<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON March 1, 1996
File No. 33-64875
File No. 811-7445
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
PRE-EFFECTIVE AMENDMENT NO. 1 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 1 /X/
SEI ASSET ALLOCATION TRUST
(Exact Name of Registrant as Specified in Charter)
c/o The CT Corporation System
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (610) 254-1000
DAVID G. LEE
C/O SEI CORPORATION
680 E. SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(Name and Address of Agent for Service)
Copies to:
RICHARD W. GRANT, ESQUIRE JOHN H. GRADY, JR., ESQUIRE
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
2000 ONE LOGAN SQUARE 1800 M STREET, NW
PHILADELPHIA, PENNSYLVANIA 19103 WASHINGTON, DC 20036
- --------------------------------------------------------------------------------
/X/ Approximate date of Proposed Public Offering:
As soon as practicable after the
effective date of this Registration Statement
- --------------------------------------------------------------------------------
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
Pursuant to the provisions of Rule 24f-2 under the Investment Act of 1940, an
indefinite number of units of beneficial interest is being registered by this
Registration Statement.
- --------------------------------------------------------------------------------
<PAGE>
SEI ASSET ALLOCATION TRUST
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART A -
Item 1. Cover Page Cover Page
Item 2. Synopsis Table of Contents
Item 3. Condensed Financial Information *
Item 4. General Description of Registrant Fund Expenses (Class A); Fund Expenses (Class D);
Expense Ratios of the Underlying Portfolios;
Investment Objectives and Policies of the Funds;
General Investment Policies of the funds;
Portfolio Turnover of the Funds; Risk
Factors of the Funds; Investment Limitations of the
Funds; Investment Goals of the Underlying Portfolios;
Investment Objective and Policies of the Underlying Portfolio;
General Investment Policies and Limitations of
the Underlying Portfolios; Risk Factors of the
Underlying Portfolios; Fundamental Limitations of
the Underlying Portfolios
Item 5. Management of the Trust General Information - The Adviser and Manager
of the Funds; The Advisers and Sub-Advisers to the Underlying
Portfolios; The Sub-Advisers to the Underlying Portfolios;
Transfer Agent; Distribution of Fund Shares; Performance;
General Information -- The Trust; Trustees of the Trust
Item 6. Capital Stock and Other Securities Voting Rights; Reporting; Shareholder Inquiries;
Dividends; Counsel and Independent Accountants;
Custodian and Wire Agent; Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares; General Information;
How to Purchase Shares Through the Transfer Agent; How
to Exchange Shares Through the Transfer Agent
Item 8. Redemption or Repurchase How to Sell Shares Through the Transfer Agent
Item 9. Pending Legal Proceedings *
PART B -
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Description of Permitted Investments of the
Underlying Portfolios; Description of Ratings;
Investment Limitations of the Funds; Investment
Limitations of the Underlying Portfolios
Item 14. Management of the Registrant The Manager and Shareholder Servicing Agent;
Trustees and Officers of the Trust
Item 15. Control Persons and Principal Holders *
of Securities
Item 16. Investment Advisory and Other Services The Manager and Shareholder Servicing Agent; The
Investment Adviser to the Funds; The Advisers
and Sub-Advisers to the Underlying Portfolios;
Portfolio Managers of the Underlying Portfolios;
Experts
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption, and Pricing Purchase and Redemption of Shares; Shareholder Services
of Securities Being Offered
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Item 20. Tax Status Taxes
Item 21. Underwriters Distribution
Item 22. Calculation of Yield Quotations Performance
Item 23. Financial Statements Financial Statements
</TABLE>
PART C -
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
* Not Applicable
ii
<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") according to 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>
TABLE OF CONTENTS
Fund Expenses (Class A Shares)..................................................
Fund Expenses (Class D Shares)..................................................
Expense Ratios of the Underlying Portfolios.....................................
Investment Objectives and Policies of the Funds.................................
General Investment Policies of the Funds........................................
Portfolio Turnover of the Funds ................................................
Risk Factors of the Funds ......................................................
Investment Limitations of the Funds ............................................
Investment Goals of the Underlying Portfolios ..................................
Investment Objectives and Policies .............................................
of the Underlying Portfolios ..................................................
General Investment Policies of the
Underlying Portfolios .........................................................
Risk Factors of the Underlying Portfolios ......................................
Fundamental Limitations of the Underlying Portfolios ...........................
The Adviser and Manager of the Funds ...........................................
The Advisers and Sub-Advisers to the Underlying
Portfolios ....................................................................
Transfer Agent ................................................................
Distribution of Fund Shares ....................................................
Performance ....................................................................
Taxes ..........................................................................
Purchase and Redemption of Shares ..............................................
General Information ............................................................
Description of Permitted Investments and Risk Factors
of the Underlying Portfolios ..................................................
- --------------------------------------------------------------------------------
HOW TO READ THIS PROSPECTUS
This Prospectus gives you information that you should know about the Funds
before investing. Brief descriptions are also provided throughout the
Prospectus to better explain certain key points. To find these helpful
guides, look for this symbol. [SYMBOL APPEARS HERE]
- --------------------------------------------------------------------------------
3
<PAGE>
FUND EXPENSES
(CLASS A 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 A Shares. In addition to
these direct expenses, Class A Shares of the Funds will indirectly bear their
pro rata share of the expenses of the Underlying Portfolios. See
--- ----
"Expense Ratios of the Underlying Portfolios."
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED DIVERSIFIED DIVERSIFIED DIVERSIFIED
CONSERVATIVE CONSERVATIVE MODERATE GROWTH DIVERSIFIED GROWTH U.S. STOCK
INCOME FUND FUND FUND FUND FUND
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchasee None None None None None
---------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Reinvested None None None None None
Dividends
---------------------------------------------------------------------------------------------------------------------------------
Maximum Contingent Deferred Sales Charge None None None None None
---------------------------------------------------------------------------------------------------------------------------------
Wire Redemption Fees None None None None None
---------------------------------------------------------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
---------------------------------------------------------------------------------------------------------------------------------
Management/Advisory Fees (after waivers)/1/ .00% .00% .00% .00% .00%
---------------------------------------------------------------------------------------------------------------------------------
Other Expenses (after expense .12% .12% .12% .12% .12%
reimbursements)/2/,/3/
---------------------------------------------------------------------------------------------------------------------------------
Rule 12b-1 Fees None None None None None
---------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after waivers and .12% .12% .12% .12% .12%
expense reimbursement)/3/
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ SFM is currently waiving its advisory and management fees. Absent fee
waivers, management and each Fund would be advisory fees for .30%.
These fee waivers are voluntary and may be discontinued by SFM at any
time in its sole discretion.
/2/ Absent SFM's voluntary expense reimbursement, other expenses are
estimated to be [.13]% for the current fiscal year.
/3/ Absent SFM's voluntary fee waivers and expense reimbursements, the
total operating expenses of each Fund's Class A Shares would be
[.43]%.
4
<PAGE>
EXPENSE RANGES AND EXAMPLE
BASED ON THE EXPENSE RATIOS OF THE UNDERLYING PORTFOLIOS SET FORTH BELOW, THE
RANGE OF AVERAGE WEIGHTED EXPENSE RATIOS FOR CLASS A SHARES OF THE FUNDS ARE
EXPECTED TO BE AS FOLLOWS:/+/
<TABLE>
<CAPTION>
RANGE OF
FUND EXPENSE RATIOS
- ---- --------------
<S> <C>
Diversified Conservative Income Fund Class A..................... .67% to .89%
Diversified Conservative Fund Class A............................ .75% to 1.00%
Diversified Moderate Growth Fund Class A......................... .80% to 1.07%
Diversified Growth Fund Class A.................................. .88% to 1.33%
Diversified U.S. Stock Fund Class A.............................. .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 expenses on a $1,000 investment assuming: (1) a 5% annual
return, (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Yr. 3 Yr.
----- -----
<S> <C> <C>
Diversified Conservative Income Fund Class A............. $ 8 $25
Diversified Conservative Fund Class A.................... $ 9 $28
Diversified Moderate Growth Fund Class A................. $10 $30
Diversified Growth Fund Class A.......................... $11 $35
Diversified U.S. Stock Fund Class A...................... $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."
5
<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. 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. See "Expense Ratios of the
Underlying Portfolios."
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price).
----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED DIVERSIFIED DIVERSIFIED DIVERSIFIED
CONSERVATIVE CONSERVATIVE MODERATE GROWTH DIVERSIFIED GROWTH U.S. STOCK
INCOME FUND FUND FUND FUND FUND
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed None None None None None
on Purchase
----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge Imposed None None None None None
on Reinvested Dividends
----------------------------------------------------------------------------------------------------------------------------------
Maximum Contingent Deferred None None None None None
Sales Charge
----------------------------------------------------------------------------------------------------------------------------------
Wire Redemption Fees $10.00 $10.00 $10.00 $10.00 $10.00
----------------------------------------------------------------------------------------------------------------------------------
Exchange Fees None None None None None
----------------------------------------------------------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
----------------------------------------------------------------------------------------------------------------------------------
Management/Advisory Fees .00% .00% .00% .00% .00%
(after waivers)/1/
----------------------------------------------------------------------------------------------------------------------------------
Other Expenses (after expense .12% .12% .12% .12% .12%
reimbursements)/2//,3/
----------------------------------------------------------------------------------------------------------------------------------
Rule 12b-1 Distribution & 1.00% 1.00% 1.00% 1.00% 1.00%
Shareholder Servicing Fees/4/
----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 1.12% 1.12% 1.12% 1.12% 1.12%
(after waivers and
expense reimbursements)/3/
----------------------------------------------------------------------------------------------------------------------------------
</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 voluntary expense reimbursement, other expenses are
estimated to be [.13]% for the current fiscal year.
/3/ Absent SFM's voluntary fee waivers and expense reimbursements, the
total operating expenses of each Fund's Class D Shares would be
[1.43]%.
/4/ Each Fund's Rule 12b-1 Distribution & Shareholder Servicing Fees will
be reduced in an amount equal to the Fund's pro rata share of any
--- ----
shareholder servicing fees paid by any Underlying Portfolios 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."
6
<PAGE>
EXPENSE RANGES AND EXAMPLE
BASED ON THE EXPENSE RATIOS OF THE UNDERLYING PORTFOLIOS SET FORTH BELOW, THE
RANGE OF AVERAGE WEIGHTED EXPENSE RATIOS FOR CLASS D SHARES OF THE FUNDS ARE
EXPECTED TO BE AS FOLLOWS:/+/
<TABLE>
<CAPTION>
RANGE OF
FUND EXPENSE RATIOS
- ---- --------------
<S> <C>
Diversified Conservative Income Fund Class D .................. 1.67% to 1.89%
Diversified Conservative Fund Class D.......................... 1.75% to 2.00%
Diversified Moderate Growth Fund Class D....................... 1.80% to 2.07%
Diversified Growth Fund Class D................................ 1.88% to 2.33%
Diversified U.S. Stock Fund Class D............................ 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 expenses on a $1,000 investment assuming: (1) a 5% annual
return, (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Yr. 3 Yr.
----- -----
<S> <C> <C>
Diversified Conservative Income Fund Class D.........................$18 $56
Diversified Conservative Fund Class D................................$19 $59
Diversified Moderate Growth Fund Class D.............................$20 $61
Diversified Growth Fund Class D......................................$21 $66
Diversified U.S. Stock Fund Class D..................................$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."
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 NASD.
7
<PAGE>
EXPENSE RATIOS OF
THE UNDERLYING PORTFOLIOS _____________________________________________________
Class A and Class D Shares of the Funds also will indirectly bear their pro rata
--- ----
share of fees and expenses incurred by the Underlying Portfolios, including
distribution 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%
</TABLE>
DIVERSIFIED MODERATE 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%
SIMT Core Fixed Income Portfolio.......................................................................... .55%
SIT International Fixed Income
Portfolio................................................................................................. 1.00%
SLAT Prime Obligation Portfolio........................................................................... .44%
</TABLE>
DIVERSIFIED U.S. STOCK 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%
SLAT Prime Obligation Portfolio........................................................................... .44%
</TABLE>
DIVERSIFIED CONSERVATIVE 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%
SIMT Core Fixed Income Portfolio.......................................................................... .55%
SIT International Fixed Income............................................................................ 1.00%
SLAT Prime Obligation Portfolio........................................................................... .44%
</TABLE>
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%
</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 without the benefit of professional asset
allocation recommendations. 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
distribution/shareholder servicing fees
8
<PAGE>
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. Currently, Class A Shares of the Underlying Portfolios are subject to
a .25% shareholder servicing fee. See "Distribution of Fund Shares."
INVESTMENT
OBJECTIVES AND
POLICIES OF THE
FUNDS___________________________________________________________________________
- --------------------------------------------------------------------------------
[SYMBOL APPEARS HERE]
WHAT ARE INVESTMENT OBJECTIVES AND POLICIES?
A Fund's investment objective is a statement of what it seeks to achieve. It is
important to make sure that the investment objective matches your own financial
needs and circumstances. The investment policies section spells out the types of
mutual funds in which each Fund invests in attempting to meet its investment
objective.
- --------------------------------------------------------------------------------
The Funds offer investors the opportunity to invest in certain of the Underlying
Portfolios, and are designed primarily for tax-advantaged retirement and other
long-term investment or savings accounts, including: Individual Retirement
Accounts ("IRAs"), Simplified Employee Plans ("SEPs"), 403(b)(7) tax-sheltered
retirement plans for employees of non-profit organizations, 401(k) savings
plans, profit-sharing and money-purchase pension plans, and other corporate
pension and savings plans.
In order to achieve its investment objective, each Fund typically
invests a percentage of its assets among predetermined 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.
DIVERSIFIED CONSERVATIVE INCOME FUND
The DIVERSIFIED CONSERVATIVE INCOME FUND seeks to provide current income and an
opportunity for capital appreciation 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>
9
<PAGE>
DIVERSIFIED CONSERVATIVE FUND
The DIVERSIFIED CONSERVATIVE FUND seeks to provide current 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>
DIVERSIFIED MODERATE GROWTH FUND
The DIVERSIFIED MODERATE GROWTH FUND seeks to provide long-term capital
appreciation with a limited level of current 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 GROWTH FUND
The DIVERSIFIED GROWTH FUND seeks to provide long-term 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>
10
<PAGE>
DIVERSIFIED U.S. STOCK FUND
The DIVERSIFIED U.S. STOCK FUND seeks to provide long-term 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 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 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."
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 futures
contract is priced attractively or is otherwise considered more advantageous
than the underlying security or index. While futures contracts and options can
be used as leveraged instruments, the Funds will not use futures contracts or
options to leverage their portfolios.
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>
RISK FACTORS
OF THE FUNDS ________________________________________________________
Prospective investors in the Funds should consider the following 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
. 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 not 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 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 restrictions
which are described in the Trust's Statement of Additional Information.
INVESTMENT GOALS OF
THE UNDERLYING
PORTFOLIOS ________________________________________________________
The following table describes the investment goals of each Underlying Portfolio:
12
<PAGE>
<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.
UNDERLYING EQUITY
- -----------------
PORTFOLIOS
- ----------
SIMT LARGE CAP
GROWTH PORTFOLIO The SIMT Large Cap Growth Portfolio seeks to provide
capital 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").
SIMT LARGE CAP
VALUE PORTFOLIO The SIMT Large Cap Value Portfolio seeks to provide long-
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
GROWTH PORTFOLIO The SIMT Small Cap Growth Portfolio seeks to provide
long-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
13
<PAGE>
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 an NRSRO, or if not rated,
determined to be of comparable quality by the Portfolio's
advisers.
SIMT SMALL CAP
VALUE PORTFOLIO The SIMT Small Cap Value Portfolio seeks to provide
capital 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 $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
EQUITY PORTFOLIO The SIT International Equity Portfolio seeks to provide
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;
14
<PAGE>
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 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 MARKETS
EQUITY PORTFOLIO The SIT Emerging Markets Equity Portfolio seeks to
provide capital appreciation by investing primarily in a
diversified portfolio of equity securities of emerging
market issues. 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.
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").
15
<PAGE>
These companies typically have larger average market
capitalizations than the emerging market companies in
which the Portfolio generally invests.
The 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.
UNDERLYING FIXED
- ----------------
INCOME PORTFOLIOS
- -----------------
SIMT CORE FIXED
INCOME PORTFOLIO The SIMT Core Fixed Income Portfolio seeks to provide
current income consistent with the preservation of
capital. Under normal market conditions, the Portfolio
will invests 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
BOND PORTFOLIO The SIMT High Yield Bond Portfolio seeks to maximize
total 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
16
<PAGE>
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 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 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, 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
17
<PAGE>
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
FIXED INCOME
PORTFOLIO The SIT International Fixed Income Portfolio seeks to
provide capital appreciation and current income through
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. 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, 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.
UNDERLYING MONEY
- ----------------
MARKET PORTFOLIO
- ----------------
18
<PAGE>
SLAT PRIME
OBLIGATION PORTFOLIO The SLAT Prime Obligation Portfolio seeks to preserve
principal value and maintain a high degree of liquidity
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.
GENERAL INVESTMENT
POLICIES OF THE
UNDERLYING PORTFOLIOS _____________________________________________________
Borrowing Each Underlying Portfolio, except the SLAT Prime
Obligation Portfolio, may borrow money to meet
redemptions for temporary or emergency purposes. A
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
Currency Contracts The Underlying Portfolios, except the SIMT Core Fixed
Income, SIMT Large Cap Growth, SIMT Small Cap Growth,
SIMT Large Cap Value, SIMT Small Cap Value, and SLAT
Prime Obligation Portfolios may purchase forward foreign
currency contracts.
Illiquid
Securities Each Underlying Portfolio's investment in illiquid
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 Company
Securities Each Underlying Portfolio, except the SLAT Prime
Obligation Portfolio, may purchase investment company
securities, which 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
19
<PAGE>
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 Grade
Debt Securities Each Underlying Portfolio, except the SLAT Prime
Obligation Portfolio, may invest in investment grade debt
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
Instruments In order to meet liquidity needs or for temporary
defensive 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 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
Futures Each Underlying Portfolio, except the SLAT Prime
Obligation 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
Lending Each Underlying Portfolio, except the SLAT Prime
Obligation Portfolio, may lend its securities to
qualified investors for the purpose of realizing
additional income.
U.S. Dollar
Denominated
Securities of
Foreign Issuers Each Underlying Portfolio, except the SLAT Prime
Obligation, SIMT Small Cap Growth, and SIMT Core
Fixed Income Portfolios, may invest in U.S. dollar
denominated securities 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, SIT International Fixed Income and SIT
International Equity Portfolios, may purchase warrants
in order to increase total return.
When-Issued and
Delayed-Delivery
Securities The Underlying Portfolios may purchase securities on a
when-issued or delayed-delivery basis.
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.
20
<PAGE>
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, 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 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.
THE ADVISER AND MANAGER
OF THE FUNDS _____________________________________________________
- --------------------------------------------------------------------------------
[SYMBOL APPEARS HERE]
INVESTMENT ADVISER
A Fund's investment adviser manages the investment activities and is responsible
for the performance of the Fund. The adviser executes investment strategies
based on an assessment of economic and market conditions, and determines the
appropriate allocation of the Fund's assets among the Underlying Portfolios.
- --------------------------------------------------------------------------------
Under an Investment Advisory Agreement with the Trust, SEI Financial Management
Corporation ("SFM" or the "Adviser") acts as the investment adviser to each
Fund. Under the Agreement, the Adviser will provide its proprietary asset
allocation services to the Funds, and will exercise investment discretion over
the assets of the Funds. The Adviser will monitor the allocation of each Fund's
assets, and will be responsible for supervising compliance with each Fund's
fundamental investment objectives and policies. Although it is expected that
each Fund will typically be fully invested in the Underlying Portfolios, the
Adviser 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,
21
<PAGE>
at an annual rate of .20% of the average daily net assets of each Fund. SFM has
agreed to waive its management 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 26 investment companies including more than 220 portfolios, which
investment companies had more than $51 billion in assets as of September 30,
1996.
Investment and asset allocation decisions for the Funds are made by a
committee within SFM.
THE ADVISERS AND SUB-
ADVISERS TO THE UNDERLYING
PORTFOLIOS ____________________________________________________
Overview: The following table sets forth information regarding the advisers and
sub-advisers to the Underlying Portfolios:
<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.
