once good payment for your shares has been received and
accepted (i.e., an account has been established), you may
When Can You exchange some or all of your shares of a Fund for shares of
Exchange the same Class of the other Funds. Exchanges are made at net
Shares? asset value.

The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice.

43
<PAGE>

...........................
Requesting an To request an exchange, you must .[SYMBOL APPEARS HERE]
Exchange of provide proper instructions in . HOW DOES AN
Shares writing to the Transfer Agent. . EXCHANGE TAKE
Telephone exchanges will also be . PLACE?
accepted if you previously elected .
this option on your account . When making an exchange,
application. . you authorize the sale of
. your shares of one or
In the case of shares held "of . more Funds in order to
record" by an Intermediary but . purchase the shares of
beneficially owned by you, you . another Fund. In other
should contact the Intermediary . words, you are executing
who will contact the Transfer . a sell order and then a
Agent and effect the exchange on . buy order. This sale of
your behalf. . your shares is a taxable
. event which could result
If an exchange request is for . in a taxable gain or
Shares of a Fund whose net asset . loss.
value is calculated as of a time ...........................
earlier than 4:00 p.m. Eastern
time, the exchange request will not be effective until the
next Business Day. Anyone who wishes to make an exchange must
have received a current prospectus of the Fund into which the
exchange is being made before the exchange will be effected.

Exchange The Funds' exchange privileges are not intended to afford
Privilege shareholders a way to speculate on short-term movements in
Limitations the market. Accordingly, in order to prevent excessive use of
the exchange privilege that may potentially disrupt the
management of the Funds and increase transaction costs, the
Trust reserves the right to limit the amount of or reject any
exchange, as deemed necessary by SFM, at any time.

HOW TO SELL Both Class A and Class D shares may be sold by mail.
SHARES THROUGH
THE TRANSFER To sell your Class D shares, a written request for
AGENT redemption in good order must be received by the Transfer
Agent. Valid written redemption requests will be effective on
By Mail receipt. All shareholders of record must sign the redemption
request. For information about the proper form of redemption
request, call 1-800-342-5734. You may also have the proceeds
mailed to an address of record designated on the Account
Application or specified by written instruction to the
Transfer Agent.

The Transfer Agent may require that the signatures on the
written request be guaranteed. You should be able to obtain a
signature guarantee from a bank, broker, dealer, certain
credit unions, securities exchange or association, clearing
agency or savings association. Notaries public cannot
guarantee signatures. The signature guarantee requirement will
be waived if all of the following conditions apply: (1) the
redemption is for not more than $5,000 worth of shares, (2)
the redemption check is payable to the shareholder(s) of
record, and (3) the redemption check is mailed to the
shareholder(s) at the shareholder(s) address of record. The
Trust and the Transfer Agent reserve the right to amend these
requirements without notice.

44
<PAGE>

...........................
By Telephone Both Class A and Class D Shares .[SYMBOL APPEARS HERE]
or By Wire may be sold by telephone if you . WHAT IS A
previously elected that option on . SIGNATURE
the Account Application. You may . GUARANTEE?
have the proceeds mailed to the .
address of record, wired or sent . A signature guarantee
by ACH to a commercial bank . verifies the authenticity
account previously designated on . of your signature and may
the Account Application. Under . be obtained from any of y
most circumstances, payments will . the following: banks,
be transmitted on the next . brokers, dealers, certain
Business Day following receipt of . credit unions, securities
a valid telephone request for . exchange or association,
redemption. Wire redemption . clearing agency or
requests may be made by calling . savings association. A
1-800-342-5734. Class D Shares are . notary public cannot
subject to a wire redemption . provide a signature
charge (presently $10.00) which . guarantee.
will be subtracted from the amount ...........................
of the redemption.

Neither the Trust nor the Transfer Agent will be
responsible for any loss, liability, cost or expense for
acting upon wire instructions or upon telephone instructions
that it reasonably believes to be genuine. The Trust and the
Trust's Transfer Agent will each employ reasonable procedures
to confirm that instructions communicated by telephone are
genuine, including requiring a form of personal identification
prior to acting upon instructions received by telephone and
recording telephone instructions. If market conditions are
extraordinarily active, or other extraordinary circumstances
exist, and you experience difficulties placing redemption
orders by telephone, you may wish to consider placing your
order by other means.

Systematic Systematic Withdrawal Plans may not be established for
Withdrawal Class A accounts.
Plan ("SWP")
You may establish a systematic withdrawal plan for a
Class D account with a $10,000 minimum balance. Under the
plan, redemptions can be automatically processed from accounts
(monthly, quarterly, semi-annually or annually) by check or by
ACH wire with a minimum redemption amount of $50. Please note
that if withdrawals exceed income dividends, your invested
principal in the account will be depleted.

Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net asset
value per share, your original investment could be exhausted
entirely. To participate in the SWP, you must have your
dividends automatically reinvested. You may change or cancel
the SWP at any time, upon written notice to the Transfer
Agent.

Additional You may redeem shares at any time. For an IRA or other tax-
Considerations deferred account, you must make your redemption request in
For IRAs or Other writing. Redemption proceeds are normally credited to your
Retirement account within two business days after the receipt of the
Accounts request in good order. You should be aware that any
distributions personally received by you from the account
prior to age 59 1/2 are generally subject to a 10% penalty
tax, as well as to ordinary income taxes. To avoid the 10%
penalty, you must generally roll over your distribution
to another tax-deferred account or tax-qualified retirement
plan (if permitted) within 60 days.

45
<PAGE>

GENERAL INFORMATION ____________________________________________________________

The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated November 20, 1995. The
Declaration of Trust permits the Trust to offer separate
portfolios of shares and different classes of each
portfolio. Shareholders may purchase shares in each Fund
through two separate classes of shares: Class A Shares and
Class D Shares, which provide for variations in
distribution, shareholder servicing and transfer agent
costs, voting rights and dividends. Additional information
pertaining to the Trust may be obtained by writing to SEI
Financial Management Corporation, 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658, or by calling 1-800-342-
5734. All consideration received by the Trust for shares of
any Fund and all assets of such Fund belong to that Fund and
would be subject to liabilities related thereto.

The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, including litigation and
other extraordinary expenses, brokerage costs, interest
charges, taxes and organization expenses.

Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of 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 the shareholder of record to one
vote. Each portfolio of the Trust will vote separately on
matters relating solely to that portfolio. Each class will
vote separately on matters pertaining to its distribution
plan. Each Fund will vote its Underlying Portfolio shares in
proportion to the votes of all other shareholders of each
respective Underlying Portfolio.

As a Massachusetts business trust, the Trust is not
required to hold annual meetings of shareholders, but
approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by the
remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least
10% of the outstanding shares of the Trust. In the event
that such a meeting is requested, the Trust will provide
appropriate assistance and information to the shareholders
requesting the meeting.

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.

46
<PAGE>

Shareholder Shareholder inquiries should be directed to DST Systems,
Inquiries Inc., P.O. Box 419240, Kansas City, Missouri 64141-6240.

Dividends Substantially all of the net investment income (exclusive of
capital gain) of each Fund is periodically declared and paid
as a dividend. Capital gains, if any, are distributed at
least annually.

Shareholders automatically receive all income dividends
and capital gain distributions in additional shares 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 Adviser at least 15 days prior to the
distribution.

Dividends and capital gains of each Fund are paid on a
per-share basis. The value of each share will be reduced by
the amount of any such payment. If shares are purchased
shortly before the record date for dividend or capital gain
distributions, 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 dividends on Class D Shares will normally be lower
than on Class A Shares of a Fund because of the additional
distribution, shareholder servicing and transfer agent
expenses charged to Class D Shares.

Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Price Waterhouse LLP serves as the independent public
Accountants accountants of the Trust.

Custodian and SFM, which serves as transfer agent for the Underlying
Wire Agent Portfolios, also maintains custody of assets of each Fund
that consist of uncertificated shares of the Underlying
Portfolios. CoreStates Bank, N.A., Broad and Chestnut
Streets, P.O. Box 7618, Philadelphia, Pennsylvania 19101,
acts as Custodian for the non-mutual fund assets of each
Fund (the "Custodian"). The Custodian holds cash, securities
and other assets of the Trust as required by the 1940 Act,
and acts as wire agent of the Trust's assets.

47
<PAGE>

DESCRIPTION OF
PERMITTED INVESTMENTS AND
RISK FACTORS OF
THE UNDERLYING
PORTFOLIOS _____________________________________________________________________

The following is a brief description of the permitted
investment practices for the Underlying Portfolios, and the
associated risk factors:

American ADRs are securities, typically issued by a U.S. financial
Depositary institution (a "depositary"), that evidence ownership
Receipts interests in a security or a pool of securities issued by a
("ADRs"), foreign issuer and deposited with the depositary. ADRs
Continental include American Depositary Shares and New York Shares.
Depositary EDRs, which are sometimes referred to as Continental
Receipts Depositary Receipts ("CDRs"), are securities, typically
("CDRs"), issued by a non-U.S. financial institution, that evidence
European ownership interests in a security or a pool of securities
Depositary issued by either a U.S. or foreign issuer. GDRs are issued
Receipts globally and evidence similar ownership.
("EDRs") and
Global
Depositary
Receipts
("GDRs")

Asset-Backed Asset-backed securities are securities secured by non-
Securities mortgage assets such as company receivables, truck and auto
loans, leases and credit card receivables. Such securities
are generally issued as pass-through certificates, which
represent undivided fractional ownership interests in the
underlying pools of assets. Such securities also may be debt
obligations and are generally issued as the debt of a
special purpose entity, such as a trust, organized solely
for the purpose of owning such assets and issuing such debt.

Convertible Convertible securities are corporate securities that are
Securities 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 a convertible security 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.

Demand Demand instruments are instruments which may involve a
Instruments conditional or unconditional demand feature which permits
the holder to demand payment of the principal amount of the
instrument. They may include variable amount master demand
notes.

Derivatives Derivatives are securities that derive their value from
other securities. The following are considered derivative
securities: options on futures, futures, options (e.g., puts
and calls), swap agreements, mortgage-backed 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).

Equity Equity securities represent ownership interests in a company
Securities or corporation and consist of common stock, preferred stock,
warrants and rights to subscribe to common stock and, in
general, any security that is convertible into or
exchangeable for common stock.

48
<PAGE>

Investments in common stocks are subject to market risks
which may cause their prices to fluctuate over time. The
value of convertible securities is also affected by
prevailing interest rates, the credit quality of the issuer
and any call provisions. Changes in the value of fund
securities will not necessarily affect cash income derived
from these securities, but will affect a Portfolio's net
asset value.

Fixed Income Fixed income securities are debt obligations issued by
Securities corporations, municipalities and other borrowers. The market
value of fixed income investments will generally 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.

The Portfolios may invest in securities rated in the
fourth highest category by an NRSRO; such securities, while
still investment grade, are considered to have speculative
characteristics. The SIMT High Yield Bond Fund must invest
at least 65%, and the SIT Emerging Markets Equity Portfolio
may invest, up to 5% of its net assets in securities rated
lower than investment grade. 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.

Forward Foreign A forward contract involves an obligation to purchase or
Currency sell a specific currency amount at a future date, agreed
Contracts upon by the parties, at a price set at the time of the
contract. A Portfolio may also enter into a contract to
sell, for a fixed amount of U.S. dollars or other
appropriate currency, the amount of foreign currency
approximating the value of some or all of the Portfolio's
securities denominated in such foreign currency.

Futures Futures contracts provide for the future sale by one party
Contracts and and purchase by another party of a specified amount of a
Options on specific security at a specified future time and at a
Futures specified price. An option on a futures contract gives the
Contracts purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise price
during the term of the option. A Portfolio may use futures
contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to a
particular market or instrument. A Portfolio will minimize
the risk that it will be unable to close out a futures
contract by only entering into futures contracts which are
traded on national futures exchanges. In addition, a
Portfolio will only sell covered futures contracts and
options on futures contracts.

Stock and bond index futures are futures contracts for
various stock and bond indices that are traded on registered
securities exchanges. Stock and bond index futures contracts
obligate the seller to deliver (and the purchaser to take)
an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock or bond
index at the close of the last trading day of the contract
and the price at which the agreement is made.

49
<PAGE>

Stock and bond index futures contracts are bilateral
agreements pursuant to which two parties agree to take or
make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock or bond
index value at the close of trading of the contract and the
price at which the futures contract is originally struck. No
physical delivery of the stocks or bonds comprising the
Index is made; generally contracts are closed out prior to
the expiration date of the contracts.

No price is paid upon entering into futures contracts.
Instead, a Portfolio would be 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.

Eurodollar instruments are U.S. dollar-denominated
futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign
currency denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to
obtain a fixed rate for the lending of the funds and sellers
to obtain a fixed rate for borrowings.

There are risks associated with these activities,
including the following: (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 or no correlation between the changes in market
value of the securities held by the Portfolio and the prices
of futures and options on futures; (3) there may not be a
liquid secondary market for a futures contract or option;
(4) trading restrictions or limitations may be imposed by an
exchange; and (5) government regulations may restrict
trading in futures contracts and futures options.

A Portfolio may enter into futures contracts and options
on futures contracts traded on an exchange regulated by the
Commodities Futures Trading Commission ("CFTC"), as long as,
to the extent that such transactions are not for "bona fide
hedging purposes," the aggregate initial margin and premiums
on such positions (excluding the amount by which such
options are in the money) do not exceed 5% of a Portfolio's
net assets. A Portfolio may buy and sell futures contracts
and related options to manage its exposure to changing
interest rates and securities prices. Some strategies reduce
a Portfolio's exposure to price fluctuations, while others
tend to increase its market exposure. Futures and options on
futures can be volatile instruments and involve certain
risks that could negatively impact a Portfolio's return.

In order to avoid leveraging and related risks, when a
Portfolio purchases futures contracts, it will collateralize
its position by depositing an amount of cash or liquid, high
grade debt securities equal to the market value of the
futures positions held, less margin deposits, in a
segregated account with its custodian. Collateral equal to
the current market value of the futures position will be
marked to market on a daily basis.

