SEI ASSET ALLOCATION TRUST, 497, 1999-08-06

SEI ASSET ALLOCATION TRUST
497, 1999-08-06

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<PAGE>
SEI Asset
Allocation Trust

ABOUT THIS PROSPECTUS
- ------------------------------------------------------------------------

The SEI Asset Allocation Trust is a mutual fund that offers shares in separate
investment portfolios (Funds). The Funds have individual investment goals and
strategies and are designed primarily for institutional investors and financial
institutions and their clients. This prospectus gives you important information
about the Class A Shares of the Funds that you should know before investing.
Please read this prospectus and keep it for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about risk and return which is common to each of the
Funds. For more detailed information about each Fund, please see:

DIVERSIFIED CONSERVATIVE INCOME FUND.................................2

DIVERSIFIED CONSERVATIVE FUND........................................4

DIVERSIFIED GLOBAL MODERATE GROWTH FUND..............................6

DIVERSIFIED MODERATE GROWTH FUND.....................................8

DIVERSIFIED GLOBAL GROWTH FUND......................................10

DIVERSIFIED GLOBAL STOCK FUND.......................................12

DIVERSIFIED U.S. STOCK FUND.........................................14

THE FUNDS' OTHER INVESTMENTS........................................16

INFORMATION ABOUT THE UNDERLYING SEI FUNDS..........................16

INVESTMENT ADVISER..................................................20

PURCHASING, SELLING AND EXCHANGING SHARES...........................20

DIVIDENDS AND DISTRIBUTIONS.........................................22

TAXES...............................................................22

FINANCIAL HIGHLIGHTS................................................23

HOW TO OBTAIN MORE INFORMATION ABOUT
SEI ASSET ALLOCATION TRUST..................................Back Cover

- --------------------------------------------------------------------------------
THE FUNDS AND GLOBAL ASSET ALLOCATION

STRATEGIES: Each Fund has its own distinct risk and reward characteristics,
investment objectives, policies, and strategies. SEI Investments Management
Corporation (SIMC) constructs and maintains global asset allocation strategies
for certain clients, and the Funds attempt to implement those strategies by
investing in certain mutual funds ("Underlying SEI Funds"), most of which are
managed by SIMC. The degree to which a Fund is invested in particular market
segments and/or asset classes represented by the Underlying SEI Funds varies, as
does the investment risk and reward potential represented by each Fund. Because
of the historical lack of correlation between various asset classes, an
investment in the Funds may reduce an investor's overall level of volatility. As
a result, a global asset allocation strategy may reduce risk.

In managing the Funds, SIMC focuses on four key principles: asset allocation,
portfolio structure, the use of specialist managers, and continuous portfolio
management. Asset allocation across appropriate asset classes (I.E., the
Underlying SEI Funds) is the central theme of SIMC's investment philosophy. SIMC
seeks to reduce risk by creating a portfolio that is diversified within each
asset class. SIMC then oversees a network of specialist managers who invest the
assets of the Funds in distinct segments of the market or class represented by
each Underlying SEI Fund. These specialist managers adhere to distinct
investment disciplines, with the goal of providing greater consistency and
predictability of results, as well as broader diversification across and within
asset classes. Finally, SIMC regularly rebalances to ensure that the appropriate
mix of assets is constantly in place, and constantly monitors and evaluates
specialist managers for the Underlying SEI Funds to ensure that they do not
deviate from their stated investment philosophy or process.
<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION COMMON TO THE FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal.
SIMC invests Fund assets in a way that it believes will help each Fund achieve
its goal. In order to achieve its investment objective, SIMC allocates each
Fund's assets among certain Underlying SEI Funds. These Underlying SEI Funds are
a separately-managed series of the following investment companies: SEI
Institutional Managed Trust ("SIMT"), SEI Institutional International Trust
("SIT"), and SEI Liquid Asset Trust ("SLAT"). The Underlying SEI Funds each
invest primarily in domestic or foreign equity securities, fixed-income
securities or money market instruments. The assets of each Fund are allocated
among Underlying SEI Funds in accordance with its investment objective. These
Underlying SEI Funds, in turn, invest directly in securities in accordance with
their own varying investment objectives and policies. SIMC may change the
allocations to the particular asset classes represented by the Underlying SEI
Funds when it deems it appropriate.

Still, investing in the Funds involves risk, and there is no guarantee that any
Fund will achieve its goal. SIMC's judgments about the markets, the economy, or
asset classes may not anticipate actual market movements, economic conditions or
company performance, and these judgments may affect the return on your
investment. In fact, no matter how good a job SIMC does, you could lose money on
your investment in the Funds, just as you could with other investments. A Fund
share is not a bank deposit and it is not insured or guaranteed by the FDIC or
any government agency.

The value of your investment in a Fund is based on the market prices of the
securities that the Underlying SEI Funds hold. These prices change daily due to
economic and other events that affect particular companies and other issuers.
These price movements, sometimes called volatility, may be greater or lesser
depending on the types of securities an Underlying SEI Fund owns and the markets
in which they trade. The estimated level of volatility for each Fund is set
forth in the Fund Summaries that follow. The effect on an Underlying SEI Fund of
a change in the value of a single security will depend on how widely the
Underlying SEI Fund diversifies its holdings.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

Like other mutual funds (and most organizations around the world), the Funds
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Funds or
on the financial markets in general, the Funds are taking steps to protect Fund
investors. These include efforts to ensure that the Funds' own systems are
prepared to make the transition to the year 2000, and to determine that the
problem will not affect the systems used by the Funds' mission critical service
providers. The Funds have also sought and received assurances from these service
providers that they are devoting significant resources to prevent material
adverse consequences to the Funds. Whether these steps will be effective can
only be known for certain in the year 2000. While such assurances have been
received, year 2000 problems may ultimately negatively affect the companies and
governments whose securities the Underlying SEI Funds purchase, which may have
an impact on the value of the Funds' shares. There is additional information on
these risks in the Statement of Additional Information.

<PAGE>
2 PROSPECTUS

DIVERSIFIED CONSERVATIVE INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income and capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Low to medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in investment grade U.S. fixed income
securities, and, to a lesser extent, in U.S.
common stocks
</TABLE>

- -------------------------------------------------------------------------------

INVESTMENT STRATEGY

The Diversified Conservative Income Fund invests in Underlying SEI Funds. The
Underlying SEI Funds invest, in turn, in securities in specific asset classes.
Each of the Underlying SEI Funds is managed by one or more specialist
sub-advisers under the supervision of SIMC.

At least 50% of the Fund's assets will be invested in an Underlying SEI Fund
that invests in investment grade U.S. fixed income securities, including
mortgage-backed securities. The Fund will also invest in Underlying SEI Funds
that invest in U.S. common stocks. SIMC manages the Fund by allocating Fund
assets among a variety of Underlying SEI Funds within the following percentage
ranges:

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------
Equity 10-50%
- -----

SIMT Large Cap Growth

SIMT Large Cap Value

SIMT Small Cap Growth

SIMT Small Cap Value

Fixed Income 50-65%
- ----------

SIMT Core Fixed Income

Money Market 0-30%
- ------------

SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The value of an investment in the Fund is based primarily on the performance of
the Underlying SEI Funds and the allocation of the Fund's assets among them. The
prices of the Underlying SEI Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Underlying SEI Fund's fixed income securities will decrease in
value if interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also, longer-
term securities are generally more volatile, so the average maturity or duration
of these securities affects risk.

Since some Underlying SEI Funds purchase equity securities, the Fund is subject
to the risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of an
Underlying SEI Fund's securities may fluctuate drastically from day to day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Fund.

The Fund is also subject to the risk that SIMC's decisions regarding asset
classes and Underlying SEI Funds will not anticipate market trends successfully.
For example, weighting Underlying SEI Funds that invest in common stocks too
heavily during a stock market decline may result in a failure to preserve
capital. Conversely, investing too heavily in Underlying SEI Funds that invest
in fixed income securities during a period of stock market appreciation may
result in lower total return. Of course, the risks associated with investing in
the Fund will vary depending upon how the assets are allocated among Underlying
SEI Funds.
<PAGE>
PROSPECTUS 3

DIVERSIFIED CONSERVATIVE INCOME FUND

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.55% -1.24%
(6/30/97) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 0.53%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index.

** THE INCEPTION DATE FOR THE INDEX IS JUNE 30, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.35%
-------
Total Annual Fund Operating Expenses 0.45%*
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS
VOLUNTARILY WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE
WAIVERS AT ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
DIVERSIFIED CONSERVATIVE INCOME FUND -- CLASS A SHARES 0.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.64%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, that Fund expenses remain the same, and that you
reinvest all dividends and distributions. Although your actual costs and returns
might be different, your approximate costs (including the costs of the
Underlying SEI Funds) of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Conservative
Income Fund $46 $144 $252 $567
</TABLE>

<PAGE>
4 PROSPECTUS

DIVERSIFIED CONSERVATIVE FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income and capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in investment grade U.S. and foreign
fixed income securities and, to a lesser extent,
in common stocks
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

The Diversified Conservative Fund invests in Underlying SEI Funds. The
Underlying SEI Funds invest, in turn, in securities in specific asset classes.
Each of the Underlying SEI Funds is managed by one or more specialist
sub-advisers under the supervision of SIMC.

At least 50% of the Fund's assets will be invested in Underlying SEI Funds that
invest in investment grade U.S. and foreign fixed income securities, including
mortgage-backed securities. The Fund will also invest in Underlying
SEI Funds that invest in U.S. and foreign common stocks. SIMC manages the Fund
by allocating Fund assets among a variety of Underlying SEI Funds within the
following percentage ranges:

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------
Equity 15-50%
- -----

SIMT Large Cap Growth

SIMT Large Cap Value

SIMT Small Cap Growth

SIMT Small Cap Value

SIT International Equity

Fixed Income 50-80%
- ----------

SIMT Core Fixed Income

SIT International Fixed Income

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The value of an investment in the Fund is based primarily on the performance of
the Underlying SEI Funds and the allocation of the Fund's assets among them.
The prices of an Underlying SEI Fund's fixed income securities respond to
economic developments, particularly interest rate changes, as well as to
perceptions about the creditworthiness of individual issuers, including
governments. Generally, an Underlying SEI Fund's fixed income securities will
decrease in value if interest rates rise and vice versa, and the volatility of
lower rated securities is even greater than that of higher rated securities.
Also, longer-term securities are generally more volatile, so the average
maturity or duration of these securities affects risk.

Since some Underlying SEI Funds purchase equity securities, the Fund is subject
to the risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of an
Underlying SEI Fund's securities may fluctuate drastically from day to day. In
the case of foreign stocks, these fluctuations will reflect international
economic and political events, as well as changes in currency valuations
relative to the U.S. dollar. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of
investing in the Fund.

The Fund is also subject to the risk that SIMC's decisions regarding asset
classes and Underlying SEI Funds will not anticipate market trends successfully.
For example, weighting Underlying SEI Funds that invest in common stocks too
heavily during a stock market decline may result in a failure to preserve
capital. Conversely, investing too heavily in Underlying SEI Funds that invest
in fixed income securities during a period of stock market appreciation may
result in lower total return. Of course, the risks associated with investing
in the Fund will vary depending upon how the assets are allocated among
Underlying SEI Funds.
<PAGE>
PROSPECTUS 5

DIVERSIFIED CONSERVATIVE FUND
PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
9.74% -2.70%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 0.00%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS A SHARES 1 YEAR (6/26/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED CONSERVATIVE FUND 15.62% 14.95%
- ---------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.35%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 29.93%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE RATED
INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR. THE
WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER
MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX
OF COMMON STOCKS ISSUED BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE
U.S. AND WITH READILY AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES
ARE INCLUDED IN THE INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS JUNE 30, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<S> <C>
DIVERSIFIED CONSERVATIVE FUND -- CLASS A SHARES 0.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.80%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Conservative Fund $46 $144 $252 $567
</TABLE>

<PAGE>
6 PROSPECTUS

DIVERSIFIED GLOBAL MODERATE GROWTH FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation and current income
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in U.S. and foreign common stocks and
investment grade fixed income securities
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

The Diversified Global Moderate Growth Fund invests in Underlying SEI Funds. The
Underlying SEI Funds invest, in turn, in securities in specific asset classes.
Each of the Underlying SEI Funds is managed by one or more specialist
sub-advisers under the supervision of SIMC.

At least 30% of the Fund's assets will be invested in Underlying SEI Funds that
invest in U.S. and foreign common stocks and other equity securities, including
securities of emerging market issuers. The Fund will also invest at least 25% of
its assets in Underlying SEI Funds that invest in investment grade U.S. and
foreign fixed income securities, including mortgage-backed securities and
emerging market debt securities. SIMC manages the Fund by allocating Fund assets
among a variety of Underlying SEI Funds within the following percentage ranges:

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------
Equity 30-75%
- -----

SIMT Large Cap Growth

SIMT Large Cap Value

SIMT Small Cap Growth

SIMT Small Cap Value

SIT International Equity

SIT Emerging Markets Equity

Fixed Income 25-70%
- ----------

SIMT Core Fixed Income

SIMT High Yield Bond

SIT International Fixed Income

SIT Emerging Markets Debt

Money Market 0-30%
- ------------

SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The value of an investment in the Fund is based primarily on the performance of
the Underlying SEI Funds and the allocation of the Fund's assets among them.
Since some Underlying SEI Funds purchase equity securities, the Fund is subject
to the risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of an
Underlying SEI Fund's securities may fluctuate drastically from day to day. In
the case of foreign stocks, these fluctuations will reflect international
economic and political events, as well as changes in currency valuations
relative to the U.S. dollar. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of
investing in the Fund.

Investing in Underlying SEI Funds that invest in foreign countries poses
distinct risks since political and economic events unique to a country or region
will affect those markets and their issuers. These risks will be even greater
for investments in emerging market countries since political turmoil and rapid
changes in economic conditions are more likely to occur in these countries.

The prices of an Underlying SEI Fund's fixed income securities respond to
economic developments, particularly interest rate changes, as well as to
perceptions about the creditworthiness of individual issuers, including
governments. Generally, an Underlying SEI Fund's fixed income securities will
decrease in value if interest rates rise and vice versa, and the volatility of
lower rated securities is even greater than that of higher rated securities.
Also, longer-term securities are generally more volatile, so the average
maturity or duration of these securities affects risk.

DIVERSIFIED GLOBAL MODERATE GROWTH FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
13.45% -9.37%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 2.03%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS A SHARES 1 YEAR (12/13/96)
<S> <C> <C>
- ----------------------------------------------------------------------------
DIVERSIFIED GLOBAL MODERATE GROWTH FUND 11.22% 14.26%
- ----------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.18%**
- ----------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 27.30%**
- ----------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE RATED
INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR. THE
WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER MARKET
VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX OF COMMON
STOCKS ISSUED BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE U.S. AND WITH
READILY AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES ARE INCLUDED IN THE
INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS DECEMBER 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.39%
-------
Total Annual Fund Operating Expenses 0.49%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED GLOBAL MODERATE GROWTH FUND -- CLASS A
SHARES 0.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.94%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Global Moderate
Growth Fund $50 $157 $274 $616
</TABLE>

<PAGE>
8 PROSPECTUS

DIVERSIFIED MODERATE GROWTH FUND

FUND SUMMARY

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

The Diversified Moderate Growth Fund invests in Underlying SEI Funds. The
Underlying SEI Funds invest, in turn, in securities in specific asset classes.
Each of the Underlying SEI Funds is managed by one or more specialist
sub-advisers under the supervision of SIMC.

At least 30% of the Fund's assets will be invested in Underlying SEI Funds that
invest in U.S. and foreign common stocks and other equity securities. The Fund
will also invest at least 30% of its assets in Underlying SEI Funds that invest
in investment grade U.S. and foreign fixed income securities, including
mortgage-backed securities. SIMC manages the Fund by allocating Fund assets
among a variety of Underlying SEI Funds within the following percentage ranges:

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------

Equity 30-70%
- -----

SIMT Large Cap Growth

SIMT Large Cap Value

SIMT Small Cap Growth

SIMT Small Cap Value

SIT International Equity

Fixed Income 30-60%
- ----------

SIMT Core Fixed Income

SIT International Fixed Income

Money Market 0-30%
- ------------

SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

DIVERSIFIED MODERATE GROWTH FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
13.39% -6.58%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 2.03%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS A SHARES 1 YEAR (6/10/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED MODERATE GROWTH FUND 17.14% 16.86%
- ---------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.35%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 27.30%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE RATED
INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR. THE
WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER MARKET
VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX OF COMMON
STOCKS ISSUED BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE U.S. AND WITH
READILY AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES ARE INCLUDED IN THE
INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS JUNE 30, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.40%
-------
Total Annual Fund Operating Expenses 0.50%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED MODERATE GROWTH FUND -- CLASS A SHARES 0.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.86%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Moderate Growth
Fund $51 $160 $280 $628
</TABLE>

<PAGE>
10 PROSPECTUS

DIVERSIFIED GLOBAL GROWTH FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium to high
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in U.S. and foreign common stocks and
fixed income securities
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

The Diversified Global Growth Fund invests in Underlying SEI Funds. The
Underlying SEI Funds invest, in turn, in securities in specific asset classes.
Each of the Underlying SEI Funds is managed by one or more specialist
sub-advisers under the supervision of SIMC.

At least 45% of the Fund's assets will be invested in Underlying SEI Funds that
invest in U.S. and foreign common stocks and other equity securities, including
securities of emerging market issuers. The Fund will also invest in Underlying
SEI Funds that invest in U.S. and foreign fixed income securities, including
mortgage-backed securities and emerging market debt securities. SIMC manages the
Fund by allocating Fund assets among a variety of Underlying SEI Funds within
the following percentage ranges:

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------
Equity 45-95%
- -----

SIMT Large Cap Growth

SIMT Large Cap Value

SIMT Small Cap Growth

SIMT Small Cap Value

SIT International Equity

SIT Emerging Markets Equity

Fixed Income 5-50%
- ----------

SIMT Core Fixed Income

SIMT High Yield Bond

SIT International Fixed Income

SIT Emerging Markets Debt

Money Market 0-30%
- ------------

SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

DIVERSIFIED GLOBAL GROWTH FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.17% -12.38%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 2.63%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index, Morgan Stanley MSCI EAFE Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS A SHARES 1 YEAR (6/13/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED GLOBAL GROWTH FUND 12.73% 15.27%
- ---------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.35%**
- ---------------------------------------------------------------------------
MORGAN STANLEY MSCI EAFE INDEX* 20.00% 8.96%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 25.98%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE RATED
INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR. THE MORGAN
STANLEY MSCI EAFE INDEX IS A WIDELY-RECOGNIZED, CAPITALIZATION-WEIGHTED
(COMPANIES WITH LARGER MARKET CAPITALIZATIONS HAVE MORE INFLUENCE THAN THOSE
WITH SMALLER CAPITALIZATIONS) INDEX OF OVER 900 SECURITIES LISTED ON THE STOCK
EXCHANGES IN EUROPE, AUSTRALIA AND THE FAR EAST. THE WILSHIRE 5000 INDEX IS A
WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE
MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX OF COMMON STOCKS ISSUED
BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE U.S. AND WITH READILY
AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES ARE INCLUDED IN THE
INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS JUNE 30, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.40%
-------
Total Annual Fund Operating Expenses 0.50%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED GLOBAL GROWTH FUND -- CLASS A SHARES 0.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 1.00%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Global Growth Fund $51 $160 $280 $628
</TABLE>

<PAGE>
12 PROSPECTUS

DIVERSIFIED GLOBAL STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in U.S. and foreign common stocks and
other equity securities
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

The Diversified Global Stock Fund invests in Underlying SEI Funds. The
Underlying SEI Funds invest, in turn, in securities in specific asset classes.
Each of the Underlying SEI Funds is managed by one or more specialist
sub-advisers under the supervision of SIMC.

At least 70% of the Fund's assets will be invested in Underlying SEI Funds that
invest in U.S. and foreign common stocks and other equity securities, including
securities of emerging market issuers. SIMC manages the Fund by allocating Fund
assets among a variety of Underlying SEI Funds within the following percentage
ranges:

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------

Equity 70-100%
- -----

SIMT Large Cap Growth

SIMT Large Cap Value

SIMT Small Cap Growth

SIMT Small Cap Value

SIT International Equity

SIT Emerging Markets Equity

Money Market 0-30%
- ------------

SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that SIMC's decisions regarding asset
classes and Underlying SEI Funds will not anticipate market trends successfully.
For example, weighting Underlying SEI Funds that invest in small capitalization
or foreign stocks too heavily during certain periods of time might result in
higher volatility. Conversely, investing too heavily in Underlying SEI Funds
that invest in large capitalization stocks during a period of market
appreciation for smaller companies may result in lower total return. Similarly,
investing in foreign stocks rather than U.S. stocks may cause the Fund to miss
opportunities in the U.S. markets. Alternatively, investing in foreign stocks
may subject the Fund to risks not present in the U.S. markets. Of course, the
risks associated with investing in the Fund will vary depending upon how the
assets are allocated among Underlying SEI Funds.
<PAGE>
PROSPECTUS 13

DIVERSIFIED GLOBAL STOCK FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
20.91% -15.52%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 3.28%.

