SEI INSURANCE PRODUCTS TRUST, 485APOS, 2000-02-29

SEI INSURANCE PRODUCTS TRUST
485APOS, 2000-02-29

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 29, 2000
FILE NO. 333-70013
FILE NO. 811-09183
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-1A

<TABLE>
<S> <C> <C>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 1
AND
REGISTRATION STATEMENT UNDER
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 2
</TABLE>

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SEI INSURANCE PRODUCTS TRUST
(Exact Name of Registrant as Specified in Charter)

C/O CT CORPORATION
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)

EDWARD D. LOUGHLIN
c/o SEI Investments Company
Oaks, Pennsylvania 19456

COPIES TO:

<TABLE>
<S> <C>
Richard W. Grant, Esquire John H. Grady, Jr., Esquire
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
1701 Market Street 1701 Market Street
Philadelphia, Pennsylvania 19103 Philadelphia, Pennsylvania 19103
</TABLE>

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Title of Securities Being Registered...Units of Beneficial Interest

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

It is proposed that this filing become effective (check appropriate box)

<TABLE>
<C> <S>
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(1)
/ / on April 29, 2000, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
</TABLE>

If appropriate check the following box:

<TABLE>
<C> <S>
/ / This post-effective Amendment designates a
new effective date for a previously filed
post- effective Amendment.
</TABLE>

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<PAGE>
SEI
INSURANCE
PRODUCTS
TRUST
CLASS B SHARES

PROSPECTUS
APRIL 30, 2000

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

MONEY MARKET FUND:
SEI VP PRIME OBLIGATION FUND
---------------------------------------------------------

INVESTMENT ADVISER
SEI INVESTMENTS MANAGEMENT CORPORATION

SUB-ADVISER
WELLINGTON MANAGEMENT COMPANY, LLP

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.
<PAGE>
SEI Insurance
Products Trust
ABOUT THIS PROSPECTUS
- ------------------------------------------------------------------------

SEI Insurance Products Trust is a mutual fund family that offers shares in
separate investment portfolios (Funds). The Funds have individual investment
goals and strategies and are designed exclusively as funding vehicles for
variable life insurance and variable annuity contracts. This prospectus gives
contract owners important information about the Class B Shares of the SEI VP
Prime Obligation Fund. Please read this prospectus and keep it for future
reference. Variable life insurance and variable annuity account investors should
also review the separate account prospectus prepared by their insurance company.

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 APPLICABLE TO THE FUND. FOR
MORE DETAILED INFORMATION ABOUT THE FUND, PLEASE SEE:

PRINCIPAL INVESTMENT STRATEGIES AND RISKS............................4
PERFORMANCE INFORMATION AND EXPENSES.................................5
MORE INFORMATION ABOUT FUND INVESTMENTS..............................6
THE ADVISER AND SUB-ADVISER..........................................6
PURCHASING AND SELLING FUND SHARES...................................6
DIVIDENDS AND DISTRIBUTIONS..........................................7
TAXES................................................................7
HOW TO OBTAIN MORE INFORMATION ABOUT SEI INSURANCE PRODUCTS
TRUST.......................................................Back Cover
<PAGE>
PROSPECTUS 3

RISK/RETURN INFORMATION

The SEI VP Prime Obligation Fund is a mutual fund that is available solely as a
funding vehicle for variable annuity and variable life insurance contracts sold
by various insurance companies. A mutual fund pools investors' money and, using
professional investment managers, invests it in securities.

The Fund has its own investment goal and strategies for reaching that goal. The
Fund's assets are managed under the direction of SEI Investments Management
Corporation (SIMC), and one or more Sub-Advisers who manage portions of the
Fund's assets and invest those assets in a way that they believe will help the
Fund achieve its goal. SIMC acts as "manager of managers" for the Fund, and
attempts to ensure that the Sub-Adviser(s) comply with the Fund's investment
policies and guidelines. SIMC also recommends the appointment of additional or
replacement Sub-Advisers to the Fund's Board. Still, investing in the Fund
involves risks, and there is no guarantee that the Fund will achieve its goal.
SIMC and the Sub-Advisers make judgments about the securities markets, the
economy, or companies, but these judgments may not anticipate actual market
movements or the impact of economic conditions on company performance. In fact,
no matter how good a job the Sub-Advisers do, you could lose money on your
investment in the Fund, 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 investment objectives and policies of the Fund may be similar to those of
other retail mutual funds which can be purchased outside of a variable insurance
product, and that are managed by the same investment adviser or sub-adviser. The
investment results of the Fund, however, may be higher or lower than the results
of such other retail mutual funds. There can be no assurance, and no
representation is made, that the investment results of the Fund will be
comparable to the investment results of any other retail mutual fund, even if
the other retail mutual fund has the same investment adviser or sub-adviser.
<PAGE>
4 PROSPECTUS