- ----------------------------------------------------------------------------------------------------
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 Equity SFM Montgomery Asset Management,
L.P.
- ----------------------------------------------------------------------------------------------------
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 Income Strategic Fixed Income, L.P. None
- ----------------------------------------------------------------------------------------------------
SLAT Prime Obligation Wellington Management Company None
====================================================================================================
</TABLE>
The portfolio managers employed by the advisers and sub-advisers to the
Underlying Portfolios are set forth in the Trust's Statement of Additional
Information.
ADVISERS TO THE UNDERLYING PORTFOLIOS
- -------------------------------------
22
<PAGE>
SEI FINANCIAL
MANAGEMENT
CORPORATION In addition to serving as the Trust's Adviser, SFM serves
as investment adviser to each Underlying Portfolio except
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"), the Adviser 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, the Adviser 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. The
Adviser 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 objective and policies, and under the
supervision of the Adviser 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. The Adviser
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.
The Adviser has obtained an exemptive order from
the SEC that permits the Adviser, 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 agreement to a vote
of the Underlying SEI Portfolio's shareholders. The
exemptive relief also permits the non-disclosure of
amounts payable by the Adviser 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. 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.
For its advisory services to the Underlying
Portfolios, the Adviser 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, .475% 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
INCOME L.P. Strategic Fixed Income L.P. ("SFI") acts as the
investment sub-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 Management ("SIM"). As of
__________________, 1995, SFI managed $____ billion of
client assets. Together, SFI and SIM managed over $____
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.
23
<PAGE>
WELLINGTON MANAGEMENT
COMPANY Wellington Management Company ("WMC"), 75 State Street,
Boston, Massachusetts 02109, serves as the investment
adviser to the SLAT Prime Obligation Portfolio.
As of September 30, 1995, WMC had investment
management authority with respect to approximately $102.4
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 B. Neff.
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.
THE SUB-ADVISERS TO THE
- -----------------------
UNDERLYING PORTFOLIOS
- ---------------------
ACADIAN ASSET
MANAGEMENT, INC. Acadian Asset Management, Inc. ("Acadian") act as an
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 $2 billion in assets invested globally.
Acadian's business address is 260 Franklin Street,
Boston, Massachusetts 02110.
Acadian is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
ALLIANCE CAPITAL
MANAGEMENT L.P. Alliance Capital Management L.P. ("Alliance Capital")
serves 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
September 30, 1995, Alliance managed over $123 billion in
assets. The principal business address of Alliance is
1345 Avenue of the Americas, New York, New York 10105.
Alliance Capital is entitled to either a minimum
annual fee from the Adviser, or to a fee calculated on
the basis of a percentage of the average monthly market
value of the assets assigned to it. 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
CAPITAL MANAGEMENT Apodaca-Johnston Capital Management ("Apodaca")
serves as an investment sub-adviser to a portion of the
assets of the SIMT Small Cap Growth Portfolio. Apodaca is
a California corporation with its principal address at
580 California Street, Suite 2200, San Francisco,
California 94014. Apodaca is owned equally by Scott
Johnson, Jerry C. Apodaca, Jr., and Jerry C. Apodaca, Sr.
Apodaca's predecessor was founded in 1985, and as of
September 30, 1995, Apodaca has approximately $_________
million in assets under management. Apodaca's clients
include individuals, pension and profit sharing plans, an
endowment fund and an investment company portfolio.
Apodaca is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
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
24
<PAGE>
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
Basic Appraisals, Inc., 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. No one person or entity possesses a
controlling interest in Basic Appraisals, Inc. BEA is
registered as an investment adviser under the Investment
Advisers Act of 1940, as amended.
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 September 30, 1995, BEA managed
approximately $28.6 billion in assets.
BEA is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
BLACKROCK FINANCIAL
MANAGEMENT, INC. BlackRock Financial Management, Inc. ("BlackRock") serves
as an investment sub-adviser to a portion of the assets
of the 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 September 30,
1995, BlackRock had $______ 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.
BlackRock is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
BOSTON PARTNERS
ASSET MANAGEMENT,
L.P. Boston Partners Asset Management, L.P. ("Boston") serves
as investment sub-adviser to a portion of the assets of
the SIMT Small Cap Value Portfolio. Boston, a Delaware
limited partnership, is a registered investment adviser
with its principal business address at One Financial
Center, 43rd Floor, Boston, Massachusetts 02111. Boston'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 Boston, owns approximately 20% of
Boston's partnership interests. Boston was founded in
April, 1995, and as of September 30, 1995, it had
approximately $____ billion in assets under management.
Boston's clients include corporations, endowments,
foundations, pension and profit sharing plans and one
other investment company.
Boston is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
1838 INVESTMENT
ADVISORS, L.P. 1838 Investment Advisors, L.P. ("1838") serves as
investment 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 September 30, 1995, 1838
managed $3.5 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.
1838 is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
FIRSTAR INVESTMENT
RESEARCH &
MANAGEMENT COMPANY Firstar Investment Research & Management Company
("FIRMCO") serves as an investment sub-adviser to a
portion of the assets of the SIMT Core Fixed Income
Portfolio. FIRMCO is a registered investment adviser with
its principal business address at 777 East Wisconsin
Avenue, Suite 800, Milwaukee, Wisconsin 53202. FIRMCO was
founded in 1986, and as of September 30, 1995, it had
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<PAGE>
approximately $_____ 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.
FIRMCO is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
IDS ADVISORY
GROUP INC. IDS Advisory Group Inc. ("IDS") serves as investment sub-
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 September 30, 1995, IDS managed over
$20.5 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.
IDS is entitled to either a minimum annual fee
from the Adviser, or to a fee calculated on the basis of
a percentage of the average monthly market value of the
assets assigned to it.
LSV ASSET
MANAGEMENT LSV Asset Management ("LSV") serves as investment sub-
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.
LSV is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
MELLON EQUITY
ASSOCIATES Mellon Equity Associates ("Mellon") serves as investment
sub-adviser to a portion of the assets of the SIMT Large
Cap Value Portfolio. Mellon is a Pennsylvania business
trust founded in 1987, whose sole beneficiary is MBC
Investments Corporation, a wholly-owned subsidiary of the
Mellon Bank Corporation. Mellon 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 had discretionary
management authority with respect to approximately $6.2
billion of assets as of September 30, 1995. Mellon's
predecessor organization had managed domestic equity tax-
exempt institutional accounts since 1947. The business
address for Mellon is 500 Grant Street, Suite 3700,
Pittsburgh, Pennsylvania 15258.
Mellon is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
MERUS-UCA CAPITAL
MANAGEMENT Merus UCA Capital Management ("MERUS") serves as
investment sub-adviser to a portion of the assets of the
SIMT Large Cap Value Portfolio. MERUS 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 September 30,
1995, MERUS had discretionary management authority with
respect to approximately $______ billion of assets. The
principal business address of MERUS is 475 Sansome
Street, San Francisco, California 94111.
MERUS is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
MONTGOMERY ASSET
MANAGEMENT, L.P. Montgomery Asset Management, L.P. ("MAM") acts as the
investment sub-adviser to the SIT Emerging Markets Equity
Portfolio. In accordance with the Portfolio's investment
objective and policies and under the supervision of the
Adviser and the Underlying Trust's Board of Trustees, MAM
is
26
<PAGE>
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 _______________, 1995, MAM had approximately
$____ 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, CA 94111.
MAM is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
MORGAN GRENFELL
INVESTMENT SERVICES
LIMITED Morgan Grenfell Investment Services Limited ("MG") acts
as the investment sub-adviser to the SIT International
Equity Portfolio. MG, a subsidiary of Morgan Grenfell
Asset Management Limited, managed over $____ billion in
assets as of _________________, 1995. Morgan Grenfell
Asset Management Limited, a wholly-owned subsidiary of
Deutsche Bank, A.G., a German financial services
conglomerate, managed over $____ billion in assets as of
_________________, 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 average
monthly market value of the assets assigned to it.
NICHOLAS-APPLEGATE
CAPITAL MANAGEMENT Nicholas-Applegate Capital Management ("Nicholas-
Applegate") serves as investment sub-adviser to a portion
of the assets of the SIMT Small Cap Growth Portfolio.
Nicholas-Applegate has operated as an investment adviser
which provides investment services to employee benefit
plans, endowments, foundations, other institutions and
investment companies since April 20, 1987. As of
September 30, 1995, Nicholas-Applegate had discretionary
management authority with respect to approximately $13
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, Inc., a
corporation owned by Arthur E. Nicholas.
Nicholas-Applegate is entitled to a fee from the
Adviser calculated on the basis of a percentage of the
average monthly market value of the assets assigned to
it.
PILGRIM BAXTER
& ASSOCIATES, LTD. Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter")
serves 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 Adviser is United Asset
Management Corporation ("UAM"), a New York Stock Exchange
listed holding company principally engaged, through
affiliated firms, in providing institutional investment
management services and acquiring institutional
investment management firms. UAM's corporate headquarters
are located at One International Place, Boston,
Massachusetts 02110. The Adviser currently has
discretionary management authority with respect to
approximately $6.5 billion in assets. In addition to
advising the Portfolio, the Adviser provides advisory
services to pension and profit-sharing plans, charitable
institutions, corporations, individual investors, trusts
and estates, and other investment companies. The
principal business address of the Adviser is 1255
Drummers Lane, Suite 300, Wayne, Pennsylvania 19087.
Pilgrim Baxter is entitled to a fee from the
Adviser calculated on the basis of a percentage of the
average monthly market value of the assets assigned to
it.
27
<PAGE>
SCHRODER CAPITAL
MANAGEMENT
INTERNATIONAL LIMITED Schroder Capital Management International Limited ("SC")
acts as the investment sub-adviser to the SIT
International Equity Portfolio. SC was founded in
January, 1989 and is a 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 seven in Asia. As of
___________, 1995, the Schroder Group had over $____
billion in assets under management. As of that date, SC
had over $___ 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
and Jakarta, staffed by 38 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.
SC is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
WALL STREET
ASSOCIATES Wall Street Associates ("WSA") serves as investment sub-
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 September 30, 1995, had approximately
$____ million in assets under management. WSA is owned
equally by William Jeffrey 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
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
WESTERN ASSET
MANAGEMENT COMPANY Western Asset Management Company ("Western") serves as an
investment sub-adviser to a portion of the assets of the
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
September 30, 1995, Western managed approximately $12
billion in client assets, including $2 billion of
investment company assets.
Western is entitled to a fee from the Adviser
calculated on the basis of a percentage of the average
monthly market value of the assets assigned to it.
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 D shares.
DISTRIBUTION
28
<PAGE>
OF FUND SHARES _____________________________________________________
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 and shareholder 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 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 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 recordkeeping
and other 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 the
Fund Shares.
The service fees payable to the Distributor 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, including acceptance of telephone inquiries and
transaction requests; 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. In addition, Distributor shall
perform or supervise the performance by others of other shareholder services in
connection with the operations of the applicable Funds, as agreed from time to
time.
Payments under the Class D Plan are not tied exclusively to the
expenses for distribution or shareholder servicing activities actually incurred
by the Distributor or third parties, so that such payments may exceed expenses
actually incurred by the Distributor. The Trust's Board of Trustees will
evaluate the appropriateness of the Plan and its 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.
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 Trust's SEC Order. Specifically, any Fund's
distribution/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.
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
29
<PAGE>
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.
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 Portfolio, the performance of Class A Shares will normally be
higher than the performance of the Class D shares of that Portfolio because of
the additional distribution, shareholder servicing and transfer agent expenses
charged to Class D Shares.
TAXES _____________________________________________________
- --------------------------------------------------------------------------------
[Symbol appears here]
TAXES
You must pay taxes on your Fund's earnings, whether you take your payments in
cash or additional shares.
- --------------------------------------------------------------------------------
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.
For tax-deferred retirement accounts (such as Individual Retirement
Accounts or other retirement plans), dividend and capital gains distributions
from the Funds must be reinvested in additional shares. Only when you are over
59 1/2 years old can you receive distributions in cash. For regular investment
accounts, dividend and capital gains distributions may be reinvested in
additional shares or received in cash. See "General Information - Dividends."
IRAs or other tax-qualified retirement plans generally will not be
subject to federal tax liability on either dividend and capital gains
distributions from the Funds or redemption of shares of the Funds. Rather,
participants in such plans will be taxed when they begin taking distributions
from the plans. You should consult with a tax professional on the specific rules
governing your own tax-deferred arrangement. There are varying restrictions
imposed by the Internal Revenue Service on eligibility, contributions and
withdrawals, depending on the type of tax-deferred account you have selected.
The rules governing tax-deferred retirement plans are complex, and failure to
comply with the IRS's rules and regulations governing your type of plan 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.
Tax Status
of the Funds 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 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 gains (the excess of net long-term
capital gain over net short-term capital losses)
distributed to shareholders.
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[Symbol appears here]
DISTRIBUTIONS: A Fund distributes income dividends and capital gains. Income
dividends represent the earnings from the Fund's investments; capital gains
distributions occur when the Fund's investments are sold for more than their
original purchase price.
- --------------------------------------------------------------------------------
Tax Status
of Distributions Each Fund will distribute substantially all of its net
investment income (including net short-term capital
gains) and net capital gain to shareholders. Dividends
from a Fund's net investment income will be taxable to
its shareholders as ordinary income, whether received in
cash 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 gains are taxable to shareholders as long-
term capital gains 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.
PURCHASE AND REDEMPTION OF SHARES ________________________________________
The Funds have been designed primarily for tax-advantaged retirement and other
long-term investment and savings accounts. Class A Shares of the Funds are sold
on a continuous basis and may be purchased directly from the Trust's
Distributor, SEI Financial Services Company. Class D Shares may be purchased
through the Distributor or through financial institutions, broker-dealers, or
other organizations which have established a dealer agreement or other
arrangement with SEI Financial Services Company ("Intermediaries"). This
section describes the purchase, exchange and redemption services available to
investors. Please note that the 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.
- --------------------------------------------------------------------------------
[Symbol appears here]
BUY, EXCHANGE AND SELL REQUESTS ARE IN "GOOD ORDER" WHEN:
. The account number and portfolio name are shown
. The amount of the transaction is specified in dollars or
shares
. Signatures of all owners appear exactly as they are
registered on the account
. Any required signature guarantees (if applicable) are
included
. Other supporting legal documents (as necessary) are present
- --------------------------------------------------------------------------------
Purchasing Shares
Through Intermediaries
and Retirement
Accounts Financial institutions may acquire Class A Shares of the
Funds for their own account or as record owner on behalf
of fiduciary agency or custody accounts by placing orders
with the Transfer Agent. Class D shares of the Funds may
be purchased through Intermediaries which provide various
levels of shareholder services to their customers.
Contact your Intermediary for information about the
services available to you and for specific instructions
on how to buy, sell and exchange shares.
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<PAGE>
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[Symbol appears here]
WHAT IS AN INTERMEDIARY?: Any entity, such as a bank, broker-dealer, other
financial institution, association or organization which has entered into an
arrangement with the Distributor to sell Class D Shares to its customers.
- --------------------------------------------------------------------------------
Both Class A and Class D shares are offered to tax-
advantaged retirement accounts. If you are investing in a
Fund through an IRA, 401(k) or other retirement plan, you
should contract 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.
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 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 Asset
Value is Determined The net asset value per share of each Fund is determined
by dividing the total market value of such Fund's
investments and other assets, less any liabilities, by
the total number of outstanding shares of that
32
<PAGE>
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
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 Investments The Class A shares are not subject to a minimum initial
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
Minimum Account
Balance Due to the relatively high cost of handling small
investments, a Fund reserves the right to redeem, at net
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. According, an investor purchasing shares
of a Fund in only the minimum investment amount may be
subject ot 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.
HOW TO PURCHASE SHARES
THROUGH THE TRANSFER AGENT
Opening an Account Account Application forms may be obtained by calling 1-
800-342-5734.
By Mail Class A Shares may not be purchased by mail.
Class D Shares by mailing a completed application and a
check (or other negotiable bank instrument or money
order) payable to "Class D Shares (Fund Name)." 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.
33
<PAGE>
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 Investment
Plan ("AIP") Class A Shares may not be purchased through an Automatic
Investment Plan.
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 SHARES
THROUGH THE TRANSFER AGENT
Exchange privileges apply only to Class D Shares of the
Funds. They are not available to Class A Shares.
- --------------------------------------------------------------------------------
[Symbol appears here]
HOW DOES AN EXCHANGE TAKE PLACE? When making an exchange, you authorize the
sale of your shares of one or more Funds in order to purchase the shares of
another Fund. In other words, you are executing a sell order and then a buy
order. This sale of your shares is a taxable event which could result in a
taxable gain or loss.
- --------------------------------------------------------------------------------
When Can You
Exchange Shares? Once good payment for your shares has been received and
accepted (i.e., an account has been established), you may
exchange some or all of your shares of a Fund for Class D
Shares of the other Funds. 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.
Requesting an
Exchange of Shares To request an exchange, you must provide proper
instructions in writing to the Transfer Agent. Telephone
exchanges will also be accepted if you previously elected
this option on your account application.
In the case of shares held "of record" by an Intermediary
but beneficially owned by you, you should contact the
Intermediary who will contact the Transfer Agent and
effect the exchange on your behalf.
If an exchange request is for Class D Shares of a Fund
whose net asset 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 Privilege
Limitations The Funds' exchange privileges are not intended to afford
shareholders a way to speculate on short-term movements
in the market. Accordingly, in order to prevent excessive
use of the exchange privilege that
34
<PAGE>
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 SHARES
THROUGH THE TRANSFER AGENT
BY MAIL Class A shares may not be sold by mail.
To sell your Class D shares, a written request for
redemption in good order must be received by the Transfer
Agent. Valid written redemption requests will be
effective on 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.
- --------------------------------------------------------------------------------
[Symbol appears here]
WHAT IS A SIGNATURE GUARANTEE?
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee.
- --------------------------------------------------------------------------------
By Telephone or
By Wire Both Class A and Class D Shares may be sold by telephone
if you previously elected that option on the Account
Application. You may have the proceeds mailed to the
address of record, wired or sent by ACH to a commercial
bank account previously designated on the Account
Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of
a valid telephone request for redemption. Wire redemption
requests may be made by calling 1-800-342-5734. Class D
Shares are subject to a wire redemption charge (presently
$10.00) which 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 Withdrawal
Plan ("SWP") Systematic Withdrawal Plans may not be established for
Class A accounts.
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.
35
<PAGE>
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
Considerations For
IRAs or Other
Retirement Accounts You may withdraw any portion of the funds in your account
by redeeming shares at any time. For a regular investment
account in the Funds, you may initiate a request by
writing or by telephoning. For an IRA or other tax-
deferred account, you must make your redemption request
in writing. Your redemption proceeds are normally mailed
within two business days after the receipt of the request
in good order.
If you invest in the Funds through an IRA or other
tax-deferred retirement plan, you should be aware that
any distributions personally received by you prior to age
59 1/2 are generally subject to a 10% penalty tax, as
well as ordinary income taxes. To avoid the 10% penalty,
you must generally roll over your distribution to another
IRA or qualified plan within 60 days. In contrast,
distributions paid directly to your plan will not be
subject to this penalty tax.
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 Trust The management and affairs of the Trust are supervised by
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.
36
<PAGE>
Shareholder
Inquiries Class A shareholder inquiries should be directed to SEI
Financial Management Corporation, 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658. Class D shareholder
inquiries should be directed to DST Systems, Inc., P.O.
Box 419240, Kansas City, Missouri 64141-6240.
Dividends Substantially all of the net investment income (exclusive
of capital gains) 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 gains 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
Independent
Accountants Morgan, Lewis & Bockius LLP serve as counsel to the
Trust. Price Waterhouse LLP serve as the independent
public accountants of the Trust.
Custodian
and Wire Agent SFM, which serves as transfer agent for the Underlying
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.
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 Depositary
Receipts ("ADRs"),
Continental Depositary
Receipts ("CDRs"),
European Depositary
Receipts ("EDRs")
and Global
Depositary Receipts
("GDRs") ADRs are securities, typically issued by a U.S. financial
institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by
a foreign issuer and deposited with the depositary. ADRs
include American Depositary Shares and New York Shares.
EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), are securities, typically
issued by a non-U.S. financial institution, that evidence
ownership interests in a security or a pool of securities
issued by either a U.S. or foreign issuer. GDRs are
issued globally and evidence similar ownership.
<PAGE>
Asset-Backed
Securities Asset-backed securities are securities secured by non-
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
Securities Convertible securities are corporate securities that are
exchangeable for a set number of another security at a
prestated price. Convertible securities typically have
characteristics similar to both fixed income and equity
securities. Because of the conversion feature, the market
value of 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
Instruments Demand instruments are instruments which may involve a
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),
-----
privately issued stripped securities (e.g., TGRs, TRs and
-----
CATS).
Equity
Securities Equity securities represent ownership interests in a
company 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.
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
Securities Fixed income securities are debt obligations issued by
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
Currency
Contracts A forward contract involves an obligation to purchase or
sell a specific currency amount at a future date, agreed
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 Contracts
and Options
on Futures
Contracts Futures contracts provide for the future sale by one
party and purchase by another party of a specified amount
of a specific security at a specified future time and at
a specified price. An option on a futures contract gives
the 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
38
<PAGE>
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.
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
contract.
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 cash equivalents, equal to the market value of
the futures positions held, less margin deposits, in a
segregated account with the Trust's custodian. Collateral
equal to the current market value of the futures position
will be marked to market on a daily basis.
Illiquid
Securities Illiquid securities are securities that cannot be
disposed 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
Instruments Money market securities are high-quality, dollar-
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 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 with
outstanding high-quality commercial papers; and (v)
repurchase agreements involving any of the foregoing
obligations entered into with highly-rated banks and
broker-dealers.
39
<PAGE>
Mortgage-Backed
Securities
Mortgage-backed securities are instruments that entitle
the 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"). CMs
--------------------------------------------
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 then 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 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
Rolls Mortgage "dollar rolls" are transactions in which
mortgage-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.
40
<PAGE>
Municipal
Securities Municipal securities consist of (i) debt obligations
issued 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 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
Supranational
Entities Obligations of supranational entities are obligations of
entities established through the joint participation of
several governments and include 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 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
41
<PAGE>
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.
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 Permitted
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
Agreements Repurchase agreements are agreements by which a Portfolio
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
Lending In order to generate additional income, a Portfolio may
lend 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
Foreign Issuers There are certain risks connected with investing in
foreign 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.
42
<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,
Floors and
Collars Interest rate swaps, mortgage swaps, currency swaps and
other types of swap agreements such as caps, floors and
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
Agency
Obligations Obligations issued or guaranteed by agencies of the U.S.
Government, including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the
Small Business Administration, and obligations issued or
guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the
full faith and credit of the U.S. Treasury (e.g.,
-----
Government National Mortgage Association 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., Federal National
-----
Mortgage Association securities).
U.S. Treasury
Obligations U.S. Treasury obligations consist of bills, notes and
bonds 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
Receipts U.S. Treasury receipts are interests in separately traded
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
Floating Rate
Instruments Certain obligations may carry variable or floating rates
of interest, may involve conditional or unconditional
demand features. Such instruments bear interest at rates
which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling
on interest rate changes.
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.
43
<PAGE>
When-Issued
and Delayed
Delivery
Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery
taking place in the future. Delivery of and payment for
these securities may occur a month or more after the date
of the purchase commitment.
Yankee
Obligations Yankee obligations ("Yankees") are U.S. dollar-
denominated instruments of foreign issuers who either
register with the Securities and Exchange Commission or
issue under Rule 144A of the Securities Exchange Act of
1933, as amended. 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, Pay-
In-Kind and
Deferred Payment
Securities Zero coupon securities are securities that are sold at a
discount to par value and securities on which interest
payments are not made during the life of the security.
Upon 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.
44
<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
<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 "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 sales charges,
distribution, 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 Portfolio.
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 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.
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.
The yankee obligations selected for the Portfolios will adhere to the same
quality standards as those utilized for the selection of domestic debt
obligations.
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. 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.
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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. The
SIMT Core Fixed Income Portfolio will only purchase mortgage-backed securities
issued or guaranteed by either 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
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mortgage-backed security in its investment portfolio, the SIMT Core Fixed Income
Portfolio will 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
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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
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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 BONDS 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.
The SIMT High Yield Bond Portfolio may purchase in pay-in-kind bonds.
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
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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. A Portfolio may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation a Portfolio may have under these types of
arrangements will be covered by setting aside liquid high grade securities in a
segregated account. A 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,
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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 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. The SIMT Core Fixed Income and SIMT High Yield Bond Portfolios may
purchase securities that involve the purchase of debt obligations on a when-
issued basis, in which case delivery and payment normally take 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.
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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
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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.
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.
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
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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:
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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:
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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.
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<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
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. 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.
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 otherwise permitted by 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.
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.
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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 restricted securities.
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: SEI Liquid Asset
Trust; SEI Daily Income Trust, SEI Tax Exempt Trust, SEI Index Funds, SEI
International Trust, SEI Institutional Managed Trust, Stepstone Funds, The
Advisors' Inner Circle Fund, The Pillar Funds, CUFUND, STI Classic Funds,
CoreFunds, Inc., First American Funds, Inc., First American Investment Funds,
Inc., Rembrandt Funds(R), The Arbor Fund, 1784 Funds, The PBHG Fund, Inc.,
Bishop Street Funds, Conestoga Family of Funds, Insurance Investment Products
Trust, Marquis/sm/ Funds, Morgan Grenfell Investment Trust, Morgan Grenfell
Investment Trust, The Achievement Funds Trust, CrestFunds, STI Classic Variable
Trust, Inventor Funds, ARK Funds, and Monitor Funds.
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
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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
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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.
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
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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,
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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
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<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 and Service 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 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, Pennsylvania 19087-
1658. Certain trustees and officers of the Trust also serve as trustees and
officers of some or all of the following: SEI Liquid Asset Trust, SEI Daily
Income Trust, SEI Tax Exempt Trust, SEI Index Funds, SEI International Trust,
SEI Institutional Managed Trust, Stepstone Funds, The Advisors' Inner Circle
Fund, The Pillar Funds, CUFUND, STI Classic Funds, CoreFunds, Inc., First
American Funds, Inc., First American Investment Funds, Inc., Rembrandt Funds(R),
The Arbor Fund, 1784 Funds, The PBHG Funds, Inc., Bishop Street Funds, Conestoga
Family of Funds, Marquis/sm/ Funds, Morgan Grenfell Investment Trust, The
Achievement Funds Trust, CrestFunds, Inc., STI Classic Variable Trust, Inventor
Funds, and Insurance Investment Products Trust, open-end management investment
companies which are managed by SFM and/or distributed by SEI Financial Services
Company.
ROBERT A. NESHER - 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 - 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 - 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 - 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 - 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 - Trustee** - Ten Post Office Square, Boston, MA 02109. Partner
of Dechert Price & Rhodes (law firm).
DAVID G. LEE - 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 - 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.
ROBERT B. CARROLL - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of the SEI, the Manager and Distributor since 1994. United
States Securities and Exchange Commission, Division of Investment Management,
1990-94. Associate, McGuire, Woods, Battle & Boothe (law firm), prior to 1990.
KATHRYN L. STANTON - 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 - 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 - Controller, Assistant Secretary - Director of Funds
Accounting of SEI since 1991. Audit Manager of Price Waterhouse 1988-1991.
RICHARD W. GRANT - 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. - 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 Portfolios 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 Class D Shares for
which payment has been received (i.e., an established account), may be exchanged
----
for Class D Shares of other Funds of the Trust. A shareholder may exchange the
shares of each Fund's Class D 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 sixty 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 retirement plan or other tax-exempt account. 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 losses)
("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. 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
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<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 the 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.
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 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 second 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
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<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
<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 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 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 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 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 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
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Audited Statement of Assets and Liabilities
Notes to Financial Statement
(b) Additional Exhibits
1 Agreement and Declaration of Trust of the Registrant, dated
October 20, 1995 (incorporated by reference to Initial
Registration, filed on December 1, 1995).
2 By-Laws of the Registrant (incorporated by reference to
Initial Registration, filed on December 1, 1995).
5(a) Form of Investment Advisory Agreement between the Registrant
and SEI Financial Management Corporation, filed herewith.
6 Form of Distribution Agreement between the Registrant and
SEI Financial Services Company, filed herewith.
8 Custodian Agreement between the Registrant and CoreStates
Bank, N.A., filed herewith.
9(a) Form of Administration Agreement between the Registrant and
SEI Financial Management Corporation, filed herewith.
9(b) Form of Transfer Agent Agreement between the Registrant and
DST Systems, Inc., filed herewith.
10 Opinion and Consent of Counsel, filed herewith.
11 Opinion and Consent of Independent Public Accountants, filed
herewith.
15(a) Distribution Plan, Class D shares, filed herewith.
16 Performance Calculations, filed herewith.
18 18f-3 Plan, filed herewith.
24 Powers of Attorney for Richard F. Blanchard, F. Wendell
Gooch, Frank E. Morris, James M. Storey and Robert A. Nesher
incorporated by reference to Initial Registration, filed on
December 1, 1995 and for William M. Doran, filed herewith.
27 Financial Data Schedules, filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant:
See the Prospectus and the Statement of Additional Information regarding
the Registrant's control relationships. The Administrator is a subsidiary of
SEI Corporation, which also controls the distributor of the Registrant, SEI
Financial Services Company, other corporations engaged in providing various
financial and record keeping services, primarily to bank trust departments,
pension plan sponsors, and investment managers.
C-1
<PAGE>
Item 26. Number of Holders of Securities: None
Item 27. Indemnification:
Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liability arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by trustees, directors, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suit or proceeding) is
asserted by such trustees, directors, officers or controlling persons in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser:
ADVISER
- -------
SEI Financial Management Company ("SFM") is the investment adviser for the
Trust. The principal address of SFM is 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658. SFM is an investment adviser registered under the
Advisers Act.
The list required by this Item 28 of officers and directors of SFM, together
with information as to any other business profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years is incorporated by reference to Schedules A and D of Form ADV filed by SFM
to the Advisers Act (SEC File No. 801-24593).
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:
<TABLE>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds June 1, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
Inventor Funds, Inc. August 1, 1994
The Achievement Funds Trust December 27, 1994
Insurance Investment Products Trust December 30, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
Conestoga Family of Funds May 1, 1995
STI Variable Classic Trust August 18, 1995
ARK Funds November 11, 1995
Monitor Funds January 11, 1996
</TABLE>
SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in
the answer to Item 21 of Part B. Unless otherwise noted, the business
address of each director or officer is 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer Treasurer
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Charles A. Marsh Executive Vice President-Capital Resources Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
David G. Lee Senior Vice President President & Chief
Executive Officer
</TABLE>
C-3
<PAGE>
<TABLE>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
William Madden Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, Vice President &
General Counsel and Secretary Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Crudup Managing Director --
Vic Galef Managing Director --
Kim Kirk Managing Director --
John Krzeminski Managing Director --
Carolyn McLaurin Managing Director --
Barbara Moore Managing Director --
Donald Pepin Managing Director --
Mark Samuels Managing Director --
Wayne M. Withrow Managing Director --
Mick Duncan Team Leader --
Robert Ludwig Team Leader --
Vicki Malloy Team Leader --
Robert Aller Vice President --
C. Tony Baker Vice President --
Steve Bendinelli Vice President --
Cris Brookmyer Vice President & Controller --
Gordon W. Carpenter Vice President --
Robert B. Carroll Vice President & Assistant Secretary Vice President &
Assistant Secretary
Todd B. Cipperman Vice President & Assistant Secretary
Ed Daly Vice President --
Jeff Drennen Vice President --
Lucinda Duncalfe Vice President --
Kathy Heilig Vice President --
Larry Hutchison Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Robert S. Ludwig Vice President --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary Vice President &
Assistant Secretary
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Steve Smith Vice President --
</TABLE>
C-4
<PAGE>
<TABLE>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President &
Assistant Secretary
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records will be maintained
at the offices of Registrant's Custodian:
CoreStates Bank, N.A.
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, Pennsylvania 19101
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D);
(4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Administrator:
SEI Financial Management Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087-1658
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Adviser:
SEI Financial Management Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087-1658
C-5
<PAGE>
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Directors of their desire to communicate with Shareholders of the
Corporation, the Directors will inform such Shareholders as to the approximate
number of Shareholders of record and the approximate costs of mailing or afford
said Shareholders access to a list of Shareholders.
Registrant hereby undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Director(s) when requested
in writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940.
Registrant hereby undertakes to file a post-effective amendment, including
financial statements which need not be audited, within 4-6 months from the
effective date of the Registrant's 1933 Act Registration Statement.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this Pre-
Effective Amendment No. 1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wayne, Commonwealth of Pennsylvania on
the 28th day of February, 1996.
SEI ASSET ALLOCATION TRUST
By:/s/ David G. Lee
-----------------------------------
David G. Lee
President, Chief Executive Officer
Attest:
/s/ Jeffrey A. Cohen
- ----------------------------
Jeffrey A. Cohen
Controller and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacity on the
dates indicated.
<TABLE>
<S> <C> <C>
* Trustee February 28, 1996
- --------------------------
Richard F. Blanchard
* Trustee February 28, 1996
- --------------------------
William M. Doran
* Trustee February 28, 1996
- --------------------------
F. Wendell Gooch
* Trustee February 28, 1996
- --------------------------
Frank E. Morris
* Trustee February 28, 1996
- --------------------------
James M. Storey
* Trustee February 28, 1996
- --------------------------
Robert A. Nesher
/s/ David G. Lee President, Chief February 28, 1996
- -------------------------- Executive Officer
David G. Lee
/s/ Jeffrey A. Cohen Controller and Chief February 28, 1996
- -------------------------- Financial Officer
Jeffrey A. Cohen
* By: /s/ David G. Lee
--------------------------
David G. Lee
Attorney-in-Fact
</TABLE>
C-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Name Exhibit
---- -------
<S> <C>
Agreement and Declaration of Trust of the Ex-99.B1
Registrant, dated October 20, 1995 (incorporated
by reference to Initial Registration, filed
on December 1, 1995).
By-Laws of the Registrant (incorporated by reference Ex-99.B2
to Initial Registration, filed on December 1, 1995).
Form of Investment Advisory Agreement between the Registrant Ex-99.B5(a)
and SEI Financial Management Corporation, filed herewith.
Form of Distribution Agreement between Registrant and SEI Ex-99.B6
Financial Services Company, filed herewith.
Custodian Agreement between the Registrant and CoreStates Ex-99.B8
Bank, N.A., filed herewith.
Form of Administration Agreement between the Registrant and Ex-99.B9(a)
SEI Financial Management Corporation, filed herewith.
Form of Transfer Agent Agreement between the Registrant Ex-99.B9(b)
and DST Systems, Inc., filed herewith.
Opinion and Consent of Counsel, filed herewith. Ex-99.B10
Opinion and Consent of Independent Public Accountants, Ex-99.B11
filed herewith.
Distribution Plan, Class D shares, filed herewith. Ex-99.B15
Performance Calculations, filed herewith. Ex-99.B16
18f-3 Plan, filed herewith. Ex-99.B18
Powers of Attorney for Richard F. Blanchard, F. Wendell Ex-99.B24
Gooch, Frank E. Morris, James M. Storey and Robert A.
Nesher incorporated by reference to Initial Registration,
filed on December 1, 1995, and for William M. Doran, filed
herewith.
Financial Data Schedules, filed herewith. Ex-27.1-27.10
</TABLE>
C-8
<PAGE>
INVESTMENT ADVISORY AGREEMENT
SEI ASSET ALLOCATION TRUST
AGREEMENT made this ____ day of __________, 1996 by and between SEI Asset
Allocation Trust, a Massachusetts business trust (the "Trust"), and SEI
Financial Management Corporation (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series of shares, each having its own
investment policies; and
WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Administrator") to provide administration of the Trust's operations, subject to
the control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the portfolio(s) listed in Schedule A to
this Agreement and such other portfolios as the Trust and the Adviser may agree
upon (the "Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's
Officers and Trustees concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Trust's prospectus and statement
of additional information as amended from time to time, and applicable
laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use its
best efforts to obtain the best net results as described in the
Trust's prospectus and statement of additional information from time
to time. The Adviser will promptly communicate to the Administrator
and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
<PAGE>
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, solely by reason of its having directed a securities
transaction on behalf of the Trust to a broker-dealer in compliance
with the provisions of Section 28(e) of the Securities Exchange Act of
1934.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in
Schedule A which is attached hereto and made a part of this Agreement.
Such compensation shall be paid to the Adviser at the end of each
month, and calculated by applying a daily rate, based on the annual
percentage rates as specified in Schedule A, to the assets. The fee
shall be based on the average daily net assets for the month involved.
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
5. STATUS OF THE ADVISER. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser shall be free to render
similar services to others so long as its services to the Trust are
not impaired thereby. The Adviser shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
6. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the 1940 Act which are prepared or maintained by the Adviser on
behalf of the Trust are the property of the Trust and will be
surrendered promptly to the Trust on request.
7. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser
shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against the Adviser
hereunder. The Adviser shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for
any act or omission in carrying out its duties hereunder, except a
loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law which cannot be
waived or modified hereby. (As used in this Section 7, the term
"Adviser" shall include directors, officers, employees and other
corporate agents of the Adviser as well as that corporation itself).
8. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the
Trust are or may be interested in the Adviser (or any successor
<PAGE>
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and shareholders of
the Adviser are or may be interested in the Trust as Trustees,
shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected through
affiliates of the Adviser if approved by the Board of Trustees,
subject to the rules and regulations of the Securities and Exchange
Commission.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the 1940
Act and rules and regulations thereunder. The foregoing requirement
that continuance of this Agreement be "specifically approved at least
annually" shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered, or
mailed postpaid, to the other party at any office of such party.
As used in this Section 9, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder; subject to such
exemptions as may be granted by the Securities and Exchange Commission
under said Act.
10. GOVERNING LAW. This Agreement shall be governed by the internal laws
of the Commonwealth of Massachusetts, without regard to conflict of
law principles; provided, however, that nothing herein shall be
construed as being inconsistent with the 1940 Act.
11. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at 680 East Swedesford
Road, Wayne, PA 19087, Attention: President and if to the Adviser at:
680 East Swedesford Road, Wayne, PA 19087.
12. SEVERABILITY. If any provision of this Agreement shall be held or
<PAGE>
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, is are not binding upon any of the Trustees, officers, or shareholders
of the Trust individually but binding only upon the assets and property of the
Trust.
No portfolio of the Trust shall be liable for the obligations of any other
portfolio of the Trust. Without limiting the generality of the foregoing, the
Adviser shall look only to the assets of the Portfolios for payment of fees for
services rendered to the Portfolios.
IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory
Agreement to be executed as of the day and year first written above.
SEI ASSET ALLOCATION TRUST SEI FINANCIAL MANAGEMENT TRUST
By: By:
------------------------------- ---------------------------------
Name: Name:
---------------------------- ------------------------------
Attest: Attest:
-------------------------- -----------------------------
Name: Name:
---------------------------- ------------------------------
<PAGE>
SCHEDULE A DATED _________, 1995
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED ____________, 1995
BETWEEN
SEI ASSET ALLOCATION TRUST
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Diversified Conservative Fund .10%
Diversified Conservative Growth Fund .10%
Diversified Moderate Growth Fund .10%
Diversified Growth Fund .10%
Diversified U.S. Stock Fund .10%
<PAGE>
DISTRIBUTIONS AGREEMENT
SEI ASSET ALLOCATION TRUST
THIS AGREEMENT is made as of this ___ day of _______, 1996 between SEI
Asset Allocation Trust (the "Trust"), a Massachusetts business trust, and SEI
Financial Services Company (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended (the "1940 Act"), and its shares are registered with the SEC
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and the Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Trust grants to the Distributor the
--------------
exclusive right to sell shares (the "Shares") of the portfolios (the
"Portfolios") of the Trust at the net asset value per Share, plus any applicable
sales charge in accordance with the Trust's current prospectuses, as agent and
on behalf of the Trust, during the term of this Agreement and subject to the
registration requirements of the 1933 Act, the rules and regulations of the SEC
and the laws governing the sale of securities in the various states (the "Blue
Sky Laws").
ARTICLE 2. Solicitation of Sales. In consideration of these rights
---------------------
granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, in connection with the distribution
of the Shares of the Trust; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares.