This table compares the Fund's average annual total retransfer Class A Shares
for the periods ended December 31, 1998, to those of the Morgan Stanley MSCI
EAFE Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS A SHARES 1 YEAR (12/9/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED GLOBAL STOCK FUND 13.65% 16.44%
- ---------------------------------------------------------------------------
MORGAN STANLEY MSCI EAFE INDEX* 20.00% 10.51%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 27.30%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST
DIRECTLY IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES
NOT PAY ANY COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS
PERFORMANCE WOULD BE LOWER. THE MORGAN STANLEY MSCI EAFE INDEX IS A
WIDELY-RECOGNIZED, CAPITALIZATION-WEIGHTED (COMPANIES WITH LARGER MARKET
CAPITALIZATIONS HAVE MORE INFLUENCE THAN THOSE WITH SMALLER CAPITALIZATIONS)
INDEX OF OVER 900 SECURITIES LISTED ON THE STOCK EXCHANGES IN EUROPE,
AUSTRALIA AND THE FAR EAST. THE WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED,
MARKET VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN
LOWER MARKET VALUE STOCKS) INDEX OF COMMON STOCKS ISSUED BY ALL COMPANIES
WITH HEADQUARTERS LOCATED IN THE U.S. AND WITH READILY AVAILABLE PRICE DATA.
APPROXIMATELY 6,000 SECURITIES ARE INCLUDED IN THE INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS DECEMBER 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.40%
-------
Total Annual Fund Operating Expenses 0.50%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED GLOBAL STOCK FUND -- CLASS A SHARES 0.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 1.06%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Global Stock Fund $51 $160 $280 $628
</TABLE>

<PAGE>
14 PROSPECTUS

DIVERSIFIED U.S. STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in U.S. common stocks and other equity
securities
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

The Diversified U.S. Stock Fund invests in Underlying SEI Funds. The Underlying
SEI Funds invest, in turn, in securities in specific asset classes. Each of the
Underlying SEI Funds is managed by one or more specialist sub-advisers under the
supervision of SIMC.

At least 70% of the Fund's assets will be invested in Underlying SEI Funds that
invest in U.S. common stocks and other equity securities. SIMC manages the Fund
by allocating Fund assets among a variety of Underlying SEI Funds within the
following percentage ranges:

INVESTMENT RANGE

FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)

- --------------------------------------------------------------------------------

Equity 70-100%

- -----

SIMT Large Cap Growth

SIMT Large Cap Value

SIMT Small Cap Growth

SIMT Small Cap Value

Money Market 0-30%

- ------------

SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The value of an investment in the Fund is based primarily on the performance of
the Underlying SEI Funds and the allocation of the Fund's assets among them.
Since some Underlying SEI Funds purchase equity securities, the Fund is subject
to the risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of an
Underlying SEI Fund's securities may fluctuate drastically from day to day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Fund.

The Fund is also subject to the risk that SIMC's decision regarding asset
classes and Underlying SEI Funds will not anticipate market trends successfully.
For example, weighting Underlying SEI Funds that invest in small capitalization
stocks too heavily during certain periods of time might result in higher
volatility. Conversely, investing too heavily in Underlying SEI Funds that
invest in large capitalization stocks during a period of market appreciation for
smaller companies may result in lower total return. Of course, the risks
associated with investing in the Fund will vary depending upon how the assets
are allocated among Underlying SEI Funds.

<PAGE>
PROSPECTUS 15

DIVERSIFIED U.S. STOCK FUND

PERFORMANCE INFORMATION

This bar chart show changes in the performance of the Fund's Class A Shares from
year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
22.43% -14.04%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 2.66%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ending December 31, 1998, to those of the Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS A SHARES 1 YEAR (5/13/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED U.S. STOCK FUND 20.24% 24.54%
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 24.64%**
- ---------------------------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS MAY 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.39%
--------------
Total Annual Fund Operating Expenses 0.49%*
</TABLE>

* THE FUND'S TOTAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT FISCAL
YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS VOLUNTARILY
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY
TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS
FOLLOWS:

<TABLE>
<S> <C>
DIVERSIFIED U.S. STOCK FUND -- CLASS A SHARES 0.12%
</TABLE>

For more information about these fees, see "Investment Adviser."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.88%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified U.S. Stock Fund $50 $157 $274 $616
</TABLE>

<PAGE>
16 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

This prospectus describes the Funds' primary strategies, and the Funds will
normally invest at least 90% of their assets in the Underlying SEI Funds within
the percentage ranges set forth for each asset class. However, the Funds also
may use other strategies and engage in other investment practices, which are
described in detail in the Funds' Statement of Additional Information (SAI).

The investments and strategies described in this prospectus are those that the
Funds use under normal conditions. During unusual economic or market conditions,
or for temporary defensive or liquidity purposes, the Funds may invest up to
100% of its assets in short-term obligations, cash or cash equivalents that
would not ordinarily be consistent with each Fund's objective. The Funds will do
so only if the Adviser believes that the risk of loss outweighs the opportunity
for higher taxable income. Of course, there is no guarantee that any Fund will
achieve its investment goal.

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

The Funds will invest in the following Underlying SEI Funds. However, SIMC may,
in accordance with the Funds' investment objectives and policies, select
additional Underlying SEI Funds for investment.

The chart below sets forth the expense ratios for each of the Underlying SEI
Funds in which the Funds will invest (based on information as of May 31, 1999).

<TABLE>
<CAPTION>
UNDERLYING SEI FUND: EXPENSE RATIO:
<S> <C>
- ---------------------------------------------------------
SIMT Large Cap Value Fund ................ .85%
SIMT Large Cap Growth Fund ............... .85%
SIMT Small Cap Value Fund ................ 1.10%
SIMT Small Cap Growth Fund ............... 1.10%
SIT International Equity Fund ............ 1.28%
SIT Emerging Markets Equity Fund ......... 1.95%
SIMT Core Fixed Income Fund .............. .60%
SIMT High Yield Bond Fund ................ .85%
SIT International Fixed Income Fund ...... 1.35%
SIT Emerging Markets Debt Fund ........... 1.00%
SLAT Prime Obligation Fund ............... .44%
</TABLE>

UNDERLYING U.S. EQUITY FUNDS

SIMT LARGE CAP VALUE FUND - The SIMT Large Cap Value Fund seeks long-term growth
of capital and income by investing primarily in common stocks of U.S. companies
with market capitalizations of more than $1 billion. The Fund uses a multi-
manager approach, relying on a number of Sub-Advisers to manage portions of the
Fund's portfolio under the general supervision of SIMC. Each Sub-Adviser, in
managing its portion of the Fund's assets, selects stocks it believes are
undervalued in light of such fundamental characteristics as earnings, book value
or return on equity. LSV Asset Management, L.P., Mellon Equity Associates, LLP
and Sanford C. Bernstein & Co., Inc. serve as Sub-Advisers to the SIMT Large Cap
Value Fund.

SIMT LARGE CAP GROWTH FUND - The SIMT Large Cap Growth Fund seeks capital
appreciation by investing primarily in common stocks of U.S. companies with
market capitalizations of more than $1 billion. The Fund uses a multi-manager
approach, relying on a number of Sub-Advisers to manage portions of the Fund's
portfolio under the general supervision of SIMC. Each Sub-Adviser, in managing
its portion of the Fund's assets, selects stocks it believes have significant
growth potential in light of such characteristics as revenue and earnings growth
and positive earnings surprises. Alliance Capital Management L.P., Provident
Investment Counsel, Inc. and TCW Funds Management Inc. serve as Sub-Advisers
to the SIMT Large Cap Growth Fund.
<PAGE>
PROSPECTUS 17

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

SIMT SMALL CAP VALUE FUND - The SIMT Small Cap Value Fund seeks capital
appreciation by investing primarily in common stocks of U.S. companies with
market capitalizations of less than $2 billion. The Fund uses a multi-manager
approach, relying upon a number of Sub-Advisers to manage portions of the Fund's
portfolio under the general supervision of SIMC. Each Sub-Adviser, in managing
its portion of the Fund's assets, selects stocks it believes are undervalued in
light of such fundamental characteristics as earnings, book value or return on
equity. Artisan Partners Limited Partnership, Boston Partners Asset Management,
L.P., LSV Asset Management, L.P., and Mellon Equity Associates, LLP serve as
Sub-Advisers to the SIMT Small Cap Value Fund.

SIMT SMALL CAP GROWTH FUND - The SIMT Small Cap Growth Fund seeks long-term
capital appreciation by investing primarily in common stocks of U.S. companies
with market capitalizations of less than $2 billion. The Fund uses a multi-
manager approach, relying upon a number of Sub-Advisers to manage portions of
the Fund's portfolio under the general supervision of SIMC. Each Sub-Adviser, in
managing its portion of the Fund's assets, selects stocks it believes have
significant growth potential in light of such characteristics as revenue and
earnings growth and positive earnings surprises. Furman Selz Capital Management,
LLP, Nicholas-Applegate Capital Management, RS Investment Management, L.P.,
Sawgrass Asset Management, LLC and Wall Street Associates serve as Sub-Advisers
to the SIMT Small Cap Growth Fund.

UNDERLYING INTERNATIONAL EQUITY FUNDS

SIT INTERNATIONAL EQUITY FUND - The SIT International Equity Fund seeks capital
appreciation by investing primarily in common stocks and other equity securities
of foreign companies. The Fund primarily invests in companies located in
developed countries, but may also invest in companies located in emerging
markets. The Fund uses a multi-manager approach, relying upon a number of
Sub-Advisers to manage portions of the Fund's portfolio under the general
supervision of SIMC. The Fund's portfolio is diversified as to issuers, market
capitalization, industry and country. Acadian Asset Management, Inc., Capital
Guardian Trust Company, Oechsle International Advisors, LLC, Scottish Widows
Investment Management Limited, SG Yamaichi Asset Management Company, Ltd., SG
Pacific Asset Management, Inc. and SGY Asset Management (Singapore) Ltd. serve
as Sub-Advisers to the SIT International Equity Fund.

SIT EMERGING MARKETS EQUITY FUND - The SIT Emerging Markets Equity Fund seeks
capital appreciation by investing primarily in common stocks and other equity
securities of foreign companies located in emerging market countries. The Fund
uses a multi-manager approach, relying upon a number of Sub-Advisers to manage
portions of the Fund's portfolio under the general supervision of SIMC. The Fund
is diversified as to issuers, market capitalization, industry and country.
Coronation Asset Management (Proprietary) Limited, Credit Suisse Asset
Management Limited, Morgan Stanley Dean Witter Investment Management Inc.,
Nicholas-Applegate Capital Management, Parametric Portfolio Associates, SG
Pacific Asset Management, Inc. and SGY Asset Management (Singapore) Ltd. serve
as Sub-Advisers to the SIT Emerging Markets Equity Fund.

UNDERLYING U.S. FIXED INCOME FUNDS

SIMT CORE FIXED INCOME FUND - The SIMT Core Fixed Income Fund seeks current
income and preservation of capital by investing primarily in investment grade
U.S. corporate and government fixed income securities, including mortgage-backed
securities. The Fund uses a multi-manager approach, relying upon a number of
Sub-Advisers to manage portions of the Fund's portfolio under the general
supervision of SIMC. Sub-Advisers are selected for their expertise in managing
various kinds of fixed income securities, and each Sub-Adviser makes investment
decisions based on an analysis of yield trends, credit ratings and other factors
in accordance with its particular discipline. While each Sub-Adviser chooses
securities of different types and maturities, the Fund in the aggregate will
generally have a dollar-weighted average duration that is consistent with that
of the broad U.S. fixed income market (currently 4.5 years). BlackRock, Inc.,
Firstar Investment Research & Management Company, LLC, and Western Asset
Management Company serve as Sub-Advisers to the SIMT Core Fixed Income Fund.
<PAGE>
18 PROSPECTUS

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

SIMT HIGH YIELD BOND FUND - The SIMT High Yield Bond Fund seeks total return by
investing primarily in fixed income securities rated below investment grade
("junk bonds"), including corporate bonds and debentures, convertible and
preferred securities, and zero coupon obligations. The Sub-Adviser chooses
securities that offer a high current yield as well as total return potential.
The Fund's securities are diversified as to issuers and industries. The Fund's
average weighted maturity may vary, and will generally not exceed 10 years.
There is no limit on the maturity or on the credit quality of any security.
Credit Suisse Asset Management serves as Sub-Adviser to the SIMT High Yield Bond
Fund.

UNDERLYING INTERNATIONAL FIXED INCOME FUNDS

SIT INTERNATIONAL FIXED INCOME FUND - The SIT International Fixed Income Fund
seeks capital appreciation and current income by investing primarily in foreign
government, corporate, and mortgage-backed securities. In selecting investments
for the Fund, the Adviser chooses investment grade securities issued by
corporations and governments located in various developed foreign countries,
looking for opportunities for capital appreciation and gain, as well as current
income. There are no restrictions on the Fund's average portfolio maturity or on
the maturity of any specific security. Strategic Fixed Income, LLC, serves as
Adviser to the SIT International Fixed Income Fund.

SIT EMERGING MARKETS DEBT FUND - The SIT Emerging Markets Debt Fund seeks total
return by investing primarily in U.S. dollar denominated debt securities of
government, government-related and corporate issuers in emerging market
countries, as well as entities organized to restructure the outstanding debt of
such issuers. The Sub-Adviser will spread the Fund's holdings across a number of
countries and industries to limit its exposure to a single emerging market
economy. There are no restrictions on the Fund's average portfolio maturity, or
on the maturity of any specific security. There is no minimum rating standard
for the Fund's securities and the Fund's securities will generally be in the
lower or lowest rating categories. Salomon Brothers Asset Management Inc serves
as Sub-Adviser to the SIT Emerging Markets Debt Fund.

UNDERLYING MONEY MARKET FUND

SLAT PRIME OBLIGATION FUND - The SLAT Prime Obligation Fund seeks to preserve
principal value and maintain a high degree of liquidity while providing current
income by investing exclusively in high quality short-term securities, including
commercial paper, and other short-term obligations issued by U.S. corporations
and state and local governments, U.S. Treasury Obligations and repurchase
agreements. The Fund may only purchase securities with a remaining maturity of
397 days or less and will maintain a dollar-weighted average portfolio maturity
of 90 days or less. Wellington Management Company, LLP, serves as Adviser to the
SLAT Prime Obligation Fund.

RISKS OF INVESTING IN THE UNDERLYING SEI FUNDS

The following sections describe some of the risks associated with certain of the
Underlying SEI Funds.

INTERNATIONAL INVESTING RISK: A number of the Underlying SEI Funds invest in
foreign securities. Investing in foreign countries poses distinct risks since
political and economic events unique to a country or region will affect those
markets and their issuers. These events will not necessarily affect the U.S.
economy or similar issuers located in the United States. In addition,
investments in foreign countries are generally denominated in a foreign
currency. As a result, changes in the value of those currencies compared to the
U.S. dollar may affect (positively or negatively) the value of a Fund's
investments. In the case of foreign fixed income securities, price fluctuations
will reflect international, economic and political events, as well as changes in
currency valuations relative to the U.S. dollar. These currency movements may
happen separately from and in response to events that do not otherwise affect
the value of the security in the issuer's home country. These various risks will
be even greater for investments in emerging market countries since political
turmoil and rapid changes in economic conditions are more likely to occur in
these countries.
<PAGE>
PROSPECTUS 19

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. In addition, the financial stability
of issuers (including governments) in emerging market countries may be more
precarious than in other countries. As a result, there will tend to be an
increased risk of price volatility associated with the Fund's investments in
emerging market countries, which may be magnified by currency fluctuations
relative to the U.S. dollar. The foreign sovereign debt securities and "Brady
Bonds" that some Underlying SEI Funds purchase involve specific risks, including
the risk that: (i) the governmental entity that controls the repayment of
sovereign debt may not be willing or able to repay the principal and/or interest
when it becomes due, due to factors such as debt service burden, political
constraints, cash flow problems and other national economic factors; (ii)
governments may default on their sovereign debt, which may require holders of
such sovereign debt to participate in debt rescheduling or additional lending to
defaulting governments; and (iii) there is no bankruptcy proceeding by which
defaulted sovereign debt may be collected in whole or in part.

JUNK BOND RISK: Certain Underlying SEI Funds invest in securities rated below
investment grade ("junk bond"). Junk bonds involve greater risks of default or
downgrade, and involve greater risk of price declines than investment grade
securities due to actual or perceived changes in an issuer's creditworthiness.
In addition, issuers of junk bonds may be more susceptible than other issuers to
economic downturns. Junk bonds are subject to the risk that the issuer may not
be able to pay interest or dividends and ultimately to repay principal upon
maturity. Discontinuation of these payments could substantially adversely affect
the market value of the security. The volatility of junk bonds and certain
foreign sovereign debt obligations is even greater since the prospects for
repayment of principal and interest of many of these securities is speculative.
Some may even be in default. As an incentive to invest in these risky
securities, they tend to offer higher returns.

MORTGAGE-BACKED SECURITIES: Mortgage-backed securities are fixed income
securities representing an interest in a pool of underlying mortgage loans. They
are sensitive to changes in interest rates, but may respond to these changes
differently from other fixed income securities due to the possibility of
prepayment of the underlying mortgage loans. As a result, it may not be possible
to determine in advance the actual maturity date or average life of a
mortgage-backed security. Rising interest rates tend to discourage refinancings,
with the result that the average life and volatility of the security will
increase exacerbating its decrease in market price. When interest rates fall,
however, mortgage-backed securities may not gain as much in market value because
of the expectation of additional mortgage prepayments that must be reinvested at
lower interest rates. Prepayment risk may make it difficult to calculate the
average maturity of a portfolio of mortgage-backed securities and, therefore, to
assess the volatility risk of that portfolio.

NON-DIVERSIFICATION RISK: Certain Underlying SEI Funds are non-diversified,
which means that they may invest in the securities of relatively few issuers. As
a result, these Funds may be more susceptible to a single adverse economic or
political occurrence affecting one or more of these issuers, and may experience
increased volatility due to its investments in those securities.

SMALL CAPITALIZATION RISK: Certain Underlying SEI Funds invest in stocks of
small capitalization companies. The smaller capitalization companies the Fund
invests in may be more vulnerable to adverse business or economic events than
larger, more established companies. In particular, these small companies may
have limited product lines, markets and financial resources, and may depend upon
a relatively small management group. Therefore, small cap stocks may be more
volatile than those of larger companies. These securities may be traded over the
counter or listed on an exchange and may or may not pay dividends.
<PAGE>
20 PROSPECTUS

INVESTMENT ADVISER

SIMC makes investment decisions for the Funds and continuously reviews,
supervises and administers each Fund's investment program. SIMC, an
SEC-registered adviser, serves as the Adviser to each Fund. As of May 31,
1999, SIMC had approximately $43.6 billion in assets under management. For
the fiscal year ended March 31, 1999, SIMC waived its entire advisory fee.

IN ADDITION TO SERVING AS ADVISER TO THE FUNDS, SIMC IS ADVISER TO MOST OF THE
UNDERLYING SEI FUNDS, AND OVERSEES ONE OR MORE SUB-ADVISERS FOR THOSE FUNDS.
SIMC ACTS AS THE MANAGER OF MANAGERS OF THESE UNDERLYING SEI FUNDS, AND IS
RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THESE UNDERLYING SEI FUNDS, SINCE
IT ALLOCATES EACH UNDERLYING SEI FUND'S ASSETS TO ONE OR MORE SUB-ADVISERS AND
RECOMMENDS HIRING OR CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES.

The Funds are managed by a team of investment professionals from SIMC. No one
person is primarily responsible for making asset allocation decisions
recommendations to the team.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Class A Shares of the Funds. Class A Shares are offered to
tax-advantaged and other retirement accounts. If you are investing in a Fund
through a 401(k) or other retirement plan, you should contact your plan sponsor
for the services and procedures which pertain to your account.

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day). However, Fund shares cannot be purchased by Federal
Reserve wire on Federal holidays on which wire transfers are restricted.

Financial institutions and intermediaries may purchase Class A Shares by placing
orders with the Funds' Transfer Agent (or its authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Funds' wire agent by the close of business on
the same day the order is placed. The Funds may reject any purchase order if
they determine that accepting the order would not be in the best interests of
the Funds or their shareholders.

When you purchase or sell Fund shares through certain financial institutions
(rather than directly from the Funds), you may have to transmit your purchase
and sale requests to these financial institutions at an earlier time for your
transaction to become effective that day. This allows these financial
institutions time to process your requests and transmit them to the Funds.

Certain other intermediaries, including certain broker-dealers and shareholder
organizations, are authorized to accept purchase, redemption and exchange
requests for Fund shares. These requests are normally executed at the NAV next
determined after the intermediary receives the request. These authorized
intermediaries are responsible for transmitting requests and delivering funds on
a timely basis.

Investors who deal directly with a financial institution or financial
intermediary will have to follow the institution's or intermediary's procedures
for transacting with the Funds. For more information about how to purchase or
sell Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain broker-dealers or
other financial intermediaries.

Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the New York Stock Exchange (normally, 4:00 p.m.
Eastern time). So, for you to receive the current Business Day's NAV, generally
the Funds (or an authorized intermediary) must receive your purchase order
before 4:00 p.m. Eastern time.
<PAGE>
PROSPECTUS 21

PURCHASING, SELLING AND EXCHANGING FUND SHARES

HOW THE FUNDS CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

In calculating NAV, each Fund generally values its investment portfolio at
market price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.

Some Underlying SEI Funds hold securities that are listed on foreign exchanges.
These securities may trade on weekends or other days when the Funds do not
calculate NAV. As a result, the market value of these Funds' investments may
change on days when you cannot purchase or sell Fund shares.

MINIMUM PURCHASES

To purchase Class A Shares for the first time, you must invest at least $150,000
in any Fund.

Your subsequent investments in any Fund must be made in amounts of at least
$1,000.

A Fund may accept investments of smaller amounts at its discretion.

HOW TO SELL YOUR FUND SHARES

Holders of Class A Shares may sell shares on any business day by following the
procedures established when they opened their account or accounts. If you own
your shares through an account with a broker or other institution, contact that
broker or institution to sell your shares. Your broker or institution may charge
you a fee for its services. For IRA or other tax-deferred accounts, there are
tax penalties for early withdrawal. For more information, see the SAI.