50
<PAGE>

Illiquid Illiquid securities are securities that cannot be disposed
Securities of within seven business days at approximately the price at
which they are being carried on the Portfolio's books.
Illiquid securities include demand instruments with a demand
notice period exceeding seven days, when there is no
secondary market for such security and repurchase agreements
with durations over seven days in length.

Money Market Money market securities are high-quality, dollar-
Instruments denominated, short-term debt instruments. They consist of:
(i) bankers' acceptances, certificates of deposits, notes
and time deposits of highly-rated U.S. banks and U.S.
branches of foreign banks; (ii) U.S. Treasury Obligations
and obligations of agencies and instrumentalities of the
U.S. Government; (iii) high-quality commercial paper issued
by U.S. and foreign corporations; (iv) debt obligations with
a maturity of one year or less issued by corporations that
issue high-quality commercial paper; and (v) repurchase
agreements involving any of the foregoing obligations
entered into with highly-rated banks and broker-dealers.

Mortgage-Backed Mortgage-backed securities are instruments that entitle the
Securities holder to a share of all interest and principal payments
from mortgages underlying the security. The mortgages
backing these securities include conventional fifteen- and
thirty-year fixed rate mortgages, graduated payment
mortgages, adjustable rate mortgages, and balloon mortgages.
During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be
expected to accelerate. Prepayment of mortgages which
underlie securities purchased at a premium often results in
capital losses, while prepayment of mortgages purchased at a
discount often results in capital gains.

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, FNMA and FHLMC. 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 or corporate entity. These securities include
collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs"). 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.

Collateralized Mortgage Obligations ("CMOs"). CMOs are
debt obligations or multiclass pass-through certificates
issued by agencies or instrumentalities of the U.S.
Government or by private originators or investors in
mortgage loans. Principal payments on the underlying
mortgage assets may cause CMOs to be retired substantially
earlier than their stated maturities or final distribution
dates, resulting in a loss of all or part of any premium
paid.

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

51
<PAGE>

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.

REMICs. A REMIC is a CMO that qualifies for special tax
treatment under the Internal Revenue Code and invests in
certain mortgages principally secured by interests in real
property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or
"residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC
represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or FNMA, FHLMC or
GNMA-guaranteed mortgage pass-through certificates.

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 interest-
only class ("IO"), while the other class may receive all of
the principal payments and is thus termed the principal-only
class ("PO"). The value of IOs tends to increase as rates
rise and decrease as rates fall; the opposite is true of
POs.

Risk Factors. Due to the possibility of prepayments of
the underlying mortgage instruments, mortgage-backed
securities generally do not have a known maturity. 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.

Mortgage Dollar Mortgage "dollar rolls" are transactions in which mortgage-
Rolls backed securities are sold for delivery in the current month
and the seller simultaneously contracts to repurchase
substantially similar securities on a specified future date.
Any difference between the sale price and the purchase price
is netted against the interest income foregone on the
securities sold to arrive at an implied borrowing rate.
Alternatively, the sale and purchase transactions can be
executed at the same price, with the Portfolio being paid a
fee as consideration for entering into the commitment to
purchase.

Municipal Municipal securities consist of (i) debt obligations issued
Securities by or on behalf of public authorities to obtain funds to be
used for various public facilities, for refunding
outstanding obligations, for general operating expenses, and
for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial

52
<PAGE>

development bonds issued by or on behalf of public
authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated
facilities.

Obligations of Obligations of supranational entities are obligations of
Supranational entities established through the joint participation of
Entities several governments, such as the Asian Development Bank, the
Inter-American Development Bank, International Bank for
Reconstruction and Development (World Bank), African
Development Bank, European Economic Community, European
Investment Bank and the Nordic Investment Bank.

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 purchaser 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 Portfolio 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. If a Portfolio is unable to effect a closing
purchase transaction with respect to an option it has
written, it will not be able to sell the underlying security
until the option expires or the Portfolio delivers the
security upon exercise.

A Portfolio may purchase put and call options to protect
against a decline in the market value of the securities in
its portfolio or to anticipate an increase in the market
value of securities that the Portfolio may seek to purchase
in the future. A Portfolio purchasing put and call options
pays a premium therefor. If price movements in the
underlying securities are such that exercise of the options
would not be profitable for the Portfolio, loss of the
premium paid may be offset by an increase in the value of
the Portfolio's securities or by a decrease in the cost of
acquisition of securities by the Portfolio.

A Portfolio may write covered call options as a means of
increasing the yield on its fund and as a means of providing
limited protection against decreases 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 Portfolio will realized as profit the premium received
for such option. When a call option written by a Portfolio
is exercised, the Portfolio 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
written by a Portfolio is exercised, the Portfolio 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 Portfolio 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

53
<PAGE>

respects. They are transacted directly with dealers and not
with a clearing corporation, and therefore entail the risk
of non-performance 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 generally illiquid.

A Portfolio 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 foreign currency written by
a Portfolio will be "covered," which means that the
Portfolio will own an equal amount of the underlying foreign
currency. With respect to put options on foreign currency
written by a Portfolio, the Portfolio will establish a
segregated account with its Custodian consisting of cash or
liquid, high grade debt securities in an amount equal to the
amount the Portfolio would be required to pay upon exercise
of the put.

A Portfolio 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 Portfolio may choose
to terminate an option position by entering into a closing
transaction. The ability of a Portfolio 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
Portfolio writes an option on an index, it will establish a
segregated account containing cash or liquid, high grade
debt securities 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 Portfolio 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.

54
<PAGE>

Receipts Receipts are sold as zero coupon securities, which means
that they are sold at a substantial discount and redeemed at
face value at their maturity date without interim cash
payments of interest or principal. This discount is accreted
over the life of the security, and such accretion will
constitute the income earned on the security for both
accounting and tax purposes. Because of these features, such
securities may be subject to greater interest rate
volatility than interest paying investments. See also
"Taxes."

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.

Repurchase Repurchase agreements are agreements by which a Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed upon price (including
principal and interest) on an agreed upon date within a
number of days from the date of purchase. Repurchase
agreements are considered loans under the 1940 Act.

Securities In order to generate additional income, a Portfolio may lend
Lending securities which it owns pursuant to agreements requiring
that the loan be continuously secured by collateral
consisting of cash or securities of the U.S. Government or
its agencies equal to at least 100% of the market value of
the loaned securities. A Portfolio continues to receive
interest on the loaned securities while simultaneously
earning interest on the investment of cash collateral.
Collateral is marked to market daily. There may be risks of
delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail
financially or become insolvent.

Securities of There are certain risks connected with investing in foreign
Foreign Issuers securities. These include risks of adverse political and
economic developments (including possible governmental
seizure or nationalization of assets), the possible
imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting
requirements, the possibility that there will be less
information on such securities and their issuers available
to the public, the difficulty of obtaining or enforcing
court judgments abroad, restrictions on foreign investments
in other jurisdictions, difficulties in effecting
repatriation of capital invested abroad and difficulties in
transaction settlements and the effect of delay on
shareholder equity. Foreign securities may be subject to
foreign taxes, and may be less marketable than comparable
U.S. securities. The value of a Portfolio's investments
denominated in foreign currencies will depend on the
relative strengths of those currencies and the U.S. dollars,
and a Portfolio may be affected favorably or unfavorably by
changes in the exchange rates or exchange control
regulations between foreign currencies and the U.S. dollar.
Changes in foreign currency exchange rates also may affect
the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income
and gains if any, to be distributed to shareholders by a
Portfolio. Furthermore, emerging market countries may have
less stable political environments than more developed
countries. Also, it may be more difficult to obtain a
judgment in a court outside the United States.

55
<PAGE>

Short Sales A Portfolio may sell securities short against the box. A
short sale is "against the box" if at all times during which
the short position is open, the Portfolio owns at least an
equal amount of the securities or securities convertible
into, or exchangeable without further consideration for,
securities of the same issue as the securities that are sold
short.

Swaps, Caps, Interest rate swaps, mortgage swaps, currency swaps and
Floors and other types of swap agreements such as caps, floors and
Collars collars are designed to permit the purchaser to preserve a
return or spread on a particular investment or portion of
its portfolio, and to protect against any increase in the
price of securities a Portfolio anticipates purchasing at a
later date. In a typical cap or floor agreement, one party
agrees to make payments only under specified circumstances,
usually in return for payment of a fee by the other party.
An interest rate collar combines elements of buying a cap
and selling a floor.

Swaps, Caps, Floors and Collars are sophisticated hedging
instruments that typically involve a small investment of
cash relative to the magnitude of risk assumed. As a result,
these instruments can be highly volatile and have a
considerable impact on a Portfolio's performance.
U.S. Government Obligations issued or guaranteed by agencies of the U.S.
Agency Government, including, among others, the Federal Farm Credit
Obligations 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 (e.g., GNMA
securities), and others are supported by the right of the
issuer to borrow from the Treasury (e.g., Federal Farm
Credit Bank securities), while still others are supported
only by the credit of the instrumentality (e.g., FNMA
securities).

U.S. Treasury U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury, as well as separately traded
interest and principal component parts of such obligations
known as Separately Traded Registered Interest and Principal
Securities ("STRIPS") that are transferable through the
Federal book-entry system. STRIPS are sold as zero coupon
securities.

U.S. Treasury U.S. Treasury receipts are interests in separately traded
Receipts interest and principal component parts of U.S. Treasury
obligations that are issued by banks or brokerage firms and
are created by depositing U.S. Treasury notes and
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 of
receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains
the register.

Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest and may involve conditional or unconditional demand
Instruments features. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The

56
<PAGE>

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.

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 and When-issued or delayed delivery transactions involve the
Delayed Delivery purchase of an instrument with payment and delivery taking
Securities place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment.

Yankee Yankee obligations ("Yankees") are U.S. dollar-denominated
Obligations instruments of foreign issuers who either register with the
Securities and Exchange Commission or issue securities under
Rule 144A of the Securities Exchange Act of 1933. These
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.

Zero Coupon, Zero coupon securities are securities that are sold at a
Pay In-Kind and discount to par value and securities on which interest
Deferred Payment payments are not made during the life of the security. Upon
Securities maturity, the holder is entitled to receive the par value of
the security. While interest payments are not made on such
securities, holders of such securities are deemed to have
received "phantom income" annually. Because a Portfolio will
distribute its "phantom income" to shareholders, to the
extent that shareholders elect to receive dividends in cash
rather than reinvesting such dividends in additional shares,
a Portfolio will have fewer assets with which to purchase
income producing securities. Zero coupon, pay-in-kind and
deferred payment securities may be subject to greater
fluctuation in value and lesser liquidity in the event of
adverse market conditions that comparably rated securities
paying cash interest at regular interest payment periods.

Additional information on other permitted investments can
be found in the Trust's Statement of Additional Information
and in the Underlying Portfolios' Prospectuses and
Statements of Additional Information.

57
<PAGE>

TABLE OF CONTENTS ______________________________________________________________
<TABLE>
<S> <C>
Fund Expenses (Class A Shares)....... 2
Fund Expenses (Class D Shares)....... 3
Indirect Expenses.................... 4
Investment Objectives and Policies of
the Funds............................ 6
General Investment Policies of the
Funds................................ 9
Risk Factors of the Funds............ 10
Investment Limitations of the Funds.. 11
Portfolio Turnover of the Funds...... 11
Investment Goals of the Underlying
Portfolios........................... 12
Investment Objectives and Policies of
the Underlying Portfolios............ 12
General Investment Policies of the
Underlying Portfolios................ 22
Risk Factors of the Underlying
Portfolios........................... 23
</TABLE>
<TABLE>
<S> <C>
Fundamental Limitations of the
Underlying Portfolios............... 24
The Adviser and Manager of the
Funds............................... 25
The Advisers and Sub-Advisers to the
Underlying Portfolios............... 26
Transfer Agent...................... 35
Distribution of Fund Shares and
Shareholder Servicing............... 36
Performance......................... 37
Taxes............................... 38
Purchase and Redemption of Shares... 40
General Information................. 46
Description of Permitted Investments
and Risk Factors of the Underlying
Portfolios.......................... 48
</TABLE>
<PAGE>

SEI ASSET ALLOCATION TRUST

INVESTMENT ADVISER, MANAGER AND SHAREHOLDER SERVICING AGENT:
SEI FINANCIAL MANAGEMENT CORPORATION

DISTRIBUTOR:
SEI FINANCIAL SERVICES COMPANY

This STATEMENT OF ADDITIONAL INFORMATION is not a Prospectus. It is intended to
provide additional information regarding the activities and operations of the
Trust, and should be read in conjunction with the Trust's Prospectus dated
April 1, 1996. A Prospectus may be obtained upon request and without charge by
writing the Trust's distributor, SEI Financial Services Company, at 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling 1-800-342-5734.

<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
The Trust........................................................... S-2
Description of Permitted Investments of the
Underlying Portfolios.............................................. S-2
Investment Limitations of the Funds................................. S-11
Investment Limitations of the Underlying
Portfolios......................................................... S-13
The Manager and Shareholder Servicing Agent......................... S-17
The Investment Adviser to the Funds................................. S-18
The Advisers and Sub-Advisers
To the Underlying Portfolios....................................... S-18
Portfolio Managers of the Underlying Portfolios......................S-21
Distribution........................................................ S-19
Trustees and Officers of the Trust.................................. S-19
Performance......................................................... S-21
Purchase and Redemption of Shares................................... S-21
Shareholder Services................................................ S-22
Taxes............................................................... S-23
Portfolio Transactions.............................................. S-24
Description of Shares............................................... S-25
Limitation of Trustees' Liability................................... S-25
Voting.............................................................. S-26
Shareholder Liability............................................... S-26
Experts..............................................................S-30
Financial Statements.................................................S-30
</TABLE>

April 1, 1996

SEI-F-113-01
<PAGE>

THE TRUST

SEI Asset Allocation (the "Trust") is an open-end management investment company
that currently consists of the following five separate investment portfolios
(each a "Fund" and, together, the "Funds"): Diversified Conservative Income
Fund, Diversified Conservative Fund, Diversified Moderate Growth Fund,
Diversified Growth Fund, and Diversified U.S. Stock Fund. The Funds invest in
shares of certain portfolios (the "Underlying Portfolios") of SEI Liquid Asset
Trust ("SLAT"), SEI Institutional Managed Trust ("SIMT") and SEI International
Trust ("SIT"), each of which is managed by SEI Financial Management Corporation
("SFM"), the Trust's investment adviser and manager. (Together, SLAT, SIMT and
SIT are the "Underlying Trusts.") The Funds may invest in the following
Underlying Portfolios: SIMT Large Cap Growth Portfolio, SIMT Large Cap Value
Portfolio, SIMT Small Cap Growth Portfolio, SIMT Small Cap Value Portfolio, SIT
International Equity Portfolio, SIT Emerging Markets Equity Portfolio, SIMT Core
Fixed Income Portfolio, SIMT High Yield Bond Portfolio, SIT International Fixed
Income Portfolio and SLAT Prime Obligation Portfolio.