SEI VP PRIME OBLIGATION FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal and maintaining liquidity while
providing current income
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SHARE PRICE VOLATILITY Very low
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PRINCIPAL INVESTMENT STRATEGY The Fund is professionally managed to provide liquidity,
diversification and a competitive yield by investing in high
quality, short-term money market instruments
</TABLE>

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INVESTMENT STRATEGY

The SEI VP Prime Obligation Fund is comprised of short-term debt obligations of
U.S. issuers that are rated in one of the two highest rating categories by
nationally recognized statistical rating organizations or securities that the
Sub-Adviser determines are of comparable quality. The Fund invests in: (i)
commercial paper (including asset-backed securities) rated in the highest
short-term rating category by at least one nationally recognized statistical
rating organization; (ii) certificates of deposit, time deposits, bankers'
acceptances, bank notes and other obligations of U.S. commercial banks or
savings and loan institutions that meet certain asset requirements;
(iii) short-term obligations (including asset-backed securities) rated in one of
the two highest long-term rating categories; (iv) short-term obligations issued
by state and local governments; and (v) U.S. Treasury obligations and
obligations issued or guaranteed as to principal and interest by agencies or
instrumentalities of the U.S. government. The Fund may also enter into
fully-collateralized repurchase agreements.

Using a top-down strategy (considering macroeconomic factors) and bottom-up
security selection (considering the merits of an individual security), the
Sub-Adviser seeks securities with an acceptable maturity, that are marketable
and liquid, offer competitive yields, and are issued by issuers that are on a
sound financial footing. The Sub-Adviser also considers factors such as the
anticipated level of interest rates and the maturity of individual securities
relative to the maturity of the Fund as a whole. The Fund follows strict
Investment Company Act rules about the credit quality, maturity and
diversification of its investments.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT. ALTHOUGH THE FUND SEEKS TO
MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, YOU MAY LOSE MONEY BY INVESTING IN
THE FUND.
<PAGE>
PROSPECTUS 5

SEI VP PRIME OBLIGATION FUND

PERFORMANCE INFORMATION

As of December 31, 1999, the SEI VP Prime Obligation Fund had not commenced
operations, and did not have a performance history.

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FUND FEES AND EXPENSES

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

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES CLASS B
(EXPENSES DEDUCTED FROM FUND ASSETS) SHARES
<S> <C>
Investment Advisory Fees 0.08%
Distribution (12b-1) Fees None
Other Expenses 0.90%*
--------
Total Annual Fund Operating Expenses 0.98%**
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.

** THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE CURRENT FISCAL
YEAR ARE EXPECTED TO BE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER AND
ADMINISTRATOR WILL EACH VOLUNTARILY WAIVE A PORTION OF ITS FEE IN ORDER TO KEEP
TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER AND/OR ADMINISTRATOR
MAY DISCONTINUE ALL OR PART OF THEIR WAIVERS AT ANY TIME. WITH THESE FEE
WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE EXPECTED TO BE AS
FOLLOWS:

<TABLE>
<S> <C>
SEI VP PRIME OBLIGATION FUND 0.69%
</TABLE>

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

The amount set forth above does not reflect the fees and expenses of the
insurance contract that are charged by your insurance company.

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, Fund operating expenses remain the same, and you
reinvest all dividends and distributions. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
SEI VP Prime Obligation Fund -- Class B Shares $100 $312
</TABLE>

<PAGE>
6 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Fund's primary strategies, and the Fund will
normally invest at least 65% of its assets in the types of securities described
in this prospectus. However, the Fund also may invest in other securities, use
other strategies and engage in other investment practices. These investments and
strategies, as well as those described in this prospectus, are described in
detail in the Fund's Statement of Additional Information (SAI).