ARTICLE 3. Compensation. As compensation for providing the services under
-------------
this Agreement:
(a) The Distributor shall receive from the Trust:
(1) all distribution and service fees, as applicable, at the rate and
under the terms and conditions set forth in each Distribution and
Service Plan adopted by the appropriate class of Shares of each of the
Portfolios, as such Plans may be amended from time to time, and
subject to any further limitations on such fees as the Board of
Directors of the Trust may impose;
(2) all contingent deferred sales charges ("CDSC") applied on
redemptions of CDSC Class Shares, as applicable, of each Portfolio on
the terms and subject to such waivers as are described in the Trust's
Registration Statement and current prospectuses, as amended from time
to time, or as otherwise required pursuant to applicable law; and
<PAGE>
(3) all front-end sales charges, as applicable, on purchases of
front-end load Shares of each Portfolio sold subject to such charges
as described in the Trust's Registration Statement and current
prospectuses, as amended from time to time. The Distributor, or
brokers, dealers and other financial institutions and intermediaries
that have entered into sub-distribution agreements with the
Distributor, may collect the gross proceeds derived from the sale of
such front-end load Shares, remit the net asset value thereof to the
Trust upon receipt of the proceeds and retain the applicable sales
charge.
(b) The Distributor may reallow any or all of the distribution or service
fees, CDSC and front-end sales charges which it is paid by the Trust to
such brokers, dealers and other financial institutions and intermediaries
as the Distributor may from time to time determine.
(c) The Distributor may transfer its right to the payments described in
this Article 3 to third persons who provide Trusting to the Distributor,
provided that any such transfer shall not be deemed a transfer of the
Distributor's obligations under this Agreement. Upon receipt of direction
from the Distributor to pay such fees to a transferee, the Trust shall make
payment in accordance with such direction.
ARTICLE 4. Authorized Representations. The Distributor is not authorized
--------------------------
by the Trust to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Trust filed with the SEC or contained in Shareholder reports or other material
that may be prepared by or on behalf of the Trust for the Distributor's use. The
Distributor may prepare and distribute sales literature and other material as it
may deem appropriate, provided that such literature and materials have been
prepared in accordance with applicable rules and regulations.
ARTICLE 5. Registration of Shares. The Trust agrees that it will take all
----------------------
action necessary to register Shares under the federal and state securities laws
so that there will be available for sale the number of Shares the Distributor
may reasonably be expected to sell and to pay all fees associated with said
registration. The Trust shall make available to the Distributor such number of
copies of its currently effective prospectuses and statement of additional
information as the Distributor may reasonably request. The Trust shall furnish
to the Distributor copies of all information, financial statements and other
papers which the Distributor may reasonably request for use in connection with
the distribution of Shares of the Trust.
ARTICLE 6. Indemnification of Distributor. The Trust agrees to indemnify
------------------------------
and hold harmless the Distributor and each of its directors and officers and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees and
disbursements incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground that the registration statement,
prospectus, Shareholder reports or other information filed or made public by the
Trust (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements made not misleading. However, the Trust does not
agree to indemnify the Distributor or hold it harmless to the extent that the
statements or omission was made in reliance upon, and in conformity with,
information furnished to the Trust by or on behalf of the Distributor.
<PAGE>
In no case (i) is the indemnity of the Trust to be deemed to protect the
Distributor against any liability to the Trust or its Shareholders to which the
Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Trust to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph.
The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Trust agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or Directors in
connection with the issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Trust. The Distributor covenants and agrees
------------------------
that it will indemnify and hold harmless the Trust and each of its Directors and
officers and each person, if any, who controls the Trust within the meaning of
Section 15 of the Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) based upon the 1933 Act or any other statute or common law
and arising by reason of any person acquiring any Shares, and alleging a
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, prospectus, Shareholder reports or other information
filed or made public by the Trust (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon and in conformity
with information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Trust or
any other person indemnified to be deemed to protect the Trust or any other
person against any liability to which the Trust or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Trust or any person indemnified unless the Trust or
person, as the case may be, shall have notified the Distributor in writing of
the claim within a reasonable time after the summons or other first written
<PAGE>
notification giving information of the nature of the claim shall have been
served upon the Trust or upon any person (or after the Trust or such person
shall have received notice of service on any designated agent). However,
failure to notify the Distributor of any claim shall not relieve the Distributor
from any liability which it may have to the Trust or any person against whom the
action is brought otherwise than on account of its indemnity agreement contained
in this paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
The Distributor agrees to notify the Trust promptly of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of the Trust's Shares.
ARTICLE 8. Effective Date. This Agreement shall be effective upon its
--------------
execution, and unless terminated as provided, shall continue in force for one
year from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Directors of the Trust, or the vote of a majority of the outstanding voting
securities of the Trust, and (ii) the vote of a majority of those Directors of
the Trust who are not parties to this Agreement or the Trust's Distribution Plan
or interested persons of any such party ("Qualified Directors"), cast in person
at a meeting called for the purpose of voting on the approval. This Agreement
shall automatically terminate in the event of its assignment. As used in this
paragraph the terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act. In addition, this Agreement may at any time be
terminated without penalty by the Distributor, by a vote of a majority of
Qualified Directors or by vote of a majority of the outstanding voting
securities of the Trust upon not less than sixty days prior written notice to
the other party.
ARTICLE 9. Notices. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at 680 East Swedesford Road, Wayne, Pennsylvania, and
if to the Distributor, at 680 East Swedesford Road, Wayne, Pennsylvania 19087.
ARTICLE 10. Limitation of Liability. A copy of the Articles of
-----------------------
Incorporation of the Trust is on file with the Secretary of State of Maryland,
and notice is hereby given that this Agreement is executed on behalf of the
Directors of the Trust as Directors and not individually and that the
obligations of this instrument are not binding upon any of the Directors,
officers or shareholders of the Trust individually but binding only upon the
assets and property of the Trust.
ARTICLE 11. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the state of Maryland and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the state of
Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
<PAGE>
ARTICLE 12. Multiple Originals. This Agreement may be executed in two or
------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS, the Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
SEI ASSET ALLOCATION TRUST
By:
----------------------------------
Attest:
------------------------------
SEI FINANCIAL SERVICES COMPANY
By:
----------------------------------
Attest:
------------------------------
<PAGE>
CUSTODIAN AGREEMENT
SEI ASSET ALLOCATION TRUST
This Agreement, dated as of the 7th day of February, 1996 by and between
SEI Asset Allocation Trust (the "Trust"), a business trust duly organized under
the laws of the Commonwealth of Massachusetts and CoreStates Bank, N.A. (the
"Bank").
WITNESSETH:
WHEREAS, the Trust desires to appoint the Bank to act as Custodian of its
portfolio securities, cash and other property from time to time deposited with
or collected by the Bank for the Trust;
WHEREAS, the Bank is qualified and authorized to act as Custodian for the
Trust and the separate series thereof (each a "Fund" and, collectively, the
"Funds"), and is willing to act in such capacity upon the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:
S1. The terms as defined in this Section wherever used in this Agreement, or in
- --
any amendment or supplement hereto, shall have meanings herein specified unless
the context otherwise requires.
CUSTODIAN: The term Custodian shall mean the Bank in its capacity as Custodian
under this Agreement.
DEPOSITORY: The term Depository means any depository service which acts as a
system for the central handling of securities where all securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred by bookkeeping entry without physical
delivery.
PROPER INSTRUCTIONS. For purposes of this Agreement, the Custodian shall be
deemed to have received Proper Instructions upon receipt of written (including
instructions received by means of computer terminals or facsimile
transmissions), telephone or telegraphic instructions from a person or persons
authorized from time to time by the Trustees of the Trust to give the particular
class of instructions. Telephone or telegraphic instructions shall be confirmed
in writing by such person or persons as said Trustees shall have from time to
time authorized to give the particular class of instructions in question. The
Custodian may act upon telephone or telegraphic instructions without awaiting
receipt of written confirmation, and shall not be liable for the Trust's failure
to confirm such instructions in writing.
<PAGE>
SECURITIES: The term Securities means stocks, bonds, rights, warrants and all
other negotiable or non-negotiable paper issued in certificated or book-entry
form commonly known as "securities" in banking custom or practice.
SHAREHOLDERS: The term Shareholders shall mean the registered owners from time
to time of the Shares of the Trust in accordance with the registry records
maintained by the Trust or agents on its behalf.
SHARES: The term Shares of the Trust shall mean the units of beneficial
interest.
S1. The Trust hereby appoints the Custodian as Custodian of the Trust's cash,
- --
Securities and other property, to be held by the Custodian as provided in this
Agreement. The Custodian hereby accepts such appointment subject to the terms
and conditions hereinafter provided. The Bank shall open a separate custodial
account in the name of the Trust on the books and records of the Bank to hold
the Securities of the Trust deposited with, transferred to or collected by the
Bank for the account of the Trust, and a separate cash account to which the Bank
shall credit monies received by the Bank for the account of or from the Trust.
Such cash shall be segregated from the assets of others and shall be and remain
the sole property of the Trust.
S2. The Trust shall from time to time file with the Custodian a certified copy
- --
of each resolution of its Board of Trustees authorizing the person or persons to
give Proper Instructions and specifying the class of instructions that may be
given by each person to the Custodian under this Agreement, together with
certified signatures of such persons authorized to sign, which shall constitute
conclusive evidence of the authority of the officers and signatories designated
therein to act, and shall be considered in full force and effect with the
Custodian fully protected in acting in reliance thereon until it receives
written notice to the contrary; provided, however, that if the certifying
officer is authorized to give Proper Instructions, the certification shall be
also signed by a second officer of the Trust.
S3. The Trust will cause to be deposited with the Custodian hereunder the
- --
applicable net asset value of Shares sold from time to time whether representing
initial issue, other stock or reinvestments of dividends and/or distributions
payable to Shareholders.
S4. The Bank, acting as agent for the Trust, is authorized, directed and
- --
instructed subject to the further provisions of this Agreement:
(a) to hold Securities issued only in bearer form in bearer form;
(b) to register in the name of the nominee of the Bank, the Bank's
Depositories, or sub-custodians, (i) Securities issued only in
registered form, and (ii) Securities issued in both bearer and
registered form, which are freely interchangeable without penalty;
<PAGE>
(c) to deposit any Securities which are eligible for deposit (i) with any
domestic or foreign Depository on such terms and conditions as such
Depository may require, including provisions for limitation or
exclusion of liability on the part of the Depository; and (ii) with
any sub-custodian which the Bank uses, including any subsidiary or
affiliate of the Bank;
(d) (i) to credit for the account of the Trust all proceeds received and
payable on or in respect of the assets maintained hereunder,
(ii) to debit the account of the Trust for the cost of acquiring
Securities the Bank has received for the Trust, against delivery
of such Securities to the Bank,
(iii) to present for payment Securities and other obligations
(including coupons) upon maturity, when called for redemption,
and when income payments are due, and
(iv) to make exchanges of Securities which, in the Bank's opinion,
are purely ministerial as, for example, the exchange of
Securities in temporary form for Securities in definitive form
or the mandatory exchange of certificates;
(e) to forward to the Trust, and/or any other person designated by the
Trust, all proxies and proxy materials received by the Bank in
connection with Securities held in the Trust's account, which have
been registered in the name of the Bank's nominee, or are being held
by any Depository, or sub-custodian, on behalf of the Bank;
(f) to sell any fractional interest of any Securities which the Bank has
received resulting from any stock dividend, stock split, distribution,
exchange, conversion or similar activity;
(g) to release the Trust's name, address and aggregate share position to
the issuers of any domestic Securities in the account of the Trust,
provided, however, the Trust may instruct the Bank not to provide any
such information to any issuer;
(h) to endorse and collect all checks, drafts or other orders for the
payment of money received by the Bank for the account of or from the
Trust;
(i) at the direction of the Trust, to enroll designated Securities
belonging to the Trust and held hereunder in a program for the
automatic reinvestment of all income and capital gains distributions
on those Securities in new shares (an "Automatic Reinvestment
Program"), or instruct any Depository holding such Securities to
enroll those Securities in an Automatic Reinvestment Program;
<PAGE>
(j) at the direction of the Trust, to receive, deliver and transfer
Securities and make payments and collections of monies in connection
therewith, enter purchase and sale orders and perform any other acts
incidental or necessary to the performance of the above acts with
brokers, dealers or similar agents selected by the Trust, including
any broker, dealer or similar agent affiliated with the Bank, for the
account and risk of the Trust in accordance with accepted industry
practice in the relevant market, provided, however, if it is
determined that any certificated Securities transferred to a
Depository or sub-custodian, the Bank, or the Bank's nominee, the
Bank's sole responsibility for such Securities under this Agreement
shall be to safekeep the Securities in accordance with Section 11
hereof; and
(k) to notify the Trust and/or any other person designated by the Trust
upon receipt of notice by the Bank of any call for redemption, tender
offer, subscription rights, merger, consolidation, reorganization or
recapitalization which (i) appears in The Wall Street Journal (New
York edition), The Standard & Poor's Called Bond Record for Preferred
Stocks, Financial Daily Called Bond Service, The Kenny Services, any
official notifications from The Depository Trust Company and such
other publications or services to which the Bank may from time to time
subscribe, (ii) requires the Bank to act in response thereto, and
(iii) pertain to Securities belonging to the Trust and held hereunder
which have been registered in the name of the Bank's nominee or are
being held by a Depository or sub-custodian on behalf of the Bank.
Notwithstanding anything contained herein to the contrary, the Trust
shall have the sole responsibility for monitoring the applicable dates
on which Securities with put option features must be exercised. All
solicitation fees payable to the Bank as agent in connection herewith
will be retained by the Bank unless expressly agreed to the contrary
in writing by the Bank.
Notwithstanding anything in this Section to the contrary, the Bank is authorized
to hold Securities for the Trust which have transfer limitations imposed upon
them by the Securities Act of 1933, as amended, or represent shares of mutual
funds (i) in the name of the Trust, (ii) in the name of the Bank's nominee, or
(iii) with any Depository or sub-custodian.
S1. The Custodian's compensation shall be as set forth in Schedule A hereto
- --
attached, or as shall be set forth in amendments to such schedule approved by
the Trust and the Custodian. The Bank is authorized to charge the Trust's
account for such compensation. All expenses and taxes payable with respect to
the Securities in the account of the Trust including, without limitation,
commission charges on purchases and sales and the amount of any loss or
liability for stockholders' assessments or otherwise, claimed or asserted
against the bank or against the Bank's nominee by reason of any registration
hereunder shall be charged to the Trust.
<PAGE>
S2. In connection with its functions under this Agreement, the Custodian shall:
- --
(a) render to the Trust a daily report of all monies received or paid on
behalf of the Trust; and
(b) create, maintain and retain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Trust with respect to said Custodian's activities
in accordance with generally accepted accounting principles. All
records maintained by the Custodian in connection with the performance
of its duties under this Agreement will remain the property of the
Trust and in the event of termination of this Agreement will be
relinquished to the Trust.
S1. Any Securities deposited with any Depository or with any sub-custodian will
- --
be represented in accounts in the name of the Bank which include only property
held by the Bank as Custodian for customers in which the Bank acts in a
fiduciary or agency capacity.
Should any Securities which are forwarded to the Bank by the Trust, and which
are subsequently deposited to the Bank's account in any Depository or with any
sub-custodian, or which the Trust may arrange to deposit in the Bank's account
in any Depository or with any sub-custodian, not be deemed acceptable for
deposit by such Depository or sub-custodian, for any reason, and as a result
thereof there is a short position in the account of the Bank with the Depository
for such Security, the Trust agrees to furnish the Bank immediately with like
Securities in acceptable form.
S1. The Trust represents and warrants that: (i) it has the legal right, power
- --
and authority to execute, deliver and perform this Agreement and to carry out
all of the transactions contemplated hereby; (ii) it has obtained all necessary
authorizations; (iii) the execution, delivery and performance of this Agreement
and the carrying out of any of the transactions contemplated hereby will not be
in conflict with, result in a breach of or constitute a default under any
agreement or other instrument to which the Trust is a party or which is
otherwise known to the Trust; (iv) it does not require the consent or approval
of any governmental agency or instrumentality, except any such consents and
approvals which the Trust has obtained; (v) the execution and delivery of this
Agreement by the Trust will not violate any law, regulation, charter, by-law,
order of any court or governmental agency or judgment applicable to the Trust;
and (vi) all persons executing this Agreement on behalf of the Trust and
carrying out the transactions contemplated hereby on behalf of the Trust are
duly authorized to do so.
In the event any of the foregoing representations should become untrue,
incorrect or misleading, the Trust agrees to notify the Bank immediately in
writing thereof.
<PAGE>
S1. The Bank represents and warrants that: (i) it has the legal right, power
- --
and authority to execute, deliver and perform this Agreement and to carry out
all of the transactions contemplated hereby; (ii) it has obtained all necessary
authorizations; (iii) the execution, delivery and performance of this Agreement
and the carrying out of any of the transactions contemplated hereby will not be
in conflict with, result in a breach of or constitute a default under any
agreement or other instrument to which the Bank is a party or which is otherwise
known to the Bank; (iv) it does not require the consent or approval of any
governmental agency or instrumentality, except any such consents and approvals
which the Bank has obtained; (v) the execution and delivery of this Agreement by
the Bank will not violate any law, regulation, charter, by-law, order of any
court or governmental agency or judgment applicable to the Bank; and (vi) all
persons executing this Agreement on behalf of the Bank and carrying out the
transactions contemplated hereby on behalf of the Bank are duly authorized to do
so. In the event that any of the foregoing representations should become untrue,
incorrect or misleading, the Bank agrees to notify the Trust immediately in
writing thereof.
S2. All cash and Securities held by the Bank hereunder shall be kept with the
- --
care exercised as to the Bank's own similar property. The Bank may at its
option insure itself against loss from any cause but shall be under no
obligation to insure for the benefit of the Trust.
S3. No liability of any kind shall be attached to or incurred by the Custodian
- --
by reason of its custody of the Trust's assets held by it from time to time
under this Agreement, or otherwise by reason of its position as Custodian
hereunder except only for its own negligence, bad faith, or willful misconduct
in the performance of its duties as specifically set forth in the Custodian
Agreement. Without limiting the generality of the foregoing sentence, the
Custodian:
(a) may rely upon the advice of counsel for the Trust; and for any action
taken or suffered in good faith based upon such advice or statements
the Custodian shall not be liable to anyone;
(b) shall not be liable for anything done or suffered to be done in good
faith in accordance with any request or advice of, or based upon
information furnished by, the Trust or its authorized officers or
agents;
(c) is authorized to accept a certificate of the Secretary or Assistant
Secretary of the Trust, or Proper Instructions, to the effect that a
resolution in the form submitted has been duly adopted by its Board of
Trustees or by the Shareholders, as conclusive evidence that such
resolution has been duly adopted and is in full force and effect; and
(d) may rely and shall be protected in acting upon any signature, written
(including telegraph or other mechanical) instructions, request,
letter of transmittal, certificate, opinion of counsel, statement,
instrument, report, notice, consent, order, or other paper or document
reasonably believed by it to be genuine and to have been signed,
forwarded or presented by the purchaser, Trust or other proper party
or parties.
<PAGE>
S1. The Trust, its successors and assigns do hereby fully indemnify and hold
- --
harmless the Custodian its successors and assigns, from any and all loss,
liability, claims, demand, actions, suits and expenses of any nature as the same
may arise from the failure of the Trust to comply with any law, rule, regulation
or order of the United States, any state or any other jurisdiction, governmental
authority, body, or board relating to the sale, registration, qualification of
units of beneficial interest in the Trust, or from the failure of the Trust to
perform any duty or obligation under this Agreement.
Upon written request of the Custodian, the Trust shall assume the entire defense
of any claim subject to the foregoing indemnity, or the joint defense with the
Custodian of such claim, as the Custodian shall request. The indemnities and
defense provisions of this Section 13 shall indefinitely survive termination of
this Agreement.
S1. This Agreement may be amended from time to time without notice to or
- --
approval of the Shareholders by a supplemental agreement executed by the Trust
and the Bank and amending and supplementing this Agreement in the manner
mutually agreed.