RECEIVING YOUR MONEY

Normally, the Fund will send your sale proceeds within three Business Days after
they receive your request, but it may take up to seven days. Your proceeds can
be wired to your bank account.

REDEMPTIONS IN KIND

The Funds generally pay sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Funds' remaining shareholders) the Funds might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in the Funds' SAI.

HOW TO EXCHANGE YOUR SHARES

You may exchange your shares of a Fund for Class A Shares of any other Fund on
any Business Day by contacting the Funds directly by mail or telephone. You may
also exchange shares through your financial institution by mail or telephone.
Your broker or institution may charge you a fee for its services. This
exchange privilege may be changed or canceled at any time upon 60 days'
notice. When you exchange shares, you are really selling your shares and
buying other Fund shares. So, your sale price and purchase price will be
based on the NAV next calculated after the Funds' receive your exchange
request.

<PAGE>
22 PROSPECTUS

DIVIDENDS, DISTRIBUTIONS AND TAXES

TELEPHONE TRANSACTIONS

Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Funds have certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Funds are not responsible for any losses or costs incurred by
following telephone instructions the Funds reasonably believe to be genuine. If
you or your financial institution transact with the Funds over the telephone,
you will generally bear the risk of any loss.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. SIDCo. receives no compensation for distributing the Funds' shares.

DIVIDENDS AND DISTRIBUTIONS

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

If you own Fund shares on a Fund's record date, you will be entitled to receive
the distribution.

You will receive dividends and distributions in the form of additional
Fundshares unless you elect to receive payment in cash. To elect cash payment,
you must notify the Funds in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Funds
receive your written notice. To cancel your election, simply send the Funds
written notice.

TAXES

PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.

Tax-advantaged and other retirement accounts generally will not be subject to
federal taxation on income and capital gain distributions until you begin
receiving distributions from your retirement account. You should consult your
tax adviser regarding the rules governing your own retirement plan.

Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
PROSPECTUS 23

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class A Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.

This information has been audited by PricewaterhouseCoopers, LLP, independent
public accountants. Their report, along with each Fund's financial statements,
appears in the annual report that accompanies the Funds' SAI. You can obtain the
annual report, which contains more performance information, at no charge by
calling 1-800-DIAL-SEI.

SEI ASSET ALLOCATION TRUST

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED MARCH 31,
<TABLE>
<CAPTION>
NET
REALIZED NET
NET ASSET NET AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT UNREALIZED FROM NET FROM VALUE
BEGINNING INCOME/ GAINS ON INVESTMENT CAPITAL END OF
OF PERIOD (LOSS) SECURITIES INCOME GAINS PERIOD
--------- ---------- ---------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- --------------------------------------
DIVERSIFIED CONSERVATIVE INCOME FUND
- ------------------------------------
CLASS A
1999 #.............................. $ 11.76 $ 0.56 $ 0.26 $ (0.45) $ (0.53) $ 11.60
1998 #.............................. 10.55 0.50 1.46 (0.44) (0.31) 11.76
1997(1)#............................ 10.12 0.37 0.27 (0.21) -- 10.55
- ------------------------------
DIVERSIFIED CONSERVATIVE FUND
- -----------------------------
CLASS A
1999 #.............................. $ 11.31 $ 0.50 $ 0.48 $ (0.29) $ (0.58) $ 11.42
1998 #.............................. 9.62 0.33 1.78 (0.27) (0.15) 11.31
1997(2)#............................ 9.26 0.26 0.35 (0.18) (0.07) 9.62
- ------------------------------------------
DIVERSIFIED GLOBAL MODERATE GROWTH FUND
- ---------------------------------------
CLASS A
1999 #.............................. $ 12.49 $ 0.40 $ 0.12 $ (0.25) $ (0.62) $ 12.14
1998 #.............................. 10.15 0.31 2.28 (0.19) (0.06) 12.49
1997(3)#............................ 10.00 0.06 0.14 (0.05) -- 10.15
- -----------------------------------
DIVERSIFIED MODERATE GROWTH FUND
- --------------------------------
CLASS A
1999 #.............................. $ 13.22 $ 0.32 $ 0.79 $ (0.23) $ (0.92) $ 13.18
1998 #.............................. 10.74 0.29 2.76 (0.25) (0.32) 13.22
1997(4)#............................ 10.19 0.23 0.50 (0.16) (0.02) 10.74

<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------
- ------------------------------------
DIVERSIFIED CONSERVATIVE INCOME FUND
- ------------------------------------
CLASS A
1999 #.............................. 7.22% $ 21,973 0.12% 4.02% 0.45% 3.69% 63%
1998 #.............................. 19.16 13,862 0.12 4.37 1.01 3.48 52
1997(1)#............................ 6.35* 2,983 0.12 4.38 3.65+ 0.85+ 27
- -----------------------------
DIVERSIFIED CONSERVATIVE FUND
- -----------------------------
CLASS A
1999 #.............................. 8.92% $ 40,304 0.12% 3.42% 0.45% 3.09% 30%
1998 #.............................. 22.35 22,125 0.12 3.12 0.81 2.43 24
1997(2)#............................ 6.54* 5,989 0.12 3.56 2.75+ 0.93+ 65
- ----------------------------------------
DIVERSIFIED GLOBAL MODERATE GROWTH FUND
- ----------------------------------------
CLASS A
1999 #.............................. 4.63% $ 24,010 0.12% 2.76% 0.49% 2.39% 34%
1998 #.............................. 25.68 13,255 0.12 2.66 0.86 1.92 30
1997(3)#............................ 1.96* 68 0.12 2.03 N/A++ N/A++ 3
- --------------------------------
DIVERSIFIED MODERATE GROWTH FUND
- --------------------------------
CLASS A
1999 #.............................. 8.87% $ 131,531 0.12% 2.41% 0.50% 2.03% 22%
1998 #.............................. 29.08 50,677 0.12 2.39 0.74 1.77 20
1997(4)#............................ 7.12* 15,440 0.12 2.64 1.45+ 1.31+ 22

</TABLE>

<PAGE>
24 PROSPECTUS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
REALIZED NET
NET ASSET NET AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT UNREALIZED FROM NET FROM VALUE
BEGINNING INCOME/ GAINS ON INVESTMENT CAPITAL END OF
OF PERIOD (LOSS) SECURITIES INCOME GAINS PERIOD
--------- ---------- ---------- ------------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------
DIVERSIFIED GLOBAL GROWTH FUND
- ------------------------------
CLASS A
1999 #.............................. $ 13.64 $ 0.29 $ 0.27 $ (0.14) $ (0.84) $ 13.22
1998 #.............................. 10.91 0.22 3.04 (0.19) (0.34) 13.64
1997(1)#............................ 10.19 0.15 0.68 (0.10) (0.01) 10.91
- -----------------------------
DIVERSIFIED GLOBAL STOCK FUND
- -----------------------------
CLASS A
1999 #.............................. $ 13.28 $ 0.12 $ 0.36 $ (0.03) $ (0.93) $ 12.80
1998 #.............................. 10.04 0.15 3.31 (0.09) (0.13) 13.28
1997(5)#............................ 10.00 0.02 0.05 (0.03) -- 10.04
- ---------------------------
DIVERSIFIED U.S. STOCK FUND
- ---------------------------
CLASS A
1999 #.............................. $ 16.03 $ 0.09 $ 1.25 $ (0.03) $ (1.64) $ 15.70
1998 #.............................. 11.38 0.08 5.53 (0.05) (0.91) 16.03
1997(6)#............................ 10.27 0.07 1.09 (0.05) -- 11.38

<CAPTION>
RATIO OF
NET INVESTMENT
RATIO OF RATIO INCOME/(LOSS)
NET OF EXPENSES TO AVERAGE NET
INVESTMENT TO AVERAGE ASSETS
RATIO OF INCOME/ NET ASSETS (EXCLUDING
NET ASSETS EXPENSES (LOSS) TO (EXCLUDING WAIVERS PORTFOLIO
TOTAL END OF TO AVERAGE AVERAGE WAIVERS AND AND TURNOVER
RETURN PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENT) REIMBURSEMENT) RATE
------- ------------ ---------- ---------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------
- ------------------------------
DIVERSIFIED GLOBAL GROWTH FUND
- ------------------------------
CLASS A
1999 #.............................. 4.63% $ 78,798 0.12% 1.66% 0.50% 1.28% 18%
1998 #.............................. 30.38 57,012 0.12 1.76 0.72 1.16 15
1997(1)#............................ 8.10* 16,049 0.12 1.74 1.53+ 0.33+ 13
- -----------------------------
DIVERSIFIED GLOBAL STOCK FUND
- -----------------------------
CLASS A
1999 #.............................. 4.22% $ 37,987 0.12% 0.58% 0.50% 0.20% 30%
1998 #.............................. 34.70 19,730 0.12 0.85 1.13 (0.16) 10
1997(5)#............................ 0.67* 4,807 0.12 0.65 2.13+ (1.36)+ --
- ---------------------------
DIVERSIFIED U.S. STOCK FUND
- ---------------------------
CLASS A
1999 #.............................. 9.33% $ 60,766 0.12% 0.48% 0.49% 0.11% 30%
1998 #.............................. 50.40 25,357 0.12 0.57 0.80 (0.11) 21
1997(6)#............................ 11.33* 9,065 0.12 0.72 1.84+ (1.00)+ 28

</TABLE>

+ Ratios reflect the impact of the initial low level of average net assets
associated with commencement of operations.
++ Ratio is not meaningful due to low level of assets and because SEI
Investments will bear all expenses exceeding specific limitations.
# Per share calculations were performed using average shares for the period.
* Total return has not been annualized.
(1) Commenced operations 6/13/96. All ratios for that period have been
annualized.
(2) Commenced operations 6/26/96. All ratios for that period have been
annualized.
(3) Commenced operations 12/13/96. All ratios for that period have been
annualized.
(4) Commenced operations 6/10/96. All ratios for that period have been
annualized.
(5) Commenced operations 12/9/96. All ratios for that period have been
annualized.
(6) Commenced operations 5/13/96. All ratios for that period have been
annualized.
Amounts designated as "--" are zero or have been rounded to zero.

<PAGE>

SEI INVESTMENTS

PROSPECTUS AS OF JULY 31, 1999

ASSET ALLOCATION FUNDS

Diversified Conservative Income Fund

Diversified Conservative Fund

Diversified Global Moderate Growth Fund

Diversified Moderate Growth Fund

Diversified Global Growth Fund

Diversified Global Stock Fund

Diversified U.S. Stock Fund

CLASS A

The Securities and Exchange Commission has not approved any Fund shares or
determined whether this prospectus is accurate or complete. It is a crime for
anyone to tell you otherwise.

SEI INVESTMENTS

The Art of People. The Science of Results.

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated July 31, 1999, includes more detailed information about SEI
Asset Allocation Trust. The SAI is on file with the SEC and is incorporated
by reference into this prospectus. This means that the SAI, for legal
purposes, is part of this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

These reports typically list the Funds' holdings and contain information from
the Funds' managers about fund strategies and market conditions and trends.
The reports also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-DIAL-SEI

By Mail: Write to the Funds at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

From the SEC: You can obtain the SAI or the Annual and Semi-Annual Reports,
as well as other information about the SEI Asset Allocation Trust, from the
SEC's website (http://www.sec.gov). You may review and copy documents at the
SEC Public Reference Room in Washington, DC (for information call
1-800-SEC-0330). You may request documents by mail from the SEC, upon payment
of a duplicating fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, DC 20549-6009.

The Fund's Investment Company Act registration number is 811-7445.

SEI-F-116-04

<PAGE>
SEI Asset
Allocation Trust

ABOUT THIS PROSPECTUS
- ------------------------------------------------------------------------

SEI Asset Allocation Trust is a mutual fund that offers shares in separate
investment portfolios (Funds). The Funds have individual investment goals and
strategies and are designed primarily for institutional investors and financial
institutions and their clients. This prospectus gives you important information
about the Class D Shares of the Funds that you should know before investing.
Please read this prospectus and keep it for future reference.

DIVERSIFIED CONSERVATIVE INCOME FUND.................................2
DIVERSIFIED CONSERVATIVE FUND........................................4
DIVERSIFIED GLOBAL MODERATE GROWTH FUND..............................6
DIVERSIFIED MODERATE GROWTH FUND.....................................8
DIVERSIFIED GLOBAL GROWTH FUND......................................10
DIVERSIFIED GLOBAL STOCK FUND.......................................12
DIVERSIFIED U.S. STOCK FUND.........................................14
THE FUNDS' OTHER INVESTMENTS........................................16
INFORMATION ABOUT THE UNDERLYING SEI FUNDS..........................16
INVESTMENT ADVISER..................................................20
PURCHASING, SELLING AND EXCHANGING FUND SHARES......................20
DIVIDENDS AND DISTRIBUTIONS.........................................22
TAXES...............................................................22
FINANCIAL HIGHLIGHTS................................................23
HOW TO OBTAIN MORE INFORMATION ABOUT
SEI ASSET ALLOCATION TRUST..................................Back Cover

- --------------------------------------------------------------------------------
THE FUNDS AND GLOBAL ASSET ALLOCATION

RISK/RETURN INFORMATION COMMON TO THE FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal.
SIMC invests Fund assets in a way it believes will help any Fund achieve its
goal. In order to achieve its investment objective, SIMC allocates each Fund's
assets among certain Underlying SEI Funds. These Underlying SEI Funds are
separately-managed series of the following investment companies: SEI
Institutional Managed Trust ("SIMT"), SEI Institutional International Trust
("SIT"), and SEI Liquid Asset Trust ("SLAT"). The Underlying SEI Funds each
invest primarily in domestic or foreign equity securities, fixed-income
securities or money market instruments. The assets of each Fund are allocated
among Underlying SEI Funds in accordance with its investment objective. These
Underlying SEI Funds, in turn, invest directly in securities in accordance with
their own varying investment objectives and policies. SIMC may change the
allocations of the particular asset classes represented by the Underlying SEI
Funds when it deems it appropriate.

Still, investing in the Funds involves risk, and there is no guarantee that a
Fund will achieve its goal. SIMC's judgments about the markets, the economy, or
asset classes may not anticipate actual market movements, economic conditions or
company performance, and these judgments may affect the return on your
investment. In fact, no matter how good a job SIMC does, you could lose money on
your investment in the Funds, just as you could with other investments. A Fund
share is not a bank deposit and it is not insured or guaranteed by the FDIC or
any government agency.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

<PAGE>
2 PROSPECTUS

DIVERSIFIED CONSERVATIVE INCOME FUND

FUND SUMMARY

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------

Equity 10-50%
- -----
SIMT Large Cap Growth
SIMT Large Cap Value
SIMT Small Cap Growth
SIMT Small Cap Value

Fixed Income 50-65%
- ----------
SIMT Core Fixed Income

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

DIVERSIFIED CONSERVATIVE INCOME FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class D Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.20% -1.46%
(6/30/97) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS D TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 0.20%.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS D SHARES 1 YEAR (6/21/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED CONSERVATIVE INCOME FUND 10.35% 11.61%
- ---------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.35%**
- ---------------------------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS JUNE 30, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees 0.75%
Other Expenses 0.60%
-------
Total Annual Fund Operating Expenses 1.45%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED CONSERVATIVE INCOME FUND -- CLASS D SHARES 1.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Conservative
Income Fund $148 $459 $792 $1,735
</TABLE>

<PAGE>
4 PROSPECTUS

DIVERSIFIED CONSERVATIVE FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income and capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in investment grade U.S. and foreign
fixed income securities, and, to a lesser extent,
in common stocks
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

At least 50% of the Fund's assets will be invested in Underlying SEI Funds that
invest in investment grade U.S. and foreign fixed income securities, including
mortgage-backed securities. The Fund will also invest in Underlying SEI Funds
that invest in U.S. and foreign common stocks. SIMC manages the Fund by
allocating Fund assets among a variety of Underlying SEI Funds within the
following percentage ranges:

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------

Equity 15-50%
- -----
SIMT Large Cap Growth
SIMT Large Cap Value
SIMT Small Cap Growth
SIMT Small Cap Value
SIT International Equity

Fixed Income 50-80%
- ----------
SIMT Core Fixed Income
SIT International Fixed Income

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The value of an investment in the Fund is based primarily on the performance of
the Underlying SEI Funds and the allocation of the Fund's assets among them. The
prices of an Underlying SEI Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, an Underlying SEI Fund's fixed income securities will decrease in
value if interest rates rise and vice versa, and the volatility of lower rated
securities is even greater than that of higher rated securities. Also, longer-
term securities are generally more volatile, so the average maturity or duration
of these securities affects risk.

Since some Underlying SEI Funds purchase equity securities, the Fund is subject
to the risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of an
Underlying SEI Fund's securities may fluctuate drastically from day to day. In
the case of foreign stocks, these fluctuations will reflect international
economic and political events, as well as changes in currency valuations
relative to the U.S. dollar. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may suffer a decline in response.
These factors contribute to price volatility, which is the principal risk of
investing in the Fund.

DIVERSIFIED CONSERVATIVE FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class D Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
9.50% -2.91%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS D TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS -0.34%.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ended December 31, 1998 to those of the Lehman Aggregate Bond
Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS D SHARES 1 YEAR (7/1/96)
<S> <C> <C>
- --------------------------------------------------------------------------
DIVERSIFIED CONSERVATIVE FUND 15.62% 14.95%
- --------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.56%**
- --------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 29.93%**
- --------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE
RATED INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR.
THE WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER
MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX
OF COMMON STOCKS ISSUED BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE
U.S. AND WITH READILY AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES
ARE INCLUDED IN THE INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS JULY 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees 0.75%
Other Expenses 0.61%
-------
Total Annual Fund Operating Expenses 1.46%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED CONSERVATIVE FUND -- CLASS D SHARES 1.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF SHARES."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998 the Fund's indirect expenses
used on its investments in Underlying SEI Funds were 0.80%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period. The Example also assumes that each year
your investment has a 5% return, that Fund expenses remain the same, and that
you reinvest all dividends and distributions. Although your actual costs and
returns might be different, your approximate costs (including the costs of the
Underlying SEI Funds) of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Conservative Fund $149 $462 $797 $1,746
</TABLE>

<PAGE>
6 PROSPECTUS

DIVERSIFIED GLOBAL MODERATE GROWTH FUND

FUND SUMMARY

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------
Equity 30-75%
- -----
SIMT Large Cap Growth
SIMT Large Cap Value
SIMT Small Cap Growth
SIMT Small Cap Value
SIT International Equity
SIT Emerging Markets Equity

Fixed Income 25-70%
- ----------
SIMT Core Fixed Income
SIMT High Yield Bond
SIT International Fixed Income
SIT Emerging Markets Debt

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that SIMC's decisions regarding asset
classes and Underlying SEI Funds will not anticipate market trends successfully.
For example, weighting Underlying SEI Funds that invest in common stocks too
heavily during a stock market decline may result in a failure to preserve
capital. Conversely, investing too heavily in Underlying SEI Funds that
invest in fixed income securities during a period of stock market appreciation
may result in lower total return. Of course, the risks associated with investing
in the Fund will vary depending upon how the assets are allocated among
Underlying SEI Funds.
<PAGE>
PROSPECTUS 7

DIVERSIFIED GLOBAL MODERATE GROWTH FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class D Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
13.16% -9.59%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS D TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 1.72%.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS D SHARES 1 YEAR (12/5/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED GLOBAL MODERATE GROWTH FUND 10.10% 12.88%
- ---------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.18%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 27.30%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE RATED
INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR. THE
WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER
MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX
OF COMMON STOCKS ISSUED BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE U.S.
AND WITH READILY AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES ARE
INCLUDED IN THE INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS DECEMBER 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees 0.75%
Other Expenses 0.64%
-------
Total Annual Fund Operating Expenses 1.49%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED GLOBAL MODERATE GROWTH FUND -- CLASS D
SHARES 1.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.94%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Global Moderate
Growth Fund $152 $471 $813 $1,779
</TABLE>

<PAGE>
8 PROSPECTUS

DIVERSIFIED MODERATE GROWTH FUND

FUND SUMMARY

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------

Equity 30-70%
- -----
SIMT Large Cap Growth
SIMT Large Cap Value
SIMT Small Cap Growth
SIMT Small Cap Value
SIT International Equity

Fixed Income 30-60%
- ----------
SIMT Core Fixed Income
SIT International Fixed Income

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

DIVERSIFIED MODERATE GROWTH FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class D Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
13.11% -6.86%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS D TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 0.64%.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ended December 31, 1998 to those of the Lehman Aggregate Bond
Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS D SHARES 1 YEAR (5/30/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED MODERATE GROWTH FUND 15.91% 15.37%
- ---------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.60%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 24.64%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE RATED
INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR. THE
WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER
MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX
OF COMMON STOCKS ISSUED BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE
U.S. AND WITH READILY AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES
ARE INCLUDED IN THE INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS MAY 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees 0.75%
Other Expenses 0.63%
-------
Total Annual Fund Operating Expenses 1.48%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED MODERATE GROWTH FUND -- CLASS D SHARES 1.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.86%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Moderate Growth
Fund $151 $468 $808 $1,768
</TABLE>

<PAGE>
10 PROSPECTUS

DIVERSIFIED GLOBAL GROWTH FUND

FUND SUMMARY

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------
Equity 45-95%
- -----
SIMT Large Cap Growth
SIMT Large Cap Value
SIMT Small Cap Growth
SIMT Small Cap Value
SIT International Equity
SIT Emerging Markets Equity

Fixed Income 5-50%
- ----------
SIMT Core Fixed Income
SIMT High Yield Bond
SIT International Fixed Income
SIT Emerging Markets Debt