The investments and strategies described throughout this prospectus are those
that the Sub-Adviser uses under normal conditions. During unusual economic or
market conditions or for temporary defensive or liquidity purposes, the Fund may
invest up to 100% of its assets in cash, money market instruments, repurchase
agreements and short-term obligations that may not be consistent with the Fund's
objectives. The Fund will do so only if the Adviser or Sub-Adviser believe that
the risk of loss outweighs the opportunity for capital gains and higher income.
Of course, there is no guarantee that the Fund will achieve its investment goal.

INVESTMENT ADVISER AND SUB-ADVISER

SEI INVESTMENTS MANAGEMENT CORPORATION (SIMC) ACTS AS THE MANAGER OF MANAGERS OF
THE FUND, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE FUND SINCE IT
ALLOCATES THE FUND'S ASSETS TO ONE OR MORE SUB-ADVISERS AND RECOMMENDS HIRING OR
CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES.

The Sub-Adviser makes investment decisions for the assets it manages and
continuously reviews, supervises and administers its investment program. SIMC
oversees the Sub-Adviser to ensure compliance with the Fund's investment
policies and guidelines, and monitors the Sub-Adviser's adherence to its
investment style. The Board of Trustees supervises SIMC and the Sub-Adviser;
establishes policies that they must follow in their management activities; and
oversees the hiring and termination of Sub-Advisers recommended by SIMC. SIMC
pays the Sub-Adviser out of the investment advisory fees it receives.

SIMC, an SEC-registered adviser, serves as the Adviser to the Fund. As of
December 31, 1999, SIMC had approximately $61.8 billion in assets under
management. SIMC is entitled to investment advisory fees of 0.08% of the average
daily net assets of the Fund.

SUB-ADVISER AND PORTFOLIO MANAGER

Wellington Management Company, LLP: A committee of investment professionals at
Wellington Management Company, LLP, manages the assets of the Fund.

PURCHASING AND SELLING FUND SHARES

HOW TO PURCHASE FUND SHARES

Shares are offered on each day that the New York Stock Exchange (NYSE) is open
for business (a "Business Day").

The Fund offers its Class B Shares only to insurance companies for separate
accounts they establish to fund variable life insurance and variable annuity
contracts. An insurance company purchases or redeems shares of the Fund based
on, among other things, the amount of net contract premiums or purchase payments
allocated to a separate account investment division, transfers to or from a
separate account investment division, contract loans and repayments, contract
withdrawals and surrenders, and benefit payments. The contract prospectus
describes how contract owners may allocate, transfer and withdraw amounts to,
and from, separate accounts.
<PAGE>
PROSPECTUS 7

PURCHASING AND SELLING FUND SHARES

HOW THE FUND CALCULATES NAV

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

The Fund values securities utilizing the amortized cost method (as described in
the SAI). If the Fund thinks amortized cost is unreliable, fair value prices may
be determined in good faith using methods approved by the Board of Trustees. The
Fund expects its NAV to remain constant at $1.00 per share, although there is no
guarantee that the Fund can accomplish this.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives no compensation for distributing the Fund's Class B
Shares.

For Class B Shares, shareholder servicing fees, as a percentage of average daily
net assets, may be up to 0.25%.

DIVIDENDS AND DISTRIBUTIONS

The Fund declares dividends daily and distributes its income monthly. The Fund
makes distributions of capital gains, if any, at least annually.

TAXES

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

The Fund has been advised that it will not have to pay income taxes if it
distributes all of its income and gains. Net income and realized capital gains
that the Fund distributes are not currently taxable when left to accumulate
within a variable annuity or variable life insurance contract.

For information on federal income taxation of a life insurance company with
respect to its receipt of distributions from the Fund and federal income
taxation of owners of variable annuity or variable life insurance contracts,
refer to your contract prospectus.

MORE INFORMATION ABOUT TAXES IS IN THE FUND'S SAI.
<PAGE>
SEI Insurance
Products Trust

INVESTMENT ADVISER

SEI Investments Management Corporation
One Freedom Valley Drive
Oaks, PA 19456

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)
- ------------------------------------------------

The SAI dated April 30, 2000, includes more detailed information about SEI
Insurance Products 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
a part of this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS
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These reports will typically list the Fund's holdings and contain information
from the Fund's managers about strategies and market conditions and trends and
their impact on performance. The reports will also contain detailed financial
information about the Fund.