The Trust was established as a Massachusetts business trust pursuant to a
Declaration of Trust dated November 20, 1995. The Declaration of Trust permits
the Trust to offer separate series ("portfolios") of units of beneficial
interest ("shares") and separate classes of portfolios. Except for differences
between the Class A shares and Class D shares pertaining to distribution and
shareholder servicing fees, voting rights, dividends and transfer agent
expenses, each share of each portfolio represents an equal proportionate
interest in that Fund with each other share of that Fund.

This Statement of Additional Information relates to the following Funds:
Diversified Conservative Income Fund, Diversified Conservative Fund, Diversified
Moderate Growth Fund, Diversified Growth Fund and Diversified U.S. Stock Fund.
Shareholders may purchase shares in the Funds through two separate classes,
Class A and Class D, which provide for variations in distribution and
shareholder servicing costs, transfer agent fees, voting rights and dividends.

DESCRIPTION OF PERMITTED INVESTMENTS OF THE UNDERLYING PORTFOLIOS

AMERICAN DEPOSITORY RECEIPTS ("ADRS") Generally, ADRs are designed for trading
in the U.S. securities market, EDRs are designed for trading in European
securities markets and GDRs are designed for trading in non-U.S. securities
markets. ADRs, EDRs, CDRs and GDRs may be available for investment through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the security underlying the receipt and a depositary,
whereas an unsponsored facility may be established by a depositary without
participation by the issuer of the receipt's underlying security. Holders of an
unsponsored depositary receipt generally bear all the costs of the unsponsored
facility. The depositary of an unsponsored facility frequently is under no
obligation to distribute shareholder communications received from the issuer of
the deposited security or to pass through to the holders of the receipts voting
rights with respect to the deposited securities.

ASSET-BACKED SECURITIES Asset-backed securities are securities backed by
automobile, credit-card or other types of receivables and in securities backed
by other types of assets. Credit support for asset-backed securities may be
based on the underlying assets and/or provided by a third party through credit
enhancements. Credit enhancement techniques include letters of credit,
insurance bonds, limited guarantees (which are generally provided by the
issuer), senior-subordinated structures and over-collateralization.
<PAGE>

Asset-backed securities are not issued or guaranteed by the United States
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts for a certain 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. The purchase of asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities. For example, 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. There also is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on those
securities. 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 the mortgage-backed securities. In addition, credit card
receivables are unsecured obligations of the card holders.

BANK NOTES Bank notes are notes used to represent debt obligations issued by
banks in large denominations.

BANKERS' ACCEPTANCES Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers' acceptances are issued by
corporations to finance the shipment and storage of goods. 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 a term used to describe unsecured short-
term promissory notes issued by banks, municipalities, corporations and other
entities. Maturities on these issues vary, generally from a few to 270 days.

CONVERTIBLE SECURITIES Convertible securities, such as rights, bonds, notes
and preferred stocks, which are convertible into or exchange for common stocks,
have characteristics similar to both fixed income and equity securities.
Because of the conversion feature, the market value of convertible securities
tends to move together with the market value of the underlying stock. As a
result, an Underlying Portfolio's selection of convertible securities is based,
to a great extent, on the potential for capital appreciation that may exist in
the underlying stock.

CORPORATE ZERO COUPON SECURITIES 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 date 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.

FIXED INCOME SECURITIES Fixed income securities with longer maturities tend to
produce higher yields, the prices of longer maturity securities and 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 Portfolio's net asset value.

S-3
<PAGE>

FOREIGN SECURITIES Foreign securities are securities issued by non-U.S.
issuers. Certain of the Underlying Portfolios may invest in U.S. dollar
denominated obligations or securities of foreign issuers. Permissible
investments may consist of obligations of foreign branches of U.S. banks and
foreign banks, including European Certificates of Deposit, European Time
Deposits, Canadian Time Deposits, Yankee Certificates of Deposit and investments
in Canadian Commercial Paper and Europaper. These instruments may subject the
Underlying Portfolio 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 the 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 commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to different 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. The yankee obligations
selected for the Portfolios will adhere to the same quality standards as those
utilized for the selection of domestic debt obligations.

Some securities issued by foreign governments or their subdivisions, agencies or
instrumentalities may not be backed by the full faith and credit of the foreign
government.

FORWARD FOREIGN CURRENCY CONTRACTS Forward Foreign Currency Contracts are
contracts which involve an obligation to purchase or sell a specified currency
at a future date at a price set at the time of the contract. Forward currency
contracts do not eliminate fluctuations in the values of portfolio securities
but rather allow an Underlying Portfolio to establish a rate of exchange for a
future point in time. At the maturity of a forward contract, the Portfolio may
either sell a portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader, obligating it to purchase, on the same maturity date, the same
amount of the foreign currency. The Portfolio may realize a gain or loss from
currency transactions.

When entering into a contract for the purchase or sale of a security in a
foreign currency, an Underlying Portfolio may enter into a foreign forward
currency contract for the amount of the purchase or sale price to protect
against variations, between the date the security is purchased or sold and the
date on which payment is made or received, in the value of the foreign currency
relative to the United States dollar or other foreign currency.

Also, when the Underlying Portfolio's adviser or sub-adviser anticipates that a
particular foreign currency may decline substantially relative to the United
States dollar or other leading currencies, in order to reduce risk, an
Underlying Portfolio may enter into a forward contract to sell, for a fixed
amount, the amount of foreign currency approximating the value of its securities
denominated in such foreign currency. With respect to any such forward foreign
currency contract, it will not generally be possible to match precisely the
amount covered by that contract and the value of the securities involved due to
changes in the values of such securities resulting from market movements between
the date the forward contract is entered into and the date it matures. In
addition, while forward currency contracts may offer protection from losses
resulting from declines in value of a particular foreign currency, they also
limit potential gains which might result from increases in the value of such
currency. An Underlying Portfolio will also incur costs in connection with
forward foreign currency contracts

S-4
<PAGE>

and conversions of foreign currencies into United States dollars. Some of the
Underlying Portfolios may enter into forward foreign currency contracts.

ILLIQUID SECURITIES The SIT Emerging Markets Equity Portfolio believes that
carefully selected investments in joint ventures, cooperatives, partnerships,
private placements, unlisted securities and other similar situations
(collectively, "special situations") could enhance the Portfolio's capital
appreciation potential. Investments in special situations may be illiquid, as
determined by the Portfolio's advisers based on criteria approved by the Board
of Trustees. To the extent these investments are deemed illiquid, the
Portfolio's investment in them will be consistent with its 10% restriction on
investment in illiquid securities.

LOWER RATED SECURITIES Lower-rated securities are lower-rated bonds commonly
referred to as "junk bonds" or high-yield/high-risk securities. These
securities are rated "Baa" or lower by Moody's Investors Service, Inc.
("Moody's") or "BBB" or lower by Standard & Poor's Corporation ("S&P"). The
SIMT High Yield Bond Portfolio may invest in securities rated as low as "C" by
Moody's or "D" by S&P. These ratings indicate that the obligations are
speculative and may be in default. In addition, the Portfolio may invest in
unrated securities of comparable quality subject to the restrictions stated in
the Portfolio's Prospectus.

CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES. The
descriptions below are intended to supplement the discussion in the Portfolio's
Prospectus under "Risk Factors Relating to Investing in Lower Rated Securities."

GROWTH OF HIGH-YIELD, 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. The market for lower-
rated securities may be less active, causing market price volatility and limited
liquidity in the secondary market. This may limit the Portfolios' ability to
sell such securities at their market value. In addition, the market for these
securities may 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.

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES. Lower rated bonds are
very sensitive to adverse economic changes and corporate developments. During
an economic down turn 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, the Portfolio 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 the Portfolio'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, the Portfolio would 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 Portfolio's assets. If the
Portfolio 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 Portfolio's rate of return.

S-5
<PAGE>

LIQUIDITY AND VALUATION. There may be little trading in the secondary
market for particular bonds, which may affect adversely the Portfolio'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 the Portfolio's net asset value and
investment practices, the secondary market for high-yield securities, the
financial condition of issuers of these securities and the value of outstanding
high-yield securities.

TAXES. The Portfolio may purchase debt securities (such as zero-coupon or
pay-in-kind securities) that contain original issue discount. Original issue
discount that accrues in a taxable year is treated as earned by a Portfolio and
therefore is subject to the distribution requirements of the tax code even
though the Portfolio has not received any interest payments on such obligations
during that period. Because the original issue discount earned by the Portfolio
in a taxable year may not be represented by cash income, the Portfolio may have
to dispose of other securities and use the proceeds to make distributions to
shareholders.

MORTGAGE-BACKED SECURITIES Mortgage-backed securities are securities which
represent pools of mortgage loans assembled for sale to investors by various
governmental agencies such as the Government National Mortgage Association
("GNMA") and government-related organizations such as the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"), as well as by non-governmental issuers such as commercial banks,
savings and loan institutions, mortgage bankers, and private mortgage insurance
companies. Certain Underlying Portfolios may, consistent with their respective
investment objectives and policies, invest in mortgage-backed securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities.
Although certain mortgage-backed securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If an Underlying Portfolio purchases a mortgage-
backed security at a premium, that portion may be lost if there is a decline in
the market value of the security whether resulting from changes in interest
rates or prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a mortgage-
backed security may decline when interest rates rise, the converse is not
necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. Because of these
unpredictable prepayment characteristics, it is often not possible to predict
accurately the average life or realized yield of a particular issue. For this
and other reasons, a mortgage-backed security's stated maturity may be shortened
by unscheduled prepayments on the underlying mortgages and, therefore, it is not
possible to predict accurately the security's investment return to an Underlying
Portfolio. In addition, regular payments received in respect of mortgage-backed
securities include both interest and principal. No assurance can be given as to
the return an Underlying Portfolio will receive when these amounts are
reinvested.

An Underlying Portfolio may also invest in collateralized mortgage obligations
("CMOs") structured on pools of mortgage pass-through certificates or mortgage
loans. In a CMO, series of bonds or certificates are usually issued in multiple
classes. Principal and interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in a variety of ways.
Each class of a CMO, often referred to as a "tranche," is issued with a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. CMOs will be purchased only if rated in the three highest rating
categories by a nationally recognized statistical rating organization such as
Moody's or S&P. For purposes of determining the average maturity of a

S-6
<PAGE>

mortgage-backed security in its investment portfolio, the Underlying Portfolios
may utilize the expected average life of the security, as estimated in good
faith by the Portfolio's adviser and sub-advisers, and will not invest in
mortgage-backed securities with an expected average maturity of over seven
years.

Stripped mortgage-backed securities ("SMBs") are mortgage-backed securities
where the interest portion of the security has been stripped from the principal
portion of the security, and the two component parts are sold separately. SMBs
are extremely sensitive to changes in interest rates because of the impact
thereon of prepayment of principal on the underlying mortgage securities. The
market for SMBs is not as fully developed as other markets; SMBs, therefore, may
be illiquid.

There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-backed securities
and among the securities that they issue. Mortgage-backed securities issued by
the GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") that are guaranteed as to the timely payment of principal and interest by
GNMA and such guarantee is backed by the full faith and credit of the United
States. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-backed securities issued by the
FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") that are solely the obligations of the FNMA and are not backed by
or entitled to the full faith and credit of the United States. The FNMA is a
government-sponsored organization owned entirely by private stockholders.
Fannie Maes are guaranteed as to timely payment of the principal and interest by
FNMA. Mortgage-backed securities issued by the FHLMC include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or "PC's"). The FHLMC
is a corporate instrumentality of the United States, created pursuant to an Act
of Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Banks and do
not constitute a debt or obligation of the United States or of any Federal Home
Loan Bank. Freddie Macs entitle the holder to timely payment of interest, which
is guaranteed by the FHLMC. The FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans. When
the FHLMC does not guarantee timely payment of principal, FHLMC may remit the
amount due on account of its guarantee of ultimate payment of principal at any
time after default on an underlying mortgage, but in no event later than one
year after it becomes payable. For FHLMC REMIC Certificates, FHLMC guarantees
the timely payment of interest, and also guarantees the payment of principal as
payments are required to be made on the underlying mortgage participation
certificates. FNMA REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA.

MORTGAGE DOLLAR ROLLS Mortgage dollar rolls may be renewed prior to cash
settlement and initially may involve only a firm commitment agreement by the
Portfolio to buy a security. If the broker-dealer to whom the Portfolio sells
the security becomes insolvent, the Portfolio's right to repurchase the security
may be restricted. Other risks involved in entering into mortgage dollar rolls
include the risk that the value of the security may change adversely over the
term of the mortgage dollar roll and that the security the Portfolio is required
to repurchase may be worth less than the security that the Portfolio originally
held.

To avoid any leveraging concerns, a Portfolio will place U.S. Government or
other liquid, high grade debt securities in a segregated account with its
Custodian in an amount sufficient to cover its repurchase obligation.

MUNICIPAL LEASES Municipal leases are instruments, or participations in
instruments, issued in connection with lease obligations or installment purchase
contract obligations of municipalities ("municipal lease obligations").
Although municipal lease obligations do not constitute general obligations of
the issuing municipality, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate

S-7
<PAGE>

funds for, and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses, which provide
that the municipality has no obligation to make lease or installment purchase
payments in future years unless money is appropriated for such purpose in the
relevant years. Municipal lease obligations are a relatively new for of
financing, and the market for such obligations is still developing. Municipal
leases will be treated as liquid only if they satisfy criteria set forth in
guidelines established by the Board of Trustees, and there can be no assurance
that a market will exist or continue to exist for any municipal lease
obligation.