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

DIVERSIFIED GLOBAL GROWTH FUND

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class D Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.85% -12.63%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS D TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 2.35%.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ended December 31, 1998, to those of the Lehman Aggregate Bond
Index, Morgan Stanley MSCI EAFE Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS D SHARES 1 YEAR (5/30/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED GLOBAL GROWTH FUND 11.58% 13.69%
- ---------------------------------------------------------------------------
LEHMAN AGGREGATE BOND INDEX* 8.67% 9.60%**
- ---------------------------------------------------------------------------
MORGAN STANLEY MSCI EAFE INDEX* 20.00% 8.90%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 24.64%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE LEHMAN AGGREGATE BOND INDEX IS A WIDELY-RECOGNIZED MARKET
VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET
VALUE STOCKS) INDEX OF U.S. GOVERNMENT OBLIGATIONS, CORPORATE DEBT SECURITIES,
AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL SECURITIES IN THE INDEX ARE RATED
INVESTMENT GRADE (BBB) OR HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR. THE MORGAN
STANLEY MSCI EAFE INDEX IS A WIDELY-RECOGNIZED, CAPITALIZATION-WEIGHTED
(COMPANIES WITH LARGER MARKET CAPITALIZATIONS HAVE MORE INFLUENCE THAN THOSE
WITH SMALLER CAPITALIZATIONS) INDEX OF OVER 900 SECURITIES LISTED ON THE STOCK
EXCHANGES IN EUROPE, AUSTRALIA AND THE FAR EAST. THE WILSHIRE 5000 INDEX IS A
WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE
INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX OF COMMON STOCKS ISSUED BY ALL
COMPANIES WITH HEADQUARTERS LOCATED IN THE U.S. AND WITH READILY AVAILABLE PRICE
DATA. APPROXIMATELY 6,000 SECURITIES ARE INCLUDED IN THE INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS MAY 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees 0.75%
Other Expenses 0.65%
-------
Total Annual Fund Operating Expenses 1.50%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED GLOBAL GROWTH FUND -- CLASS D SHARES 1.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND "DISTRIBUTION
OF FUND SHARES."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 1.00%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Global Growth Fund $153 $474 $818 $1,791
</TABLE>

<PAGE>
12 PROSPECTUS

DIVERSIFIED GLOBAL STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in U.S. and foreign common stocks and
other equity securities
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------

Equity 70-100%
- -----
SIMT Large Cap Growth
SIMT Large Cap Value
SIMT Small Cap Growth
SIMT Small Cap Value
SIT International Equity
SIT Emerging Markets Equity

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that SIMC's decisions regarding asset
classes and Underlying SEI Funds will not anticipate market trends successfully.
For example, weighting Underlying SEI Funds that invest in small capitalization
or foreign stocks too heavily during certain periods of time might result in
higher volatility. Conversely, investing too heavily in Underlying SEI Funds
that invest in large capitalization stocks during a period of market
appreciation for smaller companies may result in lower total return. Similarly,
investing in foreign stocks rather than U.S. stocks may cause the Fund to miss
opportunities in the U.S. markets. Alternately, investing in foreign stocks may
subject the Fund to risks not present in the U.S. markets. Of course, the risks
associated with investing in the Fund will vary depending upon how the assets
are allocated among Underlying SEI Funds.
<PAGE>
PROSPECTUS 13

DIVERSIFIED GLOBAL STOCK FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class D Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
20.65% -15.73%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS D TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 3.02%.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ended December 31, 1998, to those of the Morgan Stanley MSCI
EAFE Index and Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS D SHARES 1 YEAR (12/5/96)
<S> <C> <C>
- ---------------------------------------------------------------------------
DIVERSIFIED GLOBAL STOCK FUND 12.61% 15.21%
- ---------------------------------------------------------------------------
MORGAN STANLEY MSCI EAFE INDEX* 20.00% 10.51%**
- ---------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 27.30%**
- ---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE MORGAN STANLEY MSCI EAFE INDEX IS A WIDELY-RECOGNIZED,
CAPITALIZATION-WEIGHTED (COMPANIES WITH LARGER MARKET CAPITALIZATIONS HAVE MORE
INFLUENCE THAN THOSE WITH SMALLER CAPITALIZATIONS) INDEX OF OVER 900 SECURITIES
LISTED ON THE STOCK EXCHANGES IN EUROPE, AUSTRALIA AND THE FAR EAST. THE
WILSHIRE 5000 INDEX IS A WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER
MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS) INDEX
OF COMMON STOCKS ISSUED BY ALL COMPANIES WITH HEADQUARTERS LOCATED IN THE
U.S. AND WITH READILY AVAILABLE PRICE DATA. APPROXIMATELY 6,000 SECURITIES
ARE INCLUDED IN THE INDEX.

** THE INCEPTION DATE FOR EACH INDEX IS DECEMBER 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees 0.75%
Other Expenses 0.65%
--------------
Total Annual Fund Operating Expenses 1.50%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED GLOBAL STOCK FUND -- CLASS D SHARES 1.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 1.06%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified Global Stock Fund $153 $474 $818 $1,791
</TABLE>

<PAGE>
14 PROSPECTUS

DIVERSIFIED U.S. STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Investing in a combination of Underlying SEI Funds
that invest in U.S. common stocks and other equity
securities
</TABLE>

- ------------------------------------------------------------------------

INVESTMENT STRATEGY

INVESTMENT RANGE
FUND/ASSET CLASS (PERCENTAGE OF THE FUND'S ASSETS)
- --------------------------------------------------------------------------------

Equity 70-100%
- -----
SIMT Large Cap Growth
SIMT Large Cap Value
SIMT Small Cap Growth
SIMT Small Cap Value

Money Market 0-30%
- ------------
SLAT Prime Obligation

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The value of an investment in the Fund is based primarily on the performance of
the Underlying SEI Funds and the allocation of the Fund's assets among them.
Since some Underlying SEI Funds purchase equity securities, the Fund is subject
to the risk that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of an
Underlying SEI Fund's securities may fluctuate drastically from day to day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Fund.

The Fund is also subject to the risk that SIMC's decisions regarding asset
classes and Underlying SEI Funds will not anticipate market trends successfully.
For example, weighting Underlying SEI Funds that invest in small capitalization
stocks too heavily during certain periods of time might result in higher
volatility. Conversely, investing too heavily in Underlying SEI Funds that
invest in large capitalization stocks during a period of market appreciation for
smaller companies may result in lower total return. Of course, the risks
associated with investing in the Fund will vary depending upon how the assets
are allocated among Underlying SEI Funds.
<PAGE>
PROSPECTUS 15

DIVERSIFIED U.S. STOCK FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class D Shares
from year to year for two years.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
22.05% -14.21%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS D TOTAL RETURN FROM JANUARY 1, 1999, TO JUNE 30, 1999, WAS 2.42%.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ended December 31, 1998, to those of the Wilshire 5000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
CLASS D SHARES 1 YEAR (7/1/96)
<S> <C> <C>
- --------------------------------------------------------------------------
DIVERSIFIED U.S. STOCK FUND 19.01% 24.23%
- --------------------------------------------------------------------------
WILSHIRE 5000 INDEX* 23.43% 29.93%**
- --------------------------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS JULY 31, 1996.

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the highest fees and expenses that you may pay indirectly
if you buy and hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees 0.75%
Other Expenses 0.65%
-------
Total Annual Fund Operating Expenses 1.50%*
</TABLE>

<TABLE>
<S> <C>
DIVERSIFIED U.S. STOCK FUND -- CLASS D SHARES 1.12%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

The expenses set forth above do not reflect the costs of the Underlying SEI
Funds borne by the Fund. As of December 31, 1998, the Fund's indirect expenses
based on its investments in Underlying SEI Funds were 0.88%. These expenses are
described in more detail in "Information about the Underlying SEI Funds."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Diversified U.S. Stock Fund $153 $474 $818 $1,791
</TABLE>

<PAGE>
16 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

This prospectus describes the Fund's primary strategies, and the Funds will
normally invest at least 90% of their assets in the Underlying SEI Funds within
the percentage ranges set forth for each asset class. However, the Funds also
may use other strategies and engage in other investment practices, which are
described in detail in the Funds' Statement of Additional Information (SAI).

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

The chart below sets forth the expense ratios for each of the Underlying SEI
Funds in which the Funds will invest (based on information as of May 31, 1999).

<TABLE>
<CAPTION>
UNDERLYING SEI FUND: EXPENSE RATIO:
- ------------------------------------------------------------------
<S> <C>
SIMT Large Cap Value Fund ................... .85%
SIMT Large Cap Growth Fund .................. .85%
SIMT Small Cap Value Fund ................... 1.10%
SIMT Small Cap Growth Fund .................. 1.10%
SIT International Equity Fund ............... 1.28%
SIT Emerging Markets Equity Fund ............ 1.95%
SIMT Core Fixed Income Fund ................. .60%
SIMT High Yield Bond Fund ................... .85%
SIT International Fixed Income Fund ......... 1.35%
SIT Emerging Markets Debt Fund .............. 1.00%
SLAT Prime Obligation Fund .................. .44%
</TABLE>

UNDERLYING U.S. EQUITY FUNDS

SIMT LARGE CAP GROWTH FUND - The SIMT Large Cap Growth Fund seeks capital
appreciation by investing primarily in common stocks of U.S. companies with
market capitalizations of more than $1 billion. The Fund uses a multi-manager
approach, relying on a number of Sub-Advisers to manage portions of the Fund's
portfolio under the general supervision of SIMC. Each Sub-Adviser, in managing
its portion of the Fund's assets, selects stocks it believes have significant
growth potential in light of such characteristics as revenue and earnings growth
and positive earnings surprises. Alliance Capital Management L.P., Provident
Investment Counsel, Inc. and TCW Funds Management Inc. serve as Sub-Advisers to
the SIMT Large Cap Growth Fund.
<PAGE>
PROSPECTUS 17

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

SIMT SMALL CAP GROWTH FUND - The SIMT Small Cap Growth Fund seeks long-term
capital appreciation by investing primarily in common stocks of U.S. companies
with market capitalizations of less than $2 billion. The Fund uses a multi-
manager approach, relying upon a number of Sub-Advisers to manage portions of
the Fund's portfolio under the general supervision of SIMC. Each Sub-Adviser, in
managing its portion of the Fund's assets, selects stocks it believes have
significant growth potential in light of such characteristics as revenue and
earnings growth and positive earnings surprises. Furman Selz Capital Management,
LLP, Nicholas-Applegate Capital Management, RS Investment Management, L.P.,
Sawgrass Asset Management, LLC, and Wall Street Associates serve as Sub-Advisers
to the SIMT Small Cap Growth Fund.

UNDERLYING INTERNATIONAL EQUITY FUNDS

SIT INTERNATIONAL EQUITY FUND - The SIT International Equity Fund seeks capital
appreciation by investing primarily in common stocks and other equity securities
of foreign companies. The Fund primarily invests in companies located in
developed countries, but may also invest in companies located in emerging
markets. The Fund uses a multi-manager approach, relying upon a number of
Sub-Advisers to manage portions of the Fund's portfolio under the general
supervision of SIMC. The Fund's portfolio is diversified as to issuers, market
capitalization, industry and country. Acadian Asset Management, Inc., Capital
Guardian Trust Company, Oechsle International Advisors, LLC, Scottish Widows
Investment Management Limited, SG Yamaichi Asset Management Company, Ltd. SG
Pacific Asset Management, Inc. and SGY Asset Management (Singapore) Ltd. serve
as Sub-Advisers to the SIT International Equity Fund.

UNDERLYING U.S. FIXED INCOME FUNDS

<PAGE>
18 PROSPECTUS

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

SIMT HIGH YIELD BOND FUND - The SIMT High Yield Bond Fund seeks total return by
investing primarily in fixed income securities rated below investment grade
("junk bonds"), including corporate bonds and debentures, convertible and
preferred securities, and zero coupon obligations. The Sub-Adviser chooses
securities that offer a high current yield as well as total return potential.
The Fund's securities are diversified as to issuers and industries. The
Fund's average weighted maturity may vary, and will generally not exceed 10
years. There is no limit on the maturity or on the credit quality of any
security. Credit Suisse Asset Management serves as Sub-Adviser to the SIMT
High Yield Bond Fund.

UNDERLYING INTERNATIONAL FIXED INCOME FUNDS

UNDERLYING MONEY MARKET FUND

SLAT PRIME OBLIGATION FUND - The SLAT Prime Obligation Fund seeks to preserve
principal value and maintain a high degree of liquidity while providing current
income by investing exclusively in high quality short-term securities, including
commercial paper, and other short-term corporate obligations issued by U.S.
corporations and state and local governments, U.S. Treasury Obligations and
repurchase agreements. The Fund may only purchase securities with a remaining
maturity of 397 days or less and will maintain a dollar-weighted average
portfolio maturity of 90 days or less. Wellington Management Company, LLP,
serves as Adviser to the SLAT Prime Obligation Fund.

RISKS OF INVESTING IN THE UNDERLYING SEI FUNDS

The following sections describe some of the risks associated with certain of the
Underlying SEI Funds.

<PAGE>
PROSPECTUS 19

INFORMATION ABOUT THE UNDERLYING SEI FUNDS

Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. In addition, the financial
stability of issuers (including governments) in emerging market countries may
be more precarious than in other countries. As a result, there will tend to
be an increased risk of price volatility associated with the Fund's investments
in emerging market countries, which may be magnified by currency fluctuations
relative to the U.S. dollar. The foreign sovereign debt securities and "Brady
Bonds" that some Underlying SEI Funds purchase involve specific risks, including
the risk that: (i) the governmental entity that controls the repayment of
sovereign debt may not be willing or able to repay the principal and/or interest
when it becomes due, due to factors such as debt service burden, political
constraints, cash flow problems and other national economic factors; (ii)
governments may default on their sovereign debt, which may require holders of
such sovereign debt to participate in debt rescheduling or additional lending to
defaulting governments; and (iii) there is no bankruptcy proceeding by which
defaulted sovereign debt may be collected in whole or in part.

JUNK BOND RISK: Certain Underlying SEI Funds invest in securities rated below
investment grade ("Junk Bond"). Junk bonds involve greater risks of default or
downgrade, and involve greater risk of price declines than investment grade
securities due to actual or perceived changes in an issuer's creditworthiness.
In addition, issuers of junk bonds may be more susceptible than other issuers to
economic downturns. Junk bonds are subject to the risk that the issuer may not
be able to pay interest or dividends and ultimately to repay principal upon
maturity. Discontinuation of these payments could substantially adversely affect
the market value of the security. The volatility of junk bonds and certain
foreign sovereign debt obligations is even greater since the prospects for
repayment of principal and interest of many of these securities is speculative.
Some may even be in default. As an incentive to invest in these risky
securities, they tend to offer higher returns.

<PAGE>
20 PROSPECTUS

INVESTMENT ADVISER

SIMC makes investment decisions for the Funds and continuously reviews,
supervises and administers each Fund's investment program. SIMC, an
SEC-registered adviser, serves as the Adviser to each Fund. As of May 31, 1999,
SIMC had approximately $43.6 billion in assets under management. For the fiscal
year ended March 31, 1999, SIMC waived its entire advisory fee.

IN ADDITION TO SERVING AS ADVISER TO THE FUNDS, SIMC IS ADVISER TO MOST OF THESE
UNDERLYING SEI FUNDS, AND OVERSEES ONE OR MORE SUB-ADVISERS FOR THOSE FUNDS.
SIMC ACTS AS THE MANAGER OF MANAGERS OF THESE UNDERLYING SEI FUNDS AND IS
RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE UNDERLYING SEI FUNDS SINCE IT
ALLOCATES EACH UNDERLYING SEI FUND'S ASSETS TO ONE OR MORE SUB-ADVISERS AND
RECOMMENDS HIRING OR CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES.

The Funds are managed by a team of investment professionals from SIMC. No one
person is primarily responsible for making asset allocation recommendations to
the team.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Class D Shares of the Funds. Class D Shares are offered to
tax-advantaged and other retirement 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. If you are investing in a
Fund through a 401(k) or other retirement plan, you should contact your plan
sponsor for the services and procedures which pertain to your account.

HOW TO PURCHASE FUND SHARES

Financial institutions and intermediaries may purchase Class D Shares by placing
orders with the Funds' Transfer Agent (or its authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Funds' wire agent by the close of business on
the same day the order is placed. The Funds may reject any purchase order if
they determine that accepting the order would not be in the best interests of
the Funds or their shareholders.

<PAGE>
PROSPECTUS 21

PURCHASING, SELLING AND EXCHANGING FUND SHARES

HOW THE FUNDS CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

MINIMUM PURCHASES

To purchase Class D Shares for the first time, you must invest at least $150,000
in any Fund.

Your subsequent investments in any Fund must be made in amounts of at least
$1,000.

A Fund may accept investments of smaller amounts at its discretion.

HOW TO SELL YOUR FUND SHARES

Holders of Class D Shares may sell shares on any business day by following the
procedures established when they opened their account or accounts. If you own
your shares through an account with a broker or other institution, contact that
broker or institution to sell your shares. Your broker or institution may charge
you a fee for its services. For IRA or other tax-deferred accounts, there are
tax penalties for early withdrawal. For more information, see the SAI.

RECEIVING YOUR MONEY

Normally, the Fund will send your sale proceeds within three days after they
receive your request, but it may take up to seven days. Your proceeds can be
wired to your bank account.

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in the Funds' SAI.

HOW TO EXCHANGE YOUR SHARES

You may exchange your shares of a Fund for Class D Shares of any other Fund on
any Business Day by contacting the Funds directly by mail or telephone. You may
also exchange shares through your financial institution by mail or telephone.
Your broker or institution may charge you a fee for its services. This exchange
privilege may be changed or canceled at any time upon 60 days' notice. When you
exchange shares, you are really selling your shares and buying other Fund
shares. So, your sale price and purchase price will be based on the NAV next
calculated after the Funds' receive your exchange request.

<PAGE>
22 PROSPECTUS

DIVIDENDS, DISTRIBUTIONS AND TAXES

TELEPHONE TRANSACTIONS

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. SIDCo. receives no compensation for distributing the Funds' shares.

The Funds have adopted a distribution plan that allows the Funds to pay SIDCo.
distribution and service fees for the sale and distribution of its Class D
Shares, and for services provided to shareholders. Because these fees are paid
out of the Funds' assets continuously, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges. For Class D Shares, the distribution fee is .75% of the average daily
net assets of each Fund, and the shareholder servicing fee may be up to .25% of
average daily net assets of each Fund.

The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide incentives, in the
form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling Class D Shares of the Funds.

DIVIDENDS AND DISTRIBUTIONS

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

If you own Fund shares on a Fund's record date, you will be entitled to receive
the distribution.

You will receive dividends and distributions in the form of additional
Fund shares unless you elect to receive payment in cash. To elect cash payment,
you must notify the Funds in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Funds
receive your written notice. To cancel your election, simply send the Funds
written notice.

TAXES

Capital gains distributions are generally taxable at the rates applicable to
long-term capital gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE
EVENT.

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
PROSPECTUS 23

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class D Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.