S2. Either the Trust or the Custodian may give one hundred twenty (120) days'
- --
written notice to the other of the termination of this Agreement, such
termination to take effect at the time specified in the notice. In case such
notice of termination is given either by the Trust or by the Custodian, the
Trustees of the Trust shall, by resolution duly adopted, promptly appoint a
successor Custodian (the "Successor Custodian") which Successor Custodian shall
be a bank, trust company, or a bank and trust company in good standing, with
legal capacity to accept custody of the cash and Securities of a mutual fund.
Upon receipt of written notice from the Trust of the appointment of such
Successor Custodian and upon receipt of Proper Instructions, the Custodian shall
deliver such cash and Securities as it may then be holding hereunder directly
and only to the Successor Custodian. Unless or until a Successor Custodian has
been appointed as above provided, the Custodian then acting shall continue to
act as Custodian under this Agreement.
Every Successor Custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations and custody of its predecessor
Custodian. The Custodian ceasing to act shall nevertheless, upon request of the
Trust and the Successor Custodian and upon payment of its charges and
disbursements, execute an instrument in form approved by its counsel
transferring to the Successor Custodian all the predecessor Custodian's rights,
duties, obligations and custody.
Subject to the provisions of Section 21 hereof, in case the Custodian shall
consolidate with or merge into any other corporation, the corporation remaining
<PAGE>
after or resulting from such consolidation or merger shall ipso facto without
the execution of filing of any papers or other documents, succeed to and be
substituted for the Custodian with like effect as though originally named as
such, provided, however, in every case that said Successor corporation maintains
-------- -------
the qualifications set out in Section 17(f) of the Investment Company Act of
1940, as amended.
S1. This Agreement shall take effect when assets of the Trust are first
- --
delivered to the Custodian.
S2. This Agreement may be executed in two or more counterparts, each of which
- --
when so executed shall be deemed to be an original, but such counterparts shall
together constitute but one and the same instrument.
S3. A copy of the Declaration of Trust of the Trust is on file with the
- --
Secretary of State of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees, officers or Shareholders of the Trust
individually, but binding only upon the assets and property of the Trust. No
Fund of the Trust shall be liable for the obligations of any other Fund of the
Trust.
S4. The Custodian shall create and maintain all records relating to its
- --
activities and obligations under this Agreement in such manner as will meet the
obligations of the Trust under the Investment Company Act of 1940, as amended,
with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable Federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Trust.
Subject to security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian, the books and
records of the Custodian pertaining to this Agreement shall be open to
inspection and audit at any reasonable times by officers of, attorneys for, and
auditors employed by, the Trust.
S1. Nothing contained in this Agreement is intended to or shall require the
- --
Custodian in any capacity hereunder to perform any functions or duties on any
holiday or other day of special observance on which the Custodian is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day the Custodian is open.
S2. This Agreement shall extend to and shall be binding upon the parties hereto
- --
and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Trust without the written consent of
the Custodian, or by the Custodian without the written consent of the Trust,
authorized or approved by a resolution of its Board of Trustees.
<PAGE>
S3. All communications (other than Proper Instructions which are to be
- --
furnished hereunder to either party, or under any amendment hereto, shall be
sent by mail to the address listed below, provided that in the event that the
Bank, in its sole discretion, shall determine that an emergency exists, the Bank
may use such other means of communications as the Bank deems advisable.
To the Trust: SEI Asset Allocation Trust
c/o SEI Corporation
680 East Swedesford Road
Wayne, PA 19087
To the Bank:
<PAGE>
S1. This Agreement, and any amendments hereto, shall be governed, construed and
- --
interpreted in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed entirely within such
Commonwealth.
IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed by their respective officers as of the day and year first above written.
SEI ASSET ALLOCATION TRUST
By:
---------------------------
Name: Robert B. Carroll
Title: Vice President and Assistant Secretary
CORESTATES BANK, N.A.
By:
--------------------------
Name:
Title:
<PAGE>
SCHEDULE A
FEE SCHEDULE
1.00 basis points on the first $2.5 billion
.75 basis points on the next $2.5 billion
.50 basis points son the next $5 billion
.40 basis points on remainder
Transactions billed separately by portfolio at the now current rates. Asset
level charges billed as one invoice covering all SEI Asset Allocation Trust
portfolios custodied at CoreStates. SEI will allocate charges back to
individual portfolios. Transactions charges are subject to change.
<PAGE>
SCHEDULE B
CUSTODY SERVICES
Transaction Fees
$ 4.00 Per trade and maturity clearing through Depository Trust
Company.
$10.00 Per trade and maturity clearing book entry through Federal
Reserve.
$15.00 Per trade and maturity for assets requiring physical
settlement.
$10.00 Per trade and maturity clearing through Participants Trust
Company.
$ 4.00 Paydowns on mortgage-backed securities.
$ 5.50 Fed wire charge on Repo collateral in/out.
$ 5.50/7.50 Other cash wire transfers in/out.
$ 5.50 Dividend reinvestment.
$ 2.50 Fed charge for sale/return of collateral.
<PAGE>
ADMINISTRATION AGREEMENT
SEI ASSET ALLOCATION TRUST
THIS AGREEMENT is made as of this __ day of _______, 1996, by and between
SEI Asset Allocation Trust, a Massachusetts business trust (the "Trust"), and
SEI Financial Management Corporation (the "Administrator"), a Delaware
corporation.
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series of shares of Common Stock; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such portfolios of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on the schedules attached hereto ("Schedules") and
made a part of this Agreement, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Trust hereby retains the
------------------------------
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Administrative and Accounting Services. The Administrator shall
--------------------------------------
perform or supervise the performance by others of other administrative services
in connection with the operations of the Portfolios, and, on behalf of the
Trust, will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance by any investment adviser
or sub-adviser of its responsibilities. The Administrator may appoint a sub-
administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund accounting and related portfolio accounting services,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Trustees' meetings) for handling the
affairs of the Portfolios and such other services as the Trustees may, from time
to time, reasonably request and the Administrator shall, from time to time,
reasonably determine to be necessary to perform its obligations under this
Agreement. In addition, at the request of the Trust's Board of Trustees (the
"Trustees"), the Administrator shall make reports to the Trustees concerning the
performance of its obligations hereunder.
<PAGE>
Without limiting the generality of the foregoing, the Administrator shall:
(A) calculate contractual Trust expenses and control all disbursements for
the Trust, and as appropriate compute the Trust's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighed maturity;
(B) assist Trust counsel with the preparation of prospectuses, statements
of additional information, registration statements, and proxy
materials;
(C) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in
order to comply with Federal and state securities law) as may be
necessary or desirable to register the Trust's shares with state
securities authorities, monitor sale of Trust shares for compliance
with state securities laws. and file with the appropriate state
securities authorities the registration statements and reports for
the Trust and the Trust's shares and all amendments thereto, as may
be necessary or convenient to register and keep effective the Trust
and the Trust's shares with state securities authorities to enable
the Trust to make a continuous offering of its shares;
(D) develop and prepare communications to shareholders, including the
annual report to shareholders, coordinate mailing prospectuses,
notices, proxy statements, proxies and other reports to Trust
shareholders, and supervise and facilitate the solicitation of
proxies solicited by the Trust for all shareholder meetings,
including tabulation process for shareholder meetings;
(E) coordinate with Trust counsel the preparation and negotiation of, and
administer contracts on behalf of the Trust with, among others, the
Trust's investment adviser, distributor, custodian, and transfer
agent;
(F) maintain the Trust's general ledger and prepare the Trust's financial
statements, including expense accruals and payments, determine the
net asset value of the Trust's assets and of the Trust's shares, and
supervise the Trust's transfer agent with respect to the payment of
dividends and other distributions to shareholders;
(G) calculate performance data of the Trust and its portfolios for
dissemination to information services covering the investment company
industry;
(H) coordinate and supervise the preparation and filing of the Trust's tax
returns;
(I) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, transfer agent, outside legal counsel and
independent public accountants, and at the request of the Trustees,
report to the Trustees on the performance of organizations;
<PAGE>
(J) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of
the Trust's semi-annual and annual reports to shareholders;
(K) provide internal legal and administrative services as requested by
the Trust from time to time;
(L) assist with the design, development, and operation of the Trust,
including new portfolio and class investment objectives, policies and
structure;
(M) provide individuals acceptable to the Trustees for nomination,
appointment, or election as officers of the Trust, who will be
responsible for the management of certain of the Trust's affairs as
determined by the Trustees;
(N) advise the Trust and its Trustees on matters concerning the Trust and
its affairs;
(O) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under
the 1940 Act as such bonds and policies are approved by the Trust's
Board of Trustees;
(P) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(Q) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions
are not provided to the Trust or such Portfolio pursuant to the
Trust's or such Portfolio's investment advisory agreement,
distribution agreement, custodian agreement and transfer agent
agreement;
(R) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable; and
(S) prepare and file with the SEC the semi-annual report for the Trust on
Form N-SAR and all required notices pursuant to Rule 24f-2.
Also, the Administrator will perform other services for the Trust as agreed from
time to time, including, but not limited to performing internal audit
examinations; mailing the annual reports of the Portfolios; preparing an annual
list of shareholders; and mailing notices of shareholders' meetings, proxies and
proxy statements, for all of which the Trust will pay the Administrator's out-
of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
-----------------------------------
(A) The Administrator. The Administrator shall furnish at its own expense
------------------
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
<PAGE>
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
----------
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of Trustees
who are not affiliated persons of the Administrator or the investment adviser to
the Trust or any affiliated corporation of the Administrator or the investment
Adviser, the costs of Trustees' meetings, insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, and all fees and
charges of investment advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
----------------------------------
(A) Administration Fee. For the services to be rendered, the facilities
-------------------
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedules. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month shall
be made promptly.
(B) Compensation from Transactions. The Trust hereby authorizes any entity
-------------------------------
or person associated with the Administrator which is a member of a national
securities exchange to effect any transaction on the exchange for the account of
the Trust which is permitted by Section 11 (a) of the Securities Exchange Act of
1934 and Rule 11a2-2(T) thereunder, and the Trust hereby consents to the
retention of compensation for such transactions in accordance with Rule 11a2-
2(T) (a) (2) (iv).
(C) Survival of Compensation Rates. All rights of compensation under this
-------------------------------
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
---------------------------------------------
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable law which
cannot be waived or modified hereby. (As used in this Article 5, the term
"Administrator" shall include directors, officers, employees and other agents of
the Administrator as well as that corporation itself.)
<PAGE>
So long as the Administrator, or its agents, acts in good faith and with
due diligence and without negligence, the Trust assumes full responsibility and
shall indemnify the Administrator and hold it harmless from and against any and
all actions, suits and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
administration, transfer agency, and dividend disbursing relationships to the
Trust or any other service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The services of the
--------------------------------
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
<PAGE>
ARTICLE 7. Confidentiality. The Administrator agrees on behalf of itself
----------------
and its employees to treat confidentially all records and other information
relative to the Trust and its prior, present or potential Shareholders and
relative to the Adviser and its prior, present or potential customers, except,
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the
Administrator may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
ARTICLE 8. Equipment Failures. In the event of equipment failures beyond
-------------------
the Administrator's control, the Administrator shall, at no additional expense
to the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto. The Administrator shall develop and
maintain a plan for recovery from equipment failures which may include
contractual arrangements with appropriate parties making reasonable provision
for emergency use of electronic data processing equipment to the extent
appropriate equipment is available.
ARTICLE 9. Compliance With Governmental Rules and Regulations. The
---------------------------------------------------
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by the Administrator hereunder.
ARTICLE 10. Duration and Termination of this Agreement. This Agreement
-------------------------------------------
shall become effective on the date set forth in the Schedules and shall remain
in effect for the initial term of the Agreement (the "Initial Term") and each
renewal term thereof (each, a "Renewal Term"), each as set forth in the
Schedules, unless terminated in accordance with the provisions of this Article
10. This Agreement may be terminated only: (a) by the mutual written agreement
of the parties; (b) by either party hereto on 90 days' written notice, as of the
end of the Initial Term or the end of any Renewal Term; (c) by either party
hereto on such date as is specified in written notice given by the terminating
party, in the event of a material breach of this 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 Portfolio or the Trust,
effective upon the liquidation of such Portfolio or the Trust, as the case may
be. For purposes of this Article 10, the term "liquidation" shall mean a
transaction in which the assets of the Administrator, the Trust or a Portfolio
are sold or otherwise disposed of and proceeds therefrom are distributed in cash
to the shareholders in complete liquidation of the interests of such
shareholders in the entity.
This Agreement shall not be assignable by the Administrator, without the
prior written consent of the Trust, except to an entity that is controlled by,
or under common control, with, the Administrator.
ARTICLE 11. Amendments. This Agreement or any part hereof may be changed
-----------
or waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
ARTICLE 12. Certain Records. The Administrator shall maintain customary
----------------
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and 31a-
2 under the 1940 Act which are prepared or maintained by the Administrator on
behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
<PAGE>
ARTICLE 13. Definitions of Certain Terms. The terms "interested person"
-----------------------------
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 14. Notice. Any notice required or permitted to be given by either
-------
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Trust, at c/o Kevin P. Robins, General Counsel, SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, PA 19087; and if to the
Administrator at 680 East Swedesford Road, Wayne, PA 19087-1658.
ARTICLE 15. Governing Law. This Agreement shall be construed in accordance
--------------
with the laws of the Commonwealth of Massachusetts and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the Commonwealth of
Massachusetts, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be executed in two or
-------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. Limitation of Liability. The Administrator is hereby expressly
------------------------
put on notice of the limitation of liability as set forth in Article XI of the
Trust's Declaration of Trust and agrees that the obligations pursuant to this
Agreement of a particular Portfolio and of the Trust with respect to that
Portfolio shall be limited solely to the assets of that Portfolio, and the
Administrator shall not seek satisfaction of any such obligation from any other
Portfolio, the shareholders of any Portfolio, the Trustees, officers, employees
or agents of the Trust, or any of them.
<PAGE>
ARTICLE 18. Binding Agreement. This Agreement, and the rights and
------------------
obligations of the parties and the Portfolios hereunder, shall be binding on,
and inure to the benefit of, the parties and the Portfolios and the respective
successors and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
SEI ASSET ALLOCATION TRUST
By:
---------------------------------
Attest:
-----------------------------
SEI FINANCIAL MANAGEMENT CORPORATION
By:
---------------------------------
Attest:
-----------------------------
<PAGE>
SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF ______________, 1996
BETWEEN
SEI ASSET ALLOCATION TRUST
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Portfolios: This Agreement shall apply to all Portfolios of the Trust, either
now in the future created. The following is a listing of the current
portfolios of the Trust: Diversified Conservative Fund, Diversified
Conservative Growth Fund, Diversified Moderate Growth Fund,
Diversified Growth Fund and Diversified U.S. Stock Fund
(collectively, the "Portfolios").
Fees: Pursuant to Article 4, Section A, the Trust shall pay the
Administrator compensation for services rendered to the Portfolios
at an annual rate, which is calculated daily and paid monthly, at a
maximum administrative fee equal to .20% of each Portfolios' average
daily net assets.
Term: This Agreement shall become effective on _____________________, and
shall remain in effect for an Initial Term of two (2) years from
such date and, thereafter, for successive Renewal Terms of one (1)
year each, unless and until this Agreement is terminated in
accordance with the provisions of Article 10 hereof.
<PAGE>
AGENCY AGREEMENT
THIS AGREEMENT made the __________ day of ______________, 19___, by and
between ____________ a corporation existing under the laws of the State of
_________, having its principal place of business at _________________________
("Fund"), and DST SYSTEMS, INC., a corporation existing under the laws of the
State of Delaware, having its principal place of business at 1055 Broadway,
Kansas City, Missouri 64105 ("DST"):
WITNESSETH:
WHEREAS, Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
--------------------------------------
In connection with the appointment of DST as Transfer Agent and Dividend
Disbursing Agent for Fund, there will be filed with DST the following
documents:
A. A certified copy of the resolutions of the Board of Directors of Fund
appointing DST as Transfer Agent and Dividend Disbursing Agent,
approving the form of this Agreement, and designating certain persons
to sign stock certificates, if any, and give written instructions and
requests on behalf of Fund;
B. A certified copy of the Articles of Incorporation of Fund and all
amendments thereto;
C. A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements and amendments thereto, filed with
the Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates, in the forms
approved by the Board of Directors of Fund, with a certificate of the
Secretary of Fund, as to such approval;
F. Specimens of the signatures of the officers of the Fund authorized to
sign stock certificates and individuals authorized to sign written
instructions and requests;
G. An opinion of counsel for Fund with respect to:
(1) Fund's organization and existence under the laws of its state of
organization,
(2) The status of all shares of stock of Fund covered by the
appointment under the Securities Act of 1933, as amended, and any
other applicable federal or state statue, and
(3) That all issued shares are, and all unissued shares will be, when
issued, validly issued, fully paid and nonassessable.
<PAGE>
2. Certain Representations and Warranties of DST.
---------------------------------------------
DST represents and warrants to Fund that:
A. It is a corporation duly organized and existing and in good standing
under the laws of Delaware.
B. It is duly qualified to carry on its business in the State of
Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and bylaws to enter into and perform the services
contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
3. Certain Representations and Warranties of Fund.
----------------------------------------------
Fund represents and warrants to DST that:
A. It is a corporation duly organized and existing and in good standing
under the laws of the State of __________.
B. It is an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933 has been
filed and will be effective with respect to all shares of Fund being
offered for sale.
D. All requisite steps have been and will continue to be taken to
register Fund's shares for sale in all applicable states and such
registration will be effective at all times shares are offered for
sale in such state.
E. Fund is empowered under applicable laws and by its charter and bylaws
to enter into and perform this Agreement.
4. Scope of Appointment.
--------------------
A. Subject to the conditions set forth in this Agreement, Fund hereby
appoints DST as Transfer Agent and Dividend Disbursing Agent.
B. DST hereby accepts such appointment and agrees that it will act as
Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees that
it will also act as agent in connection with Fund's periodic
withdrawal payment accounts and other open accounts or similar plans
for shareholders, if any.
<PAGE>
C. Fund agrees to use its best efforts to deliver to DST in Kansas City,
Missouri, as soon as they are available, all of its shareholder
account records.
D. DST, utilizing TA2000(TM), DST's computerized data processing system
for securityholder accounting (the "TA2000(TM) System"), will perform
the following services as transfer, dividend disbursing and
shareholders' servicing agent for the Fund, and as agent of the Fund
for shareholder accounts thereof, in a timely manner: issuing
(including countersigning), transferring and canceling share
certificates; maintaining all shareholder accounts; providing
transaction journals; preparing shareholder meeting lists, mailing
proxies and proxy materials, receiving and tabulating proxies,
certifying the shareholder votes in the Fund; mailing shareholder
reports and prospectuses; withholding, as required by Federal law,
taxes on shareholder accounts, disbursing income dividends and capital
gains distributions to shareholders, preparing, filing and mailing
U.S. Treasury Department Forms 1099, 1042, and 10428 and performing
and paying backup withholding as required for all shareholders;
preparing and mailing confirmation forms to shareholders and dealers,
as instructed, for all purchases and liquidations of shares of the
Fund and other confirmable transactions in shareholders' accounts;
recording reinvestment of dividends and distributions in shares of the
Fund; providing or making available on-line daily and monthly reports
as provided by the TA2000(TM) System and as requested by the Fund or
its management company; maintaining those records necessary to carry
out DST's duties hereunder, including all information reasonably
required by the Fund to account for all transactions in Fund shares,
calculating the appropriate sales charge with respect to each purchase
of Fund shares as set forth in the prospectus for the Fund,
determining the portion of each sales charge payable to the dealer
participating in a sale in accordance with schedules delivered to DST
by the Fund's principal underwriter or distributor (hereinafter
"principal underwriter") from time to time, disbursing dealer
commissions collected to such dealers, determining the portion of each
sales charge payable to such principal underwriter and disbursing such
commissions to the principal underwriter; receiving correspondence
pertaining to any former, existing or new shareholder account,
processing such correspondence for proper recordkeeping, and
responding promptly to shareholder correspondence; mailing to dealers
confirmations of wire order trades; mailing copies of shareholder
statements to shareholders and registered
<PAGE>
representatives of dealers in accordance with the Fund's instructions;
and processing, generally on the date of receipt, purchases or
redemptions or instructions to settle any mail or wire order purchases
or redemptions received in proper order as set forth in the
prospectus, rejecting promptly any requests not received in proper
order (as defined by the Fund or its agents), and causing exchanges of
shares to be executed in accordance with the Fund's instructions and
prospectus and the general exchange privilege application.