MUNICIPAL SECURITIES Municipal Securities include general obligation bonds
backed by the taxing power of the issuing municipality, revenue bonds backed by
the revenues of a project or facility (tolls from a bridge, for example), and
certificates of participation, which represent an interest in an underlying
obligation or commitment, such as an obligation issued in connection with a
leasing arrangement. The payment of principal and interest on private activity
and industrial development bonds generally is dependent solely on the ability of
a facility's user to meet its financial obligations and the pledge, if any, of
real and personal property as security for such payment.

Municipal securities include both municipal notes and municipal bonds.
Municipal notes include general obligation notes, tax anticipation notes,
revenue anticipation notes, bond anticipation notes, certificates of
indebtedness, demand notes and construction loan notes and participation
interests in municipal notes. Municipal bonds include general obligation bonds,
revenue or special obligation bonds, private activity and industrial development
bonds and participation interests in municipal bonds.

OPTIONS Options are contracts that give one of the parties to the contract the
right to buy or sell the security that is subject to the option at a stated
price during the option period, and obligates the other party to the contract to
buy or sell such security at the stated price during the option period.

The Underlying Portfolios may trade put and call options on stocks and stock
indices to a limited extent, as the Adviser or Sub-Adviser determines is
appropriate in seeking an Underlying Portfolio's investment objective, and
except as restricted by each Underlying Portfolio's investment limitations as
set forth below. See "Investment Limitations."

A put option gives the purchaser (an Underlying Portfolio) the right to sell,
and imposes on the writer an obligation to buy, the underlying security at the
exercise price during the option period. The advantage to an Underlying
Portfolio of buying the protective put is that if the price of the security
falls during the option period, the Underlying Portfolio may exercise the put
and receive the higher exercise price for the security. However, if the
security rises in value, the Underlying Portfolio will have paid a premium for
the put, which will expire unexercised.

A call option gives the purchaser the right to buy and imposes on the writer (an
Underlying Portfolio) the obligation to sell, the underlying security at the
exercise price during the option period. The advantage to an Underlying
Portfolio of writing covered call options is that the Underlying Portfolio
receives a premium, which is additional income. However, if the security rises
in value, an Underlying Portfolio may not fully participate in the market
appreciation. During the option period, a covered call option writer may be
assigned an exercise notice by the broker-dealer through whom such call option
was sold requiring the writer to deliver the underlying security against payment
of the exercise price. An Underlying Portfolio's obligation as the writer of a
covered call is terminated upon the expiration of the option period or at such
earlier time in which the writer effects a closing purchase transaction. As
noted above, a closing purchase transaction is one in which an Underlying
Portfolio, when obligated as a writer of an option, terminates its obligation by
purchasing an option of the same

S-8
<PAGE>

series as the option previously written. A closing purchase transaction cannot
be effected with respect to an option once the option writer has received an
exercise notice for such option.

The market value of an option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the pricing volatility of the underlying
security and the time remaining until the expiration date. The Underlying
Portfolios will engage in option transactions only as hedging transactions and
not for speculative purposes.

PAY-IN-KIND SECURITIES Pay-in-kind securities are securities which, at the
issuer's option, pay interest in either cash or additional securities for a
specified period. Pay-in-kind bonds, like zero coupon 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
accrued interest since the last payment. Pay-in-kind bonds are usually less
volatile than zero coupon bonds, but more volatile than cash pay securities.

PRIVATIZATIONS Privatizations are foreign government programs for selling all
or part of the interests in government owned or controlled enterprises. The
ability of a U.S. entity to participate in privatizations in certain foreign
countries may be limited by local law, or the terms on which a Portfolio may be
permitted to participate may be less advantageous than those applicable for
local investors. There can be no assurance that foreign governments will
continue to sell their interests in companies currently owned or controlled by
them or that privatization programs will be successful.

RECEIPTS Receipts are 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 (See "U.S.
Treasury Obligations") are interests in accounts sponsored by the U.S. Treasury.
Receipts are sold as zero coupon securities; for more information, see "Zero
Coupon Securities."

REPURCHASE AGREEMENTS Repurchase agreements are agreements under which
securities are acquired from a securities dealer or bank subject to resale on an
agreed upon date and at an agreed upon price which includes principal and
interest. The Portfolio or its agent will have actual or constructive possession
of the securities held as collateral for the repurchase agreement. An Underlying
Portfolio bears a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from exercising its right
to dispose of the collateral securities, or if the Portfolio realizes a loss on
the sale of the collateral securities. An adviser will enter into repurchase
agreements on behalf of a Portfolio only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the Trustees. An Underlying
Portfolio enters into repurchase agreements only with financial institutions
that it deems to present minimal risk of bankruptcy during the term of the
agreement, based on guidelines that are periodically reviewed by the Board of
Trustees. These guidelines currently permit each Portfolio to enter into
repurchase agreements only with approved banks and primary securities dealers,
as recognized by the Federal Reserve Bank of New York, which have minimum net
capital of $100 million, or with a member bank of the Federal Reserve System.
Repurchase agreements are considered to be loans collateralized by the
underlying security. Repurchase agreements entered into by an Underlying
Portfolio will provide that the

S-9
<PAGE>

underlying security at all times shall have a value at least equal to 102% of
the price stated in the agreement. This underlying security will be marked to
market daily. The advisers and sub-advisers will monitor compliance with this
requirement. Under all repurchase agreements entered into by an Underlying
Portfolio, the Custodian or its agent must take possession of the underlying
collateral. However, if the seller defaults, an Underlying Portfolio could
realize a loss on the sale of the underlying security to the extent the proceeds
of the sale are less than the resale price. In addition, even though the
Bankruptcy Code provides protection for most repurchase agreements, if the
seller should be involved in bankruptcy or insolvency proceedings, an Underlying
Portfolio may incur delay and costs in selling the security and may suffer a
loss of principal and interest if the Underlying Portfolio is treated as an
unsecured creditor.

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
(including investment companies) who purchase for investment. Any resale of
such commercial paper must be in 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 Securities lending is an investment technique which enables
an Underlying Portfolio to generate additional income by lending its securities
pursuant to agreements requiring that the loans be continuously secured by cash,
securities of the U.S. Government or its agencies, or any combination of cash
and such securities, as collateral equal to at least the market value at all
times of the loaned securities. Such loans will not be made if, as a result,
the aggregate amount of all outstanding loaned securities for an Underlying
Portfolio exceeds 20% of the value of that Portfolio's total assets taken at
fair market value. Loans are made only to borrowers deemed by the adviser or
sub-adviser to be in good standing and when, in the judgment of the adviser or
sub-adviser, the consideration that can be earned currently from such loaned
securities justifies the attendant risk. Any loan may be terminated by either
party upon reasonable notice to the other party. Each of the Underlying
Portfolios may use the Distributor as a broker in these transactions.

SWAP, CAPS, FLOORS AND COLLARS In a typical interest rate swap, one party
agrees to make regular payments equal to a floating interest rate times a
"notional principal amount," in return for payments equal to a fixed rate times
the same amount, for a specific period of time. If a swap agreement provides for
payment in different currencies, the parties might agree to exchange the
notional principal amount as well. Swaps may also depend on other prices or
rates, such as the value of an index or mortgage prepayment rates.

The buyer of an interest rate cap obtains the right to receive payments to the
extent that a specific interest rate exceeds an agreed-upon level, while the
seller of an interest rate floor is obligated to make payments to the extent
that a specified interest rate falls below an agreed-upon level.

Swap agreements are subject to risks related to the counterparty's ability to
perform, and may decline in value if the counterparty's creditworthiness
deteriorates. An Underlying Portfolio may also suffer losses if it is unable to
terminate outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation an Underlying Portfolio may have under these types
of arrangements will be covered by setting aside liquid, high grade securities
in a segregated account. An Underlying Portfolio will enter into swaps only with
counterparties believed to be creditworthy.

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,

S-10
<PAGE>

it cannot be traded in the secondary market. Time deposits with a withdrawal
penalty are considered to be illiquid securities.

U.S. GOVERNMENT AGENCY SECURITIES Guarantees of principal by agencies or
instrumentalities of the United Sates 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 the Underlying Portfolio's shares.

U.S. TREASURY RECEIPTS U.S. Treasury receipts include "Treasury Receipts"
("TRs"), "Treasury Investment Growth Receipts" ("TIGRs") "Liquid Yield Option
Notes" ("LYONs") and "Certificates of Accrual on Treasury Securities" ("CATS").
LYONs, TIGRs and CATS are interests in private proprietary accounts, while TRs
and STRIPS are interests in accounts sponsored by the U.S. Treasury.

VARIABLE OR FLOATING RATE INSTRUMENTS Variable or floating rate instruments
are instruments which may involve a demand feature and may include variable
amount master demand notes available through the Custodian. Variable or
floating rate instruments bear interest at a rate which varies with changes in
market rates. The holder of an instrument with a demand feature may tender the
instrument back to the issuer at par prior to maturity. A variable amount
master demand note is issued pursuant to a written agreement between the issuer
and the holder, its amount may be increased by the holder or decreased by the
holder or issuer, it is payable on demand, and the rate of interest varies based
upon an agreed formula. 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. The quality of the
underlying credit must, in the opinion of an Underlying Portfolio's advisers, be
equivalent to the long-term bond or commercial paper ratings applicable to
permitted investments for each Underlying Portfolio. Each Underlying
Portfolio's advisers will monitor on an ongoing basis the earning power, cash
flow, and liquidity ratios of the issuers of such instruments and will similarly
monitor the ability of an issuer of a demand instrument to pay principal and
interest on demand.

In case of obligations which include a put feature at the option of the debt
holder, the date of the put may be used as an effective maturity date for the
purpose of determining weighted average portfolio maturity.

WHEN-ISSUED SECURITIES When-issued securities are securities for which delivery
and payment normally take place within 45 days after the date of commitment to
purchase. In the case of debt obligations, delivery and payment normally takes
place within 45 days after the date of commitment to purchase. An Underlying
Portfolio 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 are subject to market
fluctuation, and no interest accrues to the purchaser during this period. The
payment obligation and the interest rate that will be received on the 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. An Underlying
Portfolio will establish a segregated account with the Custodian and maintain
liquid, high grade debt securities in an amount at least equal in value to that
Underlying Portfolio's commitments to purchase when-issued securities. If the
value of these assets declines, the Underlying Portfolio involved will place
additional liquid assets in the account on a daily basis so that the value of
the assets in the account is equal to the amount of such commitments.

S-11
<PAGE>

One form of when-issued or delayed-delivery security that a Portfolio 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.

ZERO COUPON SECURITIES Zero coupon securities are fixed income securities that
have been stripped of their unmatured interest coupons. Zero coupon securities,
including STRIPS and Receipts (TRs, TIGRs and CATS) 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
accredited 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. Shareholders may have to redeem
shares to pay tax on the "phantom income" earned by a Portfolio, and the
Portfolio may have to dispose of its portfolio securities under disadvantageous
circumstances to generate cash, or may have to leverage itself by borrowing cash
to satisfy distribution requirements. A Portfolio accrues income with respect
to the securities prior to the receipt in cash payments. Pay-in-kind securities
are securities that have interest payable by delivery of additional securities.
Deferred payment securities are securities that remain zero coupon securities
until a predetermined date, at which time the stated coupon rate becomes
effective and interest becomes payable at regular intervals. See also "Taxes."

INVESTMENT LIMITATIONS OF THE FUNDS

FUNDAMENTAL POLICIES

Each Fund may not:

1. Make loans if, as a result, more than 33 1/3% of its total assets would be
loaned to other parties.

2. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase commodities contracts
relating to financial instruments, such as financial futures or index
contracts and options on such contracts.

3. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the Securities and Exchange Commission (the
"SEC").

4. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

5. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.

These investment limitations and certain of the investment limitations in each
Prospectus are fundamental policies of the Funds and may not be changed without
the approval of a majority of a Fund's outstanding shares. The term "majority
of 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.

NON-FUNDAMENTAL POLICIES

S-12
<PAGE>

Each Fund may not:

1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund'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 each 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 (i) by
purchase in the open market involving only customary brokers' commissions;
(ii) in connection with mergers, acquisitions of assets, or consolidations;
or (iii) as permitted by the Trust's SEC Order; or (iv) as otherwise
permitted by the 1940 Act.

5. Purchase or retain securities (other than obligations issued or guaranteed
by the U.S. Government or any foreign government, their agencies or
instrumentalities or shares of the Underlying Portfolios) of an issuer if,
to the knowledge of the Trust, an officer, trustee, partner or director of
the Trust or any investment adviser of the Trust owns beneficially more
than 1/2 of the 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.

6. 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 fair market value) would be invested in
such securities.

A Fund's purchase of investment company 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) applies at the time of purchase.
These limitations are non-fundamental and may be changed by the Trust's Board of
Trustees without a vote of shareholders.

ADDITIONAL RESTRICTIONS

The following are non-fundamental investment limitations that are currently
required by one or more states in which the Trust sells shares of the Funds.
These limitations are in addition to, and in some cases more restrictive than,
the fundamental and non-fundamental investment limitations listed above. A
limitation may be changed or eliminated without shareholder approval if the
relevant state changes or eliminates its policy

S-13
<PAGE>

regarding such investment restriction. As long as a Fund's shares are
registered for sale in such states, it may not:

1. Invest more than 5% of its net assets in warrants; provided that, of this
5%, no more than 2% will be in warrants that are not listed on the New York
Stock Exchange or the American Stock Exchange.

2. Invest more than 15% of its net assets in illiquid securities, including
securities which are not readily marketable.

INVESTMENT LIMITATIONS OF THE UNDERLYING PORTFOLIOS

FUNDAMENTAL POLICIES

The following investment limitations are fundamental policies of each Underlying
Portfolio which cannot be changed with respect to an Underlying Portfolio wit
hout the consent of the holders of a majority of that Portfolio's outstanding
shares. The term "majority of outstanding shares" means the vote of (i) 67% or
more of an Underlying Portfolio's shares present at a meeting, if not more than
50% of the outstanding shares of an Underlying Portfolio are present or
represented by proxy, or (ii) more than 50% of an Underlying Portfolio's out
standing shares, whichever is less.