SEI ASSET ALLOCATION TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED MARCH 31,

<TABLE>
<CAPTION>
NET
REALIZED NET
NET ASSET NET AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT UNREALIZED FROM NET FROM VALUE
BEGINNING INCOME/ GAINS ON INVESTMENT CAPITAL END OF
OF PERIOD (LOSS) SECURITIES INCOME GAINS PERIOD
---------- ---------- ---------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------
DIVERSIFIED CONSERVATIVE INCOME FUND
- ---------------------------------
CLASS D
1999 #.............................. $ 11.70 $ 0.40 $ 0.30 $ (0.34) $ (0.53) $ 11.53
1998 #.............................. 10.49 0.38 1.46 (0.32) (0.31) 11.70
1997(1)#............................ 10.09 0.27 0.30 (0.17) -- 10.49
- ------------------------------
DIVERSIFIED CONSERVATIVE FUND
- --------------------------
CLASS D
1999 #.............................. $ 11.27 $ 0.38 $ 0.48 $ (0.18) $ (0.58) $ 11.37
1998 #.............................. 9.58 0.24 1.78 (0.18) (0.15) 11.27
1997(2)#............................ 9.33 0.19 0.26 (0.13) (0.07) 9.58
- ------------------------------------------
DIVERSIFIED GLOBAL MODERATE GROWTH FUND
- -------------------------------------
CLASS D
1999 #.............................. $ 12.38 $ 0.30 $ 0.10 $ (0.14) $ (0.62) $ 12.02
1998 #.............................. 10.11 0.17 2.28 (0.12) (0.06) 12.38
1997(3)#............................ 10.00 0.02 0.13 (0.04) -- 10.11
- -----------------------------------
DIVERSIFIED MODERATE GROWTH FUND
- -------------------------------
CLASS D
1999 #.............................. $ 13.16 $ 0.26 $ 0.72 $ (0.12) $ (0.92) $ 13.10
1998 #.............................. 10.67 0.18 2.76 (0.13) (0.32) 13.16
1997(4)#............................ 10.21 0.15 0.44 (0.11) (0.02) 10.67

<CAPTION>
RATIO OF
NET INVESTMENT
RATIO OF RATIO INCOME/(LOSS)
NET OF EXPENSES TO AVERAGE NET
INVESTMENT TO AVERAGE ASSETS
RATIO OF INCOME/ NET ASSETS (EXCLUDING
NET ASSETS EXPENSES (LOSS) TO (EXCLUDING WAIVERS PORTFOLIO
TOTAL END OF TO AVERAGE AVERAGE WAIVERS AND AND TURNOVER
RETURN PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENT) REIMBURSEMENT) RATE
------- ------------ ---------- ---------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------
DIVERSIFIED CONSERVATIVE INCOME FUND
- ---------------------------------
CLASS D
1999 #.............................. 6.19% $ 5,107 1.12% 2.98% 1.45% 2.65% 63%
1998 #.............................. 17.90 2,600 1.12 3.35 2.27 2.20 52
1997(1)#............................ 5.67* 603 1.12 3.37 N/A++ N/A++ 27
- ------------------------------
DIVERSIFIED CONSERVATIVE FUND
- --------------------------
CLASS D
1999 #.............................. 7.84% $ 12,405 1.12% 2.41% 1.46% 2.07% 30%
1998 #.............................. 21.29 5,842 1.12 2.13 1.91 1.34 24
1997(2)#............................ 4.84* 1,704 1.12 2.60 3.72+ 0.00+ 65
- ----------------------------------------
DIVERSIFIED GLOBAL MODERATE GROWTH FUND
- -------------------------------------
CLASS D
1999 #.............................. 3.54% $ 7,142 1.12% 1.79% 1.49% 1.42% 34%
1998 #.............................. 24.38 7,001 1.12 1.72 1.93 0.91 30
1997(3)#............................ 1.52* 85 1.12 0.60 N/A++ N/A++ 3
- -----------------------------------
DIVERSIFIED MODERATE GROWTH FUND
- -------------------------------
CLASS D
1999 #.............................. 7.71% $ 27,537 1.12% 1.40% 1.48% 1.04% 22%
1998 #.............................. 27.99 8,935 1.12 1.37 1.80 0.69 20
1997(4)#............................ 5.71* 6,471 1.12 1.63 2.57+ 0.18+ 22

</TABLE>

<PAGE>
24 PROSPECTUS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
REALIZED NET
NET ASSET NET AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT UNREALIZED FROM NET FROM VALUE
BEGINNING INCOME/ GAINS ON INVESTMENT CAPITAL END OF
OF PERIOD (LOSS) SECURITIES INCOME GAINS PERIOD
---------- ---------- ---------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------
DIVERSIFIED GLOBAL GROWTH FUND
- ---------------------------
CLASS D
1999 #.............................. $ 13.59 $ 0.14 $ 0.28 $ (0.03) $ (0.84) $ 13.14
1998 #.............................. 10.87 0.10 3.04 (0.08) (0.34) 13.59
1997(4)#............................ 10.24 0.06 0.63 (0.05) (0.01) 10.87
- ------------------------------
DIVERSIFIED GLOBAL STOCK FUND
- --------------------------
CLASS D
1999 #.............................. $ 13.16 $ 0.03 $ 0.33 $ -- $ (0.93) $ 12.59
1998 #.............................. 10.01 0.01 3.31 (0.04) (0.13) 13.16
1997(3)#............................ 10.00 (0.03) 0.06 (0.02) -- 10.01
- ----------------------------
DIVERSIFIED U.S. STOCK FUND
- ------------------------
CLASS D
1999 #.............................. $ 15.83 $ 0.03 $ 1.14 $ -- $ (1.64) $ 15.36
1998 #.............................. 11.32 (0.11) 5.53 -- (0.91) 15.83
1997(2)#............................ 10.36 (0.03) 1.01 (0.02) -- 11.32

<CAPTION>
RATIO OF
NET INVESTMENT
RATIO OF RATIO INCOME/(LOSS)
NET OF EXPENSES TO AVERAGE NET
INVESTMENT TO AVERAGE ASSETS
RATIO OF INCOME/ NET ASSETS (EXCLUDING
NET ASSETS EXPENSES (LOSS) TO (EXCLUDING WAIVERS PORTFOLIO
TOTAL END OF TO AVERAGE AVERAGE WAIVERS AND AND TURNOVER
RETURN PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENT) REIMBURSEMENT) RATE
------- ------------ ---------- ---------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------
DIVERSIFIED GLOBAL GROWTH FUND
- ---------------------------
CLASS D
1999 #.............................. 3.50% $ 18,979 1.12% 0.49% 1.50% 0.11% 18%
1998 #.............................. 29.22 13,949 1.12 0.72 1.76 0.08 15
1997(4)#............................ 6.69* 6,882 1.12 0.71 2.56+ (0.73)+ 13
- ------------------------------
DIVERSIFIED GLOBAL STOCK FUND
- --------------------------
CLASS D
1999 #.............................. 3.23% $ 6,264 1.12% (0.56)% 1.50% (0.94)% 30%
1998 #.............................. 33.38 2,910 1.12 (0.07) 2.52 (1.47) 10
1997(3)#............................ 0.31* 46 1.12 (1.06) N/A++ N/A++ --
- ----------------------------
DIVERSIFIED U.S. STOCK FUND
- ------------------------
CLASS D
1999 #.............................. 8.18% $ 24,267 1.12% (0.53)% 1.50% (0.91)% 30%
1998 #.............................. 48.86 13,794 1.12 (0.42) 1.82 (1.12) 21
1997(2)#............................ 9.43* 5,885 1.12 (0.39) 2.75+ (2.02)+ 28

</TABLE>

+ Ratios reflect the impact of the initial low level of average net assets
associated with commencement of operations.

++ Ratio is not meaningful due to low level of assets and because SEI
Investments will bear all expenses exceeding specific limitations.

# Per share calculations were performed using average shares for the period.

* Total return has not been annualized.

(1) Commenced operations 6/21/96. All ratios for that period have been
annualized.

(2) Commenced operations 7/1/96. All ratios for that period have been
annualized.

(3) Commenced operations 12/5/96. All ratios for that period have been
annualized.

(4) Commenced operations 5/30/96. All ratios for that period have been
annualized.

Amounts designated as "--" are zero or have been rounded to zero.

<PAGE>

SEI INVESTMENTS

PROSPECTUS AS OF JULY 31, 1999

ASSET ALLOCATION FUNDS

Diversified Conservative Income Fund

Diversified Conservative Fund

Diversified Global Moderate Growth Fund

Diversified Moderate Growth Fund

Diversified Global Growth Fund

Diversified Global Stock Fund

Diversified U.S. Stock Fund

CLASS D

The Securities and Exchange Commission has not approved any Fund shares or
determined whether this prospectus is accurate or complete. It is a crime for
anyone to tell you otherwise.

SEI INVESTMENTS

The Art of People. The Science of Results.

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-DIAL-SEI

By Mail: Write to the Funds at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

The Fund's Investment Company Act registration number is 811-7445.

SEI-F-117-04

<PAGE>
SEI ASSET ALLOCATION TRUST

Investment Adviser:

SEI Investments Management Corporation

Administrator:

SEI Investments Fund Management

Distributor:

SEI Investments Distribution Co.

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 July
31, 1999. A Prospectus may be obtained upon request and without charge by
writing the Trust's distributor, SEI Investments Distribution Co., at Oaks,
Pennsylvania 19456, or by calling 1-800-342-5734.

TABLE OF CONTENTS

<TABLE>
<S> <C>
The Trust............................................................................. S-2
Investment Objectives and Policies of the Funds....................................... S-2
Description of Permitted Investments and Risk Factors of the Underlying SEI Funds..... S-4
Investment Limitations of the Funds................................................... S-21
Investment Limitations of the Underlying SEI Funds.................................... S-23
The Administrator to the Funds........................................................ S-27
The Investment Adviser to the Funds................................................... S-28
The Advisers and Sub-Advisers to the Underlying SEI Funds............................. S-28
Managers of the Underlying SEI Funds.................................................. S-29
Distribution.......................................................................... S-34
Trustees and Officers of the Trust.................................................... S-36
Performance........................................................................... S-38
Purchase and Redemption of Shares..................................................... S-39
Shareholder Services.................................................................. S-40
Taxes................................................................................. S-40
Portfolio Transactions................................................................ S-42
Description of Shares................................................................. S-43
Limitation of Trustees' Liability..................................................... S-43
Voting................................................................................ S-44
Shareholder Liability................................................................. S-44
Control Persons and Principal Holders of Securities................................... S-44
Financial Statements.................................................................. S-47
Custodian............................................................................. S-47
Experts............................................................................... S-47
Legal Counsel......................................................................... S-47
Appendix.............................................................................. S-48

July 31, 1999
</TABLE>
<PAGE>
THE TRUST

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

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. 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
Investments Fund Management, Oaks, Pennsylvania 19456, 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
thereto. Except for differences between the Class A shares and Class D shares
pertaining to distribution and shareholder servicing fees, voting rights,
dividends and transfer agent expenses, each share of each Fund represents an
equal proportionate interest in that Fund with each other share of that Fund.

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.

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

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 low to medium level of capital growth, while subjecting investors to a
medium level of principal risk.

DIVERSIFIED CONSERVATIVE FUND--The Diversified Conservative Fund seeks to
provide current income and an 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.

DIVERSIFIED GLOBAL MODERATE GROWTH FUND--The Diversified Global Moderate
Growth Fund seeks long-term capital appreciation through participation in the
domestic and global equity markets with a limited level of current income. In
general, relative to the other Funds, the Diversified Global 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.

S-2
<PAGE>
DIVERSIFIED MODERATE GROWTH FUND--The Diversified Moderate Growth Fund seeks
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.

DIVERSIFIED GLOBAL GROWTH FUND--The Diversified Global Growth Fund seeks to
provide long-term capital appreciation. Current income is a secondary
consideration. In general, relative to the other Funds, the Diversified Global
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.

DIVERSIFIED GLOBAL STOCK FUND--The Diversified Global Stock Fund seeks to
provide long-term capital appreciation through a diversified global equity
strategy. In general, relative to the other Funds, the Diversified Global Stock
Fund should offer investors the potential for a lower level of income and the
potential for a higher level of capital growth, while subjecting investors to
medium to high levels of principal risk.

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.

GENERAL INVESTMENT POLICIES OF THE FUNDS

The Funds will attempt to achieve their investment objectives by purchasing
shares of the Underlying SEI Funds within the percentage ranges set forth above
for each asset class. The SEC issued an exemptive order to the Trust dated
December 20, 1995 (the "Order"), which permits the Funds to acquire up to 100%
of the Shares of any of the Underlying SEI Funds under certain conditions.

In addition to purchasing shares of the Underlying SEI Funds, the Funds may
use futures contracts and options in order to remain effectively fully invested
in proportions consistent with SIMC'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.

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 SEI Funds."

RISK FACTORS OF THE FUNDS

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

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

- Under certain circumstances, an Underlying SEI Fund 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 SEI Fund until the Adviser
determines that it is appropriate to dispose of such securities;

S-3
<PAGE>
- Certain Underlying SEI Funds may: invest a portion of their assets in
foreign securities, including securities issued by emerging market
issuers; enter into forward currency transactions; lend their portfolio
securities; enter into stock and bond 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 of the Underlying SEI Funds" and
"Description of Permitted Investments and Risk Factors of the Underlying
SEI Funds" in this Statement of Additional Information;

- The Diversified Global Growth Fund and Diversified Global Moderate Growth
Fund can each invest a portion of its assets in the SIMT High Yield Bond
Fund. As a result, these Funds will be subject to the risks associated
with high yield investing;

- Certain Funds invest at least 10% and can invest as much as 30% of their
assets in the SIT International Fixed Income and SIT Emerging Markets Debt
Funds, which invest primarily in foreign fixed-income securities,
including securities issued by emerging market issuers. Certain other
Funds invest at least 20% and can invest as much as 50% of their assets in
Underlying SEI Funds 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 SEI Funds. Conflicts may
arise as these persons seek to fulfill their fiduciary responsibilities at
both levels.

Further information regarding these risk factors may be found elsewhere in
this Statement of Additional Information and in the Prospectus.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
OF THE UNDERLYING SEI FUNDS

AMERICAN DEPOSITORY RECEIPTS ("ADRS")--Generally, ADRs are designed for
trading in the U.S. securities market, EDRs and CDRs are designed for trading in
European securities markets and GDRs are designed for trading in non-U.S.
securities markets. 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, 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. While the
funds typically invest in sponsored ADRs, joint arrangements between the issuer
and the depositary, some ADRs may unsponsored. 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 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
instruments, which are also known as collateralized 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.
Credit support for asset-backed securities may be based on the underlying assets
and/or provided by a third party through credit

S-4
<PAGE>
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.

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. 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.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

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 and to
furnish dollar exchange. Maturities are generally six months or less.

BRADY BONDS--In the event of a default on collateralized Brady Bonds for
which obligations are accelerated, the collateral for the payment of principal
will not be distributed to investors, nor will such obligations be sold and the
proceeds distributed. The collateral will be held by the collateral agent to the
scheduled maturity of the defaulted Brady Bonds, which will continue to be
outstanding, at which time the face amount of the collateral will equal the
principal payments which would have then been due on the Brady Bonds in the
normal course.

CERTIFICATES OF DEPOSIT--Certificates of deposit are negotiable,
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 municipalities, corporations and other
entities. Maturities on these issues vary, generally from a day to nine months.

CONVERTIBLE SECURITIES--Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities 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, a Fund's selection of convertible securities is
based, to a great extent, on the potential for capital appreciation that may
exist in the underlying stock. The value of convertible securities is also
affected by prevailing interest rates, the credit quality of the issuer and any
call provisions.

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,

S-5
<PAGE>
are subject to the risk of the issuer's failure to pay interest and repay
principal in accordance with the terms of the obligation.

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.

EQUITY SECURITIES--Equity securities represent ownership interests in a
company or corporation, and include common stock, preferred stock, and warrants
and other rights to acquire such instruments. Investments in equity securities
are subject to market risks that may cause their prices to fluctuate over time.
The value of convertible equity securities is also affected by prevailing
interest rates, the credit quality of the issuer and any call provisions.
Fluctuations in the value of equity securities will not necessarily affect cash
income derived from these securities, but will affect a Fund's net asset value.

FIXED INCOME SECURITIES--Fixed income securities consist primarily of debt
obligations issued by governments, corporations, municipalities and other
borrowers, but may also include structured securities that provide for
participation interests in debt obligations. 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. Moreover, while
securities with longer maturities tend to produce higher yields, the prices of
longer maturity securities are also subject to greater market fluctuations as a
result of changes in interest rates. Changes by recognized agencies in the
rating of any fixed income security and in the ability of an issuer to make
payments of interest and principal also affect the value of these investments.
Changes in the value of these securities will not affect cash income derived
from these securities, but will affect a Fund's net asset value.

There are no restrictions on the average maturity of the International Fixed
Income or the Emerging Markets Debt Funds or on the maturity of any single
instrument held by any Fund. 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 a Fund is downgraded, the adviser will
review the situation and take appropriate action with regard to the security.
Fixed income securities rated BBB or Baa lack outstanding investment
characteristics, and have speculative characteristics as well. Fixed income
securities 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.

FOREIGN SECURITIES--Foreign securities are securities issued by non-U.S.
issuers. Certain of the Underlying SEI Funds 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 SEI Fund to investment risks that differ in some respects from those
related to investments in obligations of U.S. domestic issuers. Investing in the
securities of foreign companies and the utilization of forward foreign currency
contracts involve special risks and considerations not typically associated with
investing in U.S. companies. Such risks include future adverse political and
economic developments, the possible imposition of withholding taxes on interest
or other income, possible seizure, nationalization, or expropriation of foreign
deposits, the possible establishment of exchange controls or taxation at the
source, greater fluctuations in value due to changes in the exchange rates, or
the adoption of other foreign governmental restrictions which might adversely
affect the payment of principal and interest on such obligations. Such
investments may also entail higher custodial fees and sales commissions than
domestic investments. Foreign issuers of securities or obligations are often
subject to different accounting treatment and engage in business practices
different from those respecting domestic issuers of similar securities or
obligations. Foreign branches of U.S. banks and foreign banks may be subject to
less stringent reserve requirements than those applicable to domestic branches
of U.S. banks. The yankee

S-6
<PAGE>
obligations selected for the Funds will adhere to the same quality standards as
those utilized for the selection of domestic debt obligations.

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

FORWARD FOREIGN CURRENCY CONTRACTS--Forward Foreign Currency Contracts are
contracts which involve an obligation to purchase or sell a specified currency
at a future date at a price set at the time of the contract. The Funds 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 Funds, to some degree, against possible losses resulting from an
adverse change in the relationship between foreign currencies and the U.S.
dollar. The Funds also may invest in foreign currency futures and in options on
currencies. Forward foreign currency contracts involve an obligation to purchase
or sell a specified currency at a future date at a price set at the time of the
contract. A fund may 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 Fund's securities denominated in
such foreign currency. Forward currency contracts do not eliminate fluctuations
in the values of portfolio securities but rather allow an Underlying SEI Fund to
establish a rate of exchange for a future point in time. At the maturity of a
forward contract, the Fund 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 Fund 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 SEI Fund 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 SEI Fund'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 SEI Fund 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 SEI Fund will also incur costs in connection with
forward foreign currency contracts and conversions of foreign currencies into
United States dollars. Some of the Underlying SEI Funds may enter into forward
foreign currency contracts. The Underlying SEI Funds will place assets in a
segregated account to assure that its obligations under forward foreign currency
contracts are covered.

FUTURES AND OPTIONS--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

S-7
<PAGE>
futures contract is originally struck. No physical delivery of the stocks or
bonds comprising the Index is made; generally contracts are closed out prior to
the expiration date of the contracts.

No price is paid upon entering into futures contracts. Instead, an
Underlying SEI Fund 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.

An Underlying SEI Fund 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 an Underlying SEI Fund's net assets. An
Underlying SEI Fund may buy and sell futures contracts and related options to
manage its exposure to changing interest rates and securities prices. Some
strategies reduce an Underlying SEI Fund'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
an Underlying SEI Fund's return.

An Underlying SEI Fund 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, an Underlying SEI Fund will
only sell covered futures contracts and options on futures contracts.

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

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

HIGH YIELD FOREIGN SOVEREIGN DEBT SECURITIES--Investing in fixed and
floating rate high yield foreign sovereign debt securities will expose a Fund to
the direct or indirect consequences of political, social or economic changes in
countries that issue the securities. The ability of a foreign sovereign obligor
to make timely payments on its external debt obligations will also be strongly
influenced by the obligor's balance of payments, including export performance,
its access to international credits and investments, fluctuations in interest
rates and the extent of its foreign reserves. A country whose exports are
concentrated in a few commodities or whose economy depends on certain strategic
imports could be vulnerable to fluctuations in international prices of these
commodities or imports. To the extent that a country receives payment for its
exports in currencies other than dollars, its ability to make debt payments
denominated in dollars could be adversely affected. If a foreign sovereign
obligor cannot generate sufficient earnings from foreign trade to service its
external debt, it may need to depend on continuing loans and aid from foreign
governments, commercial banks and multilateral organizations, and inflows of
foreign investment. The commitment on the part of these foreign governments,
multilateral organizations and others to make such disbursements may be
conditioned on the government's implementation of economic reforms and/or
economic performance and the timely service of its obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation

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of such third parties' commitments to lend funds, which may further impair the
obligor's ability or willingness to timely service its debts.

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 a Fund's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven days, securities for
which there is no active secondary market, and repurchase agreements with
maturities of over seven days in length. The Funds may invest in securities that
are neither listed on a stock exchange nor traded over-the-counter, including
privately placed securities. Investing in such unlisted emerging country equity
securities, including investments in new and early stage companies, may involve
a high degree of business and financial risk that can result in substantial
losses. As a result of the absence of a public trading market for these
securities, they may be less liquid than publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
realized from these sales could be less than those originally paid by the Fund,
or less than what may be considered the fair value of such securities. Further,
companies whose securities are not publicly traded may not be subject to the
disclosure and other investor protection requirements which might be applicable
if their securities were publicly traded. If such securities are required to be
registered under the securities laws of one or more jurisdictions before being
resold, the Fund may be required to bear the expenses of registration. The
advisers of the SIT Emerging Markets Equity Fund believe that carefully selected
investments in joint ventures, cooperatives, partnerships, private placements,
unlisted securities and other similar situations (collectively, "special
situations") could enhance the Fund's capital appreciation potential.
Investments in special situations may be illiquid, as determined by the Fund's
advisers based on criteria approved by the Board of Trustees. To the extent
these investments are deemed illiquid, the Fund's investment in them will be
consistent with its 15% 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 Fund 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 Fund may invest in unrated securities of
comparable quality subject to the restrictions stated in the Fund's Prospectus.
The SIT Emerging Markets Debt Fund may invest in securities with the lowest
available rating. Lower rated or unrated (I.E., high yield) securities are more
likely to react to developments affecting issuers 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 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.

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 Fund's
advisers 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 Trust 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 Underlying SEI Fund's net asset value.

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

CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES. The
descriptions below are intended to supplement the discussion in the Prospectus.

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 Underlying SEI Funds' 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 downturn or substantial period of
rising interest rates, highly leveraged issuers may experience financial stress
that would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals, and to obtain
additional financing. If the issuer of a bond defaulted on its obligations to
pay interest or principal or entered into bankruptcy proceedings, the Underlying
SEI Fund may incur losses or expenses in seeking recovery of amounts owed to it.
In addition, periods of economic uncertainty and change can be expected to
result in increased volatility of market prices of high-yield, high-risk bonds
and the Underlying SEI Fund's net asset value.

PAYMENT EXPECTATIONS.

High-yield, high-risk bonds may contain redemption or call provisions. If an
issuer exercised these provisions in a declining interest rate market, the
Underlying SEI Fund 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 Underlying SEI Fund's assets. If the Underlying
SEI Fund experiences significant unexpected net redemptions, this may force it
to sell high-yield, high-risk bonds without regard to their investment merits,
thereby decreasing the asset base upon which expenses can be spread and possibly
reducing the Underlying SEI Fund's rate of return.

LIQUIDITY AND VALUATION.

There may be little trading in the secondary market for particular bonds,
which may affect adversely the Underlying SEI Fund's ability to value accurately
or dispose of such bonds. Adverse publicity and investor perception, whether or
not based on fundamental analysis, may decrease the values and liquidity of
high-yield, high-risk bonds, especially in a thin market.

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LEGISLATION.

Legislative changes could adversely affect the Underlying SEI Fund's net
asset value and investment practices, the secondary market for high-yield
securities, the financial condition of issuers of these securities and the value
of outstanding high-yield securities.