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
- ------------------------------------------------

BY TELEPHONE: Call 1-800-DIAL-SEI

BY MAIL: Write to the Fund 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 SEI Insurance Products Trust, from the EDGAR
Database on the SEC's website ("http://www.sec.gov"). You may review and copy
documents at the SEC Public Reference Room in Washington, D.C. (for information
on the operation of the Public Reference Room, call 202-942-8090). 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 20549-0102. You may also obtain this information, upon payment of
a duplicating fee, by e-mailing the SEC at the following address:
[email protected].

The Trust's Investment Company Act registration number is 811-9183.
<PAGE>
SEI INSURANCE PRODUCTS TRUST

Adviser:

SEI Investments Management Corporation

Administrator:

SEI Investments Fund Management

Distributor:

SEI Investments Distribution Co.

Sub-Advisers:

Acadian Asset Management, Inc.
Alliance Capital Management L.P.
Artisan Partners Limited Partnership
BlackRock Financial Management, Inc.
BlackRock International, Ltd.
Capital Guardian Trust Company
Coronation Asset Management (Proprietary)
Limited
Credit Suisse Asset Management LLC/
Americas
Credit Suisse Asset Management Limited
Firstar Investment Research & Management
Company, LLC
LSV Asset Management, L.P.
Mazama Asset Management, LLC
Mellon Bond Associates, LLP
Mellon Equity Associates, LLP
Morgan Stanley Dean Witter Investment
Management Inc.
Nicholas-Applegate Capital Management
Nomura Corporate Research and Asset
Management Inc.
Oechsle International Advisors, LLC
Provident Investment Counsel, Inc.
RS Investment Management, L.P.
Salomon Brothers Asset Management Inc
Sanford C. Bernstein & Co., Inc.
Sawgrass Asset Management, LLC
Security Capital Global Capital Management
Incorporated
SG Pacific Asset Management, Inc.,
SGY Pacific Asset Management (Singapore)
Limited
SG Yamaichi Asset Management Co., Ltd.
Strategic Fixed Income, LLC
TCW Funds Management Inc.
Wellington Asset Management Company, LLP
Western Asset Management Company
World Asset Management, LLC

This STATEMENT OF ADDITIONAL INFORMATION is not a Prospectus. It is intended
to provide additional information regarding the activities and operations of SEI
Insurance Products Trust (the "Trust") and should be read in conjunction with
the Trust's Prospectus dated April 30, 2000. A Prospectus may be obtained
through SEI Investments Distribution Co., Oaks, Pennsylvania 19456.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
The Trust................................................... S-3
Investment Objectives and Policies.......................... S-3
Description of Permitted Investments and Risk Factors....... S-12
Description of Ratings...................................... S-34
Investment Limitations...................................... S-41
The Administrator and Transfer Agent........................ S-42
The Adviser and The Sub-Advisers............................ S-43
Distribution and Shareholder Servicing...................... S-47
Trustees and Officers of the Trust.......................... S-47
Performance................................................. S-50
Purchase and Redemption of Shares........................... S-52
Taxes....................................................... S-52
Portfolio Transactions...................................... S-54
Description of Shares....................................... S-55
Limitation of Trustees' Liability........................... S-55
Voting...................................................... S-56
Custodians.................................................. S-56
Shareholder Liability....................................... S-56
Experts..................................................... S-56
Legal Counsel............................................... S-56
</TABLE>

April 30, 2000

S-2
<PAGE>
THE TRUST

SEI Insurance Products Trust (the "Trust") is an open-end management
investment company that has diversified and non-diversified portfolios. The
Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated December 14, 1998. The Declaration of Trust permits the Trust to
offer separate series ("funds") of units of beneficial interest ("shares") and
different classes of shares. Each share of each fund represents an equal
proportionate interest in that fund with each other share of that fund. All
consideration received by the Trust for shares of any class of any fund and all
assets of such fund or class belong to that fund or class, respectively, and
would be subject to the liabilities related thereto.