The SIMT Core Fixed Income, SIMT High Yield Bond, SIMT Large Cap Growth, SIMT
Large Cap Value, SIMT Small Cap Growth, SIMT Small Cap Value, SIT International
Equity and SIT Emerging Markets Equity Portfolios may not:

1. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate a Portfolio to purchase securities or
require a Portfolio 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.

2. Make loans if, as a result, more than 33 1/3% of its total assets would
be lent to other parties, except that each Portfolio may (i) purchase or
hold debt instruments in accordance with its investment objective and
policies; (ii) enter into repurchase agreements; and (iii) lend its
securities.

3. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Portfolio may purchase (i) marketable
securities issued by companies which own or invest in real estate
(including real estate investment trusts), commodities, or commodities
contracts; and (ii) commodities contracts relating to financial
instruments, such as financial futures contracts and options on such
contracts.

4. Issue senior securities (as defined in the 1940 Act) except as permitted
by rule, regulation or order of the Securities and Exchange Commission
(the "SEC").

5. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

6. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.

The SIT International Fixed Income Portfolio may not:

S-14
<PAGE>

1. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings as described in the Prospectuses in aggregate amounts not to
exceed 10% of the net assets of such Portfolio taken at current value at
the time of the incurrence of such loan.

2. Make loans, except that the Portfolio may (i) purchase or hold debt
securities in accordance with its investment objectives and policies; (ii)
engage in securities lending as described in this Prospectus and in the
Statement of Additional Information; and (iii) 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 total assets of the International
Fixed Income Portfolio.

3. Invest in companies for the purpose of exercising control.

4. Acquire more than 10% of the voting securities of any one issuer.

5. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts. However, subject to its permitted
investments, the Portfolio may purchase obligations issued by companies
which invest in real estate, commodities or commodities contracts.

6. Make short sales of securities, maintain a short position or purchase
securities on margin, except as described in the Prospectus and except that
the Trust may obtain short-term credits as necessary for the clearance of
security transactions.

7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

8. 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.

9. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowing as described in the Prospectuses in this
Statement of Additional Information 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 adviser 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.

11. 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.

12. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.

13. Purchase restricted securities (securities which must be registered under
the Securities Act of 1933, as amended (the "1933 Act"), before they may be
offered or sold to the public) or other illiquid securities except as
described in the Prospectuses and this Statement of Additional Information.

The SLAT Prime Obligation Portfolio may not:

S-15

<PAGE>

1. 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 Portfolio.
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 by the
Portfolio will be repaid before making additional investments for the
Portfolio and any interest on such borrowings will reduce the income of the
Portfolio.

2. Make loans, except that the Portfolio may purchase or hold debt instruments
in accordance with its investment objective and policies and may enter into
repurchase agreements, provided that repurchase agreements maturing in more
than seven days, restricted securities and other illiquid securities are
not to exceed, in the aggregate, 10% of the Portfolio's total assets.

3. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings, as described in the Prospectus, in aggregate amounts not to
exceed 10% of the net assets of such Portfolio taken at fair market value
at the time such loan is incurred.

4. Invest in companies for the purpose of exercising control.

5. Acquire more than 10% of the voting securities of any one issuer.

6. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts including futures contracts.
However, subject to its permitted investments, the Portfolio may purchase
obligations issued by companies which invest in real estate, real estate
limited partnerships, commodities or commodities contracts.

7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Portfolio may obtain short-term
credits as necessary for the clearance of securities transactions.

8. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

9. Purchase securities of other investment companies except as permitted by
the 1940 Act and the rules and regulations thereunder and, in any event,
may not purchase securities of other open-end investment companies. Under
these rules and regulations, the Portfolio is prohibited from acquiring
the securities of other investment companies if, as a result of such
acquisition, the Portfolio owns more than 3% of the total voting stock of
an investment company; securities issued by any one investment company
represent more than 5% of the total Portfolio assets; or securities
(other than treasury stock) issued by all investment companies represent
more than 10% of the total assets of the Portfolio. These investment
companies typically incur fees that are separate from those fees incurred
directly by the Portfolio. The Portfolio's purchase of such investment
companies results in the layering of expenses such that shareholders
would indirectly bear a proportionate share of such investment companies'
expenses, including advisory fees.

10. Issue senior securities (as defined in the Investment Company Act of
1940) except in connection with permitted borrowings as described in the
Prospectus and Statement of Additional Information or as permitted by
rule, regulation or order of the Securities and Exchange Commission.

11. 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 adviser 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 of securities.

S-16

<PAGE>

12. Purchase securities of any company which has (with predecessors) a record
of less than three years' continuing operations, except (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (ii) municipal securities which are rated by at least
two nationally recognized municipal bond rating services, if, as a result,
more than 5% of the total assets (taken at fair market value) of the
Portfolio would be invested in such securities.

13. Purchase warrants, puts, calls, straddles, spreads or combinations thereof.

14. Invest in interests in oil, gas or other mineral exploration or development
programs.

15. 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 the Prospectus
and this Statement of Additional Information.

The foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess or deficiency occurs
immediately after or as a result of a purchase of such security. These
investment limitations and the investment limitations in each Underlying
Portfolio's Prospectus are fundamental policies of the Trust and may not be
changed without shareholder approval.

NON-FUNDAMENTAL POLICIES

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 each
Portfolio 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.

5. 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 adviser of the Trust owns beneficially more than 1/2 of the 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.

S-17
<PAGE>

7. 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. Notwithstanding the foregoing,
securities issued pursuant to Section 4(2) of the 1933 Act and securities
eligible to be re-sold under Rule 144A of the 1933 Act may be treated as
liquid securities under procedures adopted by the Board of Trustees.

8. Purchase securities which must be registered under the 1933 Act, as
amended, before they may be sold to the public, if, in the aggregate, more
than 15% of its net assets would be invested in such restricted securities.
Securities issued pursuant to Section 4(2) of the 1933 Act and securities
exempted from registration upon re-sale by Rule 144A under the 1933 Act are
not deemed to be restricted securities for purposes of this limitation.

The SLAT Prime Obligation Portfolio must:

1. Maintain an average dollar-weighted portfolio maturity of 90 days or less.

Under rules and regulations, established by the SEC, an Underlying Portfolio is
prohibited from acquiring the securities of other investment companies if, as a
result of such acquisition, the Underlying Portfolio 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 Underlying Portfolio's total assets; or
securities (other than treasury stock) issued by all investment companies
represent more than 10% of the total assets of the Underlying Portfolio. An
Underlying Portfolio's purchase of such investment company 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.
These limitations are non-fundamental and may be changed by the Underlying
Trust's Board of Trustees without a vote of shareholders.

ADDITIONAL RESTRICTIONS

The following are non-fundamental investment limitations that are currently
required by one or more states in which the Trust sells shares of the Underlying
Portfolios. These limitations are in addition to, and in some cases more
restrictive than, the fundamental and non-fundamental investment limitations
listed above. A limitation may be changed or eliminated without shareholder
approval if the relevant state changes or eliminates its policy regarding such
investment restriction. As long as an Underlying Portfolio's shares are
registered for sale in such states, it may not:

1. Invest more than 5% of its net assets in warrants; provided that of this 5%
no more than 2% will be in warrants that are not listed on the New York
Stock Exchange or the American Stock Exchange.

2. Invest in the securities of other investment companies except by purchase
in the open market where no commission or profit to a sponsor or dealer
results from the purchase other than the customary broker's commission, or
except when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition. [This restriction does not apply to the
SIMT High Yield Bond Portfolio.]

3. Invest more than 15% (10% with respect to the SIT Core International
Equity, SIT Emerging Markets Equity, SIT International Fixed Income and
SLAT Prime Obligation Portfolios) of its net assets in illiquid securities,
including securities which are not readily marketable or are restricted.

S-18
<PAGE>

4. Invest more than 15% of its net assets in restricted securities. For
purposes of this limitation, securities exempted from registration under
the 1933 Act, including Rule 144A securities and Section 4(2) commercial
paper, are considered to be illiquid.

5. [SIT Portfolios only] Make short sales, except short sales "against the
box."

THE MANAGER AND SHAREHOLDER SERVICING AGENT TO THE FUNDS

The Administration Agreement provides that SEI Financial Management Corporation
("SFM") 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 SFM in the performance
of its duties or from reckless disregard of its duties and obligations
thereunder.

The Administration Agreement shall remain effective for the initial term of the
Agreement and each renewal term thereof unless earlier terminated (a) by the
mutual written agreement of the parties; (b) by either party of the
Administration Agreement on 90 days' written notice, as of the end of the
initial term or the end of any renewal term; (c) by either party of the
Administration Agreement on such date as is specified in written notice given by
the terminating party, in the event of a material breach of the Administration
Agreement by the other party, provided the terminating party has notified the
other party of such breach at least 45 days prior to the specified date of
termination and the breaching party has not remedied such breach by the
specified date; (d) effective upon the liquidation of the Administrator; or (e)
as to any Fund or the Trust, effective upon the liquidation of such Fund or the
Trust, as the case may be.

SFM, a wholly-owned subsidiary of SEI, was organized as a Delaware corporation
in 1969, and has its principal business offices at 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658. Alfred P. West, Jr., Henry H. Greer and Carmen
V. Romeo constitute the Board of Directors of SFM. Mr. West serves as the
Chairman of the Board of Directors and Chief Executive Officer of SFM and SEI.
Mr. Greer serves as President and Chief Operating Officer of SFM and SEI. SEI
and its subsidiaries are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. SFM also serves as
administrator or manager to the following other mutual funds: The Achievement
Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop
Street Funds, Conestoga Family of Funds, CoreFunds, Inc., CrestFunds, Inc.,
CUFUND, First American Funds, Inc., First American Investment Funds, Inc., FMB
Funds, Inc. Insurance Investment Products Trust, Inventor Funds, Inc., Marquis
Funds(R), Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc.,
The Pillar Funds, Rembrandt Funds(R), 1784 Funds, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Managed Trust, SEI International Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds and STI Classic
Variable Trust.

If operating expenses of any Fund exceed limitations established by certain
states, SFM will pay such excess. SFM will not be required to bear expenses of
any Fund to an extent which would result in the Fund's inability to qualify as a
regulated investment company under provisions of the Internal Revenue Code. The
term "expenses" is defined in such laws or regulations, and generally excludes
brokerage commissions, distribution expenses, taxes, interest and extraordinary
expenses.

THE INVESTMENT ADVISER TO THE FUNDS

SFM will discharge its responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust. The Trust's Advisory Agreement with
SFM provides that SFM Adviser shall not be protected against any liability

S-19
<PAGE>

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 Trust will operate in a manner that is distinctly different from virtually
all other investment companies. Most investment companies operate under a
structure in which a single related group of companies provide investment
advisory, administrative, and distribution services, and in which the investment
companies purchase equity and debt securities. The Trust, however, invests in
shares of certain related investment companies that are advised and/or
administered by SFM (i.e., the Underlying Portfolios). In turn, these
----
Underlying Portfolios invest in equity and debt securities. SFM is responsible
for investing the assets of each Fund in certain of the Underlying Portfolios
within percentage ranges established by SFM, and for investing uninvested cash
balances in short-term investments, including repurchase agreements.

The continuance of the Advisory Agreement must be specifically approved at least
annually (i) by the vote of a majority of the outstanding shares of that Fund or
by the 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. 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 a Fund, 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 SFM or by
SFM on 90 days' written notice to the Trust.

SFM will reimburse each Fund for certain expenses which in any year exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. Presently, the most restrictive expense ratio limitation imposed by any
state is 2.5% of the first $30 million of a Fund's average daily net assets, 2%
of the next $70 million of such assets, and 1.5% of net assets in excess of $100
million. For the purpose of determining whether a Fund is entitled to
reimbursement, the expenses of the Fund are calculated on a monthly basis. If a
Fund is entitled to reimbursement, that month's management fee will be reduced
or postponed with any adjustment made after the end of the year.

THE ADVISERS AND SUB-ADVISERS TO THE UNDERLYING PORTFOLIOS

Each Advisory and certain of the Sub-Advisory Agreements provide that each
Adviser (or Sub-Adviser) shall not be protected against any liability to the
Underlying Trusts or their 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. In addition,
certain of the Sub-Advisory Agreements provide that the Sub-Advisers shall not
be protected against any liability to the Underlying Trusts or their
Shareholders by reason of willful misfeasance, bad faith or negligence on its
part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.

Pursuant to the Advisory and Sub-Advisory Agreements, the Underlying SIMT and
SIT Portfolios rely upon SFM for access, on a pooled investment basis, the core
elements of SFM's investment adviser selection, monitoring, and asset allocation
services. Under the "Manager of Managers" approach employed by the Underlying
SIMT and SIT Portfolios, SFM will recommend and, if the Trustees of the
Underlying Trusts approve the recommendation, monitor for the Underlying
Portfolios one or more managers using a range of investment styles.

The continuance of each Advisory and Sub-Advisory Agreement must be specifically
approved at least annually (i) by the vote of a majority of the outstanding
shares of that Underlying Portfolio or by the 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 Trust or, with respect to an
Underlying Portfolio, by a majority of the outstanding shares of that Underlying
Portfolio, on not less than 30 days' nor more than 60 days' written

S-20
<PAGE>

notice to the Adviser (or Sub-Adviser) or by the Adviser (or Sub-Adviser) on 90
days' written notice to the Trust. However, SFM has obtained an exemptive order
from the Securities and Exchange Commission (the "SEC") that permits SFM, with
the approval of the Trust's Board of Trustees, to retain sub-advisers for an
Underlying Portfolio without submitting the sub-advisory agreement to a vote of
the Underlying Portfolio's shareholders. In addition, the exemptive relief
permits the non-disclosure of amounts payable by SFM under such sub-advisory
agreements.

PORTFOLIO MANAGERS OF THE UNDERLYING PORTFOLIOS

The following persons serve as portfolio managers to the Underlying Portfolios.

SIMT Large Cap Growth Portfolio
- -------------------------------

Alliance Capital Management L.P. ("Alliance") is a sub-adviser to the SIMT Large
Cap Growth Portfolio. A committee of investment professionals at Alliance has
been responsible for managing the assets of the Portfolio allocated to Alliance
since the Portfolio's inception.