TAXES.

The Fund 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 an Underlying SEI Fund and
therefore is subject to the distribution requirements of the tax code even
though the Underlying SEI Fund has not received any interest payments on such
obligations during that period. Because the original issue discount earned by
the Underlying SEI Fund in a taxable year may not be represented by cash income,
the Underlying SEI Fund 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 Fannie Mae 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 SEI Funds may,
consistent with their respective investment objectives and policies, invest in
mortgage-backed securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities. Although certain mortgage-backed securities are
guaranteed by a third party or otherwise similarly secured, the market value of
the security, which may fluctuate, is not so secured. If an Underlying SEI Fund
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
SEI Fund. 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 SEI Fund will receive when these amounts are
reinvested.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")--

CMOs are debt obligations of multiclass pass-through certificates issued by
agencies or instrumentalities of the U.S. Government or by private originators
or investors in mortgage loans. Principal payments on the underlying mortgage
assets may cause CMOs to be retired substantially earlier than their stated
maturities or final distribution dates, resulting in a loss of all or part of
any premium paid. Each class of a CMO is issued with a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.

CMOs are 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

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Moody's or S&P. For purposes of determining the average maturity of a
mortgage-backed security in its investment portfolio, the Underlying SEI Funds
may utilize the expected average life of the security, as estimated in good
faith by the Fund'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")--

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.

GOVERNMENT PASS-THROUGH SECURITIES--

These are securities that are issued or guaranteed by a U.S. Government
agency representing an interest in a pool of mortgage loans. The primary issuers
or guarantors of these mortgage-backed securities are GNMA, Fannie Mae and
FHLMC. GNMA, Fannie Mae and FHLMC guarantee timely distributions of interest to
certificate holders. GNMA and Fannie Mae also guarantee timely distributions of
scheduled principal. Fannie Mae and FHLMC obligations are not backed by the full
faith and credit of the U.S. Government as GNMA certificates are, but Fannie Mae
and FHLMC securities are supported by the instrumentalities' right to borrow
from the U.S. Treasury.

PRIVATE PASS-THROUGH SECURITIES--

These are mortgage-backed securities issued by a non-governmental entity,
such as a trust or corporate. These securities include 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.

COMMERCIAL MORTGAGE-BACKED SECURITIES ("CMBS")--

CMBS are generally multi-class or pass-through securities backed by a
mortgage loan or a pool of mortgage loans secured by commercial property, such
as industrial and warehouse properties, office buildings, retail space and
shopping malls, multifamily properties and cooperative apartments. The
commercial mortgage loans that underlie CMBS are generally not amortizing or not
fully amortizing. That is, at their maturity date, repayment of the remaining
principal balance or "balloon" is due and is repaid through the attainment of an
additional loan of sale of the property.

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 Fannie Mae, GNMA or
FHLMC represent beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed mortgage
pass-through certificates. 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. Fannie Mae REMIC Certificates are issued and guaranteed as to
timely distribution of principal and interest by Fannie Mae. GNMA REMIC
Certificates are backed by the full faith and credit of the U.S. Government.

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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.

PFANDBRIEFE--

A Pfandbriefe is a fixed-term, fixed-rate bond issued by a German mortgage
bank or a public-sector bank to finance secured real estate loans or public
sector loans. Although Pfandbriefe are collateralized securities, the issuer
assumes all of the prepayment risk.

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 Fannie Mae include Fannie
Mae Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
that are solely the obligations of Fannie Mae and are not backed by or entitled
to the full faith and credit of the United States. Fannie Mae is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to timely payment of the principal and interest by Fannie
Mae. 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. Fannie Mae REMIC Certificates are issued and guaranteed as to
timely distribution of principal and interest by Fannie Mae.

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. The difference between the sale price and the
purchase price (plus any interest earned on the cash proceeds of the sale) 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 a Fund being paid a fee as consideration for
entering into the commitment to purchase. Mortgage dollar rolls may be renewed
prior to cash settlement and initially may involve only a firm commitment
agreement by the Underlying SEI Fund to buy a security. If the broker-dealer to
whom the Underlying SEI Fund sells the security becomes insolvent, the
Underlying SEI Fund'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

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the mortgage dollar roll and that the security the Underlying SEI Fund is
required to repurchase may be worth less than the security that the Underlying
SEI Fund originally held.

To avoid any leveraging concerns, an Underlying SEI Fund will place cash or
liquid securities in a segregated account 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 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 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.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" issues. General obligation issues are issues involving
the credit of an issuer possessing taxing power and are payable from the
issuer's general unrestricted revenues, although the characteristics and method
of enforcement of general obligation issues may vary according to the law
applicable to the particular issuer. Revenue issues are payable only from the
revenues derived from a particular facility or class of facilities or other
specific revenue source. A Fund may also invest in "moral obligation" issues,
which are normally issued by special purpose authorities. Moral obligation
issues are not backed by the full faith and credit of the state and are
generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal Securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public facilities,
the refunding of outstanding obligations, the payment of general operating
expenses, and the extension of loans to other public institutions and
facilities. Certain private activity bonds that are issued by or on behalf of
public authorities to finance various privately-owned or operated facilities are
included within the term "Municipal Securities." Private activity bonds and
industrial development bonds are generally revenue bonds, the credit and quality
of which are directly related to the credit of the private user of the
facilities.

Municipal Securities may also include general obligation notes, tax
anticipation notes, bond anticipation notes, revenue anticipation notes, project
notes, certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are sold by the Department of
Housing and Urban Development. While the issuing agency has the primary
obligation with respect to its project notes, they are also secured by the full
faith and credit of the United States through agreements with the issuing
authority which provide that, if required, the federal government will lend the
issuer an amount equal to the principal of and interest on the project notes.

The quality of Municipal Securities, both within a particular classification
and between classifications, will vary, and the yields on Municipal Securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular

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offering, the maturity of the obligation and the rating(s) of the issue. In this
regard, it should be emphasized that the ratings of any NRSRO are general and
are not absolute standards of quality. Municipal Securities with the same
maturity, interest rate and rating(s) may have different yields, while Municipal
Securities of the same maturity and interest rate with different rating(s) may
have the same yield.

An issuer's obligations under its Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.

NON-DIVERSIFICATION--The International Fixed Income and Emerging Markets
Debt Funds are non-diversified investment companies, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), which means that a
relatively high percentage of assets of the Funds may be invested in the
obligations of a limited number of issuers. Although the advisers generally do
not intend to invest more than 5% of each Fund's assets in any single issuer
(with the exception of securities which are issued or guaranteed by a national
government), the value of shares of the Funds may be more susceptible to any
single economic, political or regulatory occurrence than the shares of a
diversified investment company would be. The Funds intend to satisfy the
diversification requirements necessary to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"), which
requires that the Funds be diversified (I.E., NOT INVEST MORE THAN 5% OF THEIR
ASSETS IN THE SECURITIES IN ANY ONE ISSUER) AS TO 50% OF THEIR ASSETS.

OPTIONS--Options on securities 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 SEI Funds 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 SEI Fund's investment objective, and except
as restricted by each Underlying SEI Fund's investment limitations as set forth
below. See "Investment Limitations."

A put option on a security gives the purchaser (an Underlying SEI Fund) 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 SEI Fund of buying the protective put is that if the price of the
security falls during the option period, the Underlying SEI Fund may exercise
the put and receive the higher exercise price for the security. However, if the
security rises in value, the Underlying SEI Fund will have paid a premium for
the put, which will expire unexercised.

A call option on a security gives the purchaser the right to buy and imposes
on the writer (an Underlying SEI Fund) the obligation to sell, the underlying
security at the exercise price during the option period. The advantage to an
Underlying SEI Fund of writing covered call options is that the Underlying SEI
Fund receives a premium, which is additional income. However, if the security
rises in value, an Underlying SEI Fund 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 SEI Fund'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 SEI
Fund, when obligated as a writer of an option, terminates its obligation by
purchasing an option of the same series as

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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.

An Underlying SEI Fund 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 Underlying SEI
Fund may seek to purchase in the future. An Underlying SEI Fund 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
Underlying SEI Fund, loss of the premium paid may be offset by an increase in
the value of the Fund's securities or by a decrease in the cost of acquisition
of securities by the Underlying SEI Fund.

An Underlying SEI Fund 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 Underlying SEI Fund will
realized as profit the premium received for such option. When a call option
written by an Underlying SEI Fund is exercised, the Underlying SEI Fund will be
required to sell the underlying securities to the option holder at the strike
price, and will not participate in any increase in the price of such securities
above the strike price. When a put option written by an Underlying SEI Fund is
exercised, the Underlying SEI Fund will be required to purchase the underlying
securities at the strike price, which may be in excess of the market value of
such securities.

An Underlying SEI Fund may purchase and write options on an exchange or
over-the-counter. Over-the-counter options ("OTC options") differ from
exchange-traded options in several respects. They are transacted directly with
dealers and not with a clearing corporation, and therefore entail the risk of
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.

An Underlying SEI Fund may purchase and write put and call options on
foreign currencies (traded on U.S. and foreign exchanges or over-the-counter
markets) to manage its exposure to exchange rates. Call options on foreign
currency written by an Underlying SEI Fund will be "covered," which means that
the Underlying SEI Fund will own an equal amount of the underlying foreign
currency. With respect to put options on foreign currency written by an
Underlying SEI Fund, the Underlying SEI Fund will establish a segregated account
consisting of cash or liquid securities in an amount equal to the amount the
Underlying SEI Fund would be required to pay upon exercise of the put.

An Underlying SEI Fund may purchase and write put and call options on
indices and enter into related closing transactions. Put and call options on
indices are similar to options on securities except that options on an index
give the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the underlying index is greater than (or less than,
in the case of puts) the exercise price of the option. This amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the option, expressed in dollars multiplied by a specified number.
Thus, unlike options on individual securities, all settlements are in cash, and
gain or loss depends on price movements in the particular market represented by
the index generally, rather than the price movements in individual securities.
An Underlying SEI Fund may choose to terminate an option position by entering
into a closing transaction. The ability of an Underlying SEI Fund to enter into
closing transactions depends upon the existence of a liquid secondary market for
such transactions.

All options written on indices must be covered. When an Underlying SEI Fund
writes an option on an index, it will establish a segregated account containing
cash or liquid 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.

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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 SEI
Funds will engage in option transactions only as hedging transactions and not
for speculative purposes.

PAY-IN-KIND SECURITIES--Pay-in-kind securities are securities which, at the
issuer's option, pay interest in either cash or additional securities for a
specified period. Pay-in-kind bonds, like zero coupon bonds, are designed to
give an issuer flexibility in managing cash flow. Pay-in-kind bonds are expected
to reflect the market value of the underlying debt plus an amount representing
accrued interest since the last payment. Pay-in-kind bonds are usually less
volatile than zero coupon bonds, but more volatile than cash pay securities.

PRIVATIZATIONS--Privatizations are foreign government programs for selling
all or part of the interests in government owned or controlled enterprises. The
ability of a U.S. entity to participate in privatizations in certain foreign
countries may be limited by local law, or the terms on which an Underlying SEI
Fund 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 sold as zero coupon securities, which means that they
are sold at a substantial discount and redeemed at face value at their maturity
date without interim cash payments of interest or principal. This discount is
accreted over the life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax purposes. Because of
these features, such securities may be subject to greater interest rate
volatility than interest paying investments. 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. 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 Underlying SEI Fund or its agent will have actual or constructive
possession of the securities held as collateral for the repurchase agreement. An
Underlying SEI Fund bears a risk of loss in the event the other party defaults
on its obligations and the Fund is delayed or prevented from exercising its
right to dispose of the collateral securities, or if the Fund realizes a loss on
the sale of the collateral securities. An adviser will enter into repurchase
agreements on behalf of an Underlying SEI Fund 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 SEI Fund 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 Underlying SEI Fund 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
SEI Fund will provide that the 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

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an Underlying SEI Fund, the Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, an Underlying SEI Fund
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
SEI Fund may incur delay and costs in selling the security and may suffer a loss
of principal and interest if the Underlying SEI Fund 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 SEI Fund 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 SEI Fund exceeds 20% of the value of that Fund'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
SEI Funds may use the Distributor as a broker in these transactions.

SHORT SALES--An Underlying SEI Fund 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 Underlying SEI Fund 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.

STRUCTURED SECURITIES--The SIT Emerging Markets Debt Fund may purchase
structured securities in entities organized and operated solely for the purpose
of restructuring the investment characteristics of sovereign debt obligations of
emerging market issuers. This type of restructuring involves the deposit with,
or purchase by, an entity, such as a corporation or trust, of specified
instruments (such as commercial bank loans or Brady Bonds) and the issuance by
that entity of one or more classes of securities ("Structured Securities")
backed by, or representing interests in, the underlying instruments. The cash
flow on the underlying instruments may be apportioned among the newly issued
Structured Securities to create securities with different investment
characteristics, such as varying maturities, payment priorities and interest
rate provisions, and the extent of the payments made with respect to Structured
Securities is dependent on the extent of the cash flow on the underlying
instruments. Because Structured Securities of the type in which the SIT Emerging
Markets Debt Fund anticipates it will invest typically involve no credit
enhancement, their credit risk generally will be equivalent to that of the
underlying instruments. The Fund is permitted to invest in a class of Structured
Securities that is either subordinated or unsubordinated to the right of payment
of another class. Subordinated Structured Securities typically have higher
yields and present greater risks than unsubordinated Structured Securities.
Structured Securities are typically sold in private placement transactions, and
there currently is no active trading market for Structured Securities. Certain
issuers of such structured securities may be deemed to be "investment companies"
as defined in

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the 1940 Act. As a result, the Fund's investment in such securities may be
limited by certain investment restrictions contained in the 1940 Act.

SWAPS, 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.

In a typical cap or floor agreement, 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. An interest rate collar combines elements of buying
a cap and selling a floor. In swap agreements, if the Underlying SEI Fund agrees
to exchange payments in dollars for payments in foreign currency, the swap
agreement would tend to decrease the Underlying SEI Fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and interest rates.
Caps and floors have an effect similar to buying or writing options. Depending
on how they are used, swap agreements may increase or decrease the overall
volatility of the Underlying SEI Fund's investment and their share price and
yield.

Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risk assumed. As a
result, swaps can be highly volatile and have a considerable impact on the
Underlying SEI Fund's performance.

Swap agreements are subject to risks related to the counterparty's ability
to perform, and may decline in value if the counterparty's creditworthiness
deteriorates. An Underlying SEI Fund may also suffer losses if it is unable to
terminate outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation an Underlying SEI Fund may have under these types
of arrangements will be covered by setting aside cash or liquid securities in a
segregated account. An Underlying SEI Fund 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, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or
maturing in more than seven days are considered to be illiquid securities.

U.S. GOVERNMENT AGENCY SECURITIES--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., Fannie Mae Securities). Guarantees of
principal by agencies or instrumentalities of the United States Government may
be a guarantee of payment at the maturity of the obligation so that in the event
of a default prior to maturity there might not be a market and thus no means of
realizing on the obligation prior to maturity. Guarantees as to the timely
payment of principal and interest do not extend to the value or yield of these
securities nor to the value of the Underlying SEI Fund's shares.

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

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certificates of receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register. 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 SEI Fund's advisers, be equivalent
to the long-term bond or commercial paper ratings applicable to permitted
investments for each Underlying SEI Fund. Each Underlying SEI Fund's advisers
will monitor on an ongoing basis the earning power, cash flow, and liquidity
ratios of the issuers of such instruments and will similarly monitor the ability
of an issuer of a demand instrument to pay principal and interest on demand.

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

WHEN-ISSUED SECURITIES--When-issued securities are securities for which
delivery and payment normally take place within 45 days after the date of
commitment to purchase. In the case of debt obligations, delivery and payment
normally takes place within 45 days after the date of commitment to purchase. An
Underlying SEI Fund 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 SEI Fund will establish a segregated account and
maintain cash or liquid securities in an amount at least equal in value to that
Underlying SEI Fund's commitments to purchase when-issued securities. If the
value of these assets declines, the Underlying SEI Fund 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.

One form of when-issued or delayed-delivery security that a Fund may
purchase is a "to be announced" ("TBA") mortgage-backed security. A TBA
mortgage-backed security transaction arises when a mortgage-backed security,
such as a GNMA pass-through security, is purchased or sold with specific pools
that will constitute that GNMA pass-through security to be announced on a future
settlement date.

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 securities under Rule 144A of the
Securities Exchange Act of 1933. These consist of debt securities (including
preferred or preference stock of non-governmental issuers), certificates of
deposit, fixed time deposits and bankers' acceptances issued by foreign banks,
and debt obligations of foreign governments or their subdivisions, agencies and
instrumentalities, international agencies and supranational entities. Some

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

The Yankee obligations selected for an Underlying SEI Fund will adhere to
the same standards as those utilized for the selection of domestic debt
obligations.

YEAR 2000 RISKS--The Trust depends on the smooth functioning of computer
systems in almost every aspect of its business. Like other mutual funds,
business and individuals around the world, the Trust could be adversely affected
if the computer systems used by its service providers do not properly process
dates on and after January 1, 2000 and distinguish between the year 2000 and the
year 1900. The Trust has asked its mission critical service providers whether
they expect to have their computer systems adjusted for the year 2000
transition, and have sought and received assurances from each that its system is
expected to accommodate the year 2000 without material adverse consequences to
the Trust. The Trust and its shareholders may experience losses if these
assurances prove to be incorrect or as a result of year 2000 computer
difficulties experienced by issuers of portfolio securities or third parties,
such as custodians, banks, broker-dealers or others with which the Trust does
business.

Furthermore, many foreign countries are not as prepared as the U.S. for the
year 2000 transition. As a result, computer difficulties in foreign markets and
with foreign institutions as a result of the year 2000 may add to the
possibility of losses to the Trust and its shareholder.

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 an Underlying
SEI Fund, and the Underlying SEI Fund 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. An
Underlying SEI Fund 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

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

1. Each Fund will concentrate its investments in mutual fund shares.

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

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<PAGE>
In addition, 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 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

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 as
permitted by the Trust's SEC Order or as otherwise permitted by the 1940
Act.

5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.

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.

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INVESTMENT LIMITATIONS OF THE UNDERLYING SEI FUNDS

FUNDAMENTAL POLICIES

The following investment limitations are fundamental policies of each
Underlying SEI Fund which cannot be changed with respect to an Underlying SEI
Fund without the consent of the holders of a majority of that Fund's outstanding
shares.

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, SIT Emerging Markets Debt and SIT Emerging Markets Equity
Funds may not:

1. With respect to 75% of its assets, (i) purchase the securities of any issuer
(except securities issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than 5% of its total
assets would be invested in the securities of such issuer; or (ii) acquire
more than 10% of the outstanding voting securities of any one issuer.

2. Purchase any securities which would cause more than 25% of the total assets
of the Portfolio to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities.

3. Borrow money in an amount exceeding 33 1/3% of the value 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. To the extent
that its borrowings exceed 5% of its assets, (i) all borrowings will be
repaid before a Fund makes additional investments and any interest paid on
such borrowings will reduce income; and (ii) asset coverage of at least 300%
is required.

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

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

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

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

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

The SIT International Fixed Income Fund may not:

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 Fund taken at current value at the time of the
incurrence of such loan.

2. Make loans, except that the Fund 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

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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 Fund.

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 Fund 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.

14. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the United States Government or its agencies and
instrumentalities.

15. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of the total assets of the Fund. This
borrowing provision is included solely to facilitate the orderly sale of
portfolio securities to accommodate substantial redemption requests if they
should occur and is not for investment purposes. All borrowings will be
repaid before making additional investments for the Portfolio and any
interest paid on such borrowings will reduce the income of the Fund.

For purposes of the industry concentration limitations discussed above, and
for purposes of the International Fixed Income Portfolio, these limitations form
part of the fundamental limitation: (i) utility companies will be divided
according to their services, for example, gas, gas transmission, electric and

S-24
<PAGE>
telephone will each be considered a separate industry; (ii) financial service
companies will be classified according to end users of their services, for
example, automobile finance, bank finance and diversified finance will each be
considered a separate industry; (iii) supranational agencies will be deemed to
be issuers conducting their principal business activities in the same industry;
and (iv) governmental issuers within a particular country will be deemed to be
conducting their principal business in the same industry.

The SLAT Prime Obligation Fund may not:

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 Fund. This
borrowing provision is included solely to facilitate the orderly sale of
portfolio securities to accommodate substantial redemption requests if they
should occur and is not for investment purposes. All borrowings by the Fund
will be repaid before making additional investments for the Fund and any
interest on such borrowings will reduce the income of the Fund.

2. Make loans, except that the Fund 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 Fund'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 Fund 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 Fund 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 Fund 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 Fund is prohibited from acquiring the securities
of other investment companies if, as a result of such acquisition, the Fund
owns more than 3% of the total voting stock of an investment company;
securities issued by any one investment company represent more than 5% of
the total Fund assets; or securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Fund. These investment companies typically incur fees that are separate from
those fees incurred directly by the Fund. The Fund'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

S-25
<PAGE>
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.

12. Purchase any securities which would cause more than 25% of the total assets
of the total assets of the Fund to be invested in the securities of one or
more issuers conducting their principal business activities in the same
industry, provided that this limitation does not apply to investments in (a)
domestic banks and (b) obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities.

13. 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 Fund would be invested
in such securities.

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

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

16. Purchase restricted securities (securities which must be registered under
the Securities Act of 1933 before they may be offered or sold to the public)
or other illiquid securities except as described in 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 are fundamental policies of each Trust and may not be
changed without shareholder approval.

NON-FUNDAMENTAL POLICIES

1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the 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 as
permitted by the 1940 Act.

6. Purchase securities which are not readily marketable if, in the aggregate,
more than 15% of its total assets would be invested in such restricted
securities.