F. Fund shall have the right to add new series to the TA2000(TM) System
upon at least thirty (30) days' prior written notice to DST provided
that the requirements of the new series are generally consistent with
services then being provided by DST under this Agreement. Rates or
charges for additional series shall be as set forth in Exhibit B, as
hereinafter defined, for the remainder of the contract term except as
such series use functions, features or characteristics for which DST
has imposed an additional charge as part of its standard pricing
schedule. In the latter event, rates and charges shall be in
accordance with DST's then-standard pricing schedule.
G. DST shall use reasonable efforts to provide, reasonably promptly under
the circumstances, the same services with respect to any new,
additional functions or features or any changes or improvements to
existing functions or features as provided for in Fund's instructions,
prospectus or application as amended from time to time, for the Fund
provided (i) DST is advised in advance by the Fund of any changes
therein and (ii) the TA2000(TM) System and the mode of operations
utilized by DST as then constituted supports such additional functions
and features. If any addition to; improvement of or change in the
features and functions currently provided by the TA2000(TM) System or
the operations as requested by the Fund requires an enhancement or
modification to the TA2000(TM) System or to operations as presently
conducted by DST, DST shall not be liable therefore until such
modification or enhancement is installed on the TA2000(TM) System or
new mode of operation is instituted. If any new, additional function
or feature or change or improvement to existing functions or features
or new service or mode of operation measurably increases DST's cost of
performing the services required hereunder at the current level of
service, DST shall advise the Fund of the amount of such increase and
if the Fund elects to utilize such function, feature or service, DST
shall be entitled to increase its fees by the amount of the increase
in costs. In no event shall DST
<PAGE>
be responsible for or liable to provide any additional function,
feature, improvement or change in method of operation until it has
consented thereto in writing.
5. Limit of Authority.
------------------
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by the Fund, the appointment of DST as Transfer Agent
will be construed to cover the full amount of authorized stock of the class
or classes for which DST is appointed as the same will, from time to time,
be constituted, and any subsequent increases in such authorized amount.
In case of such increase Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited, a
certified copy of a resolution of the Board of Directors of Fund
increasing the authority of DST;
B. A certified copy of the amendment to the Articles of Incorporation of
Fund authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of the
increased stock, and an opinion of counsel that the order or consent
of no other governmental or regulatory authority is required;
D. Opinion of counsel for Fund stating:
(1) The status of the additional shares of stock of Fund under the
Securities Act of 1933, as amended, and any other applicable
federal or state statute; and
(2) That the additional shares are, or when issued will be, validly
issued, fully paid and nonassessable.
6. Compensation and Expenses.
-------------------------
A. In consideration for its services hereunder as Transfer Agent and
Dividend Disbursing Agent, Fund will pay to DST from time to time a
reasonable compensation for all services rendered as Agent, and also,
all its reasonable out-of-pocket expenses, charges, counsel fees, and
other disbursements (Compensation and Expenses) incurred in connection
with the agency. Such compensation is set forth in a separate schedule
to be agreed to by Fund and DST, a copy of which is attached hereto as
Exhibit A. If the Fund has not paid such Compensation and Expenses to
DST within a reasonable time, DST may charge against any monies held
under this Agreement, the amount of any Compensation and/or Expenses
for which it shall be entitled to reimbursement under this Agreement.
B. The Fund also agrees promptly to reimburse DST for all reasonable
out-of-pocket expenses or disbursements incurred by DST in
<PAGE>
connection with the performance of services under this Agreement
including, but not limited to, expenses for postage, express delivery
services, freight charges, envelopes, checks, drafts, forms
(continuous or otherwise), specially requested reports and statements,
telephone calls, telegraphs, stationery supplies, counsel fees,
outside printing and mailing firms (including Output Technology, Inc.
and Support Resources, Inc.), magnetic tapes, reels or cartridges (if
sent to a Fund or to third party at the Fund's request) and magnetic
tape handling charges, off-site record storage, media for storage of
records (e.g., microfilm, microfiche, optical platters, computer
tapes), computer equipment installed at the Fund's request at the
Fund's or a third party's premises, telecommunications equipment,
telephone/telecommunication lines between Fund and its agents, on one
hand, and DST on the other, proxy soliciting, processing and/or
tabulating costs, second-site backup computer facility, transmission
of statement data for remote printing or processing, and NSCC
transaction fees to the extent any of the foregoing are paid by DST.
The Fund agrees to pay postage expenses at least one day in advance if
so requested. In addition, any other expenses incurred by DST at the
request or with the consent of the Fund will be promptly reimbursed by
the Fund.
C. Amounts due hereunder shall be due and paid on or before the thirtieth
(30th) business day after receipt of the statement therefor by the
Fund (the "Due Date"). The Fund is aware that its failure to pay all
amounts in a timely fashion so that they will be received by DST on or
before the Due Date will give rise to costs to DST not contemplated by
this Agreement, including but not limited to carrying, processing and
accounting charges. Accordingly, subject to Section 6.D. hereof, in
the event that any amounts due hereunder are not received by DST by
the Due Date, the Fund shall pay a late charge equal to the lesser of
the maximum amount permitted by applicable law or the product of that
rate announced from time to time by State Street Bank and Trust
Company as its "Prime Rate" plus three (3) percentage points times the
amount overdue, times the number of days from the Due Date up to and
including the day on which payment is received by DST divided by 365.
The parties hereby agree that such late charge represents a fair and
reasonable computation of the costs incurred by reason of late payment
or payment of amounts not properly due. Acceptance of such late charge
shall in no event constitute a waiver of the Fund's or DST's default
or prevent the non-defaulting party from exercising any other rights
and remedies available to it.
<PAGE>
D. In the event that any charges are disputed, the Fund shall, on or
before the Due Date, pay all undisputed amounts due hereunder and
notify DST in writing of any disputed charges for out-of-pocket
expenses which it is disputing in good faith. Payment for such
disputed charges shall be due on or before the close of the fifth
(5th) business day after the day on which DST provides to the Fund
documentation which an objective observer would agree reasonably
supports the disputed charges (the "Revised Due Date"). Late charges
shall not begin to accrue as to charges disputed in good faith until
the first day after the Revised Due Date.
E. The fees and charges set forth on Exhibit A shall increase or may be
increased as follows:
(1) On the first day of each new term, in accordance with the "Fee
Increases" provision in Exhibit A.
(2) DST may increase the fees and charges set forth on Exhibit A upon
at least ninety (90) days prior written notice, if changes in
existing laws, rules or regulations; (i) require substantial
system modifications or (ii) materially increase cost of
performance hereunder.
(3) DST may charge for additional features of TA2000 used by the Fund
which features are not consistent with the Fund's current
processing requirements.
If DST notifies Fund of an increase in fees or charges pursuant to
subparagraph (2) of this Section 6.E., the parties shall confer, diligently
and in good faith and agree upon a new fee to cover the amount necessary,
but not more than such amount, to reimburse DST for the Fund's necessary,
but not more than such amount, to reimburse DST for the Fund's aliquot
portion of the cost of developing the new software to comply with
regulatory charges and for the increased cost of operation.
If DST notifies Fund of an increase in fees or charges under
subparagraph (3) of this Section 6.E., the parties shall confer, diligently
and in good faith, and agree upon a new fee to cover such new fund feature.
7. Operation of DST System.
-----------------------
In connection with the performance of its services under this Agreement,
DST is responsible for such items as:
A. That entries in DST's records and in the Fund's records on the
TA2000(TM) System created by DST reflect the orders, instructions, and
other information received by DST from broker-dealers, shareholders,
the Fund, the Fund's principal underwriter or Fund's investment
adviser;
B. That shareholder lists, shareholder account verifications,
confirmations and other shareholder account information to be
<PAGE>
produced from its records or data be available and accurately reflect
the data in the Fund's records on the TA2000(TM) System;
C. The accurate and timely issuance of dividend and distribution checks
in accordance with instructions received from the Fund and the data in
the Fund's records on the TA2000(TM) System;
D. That redemption transactions and payments be effected timely, under
normal circumstances on the day of receipt, and accurately in
accordance with redemption instructions received by DST from dealers,
shareholders, the Fund or the Fund's principal underwriter and the
data in the Fund's records on the TA2000(TM) System;
E. The deposit daily in the Fund's appropriate special bank account of
all checks and payments received by DST from NSCC, broker-dealers or
shareholders for investment in shares;
F. Notwithstanding anything herein to the contrary, with respect to "as
of" adjustments, DST will not assume one hundred percent (100%)
responsibility for losses resulting from "as of 's" due to clerical
errors or misinterpretations of shareholder instructions, but DST will
discuss with the Fund DST's accepting liability for an "as of" on a
case-by-case basis and may accept financial responsibility for a
particular situation resulting in a financial loss to the Fund where
DST in its discretion deems that to be appropriate;
G. The requiring of proper forms of instructions, signatures and
signature guarantees and any necessary documents supporting the
opening of shareholder accounts transfers, redemptions and other
shareholder account transactions, all in conformance with DST's
present procedures as set forth in its Legal Manual, Third Party Check
Procedures, Checkwriting Draft Procedures, and Signature Guarantee
Procedures with such changes or deviations therefrom as may be from
time to time required or approved by the Fund, its investment adviser
or principal underwriter, or their or DST's counsel (the "Procedures")
and the rejection of orders or instructions not in good order in
accordance with the applicable prospectus or the Procedures;
H. The maintenance of customary records in connection with its agency,
and particularly those records required to be maintained pursuant to
subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the
Investment Company Act of 1940, if any; and
I. The maintenance of a current, duplicate set of the Fund's essential
records at a secure separate location, in a form available and usable
forthwith in the vent of any breakdown or disaster disrupting its main
operation.
<PAGE>
8. Indemnification.
---------------
A. DST shall at all times use reasonable care, due diligence and act in
good faith in performing its duties under this Agreement. DST shall
provide its services as transfer agent in accordance with Section 17A
of the Exchange Act, and the rules and regulations thereunder. In the
absence of bad faith, willful misconduct, knowing violations of
applicable law pertaining to the manner in which transfer agency
services are to be performed by DST (excluding any violations arising
directly or indirectly out of the actions of DST-unaffiliated third
parties), reckless disregard of the performance of its duties, or
negligence on its part, DST shall not be liable for any action taken,
suffered, or omitted by it or for any error of judgment made by it in
the performance of its duties under this Agreement. For those
activities or actions delineated in the Procedures, DST shall be
presumed to have used reasonable care, due diligence and acted in good
faith if it has acted in accordance with the Procedures, copies of
which have been provided to the Fund and reviewed and approved by Fund
counsel, as amended from time to time with approval of counsel, or for
any deviation therefrom approved by Fund or DST counsel. DST shall not
be responsible for, and the Fund shall indemnify and hold DST harmless
from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability which may be asserted against
DST or for which DST may be held to be liable, arising out of or
attributable to:
(1) All actions of DST required to be taken by DST pursuant to this
Agreement, provided that DST has acted in good faith and with due
diligence and reasonable care;
(2) The Fund's refusal or failure to comply with the terms of this
Agreement, the Fund's negligence or willful misconduct, or the
breach of any representation or warranty of the Fund hereunder;
(3) The good faith reliance on, or the carrying out of, any written
or oral instructions or requests of persons designated by the
Fund in writing (see Exhibit B) from time to time as authorized
to give instructions on its behalf or representatives of the
Fund's investment advisor, sponsor or principal underwriter or
DST's good faith reliance on, or use of, information, data,
records and documents received from, or which have been prepared
and/or maintained by the Fund, its investment advisor, its
sponsor or its principal underwriter;
(4) Defaults by dealers or shareowners with respect to payment for
shares orders previously entered;
<PAGE>
(5) The offer or sale of the Fund's shares in violation of any
requirement under federal securities laws or regulations or the
securities laws or regulations of any state or in violation of
any stop order or other determination or ruling by any federal
agency or state with respect to the offer or sale of such shares
in such state (unless such violation results from DST's failure
to comply with written instructions of the Fund or of any officer
of the Fund that no offers or sales be input into the Funds
securityholder records in or to residents of such state);
(6) The Fund's errors and mistakes in the use of the TA2000(TM)
System, the data center, computer and related equipment used to
access the TA2000(TM) System (the "DST Facilities"), and control
procedures relating thereto in the verification of output and in
the remote input of data;
(7) Errors, inaccuracies, and omissions in, or errors, inaccuracies
or omissions of DST arising out of or resulting from such errors,
inaccuracies and omissions in, the Fund's records, shareholder
and other records, delivered to DST hereunder by the Fund or its
prior agent(s); and
(8) Actions or omissions to act by the Fund or agents designated by
the Fund with respect to duties assumed thereby as provided for
in Section 21 hereof.
B. Except where DST is entitled to indemnification under Section 6.A.
hereof and with respect to "as ofs" set forth in Section 7.F., DST
shall indemnify and hold the Fund harmless from and against any and
all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of DST's failure to comply with the terms of
this Agreement or arising out of or attributable to DST's negligence
or willful misconduct or breach of any representation or warranty of
DST hereunder.
C. EXCEPT FOR VIOLATIONS OF SECTIONS 23, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO
ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR
CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY
PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY
THEREOF.
D. Promptly after receipt by an indemnified person of notice of the
commencement of any action, such indemnified person will, if a claim
in respect thereto is to be made against an indemnifying party
hereunder, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying
<PAGE>
party will not relieve an indemnifying party from any liability that
it may have to any indemnified person for contribution or otherwise
under the indemnity agreement contained herein except to the extent it
is prejudiced as a proximate result of such failure to timely notify.
In case any such action is brought against any indemnified person and
such indemnified person seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, assume the
defense thereof (in its own name or in the name and on behalf of any
indemnified party or both with counsel reasonably satisfactory to such
indemnified person); provided, however, if the defendants in such
indemnified person); provided, however, if the defendants in any such
action include both the indemnified person and an indemnifying party
and the indemnified person shall have reasonably concluded that there
may be a conflict between the positions of the indemnified person and
an indemnifying party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other
indemnified persons which are inconsistent with those available to an
indemnifying party, the indemnified person or indemnified persons
shall have the right to select one separate counsel (in addition to
local counsel) to assume such legal defense and to otherwise
participate in the defense of such action on behalf of such
indemnified person or indemnified persons at such indemnified party's
sole expense. Upon receipt of notice from an indemnifying party to
such indemnified person of its election so to assume the defense of
such action and approval by the indemnified person of counsel, which
approval shall not be unreasonably withheld (and any disapproval shall
be accompanied by a written statement of the reasons therefor), the
indemnifying party will not be liable to such indemnified person
hereunder for any legal or other expenses subsequently incurred by
such indemnified person in connection with the defense thereof. An
indemnifying party will not settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
persons are actual or potential parties to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified person from all liability
arising out of such claim, action, suit or proceeding. An indemnified
party will not, without the prior written consent of the indemnifying
party settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim,
<PAGE>
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder. If it does so, it waives its
right to indemnification therefor.
9. Certain Covenants of DST and Fund.
---------------------------------
A. All requisite steps will be taken by Fund from time to time when and
as necessary to register the Fund's shares for sale in all states in
which Fund's shares shall at the time be offered for sale and require
registration. If at any time Fund will receive notice of any stop
order or other proceeding in any such state affecting such
registration or the sale of Fund's shares, or of any stop order or
other proceeding under the federal securities laws affecting the sale
of Fund's shares, Fund will give prompt notice thereof to DST.
B. DST hereby agrees to perform such transfer agency functions as are set
forth in section 4.E. above and establish and maintain facilities and
procedures reasonably acceptable to Fund for safekeeping of stock
certificates, check forms, and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of,
such certificates, forms and devices, and to carry such insurance as
it considers adequate and reasonably available.
C. To the extent required by Section 31 of the Investment Company Act of
1940 as amended and Rules thereunder, DST agrees that all records
maintained by DST relating to the services to be performed by DST
under this Agreement are the property of Fund and will be preserved
and will be surrendered promptly to Fund on request .
D. DST agrees to furnish Fund annual reports of its parent's financial
condition, consisting of a balance sheet, earnings statement and any
other financial information reasonably requested by Fund. The annual
financial statements will be certified by DST's certified public
accountants.
E. DST represents and agrees that it will use its best efforts to keep
current on the trends of the investment company industry relating to
shareholder services and will use its best efforts to continue to
modernize and improve.
F. DST will permit Fund and its authorized representatives to make
periodic inspections of its operations as such would involve the Fund
at reasonable time during business hours.
G. DST agrees to use its best efforts to provide in Kansas City at the
Fund's expense two (2) man weeks of training for the Fund's personnel
in connection with use and operation of the TA2000(TM) System. All
travel and reimbursable expenses incurred by the Fund's personnel in
connection with and during training at DST's Facility
<PAGE>
shall be borne by the Fund. At the Fund's option and expense, DST
also agrees to use its best efforts to provide an additional two
(2) man weeks of training at the Fund's facility for the Fund's
personnel in connection with the conversion to the TA2000(TM)
System. Reasonable travel, per diem and reimbursable expenses
incurred by DST personnel in connection with and during training
at the Fund's facility or in connection with the conversion shall
be borne by the Fund.
10. Recapitalization or Readjustment.
--------------------------------
In case of any recapitalization, readjustment or other change in the
capital structure of Fund requiring a change in the form of stock
certificates, DST will issue or register certificates in the new form in
exchange for, or in transfer of, the outstanding certificates in the old
form, upon receiving:
A. Written instructions from an officer of Fund;
B. Certified copy of the amendment to the Articles of Incorporation
or other document effecting the change;
C. Certified copy of the order or consent of each governmental or
regulatory authority, required by law to the issuance of the
stock in the new form, and an opinion of counsel that the order
or consent of no other government or regulatory authority is
required;
D. Specimens of the new certificates in the form approved by the
Board of Directors of Fund, with a certificate of the Secretary
of Fund as to such approval;
E. Opinion of counsel for Fund stating:
(1) The status of the shares of stock of Fund in the new form
under the Securities Act of 1933, as amended and any other
applicable federal or state statute; and
(2) That the issued shares in the new form are, and all unissued
shares will be, when issued, validly issued, fully paid and
nonassessable.
11. Stock Certificates. [STRIKE IF THE FUND WILL NOT ISSUE STOCK CERTIFICATES]
------------------
Fund will furnish DST with a sufficient supply of blank stock certificates
and from time to time will renew such supply upon the request of DST. Such
certificates will be signed manually or by facsimile signatures of the
officers of Fund authorized by law and by bylaws to sign stock
certificates, and if required, will bear the corporate seal or facsimile
thereof.
12. Death, Resignation or Removal of Signing Officer.
------------------------------------------------
Fund will file promptly with DST written notice of any change in the
officers authorized to sign stock certificates, written instructions or
requests, together with two signature cards bearing the specimen signature
<PAGE>
of each newly authorized officer. In case any officer of Fund who will have
signed manually or whose facsimile signature will have been affixed to
blank stock certificates will die, resign, or be removed prior to the
issuance of such certificates, DST may issue or register such stock
certificates as the stock certificates of Fund notwithstanding such death,
resignation, or removal, until specifically directed to the contrary by
Fund in writing. In the absence of such direction, Fund will file promptly
with DST such approval, adoption, or ratification as may be required by
law.
13. Future Amendments of Charter and Bylaws.
---------------------------------------
Fund will promptly file with DST copies of all material amendments to its
Articles of Incorporation or bylaws made after the date of this Agreement.
14. Instructions, Opinion of Counsel and Signatures.
-----------------------------------------------
At any time DST may apply to any person authorized by the Fund to give
instructions to DST, and may with the approval of a Fund officer consult
with legal counsel for Fund or its own legal counsel at the expense of
Fund, with respect to any matter arising in connection with the agency and
it will not be liable for any action taken or omitted by it in good faith
in reliance upon such instructions or upon the opinion of such counsel. DST
will be protected in acting upon any paper or document reasonably believed
by it to be genuine and to have been signed by the proper person or persons
and will not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from Fund. It will also be
protected in recognizing stock certificates which it reasonably believes to
bear the proper manual or facsimile signatures of the officers of Fund, and
the proper countersignature of any former Transfer Agent or Registrar, or
of a co-Transfer Agent or co-Registrar.