A committee composed of the eight investment portfolio managers of the equity
investment team of IDS Advisory Group Inc. ("IDS") is responsible for the day-
to-day management of a portion of the SIMT Large Cap Growth Portfolio's
investments. No individual person is primarily responsible for making
recommendations to that committee.

Provident Investment Counsel, Inc., ("PIC") is a sub-adviser to the SIMT Large
Cap Growth Portfolio. PIC utilizes a team approach to portfolio management. The
Managing Director, Jeffrey J. Miller, is responsible for the day-to-day
management of the portfolio.

SIMT Large Cap Value Portfolio
- ------------------------------

Investment decisions have been made by the quantitative computer model since
March, 1995. Josef Lakonishok, Andrei Shiefer and Robert Vishny, officers of
LSV Asset Management ("LSV"), monitor the quantitative analysis model on a
continuous basis, and make adjustments to the model based on their ongoing
research and statistical analysis. Securities are identified for purchase or
sale for the SIMT Large Cap Value Portfolio based upon the computer model and
defined variance tolerances. Purchases and sales are effected by LSV based upon
the output from the model.

William P. Rydell and Robert A. Wilk of Mellon Equity Associates ("Mellon") have
been the portfolio managers for Mellon's portion of the assets of the SIMT Large
Cap Value Portfolio since 1994. Mr. Rydell is the President and Chief Executive
Officer of Mellon, and has been managing individual and collectivized portfolios
at Mellon since 1982. Mr. Wilk is a Senior Vice President and portfolio manager
of Mellon, and has been involved with securities analysis, quantitative
research, asset allocation, trading and client services at Mellon since April,
1990. Prior to joining Mellon, Mr. Wilk was in charge of portfolio management
and conducted quantitative research for another investment subsidiary of Mellon
Bank Corporation, Triangle Portfolio Associates.

Merus-UCA Capital Management ("Merus"), a division of Union Bank of California,
N.A., is a sub-adviser to SIMT's Large Cap Value Portfolio. A committee of
investment professionals at Merus has been responsible for managing the assets
of the Portfolio allocated to Merus since December, 1994.

SIMT Small Cap Growth Portfolio
- -------------------------------

The portion of the SIMT Small Cap Growth Portfolio's assets allocated to
Apodaca-Johnston Capital Management, Inc. ("Apodaca") have been managed since
August, 1995 by Scott Johnston and Jerry C. Apodaca, Jr. Mr. Johnston, a
principal and 1/3 owner of Apodaca, founded Apodaca's predecessor in 1985, and
has 23

S-21
<PAGE>

years of investment experience. Jerry C. Apodaca, Jr. joined the firm as a
principal and 1/3 owner in 1991, and has 12 years investment management
experience. Before joining Apodaca, Mr. Apodaca was a Vice President of
Marketing at Newport First Investments, Inc.

Nicholas-Applegate Capital Management, Inc. ("Nicholas-Applegate") manages its
portion of the SIMT Small Cap Growth Portfolio through its systematic-driven
management team under the supervision of Mr. Nicholas, founder and Chief
Investment Officer of the firm. Nicholas-Applegate's systems driven investment
team, headed by Lawrence S. Speidell, has been primarily responsible for the
day-to-day management of the Portfolio since March, 1994. Mr. Speidell has been
a portfolio manager and investment team leader with Nicholas-Applegate since
March, 1994. Prior to joining Nicholas-Applegate, he was an institutional
portfolio manager with Batterymarch Financial Management.

Michael D. Jones, CFA, joined Pilgrim Baxter & Associates, Ltd. ("Pilgrim
Baxter") in February, 1995 as a portfolio manager. Mr. Jones has been managing
the a portion of the assets of the SIMT Small Cap Growth Portfolio since April
15, 1995. Prior to joining Pilgrim Baxter, Mr. Jones was a portfolio manager
with The Bank of New York from June, 1990 to January, 1995.

William Jeffrey III, Kenneth F. McCain, and Richard S. Coons, each of whom own
1/3 of Wall Street Associates ("WSA"), serve as portfolio managers for the
portion of the SIMT Small Cap Growth Portfolio's assets allocated to WSA since
August, 1995. Each is a principal of WSA and, together, they have 73 years of
investment management experience.

SIMT Small Cap Value Portfolio
- ------------------------------

Edwin B. Powell, Holly L. Guthrie and Joseph T. Doyle, have served as the
portfolio managers to the SIMT Small Cap Value Portfolio since its inception,
and since 1995, Cynthia R. Axlrod has also served as a portfolio manager to the
Portfolio. These individuals work as a team and share responsibility. Mr.
Doyle has been with 1838 Investment Advisors, L.P. ("1838") since 1988. Mr.
Powell and Ms. Guthrie joined 1838 in 1994. Mr. Powell managed small cap equity
portfolios for Provident Capital Management from 1987 to 1994. Ms. Guthrie
managed small cap equity portfolios for Provident Capital Management from 1992
to 1994. Prior to that she was employed by CoreStates Investment Advisers from
1987 to 1992 as an equity analyst and portfolio manager. Prior to joining 1838,
Ms. Axlrod was with Friess Associates from 1992 to 1995. Prior to 1992, Ms.
Axlrod was with Provident Capital Management from 1987 to 1992.

The portion of the SIMT Small Cap Value Portfolio's assets allocated to Boston
Partners Asset Management, L.P. ("Boston") have been managed since November,
1995 by Wayne J. Archambo, C.F.A. Mr. Archambo has been employed by Boston
since its organization, and has 10 years experience investing in small
capitalization stocks. Prior to joining Boston, Mr. Archambo was a Senior Vice
President and member of the Equity Policy Committee at The Boston Company Asset
Management, Inc. ("TBCAM"), where he created that firm's Small Capitalization
Value Product and Mid Capitalization Product. Prior to joining TBCAM in 1989,
Mr. Archambo spent six years as a portfolio manager/analyst for Boston-based
Systematic Investors.

SIT International Equity Portfolio
- ----------------------------------

Acadian Asset Management, Inc. ("Acadian") is a sub-adviser to the SIT
International Equity Portfolio. A committee of investment professionals at
Acadian has been responsible for managing the Portfolio assets allocated to
Acadian since the Portfolio's inception.

Julian R. Johnston and Jeremy G. Lodwick have shared primary responsibility for
a portion of the assets of the SIT International Equity Portfolio and its
predecessor fund since its inception. Mr. Johnston has 20 years experience in
European equity investment. Mr. Johnston joined Morgan Grenfell Investment
Services Limited ("MG") in 1984 and is currently the head of the MG Continental
European Investment team. He speaks French,

S-22
<PAGE>

German, Swedish and Danish fluently. Mr. Lodwick has ten years experience in
European equity investment. He joined MG in 1986 and was a UK equity research
analyst before moving to New York where he was a member of the client liaison
and marketing team for 5 years. He returned to the London office in 1991 to
manage European equity portfolios.

John S. Ager, a Senior Vice President and Director of Schroder Capital
Management International Limited ("SC") and John Stainsby, First Vice President
of SC, both have served as principal portfolio managers for a portion of the
assets of the SIT International Equity Portfolio and its predecessor fund since
its inception. Mr. Ager has over 20 years of experience in managing client
accounts invested in Asian countries. Mr. Stainsby has over 10 years experience
of managing Asian investments.

SIT Emerging Markets Equity Portfolio
- -------------------------------------

Josephine S. Jimenez and Bryan L. Sudweeks share primary responsibility for the
SIT Emerging Markets Equity Portfolio. Ms. Jimenez and Mr. Sudweeks have
thirteen and six years experience, respectively, in emerging markets investment.
Both joined Montgomery Asset Management, L.P. ("MAM") in 1991.

SIMT Core Fixed Income Portfolio
- --------------------------------

BlackRock Financial Management, Inc. ("BlackRock") employs a team approach in
managing the SIMT Core Fixed Income Portfolio, however, the portfolio manager
who has day-to-day responsibility for the Portfolio is Keith Anderson. Mr.
Anderson is a Managing Director and Co-Head of Portfolio Management at
BlackRock, and has 12 years experience investing in fixed income securities.
Prior to founding BlackRock in 1988, Mr. Anderson was a Vice President in Fixed
Income Research at The First Boston Corporation.

Mr. Charles Groeschell, a Senior Vice President of Firstar Investment Research &
Management Company ("FIRMCO") and portfolio manager of a portion of the assets
of the SIMT Core Fixed Income Portfolio, has been employed by FIRMCO or its
affiliates since 1983, and has had 13 years experience in fixed income
investing.

Kent S. Engel, Director and Chief Investment Officer of Western Asset Management
Company ("Western"), has been primarily responsible for the day-to-day
management of a portion of the assets of the SIMT Core Fixed Income Portfolio
since January 19, 1994. Mr. Engel has been with Western and its predecessor
since 1969.

SIMT High Yield Bond Portfolio
- ------------------------------

The SIMT High Yield Bond Portfolio's assets have been managed by Richard J.
Lindquist, C.F.A., since its inception. Mr. Lindquist joined BEA Associates
("BEA") in 1995 as a result of BEA's acquisition of CS First Boston Investment
Management, and has had 11 years of investment management experience, including
6 years of experience working with high yield bonds. Prior to joining CS First
Boston, Mr. Lindquist was with Prudential Insurance Company of America where he
managed high yield portfolios totalling approximately $1.3 billion.

SIT International Fixed Income Portfolio
- ----------------------------------------

Kenneth Windheim, President of Strategic Fixed Income, L.P. ("SFI"), has been
the portfolio manager of the SIT International Fixed Income Portfolio since its
inception in 1991. Mr. Windheim is assisted by Gregory Barnett and David
Jallits, Directors of SFI and portfolio managers of the Portfolio since April
1994. Prior to forming SFI, Kenneth Windheim managed a global fund income
portfolio at Prudential Asset Management. Prior to joining SFI, Gregory Barnett
was portfolio manager for the Pilgrim Multi-Market Income Fund with active use
of foreign exchange option strategies. Prior to that he was vice president and
senior fixed income portfolio manager at Lexington Management. Prior to joining
SFI, David Jallits was Senior Portfolio Manager for a hedge

S-23
<PAGE>

fund at Teton Partners. From 1982-1994, he was Vice President and Global Fixed
Income portfolio manager at The Putnam Companies.

DISTRIBUTION

The Trust has adopted a Distribution Plan for Class D (the "Class D 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). In this regard, the Board
of Trustees has determined that the Class D Plan and the Distribution Agreement
are in the best interests of the shareholders. Continuance of the Class D Plan
must be approved annually by a majority of the Trustees of the Trust and by a
majority of the Trustees who are not "interested persons" of the Trust (as that
term is defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of a Distribution Plan or in any agreements related
thereto ("Qualified Trustees"). The Class D Plan requires that quarterly written
reports of amounts spent under the Plan and the purposes of such expenditures be
furnished to and reviewed by the Trustees. The Class D Plan may not be amended
to increase materially the amount which may be spent thereunder without approval
by a majority of the outstanding shares of the Fund or class affected. All
material amendments of the Class D Plan will require approval by a majority of
the Trustees of the Trust and of the Qualified Trustees.

Except to the extent that SFM (as Manager and investment adviser) benefitted
through increased fees from an increase in the net assets of the Trust which may
have resulted in part from the expenditures, no interested person of the Trust
nor any Trustee of the Trust who is not an interested person of the Trust had a
direct or indirect financial interest in the operation of the Class D Plan or
related agreements.

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.

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
executive officer is SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, PA 19087. Certain trustees and officers of the Trust also serve as
trustees and officers of some or all of the following: The Achievement Funds
Trust; The Advisors' Inner Circle Fund; The Arbor Fund; ARK Funds; Bishop
Street Funds; Conestoga Family of Funds; CoreFunds, Inc.; CrestFunds, Inc.;
CUFUND; First American Funds, Inc.; First American Investment Funds, Inc.; FMB
Funds, Inc.; Insurance Investment Products Trust; Inventor Funds, Inc.; Marquis
Funds(R); Monitor Funds; Morgan Grenfell Investment Trust; The Pillar Funds; The
PBHG Funds, Inc.; Rembrandt Funds(R); SEI Index Funds; SEI Institutional Managed
Trust; SEI International Trust; SEI Liquid Asset Trust; SEI Tax Exempt Trust;
1784 Funds; Stepstone Funds; STI Classic Funds; and STI Classic Variable Trust,
each of which is an open-end management investment company managed by SEI
Financial Management Corporation and, except for Rembrandt Funds(R), distributed
by SEI Financial Services Company.

ROBERT A. NESHER (DOB 08/17/46) - Chairman of the Board of Trustees* - Retired
since 1994. Executive Vice President of SEI 1986-94. Director and Executive Vice
President of the Manager and Executive Vice President of the Distributor
1981-94.

RICHARD F. BLANCHARD (DOB 01/21/20) - Trustee** - P.O. Box 76, Canfield Road,
Convent Station, NJ 07961. Private Investor. Director of AEA Investors Inc.
(acquisition and investment firm) June 1981-86, Director of Baker Hughes Corp.
(oil service company) 1976-88. Director of Imperial Clevite Industries
(transportation equipment

S-24

<PAGE>

company) 1981-87. Executive Vice President of American Express Company
(financial services company), responsible for the investment function, before
June 1981.

WILLIAM M. DORAN (DOB 05/26/40) - Trustee* - 2000 One Logan Square,
Philadelphia, PA 19103. Partner of Morgan, Lewis & Bockius LLP, counsel to the
Trust, Manager and Distributor, Director and Secretary of SEI and Secretary of
the Manager and Distributor.

F. WENDELL GOOCH (DOB 12/03/37) - Trustee** - 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. Executive
Vice President, Trust Department, Harris Trust and Savings Bank and Chairman of
the Board of Directors of The Harris Trust Company of Arizona before January
1981. Trustee of STI Classic Funds.

FRANK E. MORRIS (DOB 12/30/23) - Trustee - 105 Walpole Street, Dover, MA 02030.
Retired since 1990. Peter Drucker Professor of Management, Boston College, since
1989. President, Federal Reserve Bank of Boston, 1968-1988. Trustee of The Arbor
Fund, Marquis Funds, Advisors' Inner Circle Fund, Advisors' Inner Circle Fund
II, Inc. and FFB Lexicon Funds.