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

Certain shareholders in one or more of the Funds may obtain asset allocation
services from the Adviser and other financial intermediaries with respect to
their investments in such Funds. If a sufficient amount of a Fund's assets are
subject to such asset allocation services, a Fund may incur higher transaction
costs and a higher portfolio turnover rate than would otherwise be anticipated
as a result of redemptions and purchases of Fund shares pursuant to such
services. Further, to the extent that the Adviser is providing asset allocation
services and providing investment advice to the Funds, it may face conflicts of
interest in fulfilling its responsibilities because of the possible differences
between the interests of its allocation clients and the interest of the Funds.

This Statement of Additional Information relates to the SEI VP Large Cap
Value, SEI VP Large Cap Growth, SEI VP S&P 500 Index, SEI VP Small Cap Value,
SEI VP Small Cap Growth, SEI VP International Equity, SEI VP Emerging Markets
Equity, SEI VP Core Fixed Income, SEI VP Bond Index, SEI VP High Yield Bond, SEI
VP International Fixed Income, SEI VP Emerging Markets Debt and SEI VP Prime
Obligation Funds (each a "Fund" and, together, the "Funds").

The investment adviser and investment sub-advisers to the Funds are referred
to collectively as "advisers."

INVESTMENT OBJECTIVES AND POLICIES

SEI VP LARGE CAP VALUE FUND--The investment objective of the SEI VP Large
Cap Value Fund is long-term growth of capital and income.

Under normal market conditions, the Fund will invest at least 65% of its
total assets in a diversified portfolio of high quality, income producing common
stocks of large companies (I.E., companies with market capitalizations of more
than $1 billion) which, in the opinion of the advisers, are undervalued in the
marketplace at the time of purchase. In general, the advisers characterize high
quality securities as those that have above-average reinvestment rates. The
advisers also consider other factors, such as earnings and dividend growth
prospects, as well as industry outlook and market share. Any remaining assets
may be invested in other equity securities and in investment grade fixed income
securities. Investment grade (I.E., rated in one of the four highest ratings
categories) fixed income securities are securities that are rated at least BBB
by Standard & Poor's Corporation ("S&P") or Baa by Moody's Investors Service,
Inc. ("Moody's"). The Fund may also borrow money, invest in illiquid securities,
when-issued and delayed-delivery securities, shares of real estate investment
trusts ("REITs"), and shares of other investment companies, and lend its
securities to qualified buyers.

S-3
<PAGE>
SEI VP LARGE CAP GROWTH FUND--The investment objective of the SEI VP Large
Cap Growth Fund is capital appreciation.

Under normal market conditions, the Fund will invest at least 65% of its
total assets in equity securities of large companies (I.E., companies with
market capitalizations of more than $1 billion) which, in the opinion of the
advisers, possess significant growth potential. Any remaining assets may be
invested in investment grade fixed income securities or in equity securities of
smaller companies that the Fund's advisers believe are appropriate in light of
the Fund's objective. The Fund may also borrow money, invest in illiquid
securities, when-issued and delayed-delivery securities, shares of REITs, and
shares of other investment companies, and lend its securities to qualified
buyers.

SEI VP S&P 500 INDEX FUND--The SEI VP S&P 500 Index Fund seeks to provide
investment results that correspond to the aggregate price and dividend
performance of the securities in the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"), which is comprised of 500 selected securities (most
of which are common stocks listed on the New York Stock Exchange).

The Fund's ability to duplicate the performance of the S&P 500 Index will
depend to some extent on the size and timing of cashflows into and out of the
Fund, as well as on the level of the Fund's expenses.

Adjustments made to accommodate cash flows will track the S&P 500 Index to
the maximum extent possible, and may result in brokerage expenses for the Fund.
Over time, the correlation between the performance of the Fund and the S&P 500
Index is expected to be over 0.95. A correlation of 1.00 would indicate perfect
correlation, which would be achieved when the net asset value of the Fund,
including the value of its dividend and capital gains distributions, increased
or decreased in exact proportion to changes in the S&P 500 Index.

The Fund will normally be invested in all of the stocks and other securities
which comprise the S&P 500 Index, except when changes are made to the S&P 500
Index itself. The Fund's policy is to be fully invested in common stocks and
other securities included in the Index, and it is expected that cash reserve
items would normally be less than 10% of net assets. Accordingly, an investment
in shares of the Fund involves risks similar to those of investing in a
portfolio consisting of the common stocks and other securities of some or all of
the companies included in the S&P 500 Index.