15. Force Majeure and Disaster Recovery Plans.
-----------------------------------------
A. DST shall not be responsible or liable for its failure or delay in
performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation: any interruption,
loss or malfunction or any utility, transportation, computer (hardware
or software) or communication service; inability to obtain labor,
material, equipment or transportation, or a delay in mails;
governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornados, acts of God or public enemy,
revolutions, or insurrection; or any other cause, contingency,
circumstance or delay not subject to DST's reasonable control which
prevents or hinders DST's performance hereunder.
<PAGE>
B. DST currently maintains an agreement with a third party whereby DST is
to be permitted to use on a "shared use" basis a "hot site" (the
"Recovery Facility") maintained by such party in event of a disaster
rendering the DST Facilities inoperable. DST has developed and is
continually revising a Business Contingency Plan detailing which, how,
when, and by whom data maintained by DST at the DST Facilities will be
installed and operated at the Recovery Facility. Provided Fund is
paying its pro rata portion of the charge therefor, DST would, in
event of a disaster rendering the DST Facilities inoperable, convert
the TA2000(TM) System containing the designated Fund data to the
computers at the Recovery Facility in accordance with the then current
Business Contingency Plan.
C. DST also currently maintains, separate from the area in which the
operations which provides the services to the Fund hereunder are
located, a Crisis Management Center consisting of phones, computers
and the other equipment necessary to operate a full service transfer
agency business in the event one of its operations areas is rendered
inoperable. The transfer of operations to other operating areas or to
the Crisis Management Center is also covered in DST's Business
Contingency Plan.
16. Certificate of Documents.
------------------------
The required copy of the Articles of Incorporation of Fund and copies of
all amendments thereto will be certified by the Secretary of State (or
other appropriate official) of the State of Incorporation, and if such
Articles of Incorporation and amendments are required by law to be also
filed with a county, city or other officer of official body, a certificate
of such filing will appear on the certified copy submitted to DST. A copy
of the order or consent of each governmental or regulatory authority
required by law to the issuance of the stock will be certified by the
Secretary or Clerk of such governmental or regulatory authority, under
proper seal of such authority. The copy of the Bylaws and copies of all
amendments thereto, and copies of resolutions of the Board of Directors of
Fund, will be certified by the Secretary or an Assistant Secretary of Fund
under the Fund's seal.
17. Records.
-------
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained pursuant
to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the
Investment Company Act of 1940, if any.
18. Disposition of Books, Records and Canceled Certificates.
-------------------------------------------------------
DST may send periodically to Fund, or to where designated by the Secretary
or an Assistant Secretary of Fund, all books, documents, and all records
<PAGE>
no longer deemed needed for current purposes and stock certificates which
have been canceled in transfer or in exchange, upon the understanding that
such books, documents, records, and stock certificates will be maintained
by the Fund under and in accordance with the requirements of Section 17Ad-7
adopted under the Securities Exchange Act of 1934. Such materials will not
be destroyed by Fund without the consent of DST (which consent will not be
unreasonably withheld); but will be safely stored for possible future
reference.
19. Provisions Relating to DST as Transfer Agent.
--------------------------------------------
A. DST will make original issues of stock certificates upon written
request of an officer of Fund and upon being furnished with a
certified copy of a resolution of the Board of Directors authorizing
such original issue, an opinion of counsel as outlined in paragraphs
1.D. and G. of this Agreement, any documents required by paragraphs 5.
or 10. of this Agreement, and necessary funds for the payment of any
original issue tax.
B. Before making any original issue of certificates Fund will furnish DST
with sufficient funds to pay all required taxes on the original issue
of the stock, if any. Fund will furnish DST such evidence as may be
required by DST to show the actual value of the stock. If no taxes are
payable DST will be furnished with an opinion of outside counsel to
that effect.
C. Shares of stock will be transferred and new certificates issued in
transfer, or shares of stock accepted for redemption and funds
remitted therefor, or book entry transfer by effected, upon surrender
of the old certificates in form or receipt by DST of instructions
deemed by DST properly endorsed for transfer or redemption accompanied
by such documents as DST may deem necessary to evidence the authority
of the person making the transfer or redemption. DST reserves the
right to refuse to transfer or redeem shares until it is satisfied
that the endorsement or signature on the certificate or any other
document is valid and genuine, and for that purpose it may require a
guaranty of signature in accordance with the Signature Guarantee
Procedures. DST also reserves the right to refuse to transfer or
redeem shares until it is satisfied that the requested transfer or
redemption is legally authorized, and it will incur no liability for
the refusal in good faith to make transfers or redemptions which, in
its judgment, are improper or unauthorized. DST may, in effecting
transfers or redemptions, rely upon Simplification Acts or other
statutes which protect it and Fund in not requiring complete fiduciary
documentation. In cases in which DST is not directed or otherwise
required to maintain the
<PAGE>
consolidated records of shareholder's accounts, DST will not be liable
for any loss which may arise by reason of not having such records.
D. When mail is used for delivery of stock certificates, DST will forward
stock certificates in "nonnegotiable" form by first class or
registered mail and stock certificates in "negotiable" form by
registered mail, all such mail deliveries to be covered while in
transit to the addressee by insurance arranged for by DST.
E. DST will issue and mail subscription warrants, certificates
representing stock dividends, exchanges or split ups, or act as
Conversion Agent upon receiving written instructions from any officer
of Fund and such other documents as DST deems necessary.
F. DST will issue, transfer, and split up certificates and will issue
certificates of stock representing full shares upon surrender of
script certificates aggregating one full share or more when presented
to DST for that purpose upon receiving written instructions from an
officer of Fund and such other documents as DST may deem necessary.
G. DST may issue new certificates in place of certificates represented to
have been lost, destroyed, stolen or otherwise wrongfully taken upon
receiving instructions from Fund and indemnity satisfactory to DST and
Fund, and may issue new certificates in exchange for, and upon
surrender of, mutilated certificates. Such instructions from Fund will
be in such form as will be approved by the Board of Directors of Fund
and will be in accordance with the provisions of law and the bylaws of
Fund governing such matter.
H. DST will supply a shareholder's list to Fund for its annual meeting
upon receiving a request from an officer of Fund. It will also, at the
expense of the Fund, supply lists at such other times as may be
requested by an officer of Fund.
I. Upon receipt of written instructions of an officer of Fund, DST will,
at the expense of the Fund, address and mail notices to shareholders.
J. In case of any request or demand for the inspection of the stock books
of Fund or any other books in the possession of DST, DST will endeavor
to notify Fund and to secure instructions as to permitting or refusing
such inspection. DST reserves the right, however, to exhibit the stock
books or other books to any person in case it is advised by its
counsel that it may be held responsible for the failure to exhibit the
stock books or other books to such person.
20. Provisions Relating to Dividend Disbursing Agency.
-------------------------------------------------
A. DST will, at the expense of Fund, provide a special form of check
containing the imprint of any device or other matter desired by
<PAGE>
Fund. Said checks must, however, be of a form and size convenient for
use by DST.
B. If Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be furnished
DST within a reasonable time prior to the date of mailing of the
dividend checks, at the expense of Fund.
C. If Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to DST but
the size and form of said envelopes will be subject to the approval of
DST. If stamped envelopes are used, they must be furnished by Fund; or
if postage stamps are to be affixed to the envelopes, the stamps or
the cash necessary for such stamps must be furnished by Fund.
D. DST shall establish and maintain on behalf of the Fund one or more
deposit accounts as Agent for Fund, into which DST shall deposit the
funds DST receives for payment of dividends, distributions,
redemptions or other disbursements provided for hereunder and to draw
checks against such accounts.
E. DST is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees
thereof allege either that they have not received the checks or that
such checks have been mislaid, lost, stolen, destroyed or through no
fault of theirs, are otherwise beyond their control, and cannot be
produced by them for presentation and collection, and, to issue and
deliver duplicate checks in replacement thereof.
21. Assumption of Duties By the Fund or Agents Designated By the Fund.
-----------------------------------------------------------------
A. The Fund or its designated agents other than DST may assume certain
duties and responsibilities of DST or those services of Transfer Agent
and Dividend Disbursement Agent as those terms are referred to in
Section 4.E. of this Agreement including but not limited to answering
and responding to telephone inquiries from shareholders and brokers,
accepting shareholder and broker instructions (either or both oral and
written) and transmitting orders based on such instructions to DST,
preparing and mailing confirmations, obtaining certified TIN numbers,
classifying the status of shareholders and shareholder accounts under
applicable tax law, establishing shareholder accounts on the
TA2000(TM) System and assigning social codes and Taxpayer
Identification Number codes thereof, and disbursing monies of the
Fund, said assumption to be embodied in writing to be signed by both
parties.
B. To the extent the Fund or its agent or affiliate assumes such duties
and responsibilities, DST shall be relieved from all responsibility
<PAGE>
and liability therefor and is hereby indemnified and held harmless
against any liability therefrom and in the same manner and degree as
provided for in Section 8 hereof.
C. Initially the Fund or its designees shall be responsible for the
following: [LIST RESPONSIBILITIES OR DELETE AS APPROPRIATE.] (i)
answer and respond to phone calls from shareholders and broker-
dealers, and (ii) scan items into DST's AWD(TM) System as such calls
or items are received by the Fund, and (iii) enter and confirm wire
order trades.
22. Termination of Agreement.
------------------------
A. This Agreement shall be in effect for an initial period of ______
years and thereafter may be terminated by either party upon receipt of
one (1) year's written notice from the other party, provided, however,
that the effective date of any termination shall not occur during the
period from December 15 through March 30 of any year to avoid
adversely impacting year end.
B. Each party, in addition to any other rights and remedies, shall have
the right to terminate this Agreement forthwith upon the occurrence at
any time of any of the following events with respect to the other
party:
(1) Any interruption or cessation of operations by the other party or
its assigns which materially interferes with the business
operation of the first party)
(2) The bankruptcy of the other party or its assigns or the
appointment of a receiver for the other party or its assigns;
(3) Any merger, consolidation or sale of substantially all the assets
of the other party or its assigns; or
(4) Failure by the other party or its assigns to perform its duties
in accordance with the Agreement, which failure materially
adversely affects the business operations of the first party and
which failure continues for thirty (30) days after receipt of
written notice from the first party.
C. In the event of termination, Fund will promptly pay DST all amounts
due to DST hereunder. In addition, if this Agreement is terminated by
the Fund for any reason other than those set forth in Sections 22.B.
or 22.C. hereof, then the Fund shall pay to DST a termination fee
equal to the lesser of (i) the aggregate of the fees charged to the
Fund during the previous six (6) calendar months preceding receipt of
the notice or (ii) the average monthly fee over the preceding six (6)
months times the number of months remaining in the then current term
after termination. If the Fund shall not have been billed for six (6)
months before termination, the average
<PAGE>
monthly fee shall be calculated by dividing the aggregate fees charged
to the Fund during whatever period it was billed by the number of
months in that period and that average monthly fee shall be multiplied
by six (6) in order to determine the aggregate fees in subparagraph
22.C.(i). In any event, the effective date of any deconversion as a
result of termination hereof shall not occur during the period from
December 15th through March 30th of any year to avoid adversely
impacting year end.
D. In the event of termination, DST will use its best efforts to transfer
the records of the Fund to the designated successor transfer agent, to
provide reasonable assistance to the Fund and its designated successor
transfer agent, and to provide other information relating to its
service provided hereunder (subject to the recompense of DST for such
assistance at its standard rates and fees for personnel then in effect
at that time); provided, however, as used herein "reasonable
assistance" and "other information" shall not include assisting any
new service or system provider to modify, alter, enhance, or improve
its system or to improve, enhance, or alter its current, or to provide
any new, functionality or to require DST to disclose any DST
Confidential Information or any information which is otherwise
confidential to DST.
23. Confidentiality.
---------------
A. DST agrees that, except as provided in the last sentence of Section
19.J hereof, or as otherwise required by law, DST will keep
confidential all records of and information in its possession relating
to Fund or its shareholders or shareholder accounts and will not
disclose the same to any person except at the request or with the
consent of Fund.
B. Fund agrees to keep confidential all financial statements and other
financial records (other than statements and records relating solely
to Fund's business dealings with DST) and all manuals, systems and
other technical information and data, not publicly disclosed, relating
to DST's operations and programs furnished to it by DST pursuant to
this Agreement and will not disclose the same to any person except at
the request or with the consent of DST.
C. (1) The Fund acknowledges that DST has proprietary rights in and to
the TA2000(TM) System used to perform services hereunder
including, but not limited to the maintenance of shareholder
accounts and records, processing of related information and
generation of output, including, without limitation any changes
or modifications of the TA2000(TM) System and any other DST
programs, data bases, supporting documentation, or
<PAGE>
procedures (collectively "DST Confidential Information") which
the Fund's access to the TA2000(TM) System or computer hardware
or software may permit the Fund or its employees or agents to
become aware of or to access and that the DST Confidential
Information constitutes confidential material and trade secrets
of DST. The Fund agrees to maintain the confidentially of the DST
Confidential Information.
(2) The Fund acknowledges that any unauthorized use, misuse,
disclosure or taking of DST Confidential Information which is
confidential as provided by law, or which is a trade secret,
residing or existing internal or external to a computer, computer
system, or computer network, or the knowing and unauthorized
accessing or causing to be accessed of any computer, computer
system, or computer network, may be subject to civil liabilities
and criminal penalties under applicable state law. The Fund will
advise all of its employees and agents who have access to any DST
Confidential Information or to any computer equipment capable of
accessing DST or DST hardware or software of the foregoing. DST
is intended to be, and shall be, a third party beneficiary of the
Fund's obligations and undertakings contained in this Section.
(3) Fund acknowledges that disclosure of the DST Confidential
Information may give rise to an irreparable injury to DST
inadequately compensable in damages. Accordingly, DST may seek
(without the posting of any bond or other security) injunctive
relief against the breach of the foregoing undertaking of
confidentiality and nondisclosure, in addition to any other legal
remedies which may be available, and Fund consents to the
obtaining of such injunctive relief. All of the undertakings and
obligations relating to confidentiality and nondisclosure,
whether contained in this Section or elsewhere in this Agreement
shall survive the termination or elsewhere in this Agreement
shall survive the termination or expiration of this Agreement for
a period of ten (10) years.
24. Changes and Modifications.
-------------------------
A. During the term of this Agreement DST will use on behalf of the Fund
without additional cost all modifications, enhancements, or changes
which DST may make to the TA2000(TM) System in the normal course of
its business and which are applicable to functions and features
offered by the Fund, unless substantially all DST clients are charged
separately for such modifications, enhancements or changes, including,
without limitation, substantial system revisions or modifications
necessitated by changes in existing laws, rules or
<PAGE>
regulations. The Fund agrees to pay DST promptly for modifications and
improvements which are charged for separately at the rate provided for
in DST's standard pricing schedule which shall be identical for
substantially all clients, if a standard pricing schedule shall exist.
If there is no standard pricing schedule, the parties shall mutually
agree upon the rates to be charged.
B. DST shall have the right, at any time and from time to time, to alter
and modify any systems, programs, procedures or facilities used or
employed in performing its duties and obligations hereunder; provided
that the Fund will be notified as promptly as possible prior to
implementation of such alterations and modifications and that no such
alteration or modification or deletion shall materially adversely
change or affect the operations and procedures of the Fund in using or
employing the TA2000(TM) System or DST Facilities hereunder or the
reports to be generated by such system and facilities hereunder,
unless the Fund is given thirty (30) days prior notice to allow the
Fund to change its procedures and DST provides the Fund with revised
operating procedures and controls.
C. All enhancements, improvements, changes, modifications or new features
added to the TA2000(TM) System however developed or paid for shall be,
and shall remain, the confidential and exclusive property of, and
proprietary to, DST.
25. Subcontractors.
--------------
Nothing herein shall impose any duty up DST in connection with or make DST
liable for the actions or omissions to act of unaffiliated third parties
such as, by way of example and not limitation, Airborne Services, the U.S.
mails and telecommunication companies, provided, if DST selected such
company, DST shall have exercised due care in selecting the same.
26. Limitations on Liability.
------------------------
A. If Fund is comprised of more than one Portfolio, each Portfolio shall
be regarded for all purposes hereunder as a separate party apart from
each other Portfolio. Unless the context otherwise requires, with
respect to every transaction covered by this Agreement, every
reference herein to the Fund shall be deemed to relate solely to the
particular Portfolio to which such transaction relates. Under no
circumstances shall the rights, obligations or remedies with respect
to a particular Portfolio constitute a right, obligation or remedy
applicable to any other Portfolio. The use of this single document to
memorialize the separate agreement of each Portfolio is understood to
be for clerical convenience only and shall not constitute any basis
for joining the Portfolios for any reason. [DELETE IF NOT APPLICABLE]
<PAGE>
B. Notice is hereby given that a copy of Fund's Trust Agreement and all
amendments thereto is on file with the Secretary of State of the state
of its organization; that this Agreement has been executed on behalf
of Fund by the undersigned duly authorized representative of Fund in
his/her capacity as such and not individually; and that the
obligations of this Agreement shall only be binding upon the assets
and property of Fund and shall not be binding upon any trustee,
officer or shareholder of Fund individually. [DELETE IF NOT
APPLICABLE]
27. Miscellaneous.
-------------
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, excluding that body of law applicable to choice
of law.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, and the indemnification extended
hereunder, if any, are intended to and shall continue after and
survive the expiration, termination or cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
each party hereto.
E. The captions in the Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
F. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
H. This Agreement may not be assigned by the Fund or DST without prior
written consent of the other.
I. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between Fund
and DST. It is understood and agreed that all service performed
hereunder by DST shall be as an independent contractor and not as an
<PAGE>
employee of the Fund. This Agreement is between DST and the Fund and
neither this Agreement nor the performance of service under it shall
create any rights in any third parties. There are no third party
beneficiaries hereto.
J. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by any party hereunder shall not
affect any rights or obligations of any other party hereunder.
K. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed as
a continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect as if no such forebearance or waiver had occurred.
L. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or agreement or
proposal with respect to the subject matter hereof, whether oral or
written, and this Agreement may not be modified except by written
instrument executed by both parties.
M. All notices to be given hereunder shall be deemed properly given if
delivered in person or if sent by U.S. mail, first class, postage
prepaid, or if sent by facsimile and thereafter confirmed by mail as
follows:
If to DST:
DST Systems, Inc.
1055 Broadway, 7th Fl.
Kansas City, Missouri 64105
Attn: Senior Vice President-Full Service
Facsimile No.: 816-435-3455
With a copy of non-operational notices to:
DST Systems, Inc.
1055 Broadway, 9th Fl.
Kansas City, Missouri 64105
Attn: Legal Department
Facsimile No.: 816-435-8630
If to Fund:
____________________________
____________________________
____________________________
Attn: ______________________
Facsimile No.: _____________
<PAGE>
or to such other address as shall have been specified in writing by
the party to whom such notice is to be given.
N. The representations and warranties contained herein shall survive the
execution of this Agreement. The representations and warranties
contained herein and the provisions of Section 8 hereof shall survive
the termination of the Agreement and the performance of services
hereunder until any statute of limitations applicable to the matter at
issues shall have expired.
WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers, to be effective as of the day and
year first above written.
DST SYSTEMS, INC.
By:__________________________________
Title:_______________________________
[INSERT NAME OF FUND]
By:__________________________________
Title:_______________________________
<PAGE>
EXHIBIT A, P.1
REMOTE SERVICE
FEE SCHEDULE
FEE INCREASES
The fees and charges set forth in this Exhibit B shall increase annually upon
each anniversary of this Agreement over the fees and charges during the prior 12
months in an amount equal to the annual percentage of change in the Consumer
Price Index in the Kansas City, Missouri-Kansas Standard Metropolitan
Statistical Area, All Items, Base 1982-1984 =100, as last reported by the U.S.
Bureau of Labor Statistics for the 12 calendar months immediately preceding such
anniversary. In the event that this Agreement was not signed as of the first day
of the month, the fees and charges increase shall be effective as of the first
day of the month immediately following the month during which the anniversary
occurred.
OPEN AND CLOSED ACCOUNTS FEES
The monthly fee for an open account shall be charged in the month during which
an account is opened through the month in which such account is closed. The
monthly fee for a closed account shall be charged in the month following the
month during which such account is closed and shall cease to be charged in the
month following the Purge Date, as hereinafter defined. The "Purge Date" for any
year shall be any day after June 1st of that year, as selected by Fund, provided
that written notification is presented to DST at least forty-five (45) days
prior to the Purge Date.