JAMES M. STOREY (DOB 04/12/31) - Trustee** - Ten Post Office Square, Boston, MA
02109. Partner of Dechert Price & Rhodes (law firm).

DAVID G. LEE (DOB 04/16/52) - President, Chief Executive Officer - Senior Vice
President of the Distributor since 1993. Vice President of the Distributor since
1991. President, GW Sierra Trust Funds prior to 1991.

SANDRA K. ORLOW (DOB 10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Manager and Distributor since 1988.
Corporate Legal Assistant, Omni Exploration (oil and gas investment) prior to
1983.

KATHRYN L. STANTON (DOB 11/19/58) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of SEI Corporation, the Manager and
Distributor since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1989-94.

KEVIN P. ROBINS (DOB 04/15/61) - Vice President, Assistant Secretary - Senior
Vice President and General Counsel of SEI and the Distributor since 1994. Vice
President and Assistant Secretary of the Manager and Distributor 1992-94.
Associate, Morgan, Lewis & Bockius LLP (law firm) prior to 1992.

JEFFREY A. COHEN (DOB 04/22/61) - Controller, Assistant Secretary - Director of
Funds Accounting of SEI since 1991. Audit Manager of Price Waterhouse 1988-1991.

TODD CIPPERMAN (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since May, 1995, Associate, Dewey Ballantine (law firm) 1994-1995, Associate,
Winston & Strawn (law firm) 1991-1994.

JOSEPH M. LYDON (DOB 09/27/59) - Vice President and Assistant Secretary -
Director of Business Administration, SEI Corporation since April, 1995; Vice
President of Fund Group, Vice President of the Advisor - Dreman Value
Management, LP, President of Dreman Financial Services, Inc. from 1989 to 1995.

RICHARD W. GRANT (DOB 10/25/45) - Secretary - 2000 One Logan Square,
Philadelphia, PA 19103, Partner, Morgan, Lewis & Bockius LLP, counsel to the
Trust, Manager and Distributor, since 1989.

JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Partner (since 1995) and Associate (1993-1995), Morgan,
Lewis & Bockius LLP, counsel to the Trust, Manager and Distributor. Associate,
Ropes & Gray (law firm), 1988 to 1993.

==============
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.

**Messrs. Blanchard, Gooch, Morris and Storey serve as members of the Audit
Committee of the Trust.

S-25
<PAGE>

The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
Compensation of officers and affiliated Trustees of the Trust is paid by the
Manager.

PERFORMANCE

From time to time, each Fund may advertise yield and/or total return. These
figures will be based on historical earnings and are not intended to indicate
future performance.

The yield of a Fund refers to the annualized income generated by an investment
in the Fund over a specified 30-day period. The yield is calculated by assuming
that the income generated by the investment during that period generated each
period over one year 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
current 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 total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula: 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.

PURCHASE AND REDEMPTION OF SHARES

The purchase and redemption price of shares is the net asset value of each
share. The net asset value of each Fund is determined by SFM and is based upon
the proportional net asset values of each Fund's Underlying Portfolio shares
(plus any available cash). Each Underlying Portfolio's securities are valued by
SFM pursuant to valuations provided by an independent pricing service (generally
the last quoted sale price). Underlying Portfolio securities listed on a
securities exchange for which market quotations are available are valued at the
last quoted sale price on each Business Day (defined as days on which the New
York Stock Exchange is open for business ("Business Day")) or, if there is no
such reported sale, at the most recently quoted bid price. Unlisted securities
for which market quotations are readily available are valued at the most
recently quoted bid price. The pricing service may also use a matrix system to
determine valuations. This system considers such factors as security prices,
yields, maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.

It is currently the Trust's policy to pay all 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 readily marketable securities held
by an Underlying Portfolio 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 Underlying Portfolios of the Trust during any 90-day
period of up to the lesser of $250,000 or 1% of the Trust's net assets. A gain
or loss for federal income tax purposes may be realized by a taxable shareholder
upon an in-kind redemption depending upon the shareholder's basis in the shares
of the Trust redeemed.

S-26
<PAGE>

Purchases and redemptions of shares of the Funds may be made on any day the New
York Stock Exchange is open for business. Currently, the following holidays are
observed by the Trust: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during 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 which
disposal or evaluation of the portfolio securities is not reasonably
practicable, or for such other periods as the SEC may by order permit. The
Trust also reserves the right to suspend sales of shares of the Funds for
any period during which the New York Stock Exchange, the Manager, the
Distributor, the and/or the Custodian are not open for business.

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 Fund 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 Underlying Portfolios and consider the differences in
objectives and policies before making any investment.

REINSTATEMENT PRIVILEGE: A shareholder who has redeemed shares of any of the
Funds has a one-time right to reinvest the redemption proceeds in shares of the
Fund at their net asset value as of the time of reinvestment. Such a
reinvestment must be made within 30 days of the redemption and is limited to the
amount of the redemption proceeds. Although redemptions and repurchases of
shares are taxable events, a reinvestment within such 30-day period in the same
Fund is considered a "wash sale" and results in the inability to recognize
currently all or a portion of a loss realized on the original redemption for
federal income tax purposes. The investor must notify the Transfer Agent at the
time the trade is placed that the transaction is a reinvestment.

EXCHANGE PRIVILEGE: Some or all of the shares of a Fund's Shares for
which payment has been received (i.e., an established account), may be exchanged
----
for Shares of the same Class of other Funds of the Trust. A shareholder may
exchange the shares of each Fund's Shares, for which good payment has been
received, in his or her account at any time, regardless of how long he or she
has held his or her shares. Exchanges are made at net asset value. The Trust
reserves the right to change the terms and conditions of the exchange privilege
discussed herein, or to terminate the exchange privilege, upon 60 days' notice.
Exchanges will be made only after proper instructions in writing or by telephone
(an "Exchange Request") are received for an established account by the
Distributor.

Each Exchange Request must be in proper form (i.e., if in writing, signed by the
----
record owner(s) exactly as the shares are registered; if by telephone-proper
account identification is given by the dealer or shareholder of record), and
each exchange must involve either shares having an aggregate value of at least
$1,000 or all the shares in the account. Each exchange involves the redemption
of the shares of a Fund (the "Old Fund") to be exchanged and the purchase at net
asset value of the shares of the other Funds (the "New Funds"). Any gain or
loss on the redemption of the shares exchanged is reportable on the
shareholder's federal income tax return, unless such shares were held in a tax-
deferred account or tax-qualified retirement plan. If the Exchange Request
is received by the Distributor in writing or by telephone on any business day
prior to the redemption cut-off time specified in the Prospectus, the exchange
usually will occur on that day if all the restrictions set forth above have been
complied with at that time. However, payment of the redemption proceeds by the
Old Funds and thus the purchase of shares of the New Funds, may be delayed for
up to seven days if the Fund determines that such delay would be in the best
interest of all of its shareholders. Investment dealers which have satisfied
criteria established by the Funds may also communicate a Shareholder's Exchange
Request to the Funds subject to the restrictions set forth above. No more than
five exchange requests may be made in any one telephone Exchange Request.

S-27

<PAGE>

TAXES

The following is only a summary of certain additional federal tax considerations
generally affecting the Funds and their shareholders that are not described in
the Funds' prospectus. No attempt is made to present a detailed explanation of
the federal, state or local tax treatment of the Funds or their shareholders and
the discussion here and in the Funds' prospectus is not intended as a substitute
for careful tax planning.

This discussion of federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.

Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other Funds. Each Fund intends to qualify as a
regulated investment company ("RIC") under Subchapter M of the Code so that it
will be relieved of federal income tax on that part of its income that is
distributed to shareholders. In order to qualify for treatment as a RIC, a Fund
must distribute annually to its shareholders at least 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)
("Distribution Requirement") and also must meet several additional requirements.
Among these requirements are the following (i) at least 90% of a 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 other income derived with respect to its business of
investing in such stock or securities; (ii) less than 30% of a Fund's gross
income each taxable year must be derived from the sale or other disposition of
stocks, securities or certain other investments held for less than three months;
(iii) at the close of each quarter of a 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 of any one issuer, to an amount that does
not exceed 5% of the value of a Fund's assets and that does not represent more
than 10% of the outstanding voting securities of such issuer; and (iv) at the
close of each quarter of a 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 are engaged in the same, similar, or related trades or businesses,
if the Fund owns at least 20% of the voting power of such issuers.

Notwithstanding the Distribution Requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gain, a Fund will be subject to a nondeductible 4% federal excise tax to the
extent it fails to distribute by the end of any calendar year at least 98% of
its ordinary income for that year and 98% of its capital gain net income (the
excess of short- and long-term capital gain over short- and long-term capital
loss) for the one-year period ending on October 31 of that year, plus certain
other amounts. Each Fund intends to make sufficient distributions to avoid
liability for the federal excise tax applicable to RICs. A Fund may in certain
circumstances be required to liquidate portfolio investments in order to make
sufficient distributions to avoid federal excise tax liability when the
investment advisor might not otherwise have chosen to do so, and liquidation of
investments in such circumstances may affect the ability of a Fund to satisfy
the requirements for qualification as a RIC.

If capital gain distributions have been made with respect to shares that are
sold at a loss after being held for six months or less, then the loss is treated
as a long-term capital loss to the extent of the capital gain distributions.

If a Fund fails to qualify as a RIC for any year, all of its income will be
subject to tax at corporate rates, and its distributions (including capital gain
distributions) generally will be taxable as ordinary income dividends to its
shareholders, subject to the dividends received deduction for corporate
shareholders who have held shares for more than 45 days.

A Fund will be required in certain cases to withhold and remit to the United
States Treasury 31% of amounts payable to any shareholder who (1) has provided
the Fund either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to properly

S-28

<PAGE>

report payments of interest or dividends, or (3) who has failed to certify to
the Fund that such shareholder is not subject to backup withholding.

STATE TAXES

A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by a Fund to
shareholders and the ownership of shares may be subject to state and local
taxes. Shareholders should consult their own tax advisers regarding the effect
of federal, state and local taxes in their own individual circumstances.

PORTFOLIO TRANSACTIONS

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 advisers and sub-advisers are responsible for
placing orders to execute Fund transactions. In placing orders, it is the
Trust'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 advisers generally seek reasonably competitive spreads or
commissions, the Trust will not necessarily be paying the lowest spread or
commission available. The Trust 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 Funds 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 a 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 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 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 periodically. In addition, SFM has
adopted a policy respecting the receipt of research and related products and
services in connection with transactions effected for the Underlying Portfolios
operating within the "Manager of Managers" structure. Under this policy, SFM and
the various firms that serve as sub-advisers to certain Underlying Portfolios,
in the exercise of joint investment discretion over the assets of an Underlying
Portfolio, will direct a substantial portion of an Underlying Portfolio's
brokerage to the Distributor in consideration of the Distributor's provision of
research and related products to SFM for use in performing its advisory
responsibilities. All such transactions directed to the Distributor must be
accomplished in a manner that is consistent with each Underlying Trust's policy
to achieve best net results, and must comply with each Underlying Trust's
procedures regarding the execution of transactions through affiliated brokers.

Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust'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 Underlying Portfolio's advisers or sub-advisers may place
portfolio orders with qualified broker-dealers who recommend the Trust 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.

The Trust does not expect to use one particular dealer, but the Underlying
Portfolio's advisers or sub-advisers may, consistent with the interests of the
Underlying Portfolios, select brokers on the basis of the research services they
provide to the Underlying Portfolio's advisers and sub-advisers. Such services
may include analysis of the business or prospects of a company, industry or
economic sector or statistical and pricing services. Information so received by
the advisers or sub-advisers will be in addition to and not in lieu of the
services required to be performed by an Underlying Portfolio's advisers or sub-
advisers under the advisory and sub-advisory agreements. If in the judgment of
an Underlying Portfolio's advisers, the Underlying Portfolio, or other accounts
managed by the Underlying Portfolio's advisers or sub-advisers, will be
benefitted by supplemental research services, the Underlying Portfolio's
advisers or sub-advisers are authorized to pay brokerage commissions to a broker
furnishing such services that are in excess of commissions which another broker
may have charged for effecting the same transaction. The expenses of an
Underlying Portfolio's advisers or sub-advisers will not necessarily be reduced
as a result of the receipt of such supplemental information.

S-29

<PAGE>

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Fund, each of which represents an equal proportionate interest in
that Fund. Each share upon liquidation entitles a shareholder to a pro rata
--- ----
share in the net assets of that Fund, after taking into account the additional
distribution, shareholder servicing and transfer agency expenses attributable to
Class D Shares. Shareholders have no preemptive rights. The Declaration of Trust
provides that the Trustees of the Trust may create additional series of shares
or separate classes of portfolios. Share certificates representing the shares
will not be issued.

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 administrators, 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.

VOTING

Where the Trust's Prospectus or Statement of Additional Information states that
an investment limitation or a fundamental policy may not be changed without
shareholder approval, such approval means the vote of (i) 67% or more of the
affected Fund's shares present at a meeting if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by Proxy, or (ii)
more than 50% of the affected Fund's outstanding shares, whichever is less.

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 shareholders held personally liable for the obligations of the Trust.

EXPERTS

The financial statements included in this Statement of Additional Information
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

FINANCIAL STATEMENTS

S-30
<PAGE>

Following are the Trust's audited seed capital financial statements dated
February 16, 1996.

S-31
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder and Board of Directors
SEI Asset Allocation Trust

In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Diversified
Conservative Income, Diversified Conservative, Diversified Moderate Growth,
Diversified Growth and Diversified U.S. Stock Funds (constituting SEI Asset
Allocation Trust, hereafter referred to as the "Trust") at February 16, 1996, in
conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Trust's management; our responsibility is
to express an opinion on this financial statement based on our audit. We
conducted our audit of this financial statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.