The SLAT Prime Obligation Fund must:

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

S-26
<PAGE>
Under rules and regulations established by the SEC, an Underlying SEI Fund
is prohibited from acquiring the securities of other investment companies if, as
a result of such acquisition, the Underlying SEI Fund owns more than 3% of the
total voting stock of the company; securities issued by any one investment
company represent more than 5% of the Underlying SEI Fund'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 SEI Fund. An
Underlying SEI Fund'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.

THE ADMINISTRATOR TO THE FUNDS

The Administration Agreement provides that SEI Investments Fund Management
("SEI Management") 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 SEI Management 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 SEI Management; or (e) as
to any Fund or the Trust, effective upon the liquidation of such Fund or the
Trust, as the case may be.

SEI Management, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in SEI Management. SEI
Investments and its subsidiaries and affiliates, including SEI Management, are
leading providers of funds evaluation services, trust accounting systems, and
brokerage and information services to financial institutions, institutional
investors, and money managers. SEI Management and its affiliates also serve as
administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select Funds,
The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis
Funds, Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI Institutional International Trust, SEI Insurance Products Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic
Variable Trust, and TIP Funds.

If operating expenses of any Fund exceed applicable limitations, SEI
Management will pay such excess. SEI Management 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.

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<PAGE>
For the fiscal years ended March 31, 1997, 1998 and 1999 SEI Management
waived fees as follows:

<TABLE>
<CAPTION>
FEES PAID FEE WAIVERS
------------------------------------- --------------------------------
1997 1998 1999 1997 1998 1999
----- ----- ----- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Diversified Conservative Income Fund............. $ 0 $ 0 $ 0 $ 3,551 $ 19,257 $ 46,315
Diversified Conservative Fund.................... $ 0 $ 0 $ 0 $ 5,471 $ 38,376 $ 86,269
Diversified Global Moderate Growth Fund.......... $ 0 $ 0 $ 0 $ 29 $ 20,464 $ 53,727
Diversified Moderate Growth Fund................. $ 0 $ 0 $ 0 $ 20,907 $ 77,341 $ 173,396
Diversified Global Growth Fund................... $ 0 $ 0 $ 0 $ 20,537 $ 93,780 $ 68,913
Diversified Global Stock Fund.................... $ 0 $ 0 $ 0 $ 2,307 $ 25,824 $ 172,843
Diversified U.S. Stock Fund...................... $ 0 $ 0 $ 0 $ 16,684 $ 50,632 $ 128,224
</TABLE>

THE INVESTMENT ADVISER TO THE FUNDS

SIMC will discharge its responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust. The Trust's Advisory Agreement with
SIMC provides that SIMC shall not be protected against any liability to the
Trust or its shareholders by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its obligations or duties thereunder.

The 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 SIMC (I.E., the Underlying SEI Funds). In turn, these
Underlying SEI Funds invest in equity, debt and other securities. SIMC is
responsible for investing the assets of each Fund in certain of the Underlying
SEI Funds within percentage ranges established by SIMC, 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 SIMC, or by SIMC on 90 days' written notice to the Trust.

THE ADVISERS AND SUB-ADVISERS TO THE UNDERLYING SEI FUNDS

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 Funds rely upon SIMC for access, on a pooled investment basis, to the
core elements of SIMC's investment adviser selection, monitoring, and asset
allocation services. Under the "Manager of Managers" approach employed by the
Underlying SIMT and SIT Funds, SIMC will recommend and, if the Trustees of the

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<PAGE>
Underlying Trusts approve the recommendation, monitor for the Underlying SEI
Funds 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 SEI 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. 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 SEI Fund, by a majority of the outstanding shares of
that Underlying SEI Fund, on not less than 30 days' nor more than 60 days'
written notice to the Adviser (or Sub-Adviser), or by the Adviser (or
Sub-Adviser) on 90 days' written notice to the Trust. However, SIMC has obtained
an exemptive order from the Securities and Exchange Commission (the "SEC") that
permits SIMC, with the approval of the Trust's Board of Trustees, to retain
sub-advisers for an Underlying SEI Fund without submitting the sub-advisory
agreement to a vote of the Underlying SEI Fund's shareholders. In addition, the
exemptive relief permits the non-disclosure of amounts payable by SIMC under
such sub-advisory agreements.

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 0.10%
of each Fund's average daily net assets. The Adviser has voluntarily agreed to
waive this fee for the forseeable future. This waiver may be terminated by the
Adviser at any time in its sole discretion.

For the fiscal years ended March 31, 1997, 1998 and 1999 the Adviser waived
fees as follows:

<TABLE>
<CAPTION>
FEES PAID FEE WAIVERS
------------------------------------- -------------------------------
1997 1998 1999 1997 1998 1999
----- ----- ----- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Diversified Conservative Income Fund.............. $ 0 $ 0 $ 0 $ 1,775 $ 9,747 $ 23,157
Diversified Conservative Fund..................... $ 0 $ 0 $ 0 $ 2,709 $ 19,188 $ 43,134
Diversified Global Moderate Growth Fund........... $ 0 $ 0 $ 0 $ 14 $ 10,232 $ 26,863
Diversified Moderate Growth Fund.................. $ 0 $ 0 $ 0 $ 10,453 $ 37,000 $ 86,696
Diversified Global Growth Fund.................... $ 0 $ 0 $ 0 $ 10,268 $ 46,889 $ 86,420
Diversified Global Stock Fund..................... $ 0 $ 0 $ 0 $ 1,154 $ 12,091 $ 34,456
Diversified U.S. Stock Fund....................... $ 0 $ 0 $ 0 $ 8,342 $ 25,316 $ 64,111
</TABLE>

SIMC receives advisory fees from some of the underlying SEI Funds.

MANAGERS OF THE UNDERLYING SEI FUNDS

The following persons serve as portfolio managers to the Underlying SEI
Funds:

SIMT LARGE CAP GROWTH FUND

Alliance Capital Management L.P. ("Alliance") serves as a Sub-Adviser for a
portion of the assets of the SIMT Large Cap Growth Fund. 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 June 30, 1998, Alliance managed over $255 billion in assets. The principal
address of Alliance is 1345 Avenue of the Americas, New York, New York 10105.

Provident Investment Counsel, Inc. ("Provident") serves as a Sub-Adviser for
a portion of the assets of the SIMT Large Cap Growth Fund. Provident is a
registered investment adviser with its principal business address at 300 North
Lake Avenue, Pasadena, California 91101, which, through its predecessors, has
been in business since 1951, a wholly-owned subsidiary of United Asset
Management ("UAM"), a

S-29
<PAGE>
publicly traded investment adviser holding company. UAM is headquartered at One
International Place, Boston, Massachusetts 02110. As of June 30, 1999, Provident
had over $20 billion in client assets under management.

TCW Funds Management Inc. ("TCW") serves as a Sub-Adviser for a portion of
the assets of the SIMT Large Cap Growth Fund. TCW is a wholly-owned subsidiary
of the TCW Group, Inc. TCW is a registered investment adviser that currently has
approximately $57.8 billion of assets under management. The principal business
address of TCW is 865 S. Figueroa, Suite 1800, Los Angeles, California 90017.

SIMT LARGE CAP VALUE FUND

LSV Asset Management, L.P. ("LSV") serves as a Sub-Adviser to a portion of
the assets of the SIMT Large Cap Value Fund. LSV is a registered investment
adviser organized as a Delaware general partnership. An affiliate of SIMC owns a
majority interest in LSV. The general partners developed a quantitative value
investment philosophy that has been used to manage assets over the past 7 years.
The principal business address of LSV is 200 W. Madison Avenue, Chicago,
Illinois 60606. LSV manages approximately $5.9 billion in client assets.

Mellon Equity Associates, LLP ("Mellon Equity") serves as a Sub-Adviser to a
portion of the assets of the SIMT Large Cap Value Fund. Mellon Equity is a
limited liability partnership founded in 1987. Mellon Bank, N.A., is the 99%
limited partner and MMIP, Inc. is the 1% general partner. MMIP, Inc. is a
wholly-owned subsidiary of Mellon Bank, N.A., which itself is a wholly-owned
subsidiary of the Mellon Bank Corporation. Mellon Equity had discretionary
management authority with respect to approximately $32.5 billion of assets as of
June 30, 1999. The business address for Mellon Equity is 500 Grant Street, Suite
3700, Pittsburgh, Pennsylvania 15258.

Sanford C. Bernstein & Co., Inc. ("Bernstein"), serves as a Sub-Adviser to a
portion of the assets of the SIMT Large Cap Value Fund. Founded in 1967,
Bernstein is a registered investment adviser that managed approximately $89.9
billion in assets as of June 30, 1999. Bernstein is controlled by the members of
its Board of Directors and its principal business address is 767 Fifth Avenue,
New York, New York 10153.

SIMT SMALL CAP GROWTH FUND

Nicholas-Applegate Capital Management ("Nicholas-Applegate") serves as a
Sub-Adviser to a portion of the assets of the SIMT Small Cap Growth Fund. As of
June 30, 1999, Nicholas-Applegate had discretionary management authority with
respect to approximately $33.5 billion of assets. The principal business address
of Nicholas-Applegate is 600 West Broadway, 29th Floor, San Diego, California
92101. Nicholas-Applegate, pursuant to a partnership agreement, is controlled by
its general partner, Nicholas-Applegate Capital Management Holdings, L.P., a
California limited partnership controlled by a corporation controlled by Arthur
E. Nicholas.

Wall Street Associates ("WSA") serves as a Sub-Adviser for a portion of the
assets of the SIMT Small Cap Growth Fund. WSA was founded in 1987, and as of
June 30, 1999, had approximately $1.4 billion in assets under management. The
principal business address of WSA is at 1200 Prospect Street, Suite 100, La
Jolla, California 92037.

Furman Selz Capital Management LLC ("Furman Selz") serves as a Sub-Adviser
for a portion of the assets of the SIMT Small Cap Growth Fund. Furman Selz, a
Delaware limited liability company whose predecessor was formed in 1977, is a
registered investment adviser that managed approximately $10 billion in assets
as of June 30, 1999. The ultimate parent of Furman Selz is ING Groep N.V., a
Dutch financial services company. Furman Selz's principal business address is
230 Park Avenue, New York, NY 10169.

RS Investment Management, L.P. ("RSIM"), serves as a Sub-Adviser for a
portion of the assets of the SIMT Small Cap Growth Fund. RSIM is a wholly-owned
subsidiary of BankAmerica. RSIM is a registered

S-30
<PAGE>
investment adviser that currently has approximately $4.2 billion of assets under
management, $240 million of which is in the small cap product. The principal
business address of RSIM is 555 California Street, Suite 2600, San Francisco,
California 94104.

Sawgrass Asset Management, LLC ("Sawgrass") serves as a Sub-Adviser to a
portion of the assets of the SIMT Small Cap Growth Fund. Sawgrass, an
entrepreneurial startup by an experienced team of investment professionals, was
founded in 1998. Sawgrass is a registered investment adviser that currently
manages approximately $325 million in assets. Sawgrass's principal business
address is 4337 Pablo Oaks Court, Building 200, Jacksonville, Florida 32224.

SIMT SMALL CAP VALUE FUND

Artisan Partners LP ("Artisan") serves as a Sub-Adviser to a portion of the
assets of the SIMT Small Cap Value Fund. Artisan, a privately owned
multidiscipline investment firm, was founded in 1994. Artisan is a registered
investment adviser that currently manages approximately $2.4 billion in assets.
Artisan's principal business address is 1000 N. Water Street, Milwaukee,
Wisconsin 53202.

Boston Partners Asset Management, L.P. ("BPAM") serves as a Sub-Adviser for
a portion of the assets of the SIMT Small Cap Value Fund. BPAM, a Delaware
limited partnership, is a registered investment adviser whose general partner is
Boston Partners, Inc. BPAM was founded in April, 1995, and as of June 30, 1999,
it had approximately $11.4 billion in assets under management. The principal
business address of BPAM is 28 State Street, 21st Floor, Boston, Massachusetts
02109.

LSV Asset Management, L.P. ("LSV") serves as a Sub-Adviser to a portion of
the assets of the SIMT Small Cap Value Fund. LSV is a registered investment
adviser organized as a Delaware general partnership. An affiliate of SIMC owns a
majority interest in LSV. The general partners developed a quantitative value
investment philosophy that has been used to manage assets over the past 7 years.
The principal business address of LSV is 200 W. Madison Avenue, Chicago,
Illinois 60606. LSV manages approximately $5.9 billion in client assets.

Mellon Equity Associates, LLP ("Mellon Equity") serves as a Sub-Adviser to a
portion of the assets of each of the SIMT Small Cap Value Fund. Mellon Equity is
a limited liability partnership founded in 1987. Mellon Bank, N.A., is the 99%
limited partner and MMIP, Inc. is the 1% general partner. MMIP, Inc. is a
wholly-owned subsidiary of Mellon Bank, N.A., which itself is a wholly-owned
subsidiary of the Mellon Bank Corporation. Mellon Equity had discretionary
management authority with respect to approximately $32.5 billion of assets as of
June 30, 1999. The business address for Mellon Equity is 500 Grant Street, Suite
3700, Pittsburgh, Pennsylvania 15258.

SIT INTERNATIONAL EQUITY FUND

Acadian Asset Management, Inc. ("Acadian") serves as a sub-adviser for a
portion of the assets of the SIT International Equity Fund. Acadian, a
wholly-owned subsidiary of United Asset Management Corporation ("UAM"), was
founded in 1977 and managed approximately $5.5 billion in assets invested
globally as of June 30, 1999. Acadian's business address is Two International
Place, 26th floor, Boston, Massachusetts 02110.

Capital Guardian Trust Company ("CGTC"), a California trust company founded
in 1968, serves as a sub-adviser for a portion of the assets of the SIT
International Equity Fund. CGTC, a wholly-owned subsidiary of The Capital Group
Companies, Inc., managed international portfolios since 1978, and as of June 30,
1999, managed a total of over $95 billion primarily for institutional clients.
The principal business address of CGTC and The Capital Group Companies, Inc. is
333 South Hope Street, Los Angeles, California 90071.

Scottish Widows Investment Management Limited ("Scottish Widows") serves as
a sub-adviser for a portion of the assets of the SIT International Equity Fund.
Scottish Widows is a wholly-owned subsidiary of

S-31
<PAGE>
the Scottish Widows Group, a mutual insurance company founded in 1815 and based
in Edinburgh, Scotland. Scottish Widows was established to provide fund
management across a board client base which includes both individual and
institutional accounts. Scottish Widows employs a concentrated growth investment
process and specializes in the European market. Scottish Widows is a registered
investment adviser that managed approximately $52.8 billion. The principal
business address of Scottish Widows is P.O. Box 17036, 69 Morrison Street,
Edinburgh EH3 8YF, Scotland.

SG Pacific Asset Management, Inc. ("SG Pacific") and SGY Asset Management
(Singapore) Ltd. ("SGY") jointly serve as sub-adviser for a portion of the
assets of the SIT International Equity Funds. Societe Generale Asset Management
(North Pacific), a French financial services conglomerate, has a controlling
interest in SG Yamaichi Asset Management Co., Ltd. ("SG Yamaichi"), the parent
of SG Pacific and SGY. SG Yamaichi serves as a sub-adviser for a portion of the
assets of the International Equity Fund. SG Yamaichi was established in 1971 as
a global asset management firm. SG Pacific and SGY are wholly-owned subsidiaries
of SG Yamaichi. SG Yamaichi specializes in Japan and Pacific Basin equity
management with both active and quantitative strategies. The principal address
of SG Pacific is 30 Wall Street, 8th Floor, New York, New York 10005. The
principal address of SGY is 138 Robinson Road, #13-01/05, Hong Leong Centre,
Singapore 068906. The principal address of SG Yamaichi is 5-1, Nihombashi
Kabutocho, Chuo-ku, Tokyo 103, Japan. SG Yamaichi and its affiliates currently
manage over $20.4 billion in assets worldwide.

SIT EMERGING MARKETS EQUITY FUND

Coronation Asset Management (Proprietary) Limited ("Coronation") serves as a
sub-adviser for a portion of the assets of the SIT Emerging Markets Equity Fund.
Coronation, a registered investment adviser organized under the laws of the
Republic of South Africa, was founded in 1993, and currently manages $4.7
billion in assets. The principal business address of Coronation is 80 Strand
Street, Cape Town, South Africa, 8001.

Parametric Portfolio Associates ("Parametric") serves as a sub-adviser for a
portion of the assets of the SIT Emerging Markets Equity Fund. Parametric is a
general partnership whose general partners are PIMCO Advisors L.P. ("PIMCO"),
the supervisory general partner, and Parametric Management, Inc., the managing
general partner (a wholly-owned subsidiary of PIMCO). Parametric's predecessor
was founded in 1987, and as of June 30, 1999, Parametric managed approximately
$3.9 billion in client assets.

SG Pacific Asset Management, Inc. ("SG Pacific") and SGY Asset Management
(Singapore) Ltd. ("SGY") jointly serve as sub-adviser for a portion of the
assets of the SIT Emerging Markets Equity Funds. Societe Generale Asset
Management (North Pacific), a French financial services conglomerate, has a
controlling interest in SG Yamaichi Asset Management Co., Ltd. ("SG Yamaichi"),
the parent of SG Pacific and SGY. SG Yamaichi was established in 1971 as a
global asset management firm. SG Pacific and SGY are wholly-owned subsidiaries
of SG Yamaichi. SG Yamaichi specializes in Japan and Pacific Basin equity
management with both active and quantitative strategies. The principal address
of SG Pacific is 30 Wall Street, 8th Floor, New York, New York 10005. The
principal address of SGY is 138 Robinson Road, #13-01/05, Hong Leong Centre,
Singapore 068906. The principal address of SG Yamaichi is 5-1, Nihombashi
Kabutocho, Chuo-ku, Tokyo 103, Japan. SG Yamaichi and its affiliates currently
manage over $20.4 billion in assets worldwide.

Credit Suisse Asset Management Limited ("Credit Suisse") acts as a
sub-adviser for a portion of the assets of the SIT Emerging Markets Equity Fund.
Credit Suisse, a UK limited liability company formed in 1982, is a registered
investment adviser that currently manages approximately $37.7 billion. Credit
Suisse is a wholly-owned subsidiary of the Credit Suisse Group, a financial
services conglomerate headquartered in Zurich, Switzerland. Credit Suisse's
principal business address is Beaufort House, 15 St. Botolph Street, London,
EC3A 7JJ.

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<PAGE>
Morgan Stanley Dean Witter Investment Management Inc. ("MSDW Investment
Management") acts as a Sub-Adviser for a portion of the assets of the SIT
Emerging Markets Equity Fund. MSDW Investment Management is a wholly-owned
subsidiary of Morgan Stanley Dean Witter & Co. MSDW Investment Management is a
registered investment adviser that currently has approximately $79.6 billion of
assets under management. The principal business address of MSDW Investment
Management is 1221 Avenue of the Americas, New York, New York 10020.

Nicholas-Applegate Capital Management ("Nicholas-Applegate") serves as a
Sub-Adviser Manager to a portion of the assets of the SIT Emerging Markets
Equity Fund. As of June 30, 1999, Nicholas-Applegate had discretionary
management authority with respect to approximately $33.5 billion of assets. The
principal business address of Nicholas-Applegate is 600 West Broadway, 29th
Floor, San Diego, California 92101. Nicholas-Applegate, pursuant to a
partnership agreement, is controlled by its general partner, Nicholas-Applegate
Capital Management Holdings, L.P., a California limited partnership controlled
by a corporation controlled by Arthur E. Nicholas.

SIMT CORE FIXED INCOME FUND

BlackRock, Inc. (formerly, BlackRock Financial Management, Inc.)
("BlackRock") serves as a Sub-Adviser to a portion of the assets of the SIMT
Core Fixed Income Fund. 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 June 30, 1999 BlackRock had $142 billion in assets under
management. BlackRock is an indirect subsidiary of PNC Bank Corp.

Firstar Investment Research & Management Company, LLC ("FIRMCO") serves as a
Sub-Adviser for a portion of the assets of the SIMT Core Fixed Income Fund.
FIRMCO is a registered investment adviser with its principal business address at
777 East Wisconsin Avenue, Suite 800, Milwaukee, Wisconsin 53202. As of June 30,
1998, it had approximately $24.4 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.

Western Asset Management Company ("Western") serves as a Sub-Adviser for a
portion of the assets of the SIMT Core Fixed Income Fund. Western 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 funds. As of June 30, 1999, Western managed
approximately $41.5 billion in client assets, including $57.4 billion of
investment company assets. The principal business address of Western is 117 East
Colorado Boulevard, Pasadena, California 91105.

SIMT HIGH YIELD BOND FUND

Credit Suisse Asset Management (formerly, BEA Associates) ("Credit Suisse")
serves as the Sub-Adviser for the SIMT High Yield Bond Fund. Credit Suisse is a
general partnership organized under the laws of the State of New York and,
together with its predecessor firms, has been engaged in the investment advisory
business for more than 50 years. Credit Suisse, the second largest Swiss bank,
is a subsidiary of CS Holding, a Swiss corporation. As of June 30, 1999, Credit
Suisse managed approximately $37.7 billion in assets. Credit Suisse's principal
business address is One Citicorp Center, 153 East 53rd Street, New York, New
York 10022.

SIT INTERNATIONAL FIXED INCOME FUND

Strategic Fixed Income, L.L.C. ("Strategic") serves as the investment
adviser to the SIT International Fixed Income Fund. Strategic is a Delaware
limited liability company whose predecessor was formed in 1991 to manage
multi-currency fixed income portfolios. The managing member of the firm is Gobi
Investment Inc., of which Kenneth Windheim is the sole shareholder, and the
limited partner is Strategic

S-33
<PAGE>
Investment Management ("SIM"). As of June 30, 1999, Strategic managed $4.1
billion of client assets. The principal address of Strategic is 1001 Nineteenth
Street North, Suite 1720, Arlington, Virginia 22209.