The weightings of securities in the S&P 500 Index are based on each
security's relative total market value, I.E., market price per share times the
number of shares outstanding. Because of this weighting, approximately 50% of
the S&P 500 Index is currently composed of stocks of the 50 largest companies in
the S&P 500 Index, and the S&P 500 Index currently represents over 65% of the
market value of all U.S. common stocks listed on the New York Stock Exchange.

World Asset Management, LLC ("World"), the Fund's Sub-Adviser, makes no
attempt to "manage" the Fund in the traditional sense (I.E., by using economic,
financial or market analyses). The adverse financial situation of a company
usually will not result in the elimination of a security from the Fund. However,
an investment may be removed from the Fund if, in the judgment of World, the
merit of the investment has been substantially impaired by extraordinary events
or adverse financial conditions. Furthermore, administrative adjustments may be
made in the Fund from time to time because of mergers, changes in the
composition of the S&P 500 Index and similar reasons. In certain circumstances,
World may exercise discretion in determining whether to exercise warrants or
rights issued in respect to fund securities or whether to tender fund securities
pursuant to a tender or exchange offer.

The equity securities in which the Fund invests are common stocks, preferred
stocks, securities convertible into common stock and American Depositary
Receipts ("ADRs"). The Fund may also purchase shares of REITs.

The Fund may enter into stock index futures contracts to maintain adequate
liquidity to meet its redemption demands while maximizing the level of the
Fund's assets which are tracking the performance of the S&P 500 Index, provided
that the value of these contracts does not exceed 20% of the Fund's total

S-4
<PAGE>
assets. The Fund may only purchase those stock index futures contracts--such as
futures contracts on the S&P 500 Index--that are likely to closely duplicate the
performance of the S&P 500 Index. The Fund also can sell such futures contracts
in order to close out a previously established position. The Fund will not enter
into any stock index futures contract for the purpose of speculation, and will
only enter into contracts traded on national securities exchanges with
standardized maturity dates.

The Fund may invest cash reserves in securities issued by the U.S.
Government, its agencies or instrumentalities, bankers' acceptances, commercial
paper rated at least A-1 by S&P and/or Prime-1 by Moody's, certificates of
deposit and repurchase agreements involving such obligations. Such investments
will not be used for defensive purposes.

The Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes no
representation or warranty, implied or express, to the purchasers of the Fund or
any member of the public regarding the advisability of investing in index funds
or the Fund or the ability of the Index to track general stock market
performance.

SEI VP SMALL CAP VALUE FUND--The investment objective of the SEI VP Small
Cap Value Fund is capital appreciation.

Under normal market conditions, the Fund will invest at least 65% of its
total assets in the equity securities of smaller companies (I.E., companies with
market capitalizations of less than $2 billion) which, in the opinion of the
advisers, have prices that appear low relative to certain fundamental
characteristics such as earnings, book value, or return on equity. Any remaining
assets may be invested in investment grade fixed income securities or equity
securities of larger, more established companies that the Fund's advisers
believe are appropriate in light of the Fund's objective. The Fund may also
borrow money, invest in illiquid securities, when-issued and delayed-delivery
securities, shares of REITs, and shares of other investment companies, and lend
its securities to qualified buyers.

SEI VP SMALL CAP GROWTH FUND--The investment objective of the SEI VP Small
Cap Growth Fund is long-term capital appreciation.

Under normal market conditions, the Fund will invest at least 65% of its
total assets in the equity securities of smaller growth companies (I.E.,
companies with market capitalizations less than $2 billion) which, in the
opinion of the advisers, are in an early stage or transitional point in their
development and have demonstrated or have the potential for above average
capital growth. Any remaining assets may be invested in the equity securities of
more established companies that the advisers believe may offer strong capital
appreciation potential due to their relative market position, anticipated
earnings growth, changes in management or other similar opportunities.

For temporary defensive purposes, the Fund may invest all or a portion of
its assets in common stocks or larger, more established companies and in
investment grade fixed income securities. The Fund may also borrow money, invest
in illiquid securities, when-issued and delayed-delivery securities, shares of
REITs, and shares of other investment companies, and lend its securities to
qualified buyers.