/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP

Thirty South Seventeenth Street
Philadelphia, Pennsylvania
February 21, 1996

<PAGE>

SEI ASSET ALLOCATION TRUST

Statement of Assets and Liabilities
February 16, 1996

Diversified Growth Fund

<TABLE>
<CAPTION>
Assets:
<S> <C>
Cash $ 1,000
Deferred Organization Costs 16,400
Deferred Offering Costs 23,000
--------
Total Assets 40,400
========

Liabilities:
Due to Manager 39,400
========

Net Assets $ 1,000
========

Net Assets Consist of:
Portfolio shares of Class A (unlimited authorization - no par value)
based on 50.000 outstanding shares of beneficial interest $ 500
Portfolio shares of Class D (unlimited authorization - no par value)
based on 50.000 outstanding shares of beneficial interest 500
--------
Total Net Assets: $ 1,000
========

Net Asset Value, Offering and Redemption Price, Class A $ 10.00
========

Net Asset Value, Offering and Redemption Price, Class D $ 10.00
========
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>

SEI ASSET ALLOCATION TRUST

Statement of Assets and Liabilities
February 16, 1996

Diversified U.S. Stock Fund

Assets:
<S> <C>
Cash $ 1,000
Deferred Organization Costs 16,400
Deferred Offering Costs 23,000
-------
Total Assets 40,400
=======

Liabilities:
Due to Manager 39,400
=======

Net Assets $ 1,000
=======

Net Asset Value, Offering and Redemption Price, Class A $ 10.00
=======

Net Asset Value, Offering and Redemption Price, Class D $ 10.00
=======
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>

SEI ASSET ALLOCATION TRUST

Statement of Assets and Liabilities
February 16, 1996

Diversified Conservative Fund

<TABLE>
<S> <C>
Assets:
Cash $ 1,000
Deferred Organization Costs 16,400
Deferred Offering Costs 23,000
-------
Total Assets 40,400
-------

Liabilities:
Due to Manager 39,400

Net Assets $ 1,000
-------

Net Asset Value, Offering and Redemption Price, Class A $ 10.00
-------

Net Asset Value, Offering and Redemption Price, Class D $ 10.00
-------
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>

SEI ASSET ALLOCATION TRUST

Statement of Assets and Liabilities
February 16, 1996

Diversified Moderate Growth Fund

<TABLE>
<S> <C>
Assets:
Cash $ 1,000
Deferred Organization Costs 16,400
Deferred Offering Costs 23,000
-------
Total Assets 40,400
-------

Liabilities:
Due to Manager 39,400

Net Assets $ 1,000
-------

Net Asset Value, Offering and Redemption Price, Class A $ 10.00
-------

Net Asset Value, Offering and Redemption Price, Class D $ 10.00
-------
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>

SEI ASSET ALLOCATION TRUST

Statement of Assets and Liabilities
February 16, 1996

Diversified Conservative Income Fund

<TABLE>
<S> <C>
Assets:
Cash $ 96,000
Deferred Organization Costs 16,400
Deferred Offering Costs 23,000
--------
Total Assets 135,400
--------

Liabilities:
Due to Manager 39,400
--------

Net Assets $ 96,000
--------

Net Assets Consist of:
Portfolio shares of Class A (unlimited authorization - no par value)
based on 9,550.000 outstanding shares of beneficial interest $ 95,500
Portfolio shares of Class D (unlimited authorization - no par value)
based on 50.000 outstanding shares of beneficial interest 500
--------
Total Net Assets: $ 96,000
--------

Net Asset Value, Offering and Redemption Price, Class A $ 10.00
--------

Net Asset Value, Offering and Redemption Price, Class D $ 10.00
--------
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>

SEI ASSET ALLOCATION TRUST

Notes to Financial Statements
February 16, 1996

1. Organization:

The Trust is organized as a Massachusetts Business Trust under a Declaration of
Trust dated November 20, 1995. The Trust is registered under the Investment
Company Act of 1940, as amended, as an open-end investment company with five
diversified Funds: Diversified Conservative Income Fund, Diversified
Conservative Fund, Diversified Moderate Growth Fund, Diversified Growth Fund,
and Diversified U.S. Stock Fund. Each Fund offers shareholders the opportunity
to invest in certain of the Underlying Portfolios, which are separately-managed
series of the following investment companies: SEI Institutional Managed Trust,
SEI International Trust, SEI Liquid Asset Trust. The Declaration of Trust
permits the Trust to offer separate classes of shares in each Fund, Class A
Shares and Class D Shares. The assets of each Fund are segregated, and a
shareholder's interest is limited to the Fund in which shares are held. The
Funds have not commenced operations except those related to organizational
matters and the sale of initial shares of beneficial interest to SEI Financial
Management Corporation (the "Adviser" and "Manager") on February 16, 1996. The
following is a summary of the significant accounting policies followed by the
Trust.

<PAGE>

SEI ASSET ALLOCATION TRUST

Notes to Financial Statements (continued)
February 16, 1996

2. Investment Advisory, Management, Distribution and Shareholder Servicing
Agreements:

The Trust expects to enter into the following service agreements:

Under the Investment Advisory Agreement with the Trust, SEI Financial
Management Corporation ("SFM" or the "Adviser") will act as the investment
adviser to each Fund. For its investment advisory services to the Trust, the
Adviser will be entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .10% of each Fund's average daily net assets.

Under the Administration Agreement with the Trust, SFM will also provide the
Trust with overall management services, and act as dividend disbursing agent and
shareholder servicing agent. For these services to the Funds, SFM will be
entitled to a fee, which is calculated daily and paid monthly, at an annual rate
of .20% of the average daily net assets of each Fund.

SEI Financial Services company (the "Distributor"), a wholly-owned subsidiary of
SEI, will serve as each Fund's distributor pursuant to a distribution agreement
(the "Distribution Agreement") with the Trust. The Trustees of the Trust have
adopted a distribution and service plan for the Trust's Class D shares (the
"Class D Plan") pursuant to Rule 12b-1 under the 1940 Act. The Class D Plan
provides for payments to the distributor for distribution-related services at an
annual rate of .75% of each Fund's average daily net assets attributable to
Class D Shares. In addition, each Fund is authorized to pay the Distributor a
fee in connection with the ongoing servicing of shareholder accounts owning such
Class D Shares, calculated and payable monthly, at an annual rate of .25% of the
value of the average daily net assets attributable to Class D Shares of the
Fund. Periodically, the Distributor may waive a portion of the fees payable to
it under the Class D Plan in order to keep within certain sales charge limits
imposed by the Rules of the NASD. Specifically, any Fund's
distribution/shareholder servicing fees will be reduced in an amount equal to
the Fund's pro rata portion of any Underlying Portfolio in which the Fund
invests.

3. Organizational Costs, Offering Costs and Transactions with Affiliates:

Organizational costs have been capitalized by the Fund and are being amortized
over 60 months commencing with operations. In the event any of the initial
shares are redeemed by any holder thereof during the period that the fund is
amortizing its organizational costs, the redemption proceeds payable to the
holder thereof by the Fund will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of the redemption. These
costs include legal fees of approximately $50,000 for organizational work
performed by a law firm of which an officer and Trustee of the Trust is a
Partner.
<PAGE>

Offering costs have been capitalized by the Fund and will be amortized over
twelve months commencing with operations.

Certain officers and/or trustees of the Trust are also officers of the Manager
and Adviser. The Trust pays each unaffiliated Trustee an annual fee for
attendance of quarterly, interim and committee meetings. Compensation of
officers and affiliated Trustees of the Trust is paid by the Manager.
<PAGE>

APPENDIX

DESCRIPTION OF CORPORATE BOND RATINGS

MOODY'S RATING DEFINITIONS

LONG TERM BOND RATINGS

Aaa Bonds which are rated Aaa 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 by 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.

Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.

A 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 some time in the future.

Baa 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.

Ba 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.

B 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.

Caa 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.

Ca 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.

C Bonds which are rated C are the lowest rated clas 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

S-32
<PAGE>

lower of the bank's rating or Moody's sovereign rating for the bank deposits for
the country in which the branch is located.

When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.

Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.

Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.

Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

STANDARD & POOR'S RATING DEFINITIONS

A Standard & Poor's corporate or municipal debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.

The debt rating is not a recommendation to purchase, sell, or hold a
security, as it does not comment on market price or suitability for a particular
investor.

The ratings are based, in varying degrees, on the following considerations:

(1) Likelihood of default. The rating assesses the obligor's capacity and
willingness as to timely payment of interest and repayment of principal in
accordance with the terms of the obligation.

(2) The obligation's nature and provisions.

(3) Protection afforded to, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under bankruptcy
laws and other laws affecting creditors' rights.

Likelihood of default is indicated by an issuer's senior debt rating. If
senior debt is not rated, an implied senior debt rating is determined.
Subordinated debt usually is rated lower than senior debt to better reflect
relative position of the obligation in bankruptcy. Unsecured debt, where
significant secured debt exists, is treated similarly to subordinated debt.

LONG-TERM RATINGS DEFINITIONS

INVESTMENT GRADE
- ----------------

S-33
<PAGE>

AAA Debt rated 'AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.

A Debt rated 'A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB 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.

SPECULATIVE GRADE
- -----------------

Debt rated 'BB', 'B', 'CCC', 'CC', and 'C' is regarded as having
predominantly 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.

BB Debt rated 'BB' has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could
lead to inadequate capacity to meet timely interest and principal payments.
The 'BB' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied 'BBB-' rating.

B Debt rate '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 capacity or
willingness to pay interest and repay principal. The 'B' rating category
also is used for debt subordinated to senior debt that is assigned an
actual or implied 'BB' or 'BB-' rating.

CCC Debt rated 'CCC' has a current identifiable vulnerability to default, and
is dependent on favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event
of adverse business, financial, or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The 'CCC' rating
category also is used for debt subordinated to senior debt that is assigned
an actual or implied 'B' or 'B-' rating.

CC The rating 'CC' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC' rating.

C The rating 'C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating
may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.

CI Debt rated 'CI' is reserved for income bonds on which no interest is being
paid.

D Debt is rated 'D' when the issue is in payment default, or the obligor has
filed for bankruptcy. The 'D' rating is used when interest or principal
payments are not made on the date due, even if the applicable grace period
has not expired, unless S&P believes that such payments will be made during
such grace period.

S-34
<PAGE>

Plus (+) or minus (-): The ratings from 'AA' to 'CCC' may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

C The letter 'c' indicates that the holder's option to tender the security
for purchase may be canceled under certain prestated conditions enumerated
in the tender option documents.

P The letter 'p' indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project financed by the
debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful timely completion of the
project. This rating, however, while addressing credit quality subsequent
to completion of the project, makes no comment on the likelihood of, or the
risk of default upon failure of such completion. The investor should
exercise his own judgement with respect to such likelihood and risk.

L The letter 'L' indicates that the rating pertains to the principal amount
of those bonds to the extent that the underlying deposit collateral is
federally insured, and interest is adequately collateralized. In the case
of certificates of deposit, the letter 'L' indicates that the deposit,
combined with other deposits being held in the same right and capacity,
will be honored for principal and pre-default interest up to federal
insurance limits within 30 days after closing of the insured institution
or, in the event that the deposit is assumed by a successor insured
institution, upon maturity.

*Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming
investments and cash flows.

N.R. Not rated.

DEBT OBLIGATIONS OF ISSUERS OUTSIDE THE UNITED STATES AND ITS TERRITORIES are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.

If an issuer's actual or implied senior debt rating is 'AAA', its
subordinated or junior debt is rated 'AAA' or 'AA+'. If an issuer's actual or
implied senior debt rating is lower than 'AAA' but higher than 'BB+', its junior
debt is typically rated one designation lower than the senior debt rating. For
example, if the senior debt rating is 'A', subordinated debt normally would be
rated 'A-'. If an issuer's actual or implied senior debt rating is 'BB+' or
lower, its subordinated debt is typically rated two designations lower than the
senior debt rating.

INVESTMENT AND SPECULATIVE GRADES

The term "investment grade" was originally used by various regulatory
bodies to connote obligations eligible for investment by institutions such as
banks, insurance companies, and savings and loan associations. Over time, this
term gained widespread usage throughout the investment community. Issues rated
in the four highest categories, 'AAA', 'AA', 'A', 'BBB', generally are
recognized as being investment grade. Debt rated 'BB' or below generally is
referred to as speculative grade. The term "junk bond" is merely a more
irreverent expression for this category of more risky debt. Neither term
indicates which securities S&P deems worthy of investment, as an investor with a
particular risk preference may appropriately invest in securities that are not
investment grade.

Ratings continue as a factor in may regulations, both in the U.S. and
abroad, notably in Japan. For example, the Securities and Exchange Commission
(SEC) requires investment-grade status in order to register debt on Form-3,
which, in turn, is how one offers debt via a Rule 415 shelf registration. The
Federal Reserve Board allows members of the Federal Reserve System to invest in
securities rated in the four highest categories, just as the Federal Home Loan
Bank System permits federally chartered savings and loan associations to invest
in corporate debt with those ratings, and the Department of Labor allows pension
funds to invest in commercial

S-35
<PAGE>

paper rated in one of the three highest categories. In similar fashion,
California regulates investments of municipalities and county treasurers,
Illinois limits collateral acceptable for public deposits, and Vermont restricts
investments of insurers and banks. The New York and Philadelphia Stock
Exchanges fix margin requirements for mortgage securities depending on their
rating, and the securities haircut for commercial paper, debt securities, and
preferred stock that determines net capital requirements is also a function of
the ratings assigned.

SHORT-TERM DEBT RATINGS (may be assigned, for example, to commercial paper,
master demand notes, bank instruments, and letters of credit).

Moody's description of its three highest short-term debt ratings:

Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
capacity for repayment of senior short-term promissory
obligations. Prime-1 repayment capacity will normally be
evidenced by many of the following characteristics:

-Leading market positions in well-established industries.

-High rates of return on funds employed.

-Conservative capitalization structures with moderate
reliance on debt and ample asset protection.

-Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.

-Well-established access to a range of financial markets and
assured sources of alternate liquidity.

Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
capacity for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.

Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations.
The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection measurements and
may require relatively high financial leverage. Adequate
alternate liquidity is maintained.

S&P's description of its three highest short-term debt ratings:

A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to have extremely strong
safety characteristics are denoted with a plus sign (+).

A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high
as for issues designated "A-1."

S-36
<PAGE>

A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher
designations.

S-37