SIT EMERGING MARKETS DEBT FUND

Salomon Brothers Asset Management Inc ("SBAM") serves as the sub-adviser for
the assets of the SIT Emerging Markets Debt Fund. SBAM, an indirect wholly-owned
subsidiary of The Traveler's Group, is a Delaware corporation that was founded
in 1987. SBAM is a registered investment adviser that currently manages
approximately $27 billion in client assets. SBAM's principal business address is
7 World Trade Center, New York, New York 10048.

DISTRIBUTION

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned
subsidiary of SEI Investments, serves as each Fund's distributor pursuant to a
distribution agreement ("the Distribution Agreement") with the Trust. The Trust
has adopted a Distribution Plan for its Class D shares (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.

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

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

The service fees payable to the Distributor under the Service Plan are
intended to compensate the Distributor for the provision of shareholder
services, and may be used by the Distributor to provide compensation to
financial intermediaries for ongoing service and/or maintenance of shareholder
accounts with respect to Class D Shares of the applicable Funds. Such
shareholder services may include: telephone service to shareholders; acceptance
and processing of written correspondence, new account applications

S-34
<PAGE>
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 Federal Reserve wire. The Distributor shall perform or
supervise the performance by others of other shareholder services in connection
with the operation of the Funds, as agreed from time to time.

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

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

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

Except to the extent that SEI Management (as Administrator) and SIMC (as
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.

For the fiscal year ended March 31, 1999, the Funds incurred the following
distribution expenses:

<TABLE>
<CAPTION>
AMOUNT PAID TO
3RD PARTIES BY
THE DISTRIBUTOR
FOR
TOTAL FEES DISTRIBUTION-
DISTRIBUTION PAID RELATED
FUND CLASS D SHARES EXPENSES % SERVICES
- -------------------------------------------------------------------------- ----------- --------- ---------------
<S> <C> <C> <C>
Diversified Conservative Income Fund...................................... $ 42,432 .75% $ 0
Diversified Conservative Fund............................................. $ 106,760 .75% $ 0
Diversified Global Moderate Growth Fund................................... $ 67,718 .75% $ 0
Diversified Moderate Growth Fund.......................................... $ 204,808 .75% $ 0
Diversified Global Growth Fund............................................ $ 157,653 .75% $ 0
Diversified Global Stock Fund............................................. $ 56,336 .75% $ 0
Diversified U.S. Stock Fund............................................... $ 190,820 .75% $ 0
</TABLE>

S-35
<PAGE>
TRUSTEES AND OFFICERS 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.

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Oak Associates Funds, The Parkstone Group of Funds, The PBHG Funds, Inc., PBHG
Advisor Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI
Daily Income Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional International Trust, SEI Institutional Managed Trust, SEI
Insurance Products Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI
Classic Funds, STI Classic Variable Trust, TIP Funds, and Alpha Select Funds,
each of which is an open-end management investment company managed by SEI
Investments Fund Management or its affiliates and, except for PBHG Advisor
Funds, Inc., distributed by SEI Investments Distribution Co. (the
"Distributor").

ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees*--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Adviser, the Manager and
the Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds,
Marquis Funds-Registered Trademark-, Oak Associates Funds, Pillar Funds, SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust and SEI Tax Exempt
Trust.

WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--1701 Market Street, Philadelphia,
PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to the Trust,
SEI Investments, the Adviser, the Manager and the Distributor, Director and
Secretary of SEI Investments and Secretary of the Adviser, the Manager and the
Distributor. Trustee of The Advisors' Inner Circle Fund. The Arbor Fund, The
Expedition Funds, Marquis Funds-Registered Trademark-, Oak Associates Funds, SEI
Daily Income Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Institutional International Trust, SEI Liquid
Asset Trust and SEI Tax Exempt Trust.

F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--President, Orange County
Publishing Co., Inc.; Publisher, Paoli News and Paoli Republican; and Editor,
Paoli Republican, October 1981-January 1997. 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 SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds and STI Classic Variable Trust.

JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads,
from September 1987-December 1993. Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-, Oak
Associates Funds, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI Institutional
International Trust, SEI Liquid Asset Trust, and SEI Tax Exempt Trust.

GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991-December 1996; Chief

S-36
<PAGE>
Financial Officer, Noble Partners, L.P., March 1991-December 1996; Treasurer and
Clerk, Peak Asset Management, Inc., since 1991; Trustee, Navigator Securities
Lending Trust, since 1995, Trustee of SEI Daily Income Trust, SEI Index Funds,
SEI Liquid Asset Trust, SEI Institutional Investments Trust, SEI Institutional
Managed Trust, SEI Institutional International Trust, and SEI Tax Exempt Trust.

EDWARD D. LOUGHLIN (DOB 03/07/51)--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments, the Adviser and the Manager since 1997. Senior Vice President,
SEI Investments, 1986-1991; Vice President, SEI Investments, 1981-1986.

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

JAMES R. FOGGO (DOB 06/30/64)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and the Distributor since
1980. Associate, Paul Weiss, Rifkind, Wharten & Garrison (law firm), 1998.
Associate, Baker & Mckenzie (law firm), 1995-1998. Associate, Battle Fowler
L.L.P. (law firm), 1993-1995. Operations Manager, The Shareholder Services Group
Inc., 1986-1990.

LYDIA A. GAVALIS (DOB 06/05/64)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange, 1989-1998.

KATHY HEILIG (DOB 12/21/58)--Vice President and Assistant
Secretary--Treasurer of SEI Investments Company since 1997; Assistant Controller
of SEI Investments Company since 1995; Vice President of SEI Investments Company
since 1991; Director of Taxes of SEI Investments Company 1987 to 1991. Tax
Manager, Arthur Anderson LLP prior to 1987.

CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, the
Adviser, the Manager and the Distributor since August 1997. Branch Chief,
Division of Enforcement, U.S. Securities and Exchange Commission, January
1995-August 1997. Senior Counsel--Division of Enforcement, U.S. Securities and
Exchange Commission, September 1992-January 1995. Staff Attorney--Division of
Enforcement, U.S. Securities and Exchange Commission, September 1990-September
1992.

KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, the
Adviser, the Manager and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Adviser and the Manager since 1994.
Vice President, General Counsel and Assistant Secretary of the Adviser, the
Manager and the Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP
(law firm), 1988-1992.

LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.
(1997-1998). Partner, Groom and Nordberg, Chartered, 1996-1997. Associate
General Counsel, Riggs Bank, N.A., 1991-1995.

RICHARD W. GRANT (DOB 10/25/45)--Secretary--1701 Market Street,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm) since
1989, counsel to the Trust, SEI Investments, the Adviser, the Manager and the
Distributor.

MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Investments Mutual Fund
Services and Vice President of the Manager since 1996. Vice President of the
Distributor since December 1997. Vice President, Fund

S-37
<PAGE>
Accounting, BISYS Fund Services September 1995 to November 1996. Senior Vice
President and Site Manager, Fidelity Investments 1981 to September 1995.

- ------------------------

*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. Gooch, Storey, and Sullivan serve as members of the Audit Committee of
the Trust.

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 SEI
Management.

<TABLE>
<CAPTION>
AGGREGATE PENSION OR TOTAL COMPENSATION FROM
COMPENSATION RETIREMENT BENEFITS ESTIMATED ANNUAL REGISTRANT AND FUND
FROM REGISTRANT ACCRUED AS PART OF FUND BENEFITS UPON COMPLEX PAID TO TRUSTEES
NAME OF PERSON AND POSITION FOR FYE 3/31/99 EXPENSES RETIREMENT FOR FYE 3/31/99
- --------------------------------- --------------- ----------------------- --------------------- ----------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee........ $ 0 $ 0 $ 0 $0 for services on 8 boards
William M. Doran, Trustee........ $ 0 $ 0 $ 0 $0 for services on 8 boards
F. Wendell Gooch, Trustee........ $ 9,615.88 $ 0 $ 0 $104,750 for services on 8
boards
Frank E. Morris, Trustee*........ $ 9,615.88 $ 0 $ 0 $77,250 for services on 8
boards
James M. Storey, Trustee......... $ 7,179.61 $ 0 $ 0 $104,750 for services on 8
boards
George J. Sullivan, Trustee...... $ 9,615.88 $ 0 $ 0 $104,750 for services on 8
boards
</TABLE>

- --------------------------

*Mr. Frank E. Morris retired as of December 31, 1998.

Mr. Edward W. Binshadler is a Trustee Emeritus of the Trust. Mr. Binshadler
serves as a consultant to the Audit Committee and receives as compensation,
$5,000 per Audit Committee meeting attended.

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)(to the power of)(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)(to the power of)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.

S-38
<PAGE>
Based on the forgoing, the average annual total returns for the Funds from
inception through March 31, 1999, and for the one year period ended March 31,
1999, and the period from inception to March 31, 1999, were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
----------------------
ONE SINCE
FUND CLASS YEAR INCEPTION
- ----------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
Diversified Conservative Income Fund......................................... Class A 7.22% 11.55%
Class D 6.19% 10.61%
Diversified Conservative Fund................................................ Class A 8.92% 13.53%
Class D 7.84% 12.18%
Diversified Global Moderate Growth Fund...................................... Class A 4.63% 13.63%
Class D 3.54% 12.26%
Diversified Moderate Growth Fund............................................. Class A 8.87% 15.66%
Class D 7.71% 14.20%
Diversified Global Growth Fund............................................... Class A 4.63% 14.90%
Class D 3.50% 13.36%
Diversified Global Stock Fund................................................ Class A 4.22% 16.18%
Class D 3.23% 14.95%
Diversified U.S. Stock Fund.................................................. Class A 9.33% 23.34%
Class D 8.18% 22.90%
</TABLE>

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 SIMC and is based upon
the proportional net asset values of each Fund's Underlying SEI Fund shares
(plus any available cash). Each Underlying SEI Fund's securities are valued by
SIMC pursuant to valuations provided by an independent pricing service
(generally the last quoted sale price). Underlying SEI Fund 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 SEI Fund 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 SEI Funds of the Trust during any 90-day
period of up to the lesser of $250,000 or 1% of the Trust's net assets. 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.

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, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

You may redeem shares at any time. For an IRA or other tax-deferred account,
you must make your redemption request in writing. You should be aware that any
distributions personally received by you from

S-39
<PAGE>
the account prior to age 59 1/2 are generally subject to a 10% penalty tax, as
well as to ordinary income taxes. To avoid the 10% penalty, you must generally
rollover your distribution to another tax-deferred account or tax-qualified
retirement plan (if permitted) within 60 days.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or evaluation of the portfolio securities is not reasonably
practicable, or for such other periods as the SEC may by order permit. The Trust
also reserves the right to suspend sales of shares of the Funds for any period
during which the New York Stock Exchange, the Administrator, 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 SEI Funds and consider the differences in
objectives and policies before making any investment.

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

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

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.

S-40
<PAGE>
This discussion of federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.

Each Fund is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other Funds. Each Fund intends to qualify
as a regulated investment company ("RIC") under Subchapter M of the Code so that
it will be relieved of federal income tax on that part of its income that is
distributed to shareholders. In order to qualify for treatment as a RIC, a Fund
must distribute annually to its shareholders at least 90% of its investment
company taxable income (generally, net investment income plus the excess, if
any, of net short-term capital gain over net long-term capital loss)
("Distribution Requirement") and also must meet several additional requirements.
Among these requirements are the following (i) at least 90% of a Fund's gross
income each taxable year must be derived from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, or other income derived with respect to its business of
investing in such stock or securities; (ii) 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 (iii) at the close of each quarter of a Fund's
taxable year, not more than 25% of the value of its assets may be invested in
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer or of two or more issuers which are engaged in the same,
similar, or related trades or businesses, if the Fund owns at least 20% of the
voting power of such issuers.

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

If capital gain distributions have been made with respect to shares that are
sold at a loss after being held for six months or less, then the loss is treated
as a long-term capital loss to the extent of the capital gain distributions. If
a Fund fails to qualify as a RIC for any year, all of its income will be subject
to tax at corporate rates, and its distributions (including capital gain
distributions) generally will be taxable as ordinary income dividends to its
shareholders, subject to the dividends received deduction for corporate
shareholders who have held shares for more than 45 days during the 90-day period
beginning on the date which is 45 days before the date on which such shares
become exdividend with respect to such dividend.

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 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.

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.

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<PAGE>
IRAs and participants in other tax-qualified retirement plans generally will
not be subject to federal tax liability on either dividend and capital gain
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 their IRAs and/or the plans. There are various restrictions under the
Internal Revenue Code of 1986 (the "Code") on eligibility, contributions and
withdrawals, depending on the type of tax-deferred account or tax-qualified
retirement plan. The rules governing tax-deferred accounts and tax-qualified
retirement plans are complex, and failure to comply with the governing rules and
regulations may result in a substantial cost to you, including the loss of tax
advantages and the imposition of additional taxes and penalties by the IRS. You
should consult with a tax professional on the specific rules governing your own
plan.

STATE TAXES

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

PORTFOLIO TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the advisers and sub-advisers are responsible for
placing orders to execute Fund transactions. In placing orders, it is the
Trust's policy to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the advisers generally seek reasonably competitive spreads or
commissions, the Trust will not necessarily be paying the lowest spread or
commission available. The Trust will not purchase portfolio securities from any
affiliated person acting as principal except in conformity with the regulations
of the SEC.

It is expected that the Funds may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission, in conformity with the 1940 Act, the Securities Exchange Act of
1934, as amended, and rules and regulations of the SEC. Under these provisions,
the Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for a Fund on an exchange if a written contract is in
effect between the Distributor and the Trust expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the Fund
may direct commission business to one or more designated broker-dealers,
including the Distributor, in connection with such broker-dealer's payment of
certain of the Fund's expenses. The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review these
procedures periodically.

In connection with transactions effected for Underlying SEI Funds operating
within the "Manager of Managers" structure, the various firms that serve as
sub-advisers to certain Underlying SEI Funds may direct a substantial portion of
that Underlying SEI Fund's brokerage to the Distributor. All such transactions
directed to the Distributor must be accomplished in a manner that is consistent
with the Trust's policy to achieve best net results, and must comply with the
Trust's procedures regarding the execution of transactions through affiliated
brokers.

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

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<PAGE>
through such firms. However, the Underlying SEI Fund'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
SEI Fund's advisers or sub-advisers may, consistent with the interests of the
Underlying SEI Funds, select brokers on the basis of the research services they
provide to the Underlying SEI Fund'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 SEI Fund's advisers or
sub-advisers under the advisory and sub-advisory agreements. If in the judgment
of an Underlying SEI Fund's advisers, the Underlying SEI Fund, or other accounts
managed by the Underlying SEI Fund's advisers or sub-advisers, will be
benefitted by supplemental research services, the Underlying SEI Fund'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 SEI Fund's advisers or sub-advisers will not necessarily be reduced
as a result of the receipt of such supplemental information.

The portfolio turnover rate for the fiscal year ended March 31, 1997, March
31, 1998 and March 31, 1999 was as follows:

<TABLE>
<CAPTION>
TURNOVER RATE
-------------------------------------
PORTFOLIO 1997 1998 1999
- --------------------------------------------------------------------------------- ----- ----- -----
<S> <C> <C> <C>
Diversified Conservative Income Fund............................................. 27% 52% 63%
Diversified Conservative Fund.................................................... 65% 24% 30%
Diversified Global Moderate Growth Fund.......................................... 3% 30% 34%
Diversified Moderate Growth Fund................................................. 22% 20% 22%
Diversified Global Growth Fund................................................... 13% 15% 18%
Diversified Global Stock Fund.................................................... 0% 10% 30%
Diversified U.S. Stock Fund...................................................... 28% 21% 30%
</TABLE>

A portfolio turnover rate would exceed 100% if all of its securities,
exclusive of U.S. Government securities and other securities whose maturities at
the time of acquisition are one year or less, are replaced in the period of one
year. Turnover rates may vary from year to year and may be affected by cash
requirements for redemptions and by requirements which enable a Fund to receive
favorable tax treatment.

DESCRIPTION OF SHARES

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

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for
his or her own willful defaults and, if reasonable care has been exercised in
the selection of officers, agents, employees or administrators, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides

S-43
<PAGE>
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

Each share held entitles the Shareholder of record to one vote. Shareholders
of each Fund or class will vote separately on matters pertaining solely to that
Fund or class, such as any distribution plan. 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 shareholders requesting
the meeting.

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.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of July 5, 1999, the following persons were the only persons who were
record owners (or, to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Funds. The Trust believes that most of the shares
referred to below were held by the following persons in accounts for their
fiduciary, agency, or custodial customers.

S-44
<PAGE>

<TABLE>
<CAPTION>
ADDRESS NUMBER OF SHARES PERCENTAGE
- ----------------------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
DIVERSIFIED CONSERVATIVE INCOME FUND--CLASS A:
NFSC FEBO # 379-181340 ............................................................ 119,592 5.70%
Susan Jacobs
Hibsman/Jacobs/Rome Ttees
U/A 11/01/1979
19 Wilbur St.
Lynbrook, NY 11563-2360

Palsan Company .................................................................... 272,795 13.01%
C/O Sumitomo Bank of California
320 California Street, 3rd Floor
Trust Department-Stephen N. Emigh
San Francisco, CA 94104-1403

SEI Trust Company ................................................................. 792,686 37.80%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087-1610

GABCO ............................................................................. 135,416 7.41%
German American Bank
Attn: Norm Kempf
711 Main Street
Jasper, IN 47546-3042

DIVERSIFIED CONSERVATIVE INCOME FUND--CLASS A:
Bankers Trust A Trustee for Hercules Incorporated ................................. 402,280 9.88%
Attn: Andrew Bertone
BTNY Services
100 Plaza One Mail Stop 3064
Jersey City, NJ 07311-3901

SEI Trust Company ................................................................. 2,580,824 63.36%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087-1610

DIVERSIFIED GLOBAL GROWTH FUND--CLASS A:
SEI Trust Company ................................................................. 4,013,528 63.88%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087-1610

GABCO ............................................................................. 690,438 10.99%
German American Bank
Attn: Norm Kempf
711 Main Street
Jasper, IN 47546-3042
</TABLE>

S-45
<PAGE>
<TABLE>
<CAPTION>
ADDRESS NUMBER OF SHARES PERCENTAGE
- ----------------------------------------------------------------------------------- ----------------- -------------

DIVERSIFIED U.S. STOCK FUND--CLASS A:
<S> <C> <C>
SEI Trust Company ................................................................. 2,115,778 49.79%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087-1610

F&M Company ....................................................................... 236,485 5.57%
C/O F&M Bank - Winchester
Attn: Roxanne Caniford
P.O. Box 2800
Winchester, VA 22604-2000

GABCO ............................................................................. 350,561 8.25%
German American Bank
Attn: Norm Kempf
711 Main Street
Jasper, IN 47546-3042

DIVERSIFIED GLOBAL MODERATE GROWTH FUND--CLASS A:
Grand Old Co ...................................................................... 200,461 8.99%
C/O First National Bank of Zanesville
Attn: Roberta Schenkel
PO Box 2307
Zanesville, OH 43702-2307

Palsan Company .................................................................... 135,734 6.08%
C/O Sumitomo Bank of California
320 California Street, 3rd Floor
Trust Department - Stephen N. Emigh
San Francisco, CA 94101-1403

SEI Trust Company ................................................................. 1,535,747 68.84%
Attn: Jacqueline Esposito
680 E. Swedesford Rd.
Wayne, PA 19087-1610

DIVERSIFIED GLOBAL STOCK FUND--CLASS A:
Valle ............................................................................. 186,139 5.17%
C/O Marshall & Iisley
1000 North Water Street-TR11
Milwaukee, WI 53202-6648

Charles Scwab and Company ......................................................... 197,429 5.48%
101 Montgomery Street
Attn: Mutual Funds Dept
San Francisco, CA 94104-4122

SEI Trust Company ................................................................. 2,684,178 74.50%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087-1610
</TABLE>

S-46
<PAGE>
FINANCIAL STATEMENTS

The Trust's financial statements for the fiscal year ended March 31, 1999,
including notes thereto and the report of PricewaterhouseCoopers, LLP thereon,
are incorporated by reference. A copy of the 1999 Annual Report must accompany
the delivery of this Statement of Additional Information.

CUSTODIAN

SEI Investments Fund Management, which also serves as transfer agent for the
Underlying SEI Funds, also maintains custody of assets of each Fund that consist
of uncertificated shares of the Underlying SEI Funds. First Union National Bank,
Broad and Chestnut Streets, P.O. Box 7618, Philadelphia, Pennsylvania 19101,
acts as the 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.

EXPERTS

The financial statements incorporated by reference into this Statement of
Additional Information and the Financial Highlights included in the prospectuses
have been audited by PricewaterhouseCoopers, LLP, 2400 Eleven Penn Center,
Philadelphia, Pennsylvania 19103, independent public accountants, as indicated
by their report, with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in giving said report.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as counsel to the Trust and to the
Underlying SEI Funds.

S-47
<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 class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's bond ratings, where specified, are applied to senior bank
obligations and insurance company senior policyholder and claims obligations
with an original maturity in excess of one year. Obligations relying upon
support mechanisms such as letters-of-credit and bonds of indemnity are excluded
unless explicitly rated.

Obligations of a branch of a bank are considered to be domiciled in the
country in which the branch is located. Unless noted as an exception, Moody's
rating on a bank's ability to repay senior obligations extends only to branches
located in countries which carry a Moody's sovereign rating. Such branch

S-48
<PAGE>
obligations are rated at the lower of the bank's rating or Moody's sovereign
rating for the bank deposits for the country in which the branch is located.

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

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

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.

S-49
<PAGE>
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.

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

S-50
<PAGE>
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 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).

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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."

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.

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