The Fund's annual turnover rate may exceed 100%. Such a turnover rate may
result in higher transaction costs and in additional taxes for shareholders.

SEI VP INTERNATIONAL EQUITY FUND--The SEI VP International Equity Fund seeks
to provide long-term capital appreciation by investing primarily in a
diversified portfolio of equity securities of non-U.S. issuers.

Under normal circumstances, at least 65% of the International Equity Fund's
assets will be invested in equity securities of non-U.S. issuers located in at
least three countries other than the United States.

Securities of non-U.S. issuers purchased by the Fund will typically be
listed on recognized foreign exchanges, but also may be purchased in
over-the-counter markets, on U.S. registered exchanges, or in the form of
sponsored or unsponsored ADRs traded on registered exchanges or NASDAQ, or
sponsored or

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unsponsored European Depositary Receipts ("EDRs"), Continental Depositary
Receipts ("CDRs") or Global Depositary Receipts ("GDRs"). The Fund expects its
investments to emphasize both large, intermediate and small capitalization
companies.

The Fund expects to be fully invested in the primary investments described
above, but may invest up to 35% of its total assets in U.S. or non-U.S. cash
reserves; money market instruments; swaps; options on securities and non-U.S.
indices; futures contracts, including stock index futures contracts; and options
on futures contracts. The Fund is permitted to acquire floating and variable
rate securities, purchase securities on a when-issued or delayed delivery basis,
and invest up to 15% of its total assets in illiquid securities. Although
permitted to do so, the Fund does not currently intend to invest in securities
issued by passive foreign investment companies or to engage in securities
lending.

For temporary defensive purposes, when the advisers determine that market
conditions warrant, the Fund may invest up to 100% of its assets in U.S.
dollar-denominated fixed income securities or debt obligations and the following
domestic and foreign money market instruments: government obligations,
certificates of deposit, bankers' acceptances, time deposits, commercial paper,
short-term corporate debt issues and repurchase agreements, and may hold a
portion of their assets in cash. In addition, the Fund may invest in the
foregoing instruments and hold cash for liquidity purposes.

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

SEI VP EMERGING MARKETS EQUITY FUND--The SEI VP Emerging Markets Equity Fund
seeks to provide capital appreciation by investing primarily in a diversified
portfolio of equity securities of emerging market issuers.

Under normal circumstances, at least 65% of the Emerging Markets Equity
Fund's assets will be invested in equity securities of emerging market issuers.
Under normal conditions, the Fund maintains investments in at least six emerging
market countries and does not invest more than 35% of its total assets in any
one emerging market country. The Fund defines an emerging market country as any
country the economy and market of which the World Bank or the United Nations
considers to be emerging or developing. The Fund's advisers consider emerging
market issuers to include companies the securities of which are principally
traded in the capital markets of emerging market countries; that derive at least
50% of their total revenue from either goods produced or services rendered in
emerging market countries, regardless of where the securities of such companies
are principally traded; or that are organized under the laws of and have a
principal office in an emerging market country.

The Fund expects to be fully invested in the primary investments described
above, but may invest up to 35% of its total assets in debt securities,
including up to 5% of its total assets in debt securities rated below investment
grade. These debt securities will include debt securities of governmental and
private issuers in emerging market countries. Bonds rated below investment grade
are often referred to as "junk bonds." Such securities involve greater risk of
default or price volatility than investment grade securities. The Fund may
invest in certain debt securities issued by the governments of emerging market
countries that are or may be eligible for conversion into investments in
emerging market companies under debt conversion programs sponsored by such
governments.

The Fund may invest up to 15% of its total assets in illiquid securities.
The Fund's advisers believe that carefully selected investments in joint
ventures, cooperatives, partnerships, private placements, unlisted securities
and other similar situations (collectively, "special situations") could enhance
the Fund's capital appreciation potential. Investments in special situations may
be liquid, as determined by the Fund's

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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
subject to its 15% restriction on investment in illiquid securities.

The Fund may invest up to 10% of its total assets in shares of other
investment companies. The Fund may invest in futures contracts and purchase
securities on a when-issued or delayed delivery basis. The Fund may also
purchase and write options to buy or sell futures contracts.