REIMBURSABLE EXPENSES
Forms
Postage (to be paid in advance if so requested)
Outside Mailing Services
Computer Hardware
Telecommunications Equipment
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm
Freight Charges
<PAGE>
EXHIBIT B, P.2
REMOTE SERVICE
FEE SCHEDULE
Reimbursable Expenses (Cont.)
Proxy Processing - per proxy mailed
not including postage
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation
T.I.N. Certification (W-8 & W-9)
(Postage associated with the return
envelope is included)
N.S.C.C. Communications Charge Currently $.
(Fund/Serv and Networking) per Fund per Year
Off-site Record Storage
SunGard Second Site Disaster Currently between $.
Backup Fee (per account) and (guaranteed)
not to exceed $.
through
Transmission of Statement Data for Currently $. /per
Remote Processing record
Travel, Per Diem and other Out-of-
Pockets Incurred by DST personnel
traveling to, at and from Fund at
the request of Fund
<PAGE>
March 1, 1996
SEI Asset Allocation Trust
c/o CT Corporation
2 Oliver Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer and sale from
time to time of an indefinite number of units of beneficial interest, without
par value (the "Shares"), of SEI Asset Allocation Trust (the "Trust"), a
Massachusetts business trust, in registration under the Securities Act of 1933
by a Registration Statement on Form N-1A (File No. 33-64875; 811-7445) as
amended from time to time (the "Registration Statement").
We have acted as counsel to the Trust since its inception, and we are familiar
with the actions taken by its Trustees to authorize the issuance of the Shares.
We have reviewed the Declaration of Trust, the By-laws, and the minute books of
the Trust, and such other certificates, documents and opinions of counsel as we
deem necessary for the purpose of this opinion.
We have reviewed the Trust's Notification of Registration on Form N-8A under the
Investment Company Act of 1940. We have assisted in the preparation of the
Trust's Registration Statement, including all pre-effective amendments thereto,
filed or to be filed with the Securities and Exchange Commission.
In our review we have assumed the genuineness of all signatures, the
authenticity and completeness of all documents purporting to be originals
(whether reviewed by us in original or in copy form), and the conformity to the
originals of all documents purporting to be copies.
We have assumed the appropriate action will be taken to register or qualify the
sale of the Shares under any applicable state and federal laws regulating sales
and offerings of securities.
<PAGE>
Based upon the foregoing, we are of the opinion that:
1. The Trust is a business trust validly existing under the laws of the
Commonwealth of Massachusetts. The Trust is authorized under its
Declaration of Trust to issue an unlimited number of Shares in series
representing interests in the Diversified Conservative Income Fund,
Diversified Conservative Fund, Diversified Moderate Growth Fund,
Diversified Growth Fund and Diversified U.S. Stock Fund, and in such other
series or classes as the Trustees may hereafter duly authorize.
2. Upon the issuance of any Shares of any of the series or classes of the
Trust for payment therefor as described in, and in accordance with the
Registration Statement and the Declaration of Trust and By-laws of the
Trust, the Shares so issued will be validly issued, fully paid and non-
assessable, except that, as set forth in the Registration Statement,
shareholders of the Shares of the Trust may under certain circumstances be
held personally liable for its obligations.
This opinion is intended only for your use in connection with the offering
of Shares and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as Exhibit 10 to the
Trust's Pre-Effective Amendment No. 1 to be filed with the Securities and
Exchange Commission and to the reference to our firm under the caption
"Counsel and Independent Accountants" in the Prospectus and Statement of
Additional Information filed as part of such Amendment.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE>
EXHIBIT 99.B11
CONSENT OF INDEPENDENT ACCOUNTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this registration statement on Form N-1A (the "Registration
Statement") of our report dated February 21, 1996, relating to the statement of
assets and liabilities of Diversified Conservative Income, Diversified
Conservative, Diversified Moderate Growth, Diversified Growth and Diversified
U.S. Stock Funds (constituting SEI Asset Allocation Trust), which appears in
such Statement of Additional Information, and to the incorporation by reference
of our report into the Prospectus which constitutes part of this registration
statement. We also consent to the reference to us under the heading "Counsel
and Independent Accountants" in such Prospectus and to the reference to us under
the heading "Experts" in such Statement of Additional Information.
PRICE WATERHOUSE LLP
Philadelphia, PA
February 27, 1996
<PAGE>
DISTRIBUTION AND SERVICE PLAN
SEI ASSET ALLOCATION TRUST
CLASS D
WHEREAS, SEI Asset Allocation Trust (the "Trust") is engaged in business as
an open-end investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution and Service Plan will
benefit the Trust and the owners of the Class D shares of the portfolios (the
"Shareholders") of the Trust.
NOW, THEREFORE, the Trustees of the Trust hereby adopt this Distribution
and Service Plan pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust has adopted this Class D Distribution and Service
----------
Plan (the "Plan") to enable the Trust to directly or indirectly bear expenses
relating to (a) the distribution and sale of Class D shares (collectively, the
"Shares") of certain of the portfolios of the Trust, as set forth in Schedule A
attached hereto (each, a "Portfolio"), and (b) the provision of shareholder
services relating to such Shares.
SECTION 2. Distribution Activities.
----------
(a) Each Portfolio are authorized to pay the principal underwriter of the
Shares (the "Distributor") a total fee in connection with distribution-
related services provided in respect of such Shares, calculated and payable
monthly, at the annual rate of .75% of the value of the average daily net
assets of attributable to Class D shares of the Portfolio.
(b) The fee paid pursuant to this Section 2 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 Shares, to compensate third parties for the provision of
recordkeeping and other distribution-related services relating to Class D
Shares, and to pay for advertising and promotional expenses in connection
with the distribution of the Shares. These advertising and promotional
expenses include, by way of example but not by way of limitation, 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 the 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 the Shares.
(c) Payments under this Section of the Plan are not tied exclusively to the
expenses for distribution-related activities actually incurred by the
Distributor, so that such payments may exceed expenses actually incurred by
the Distributor. The Trust's Board of Trustees will evaluate the
appropriateness of the Plan and its payment terms on a continuing basis and
<PAGE>
in doing so will consider all relevant factors, including expenses borne by
the Distributor and amounts it receives under the Plan.
(d) The Trust's investment adviser and the Distributor may, at their option and
in their sole discretion, make payments from their own resources to cover
additional costs associated with the provision of distribution services to
the Trust.
SECTION 3. Shareholder Servicing Activities.
----------
(a) In addition to the amounts set forth in Section 2 above, each Portfolio is
authorized to pay the Distributor a fee in connection with the ongoing
servicing of shareholder accounts owning such Shares, 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 Portfolio.
(b) The service fee payable to the Distributor pursuant to this Section 3
hereof may be used by the Distributor to provide compensation to financial
intermediaries for ongoing servicing and/or maintenance of shareholder
accounts with respect to the Shares of the applicable Portfolios. Such
shareholder services may include, but are not limited to, the following:
telephone service to shareholders, including the acceptance of telephone
inquiries and transaction requests; 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. In addition, Distributor shall perform or supervise the
performance by others of other shareholder services in connection with the
operations of the applicable Portfolios, as agreed from time to time.
(c) Payments under this Section of the Plan are not tied exclusively to the
expenses for shareholder servicing activities actually incurred by the
Distributor or third parties, so that such payments may exceed expenses
actually incurred by the Distributor. The Trust's Board of Trustees will
evaluate the appropriateness of the Plan and its 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 Plan.
(d) The Trust's investment adviser and the Distributor may, at their option and
in their sole discretion, make payments from their own resources to cover
additional costs associated with the provision of shareholder services to
Class D shareholders.
SECTION 4. This Plan shall not take effect with respect to a Portfolio
----------
until it has been approved (a) by a vote of at least a majority of the
outstanding Class D Shares of such Portfolio; and (b) together with any related
agreement entered into pursuant to Section 8 hereof, by votes of the majority of
both (i) the Trustees of the Trust and (ii) the Qualified Trustees, cast in
person at a Board of Trustees meeting called for the purpose of voting on this
Plan or such agreement.
<PAGE>
SECTION 5. This Plan shall continue in effect for a period of more than
----------
one year after it takes effect only for so long as such continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 4 herein for the approval of this Plan.
SECTION 6. Any person authorized to direct the disposition of monies paid
----------
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
SECTION 7. This Plan may be terminated at any time with respect to any
----------
Portfolio by the vote of a majority of the Qualified Trustees or by vote of a
majority of the Portfolio's outstanding Class D Shares.
SECTION 8. All agreements with any person relating to implementation of
----------
this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time with respect to
any Portfolio, without payment of any penalty, by the vote of a majority of the
Qualified Trustees or by the vote of shareholders holding a majority of the
Portfolio's outstanding Class D Shares, on not more than 60 days written notice
to any other party to the agreement; and (b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the amount
----------
of distribution or shareholder servicing expenses permitted pursuant to Sections
2 and 3 hereof without the approval of shareholders holding a majority of the
outstanding Class D Shares of the applicable Portfolio, and all material
amendments to this Plan shall be approved in the manner provided in Section 4
(b) herein for the approval of this Plan.
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees" shall
-----------
mean those Trustees of the Trust who are not interested persons of the Trust,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it, and (b) the terms "assignment" and "interested
person" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
SECTION 11. While this Plan is in effect, the selection and nomination of
-----------
those Trustees who are not interested persons of the Trust within the meaning of
Section 2(a)(19) of the 1940 Act shall be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
SECTION 12. This Plan shall not obligate the Trust or any other party to
-----------
enter into an agreement with any particular person.
December 4, 1995
<PAGE>
SEI ASSET ALLOCATION TRUST
SCHEDULE A
TO
CLASS D
DISTRIBUTION AND SERVICE PLAN
DATED DECEMBER 4, 1995
Diversified Conservative Fund
Diversified Conservative Growth Fund
Diversified Moderate Growth Fund
Diversified Growth Fund
Diversified U.S. Stock Fund
<PAGE>
This schedule is included to illustrate how yield and total return will be
calculated for the SEI Asset Allocation Trust. The Trust was not in operation as
of January 31, 1996. The examples presented are an estimate of future
operations. The Trust has a fiscal year end of March 31.
6
Yield = 2[((a-b)/(c+d)) - 1]
<TABLE>
<CAPTION>
Diversified Conservative Diversified Conservative
Income Fund Income Fund
Class A Class D
<S> <C> <C>
a - Total Income 223,400.00 223,400.00
b - Expenses 60,000.00 101,200.00
c - Shares 4,781,905,000 4,781,905,000
d - NAV 10.50 10.50
Yield 3.55% 2.95%
</TABLE>
<TABLE>
<CAPTION>
Diversified Conservative Diversified Conservative
P.E. Fund P.E. Fund
Class A Class D
<S> <C> <C>
a - Total Income 204,900.00 204,900.00
b - Expenses 60,000.00 101,200.00
c - Shares 4,629,630,000 4,629,630,000
d - NAV 10.80 10.80
Yield 3.50% 2.50%
</TABLE>
<TABLE>
<CAPTION>
Diversified Moderate Diversified Moderate
Growth Fund Growth Fund
Class A Class D
<S> <C> <C>
a - Total Income 163,500.00 163,500.00
b - Expenses 60,000.00 101,200.00
c - Shares 4,608,294.00 4,608,294.00
d - NAV 10.85 10.85
Yield 2.50% 1.50%
</TABLE>
<TABLE>
<CAPTION>
Diversified Growth Diversified Growth
Fund Fund
Class A Class D
<S> <C> <C>
a - Total Income 153,500.00 153,500.00
b - Expenses 60,000.00 101,200.00
c - Shares 4,587,155.00 4,587,155.00
d - NAV 10.90 10.90
Yield 2.25% 1.26%
</TABLE>
<TABLE>
<CAPTION>
Diversified U.S. Stock Diversified U.S. Stock
Fund Fund
Class A Class D
<S> <C> <C>
a - Total Income 143,000.00 143,000.00
b - Expenses 60,000.00 101,200.00
c - Shares 4,716,981.00 4,716,981.00
d - NAV 10.60 10.60
Yield 2.00% 1.01%
</TABLE>
<PAGE>
Total Return P(1 + T)n = ERV
<TABLE>
<CAPTION>
Diversified Conservative Diversified Conservative
Income Fund Income Fund
Class A Class D
<S> <C> <C>
P 1,000.00 1,000.00
n 1 1
ERV 1,053.95 1,043.95
T 5.40% 4.40%
</TABLE>
<TABLE>
<CAPTION>
Diversified Conservative Diversified Conservative
Fund Fund
Class A Class D
<S> <C> <C>
P 1,000.00 1,000.00
n 1 1
ERV 1,115.00 1,105.00
T 11.50% 10.50%
</TABLE>
<TABLE>
<CAPTION>
Diversified Moderate Diversified Moderate
Growth Fund Growth Fund
Class A Class D
<S> <C> <C>
P 1,000.00 1,000.00
n 1 1
ERV 1,110.00 1,100.00
T 11.00% 10.00%
</TABLE>
<TABLE>
<CAPTION>
Diversified Growth Diversified Growth
Fund Fund
Class A Class D
<S> <C> <C>
P 1,000.00 1,000.00
n 1 1
ERV 1,112.50 1,102.50
T 11.25% 10.25%
</TABLE>
<TABLE>
<CAPTION>
Diversified U.S. Stock Diversified U.S. Stock
Fund Fund
Class A Class D
<S> <C> <C>
P 1,000.00 1,000.00
n 1 1
ERV 1,080.00 1,070.00
T 8.00% 7.00%
</TABLE>
<PAGE>
SEI ASSET ALLOCATION TRUST
RULE 18F-3
MULTIPLE CLASS PLAN
DECEMBER 4, 1995
SEI Asset Allocation Trust (the "Trust"), a registered investment
company that currently consists of a number of separately managed funds, has
elected to rely on Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), in offering multiple classes of shares in each fund
listed on Schedule A hereto (each a "Fund" and together the "Funds").
A. ATTRIBUTES OF SHARE CLASSES
1. The rights of each class of shares of the Funds shall be as set
forth in the respective Certificate of Class Designation for each class (each a
"Certificate") as each such Certificate is approved by the Trust's Board of
Trustees and as attached hereto as Exhibits.
2. With respect to each class of shares created hereunder, each share
of a Fund will represent an equal pro rata interest in the Fund and will have
--- ----
identical terms and conditions, except that: (i) each new class will have a
different class name (or other designation) that identifies the class as
separate from any other class; (ii) each class will be offered and sold only to
investors meeting the qualifications set forth in the Certificate and disclosed
in the Trust's Prospectus; (iii) each class will separately bear any
distribution fees that are payable in connection with a distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"), and
separately bear any other service fees ("service fees") that are payable under
any service agreement entered into with respect to that class which are not
contemplated by or within the scope of the Distribution Plan; (iv) each class
may bear, consistent with rulings and other published statements of position by
the Internal Revenue Service, the expenses of the Fund's operations which are
directly attributable to such class ("Class Expenses"); and (v) shareholders of
each class will have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to such class (such as a Distribution Plan or
service agreement relating to such class), and will have separate voting rights
on any matter submitted to shareholders in which the interests of that class
differ from the interests of any other class.
B. EXPENSE ALLOCATIONS
With respect to each Fund, the expenses of each class shall be
allocated as follows: (i) any Rule 12b-1 fees relating to a particular class of
shares associated with a Distribution Plan or service fees relating to a
particular class of shares are (or will be) borne exclusively by that class;
(ii) any incremental transfer agency fees relating to a particular class are (or
will be) borne exclusively by that class; and (iii) Class Expenses relating to a
particular class are (or will be) borne exclusively by that class.
Non-class specific expenses shall be allocated in accordance with Rule
18f-3(c).
<PAGE>
C. AMENDMENT OF PLAN; PERIODIC REVIEW
This Plan must be amended to properly describe (through additional
exhibits hereto) each new class of shares upon its approval by the Board.
The Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" of the Trust as defined in the 1940
Act, must review this Plan at least quarterly for its continued appropriateness,
and must approve any material amendment of the Plan as it relates to any class
of any Fund covered by the Plan. In approving any material amendment to the
Plan, the Trustees, including a majority of the Trustees who are not interested
persons of the Trust, must find that the amendment is in the best interests of
each class individually and the Trust as a whole.
<PAGE>
Schedule A
----------
SEI Asset Allocation Trust
Fund
- ----
Diversified Conservative Fund
Diversified Conservative Growth Fund
Diversified Moderate Growth Fund
Diversified Growth Fund
Diversified U.S. Stock Fund
<PAGE>
Exhibit A
SEI ASSET ALLOCATION TRUST
CERTIFICATE OF CLASS DESIGNATION
Class A Shares
1. Class-Specific Distribution Arrangements; Other Expenses.
---------------------------------------------------------
Class A Shares are sold without a sales charge and are not subject to any
Rule 12b-1 fee or service fees.
2. Eligibility of Purchasers
-------------------------
Class A Shares do not require a minimum initial investment and are
available only to financial institutions and intermediaries.
3. Exchange Privileges
-------------------
Class A Shares of each Fund may be exchanged for Class A Shares of each
other Fund of the Trust in accordance with the procedures disclosed in the
Fund's Prospectus and subject to any applicable limitations resulting from the
closing of Funds to new investors.
4. Voting Rights
-------------
Each Class A shareholder will have one vote for each full Class A Share
held and a fractional vote for each fractional Class Share A held. Class A
shareholders will have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to Class A (such as a distribution plan or
service agreement relating to Class A), and will have separate voting rights on
any other matter submitted to shareholders in which the interests of the Class A
Shareholders differ from the interests of holders of any other class.
5. Conversion Rights
-----------------
Class A Shares do not have a conversion feature.
<PAGE>
Exhibit B
SEI ASSET ALLOCATION TRUST
CERTIFICATE OF CLASS DESIGNATION
Class D Shares
1. Class-Specific Distribution Arrangements; Other Expenses.
---------------------------------------------------------
Class D Shares are sold without a load or sales charge, but are subject to
a Rule 12b-1 fee and a shareholder servicing fee. The Trust, on behalf of the
applicable Fund, will make monthly payments to the Distributor under the
Distribution and Service Plan approved by the Board of Trustees at an annual
rate of up to 1.00% of each Fund's average daily net assets attributable to
Class D Shares. The Distributor will use .75% of the fee it receives for (i)
compensation for its services in connection with distribution assistance or
provision of shareholder or account maintenance services, or (ii) payments to
financial intermediaries, plan fiduciaries, and investment professionals for
providing distribution support services, and/or account maintenance services to
shareholders (including, where applicable, any underlying beneficial owners) of
Class D Shares. The Distributor will use .25% of the fee it receives to
compensate service providers for providing ongoing account maintenance and other
services to Class D shareholders (including, where applicable, any underlying
beneficial owners) identified in the Distribution and Service Plan.
2. Eligibility of Purchasers
-------------------------
Class D Shares generally require a minimum initial investment of $1,000.
3. Exchange Privileges
-------------------
Class D Shares of each Fund may be exchanged for Class D Shares of each
other Fund of the Trust in accordance with the procedures disclosed in the
Fund's Prospectus and subject to any applicable limitations resulting from the
closing of Funds to new investors.
4. Voting Rights
-------------
Each Class D shareholder will have one vote for each full Class D Share
held and a fractional vote for each fractional Class D Share held. Class D
shareholders will have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to Class D (such as a distribution plan or
service agreement relating to Class D), and will have separate voting rights on
any other matter submitted to shareholders in which the interests of Class D
shareholders differ from the interests of holders of any other class.
5. Conversion Rights
-----------------
Class D Shares do not have a conversion feature.
<PAGE>
SEI ASSET ALLOCATION TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of The Commonwealth of Massachusetts, hereby constitutes and
appoints David G. Lee, Kevin P. Robins and Robert B. Carroll, and each of them
singly, his or her true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him or her and in his or her name,
place and stead, and in the capacity indicated below, to sign any or all
amendments (including post-effective amendments) to the Trust's Registration
Statement on Form N-1A under the provisions of the Investment Company Act of
1940 and the Securities Act of 1933, each such Act as amended, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, acting alone, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ William M. Doran Date: 2/8/96
- ------------------------------ ----------------
William M. Doran
Trustee
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