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

SEI VP CORE FIXED INCOME FUND--The investment objective of the SEI VP Core
Fixed Income Fund is current income consistent with the preservation of capital.

Under normal market conditions, the Fund will invest at least 65% of its
total assets in fixed income securities that are rated investment grade or
better, I.E., rated in one of the four highest rating categories by a nationally
recognized statistical rating organization ("NRSRO") at the time of purchase,
or, if not rated, determined to be of comparable quality by the advisers. Fixed
income securities in which the Fund may invest consist of: (i) corporate bonds
and debentures, (ii) obligations issued by the United States Government, its
agencies and instrumentalities, (iii) municipal securities of issuers located in
all fifty states, the District of Columbia, Puerto Rico and other U.S.
territories and possessions, consisting of municipal bonds, municipal notes,
tax-exempt commercial paper and municipal lease obligations, (iv) receipts
involving U.S. Treasury obligations, (v) mortgage-backed securities,
(vi) asset-backed securities, and (vii) zero coupon, pay-in-kind or deferred
payment securities.

Any remaining assets may be invested in: (i) interest-only and
principal-only components of mortgage-backed securities, (ii) mortgage dollar
rolls, (iii) securities issued on a when-issued and delayed-delivery basis,
including TBA mortgage-backed securities, (iv) warrants, (v) money market
securities, (vi) Yankee obligations and (vii) construction loans. In addition,
the Fund may purchase or write options, futures (including futures on U.S.
Treasury obligations and Eurodollar instruments) and options on futures. The
Fund may also borrow money, invest in illiquid securities and shares of other
investment companies, and lend its securities to qualified buyers.

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

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

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The Fund's annual turnover rate may exceed 100%. Such a turnover rate may
lead to higher transaction costs and may result in higher taxes for
shareholders.

SEI VP BOND INDEX FUND--The SEI VP Bond Index Fund currently seeks to
provide investment results that correspond to the aggregate price and interest
performance of the Lehman Aggregate Bond Index (the "Lehman Index"), which
tracks the performance of debt securities. The Lehman Index is made up of the
Government/Corporate Index, the Mortgage-Backed Securities Index and the
Asset-Backed Securities Index. The Lehman Index includes fixed rate debt issues
rated investment grade or higher by one or more NRSROs. All issues have at least
one year to maturity and an outstanding par value of at least $100 million.
Lehman Brothers, Inc. is neither a sponsor of nor in any other way affiliated
with the Trust. Inclusion of a security in the Lehman Index in no way implies an
opinion of Lehman Brothers, Inc. as to its attractiveness or appropriateness as
an investment.

In seeking to generate results that correspond to the performance of the
Lehman Index, the Fund will invest in the following obligations: (i) debt
obligations issued or guaranteed by the United States Government or its agencies
or instrumentalities; (ii) investment-grade debt obligations issued by U.S.
corporations; (iii) debt obligations issued or guaranteed by foreign sovereign
governments, municipalities, governmental agencies or international agencies;
(iv) mortgage-backed securities, including conventional 15- and 30-year fixed
rate mortgages, graduated payment mortgages, balloon mortgages and adjustable
rate mortgages; (v) asset-backed securities; and (vi) any other issues that are
included in the Lehman Index.

Fixed income securities in which the Fund may invest must be rated BBB or
better by S&P or Baa or better by Moody's at the time of purchase. Debt
securities rated BBB or Baa lack outstanding investment characteristics and have
speculative characteristics as well. In the event that a security held by the
Fund is downgraded below investment grade, the adviser will promptly review the
situation and take appropriate action.

If an obligation which is included in the Lehman Index on the first day of
the month ceases to meet any of the qualifications for inclusion in the Lehman
Index during that month, the obligation remains in the Lehman Index through the
end of that month and then is eliminated from the Lehman Index. Mellon Bond
Associates, LLP ("MBA"), the Fund's sub-adviser, will monitor portfolio
securities in order to determine whether any of these obligations have ceased to
qualify for inclusion in the Lehman Index. If an obligation has ceased to
qualify for inclusion in the Lehman Index as a result of: (i) a lowered
investment rating, (ii) an aggregate outstanding principal amount of less than
$100 million, or (iii) a remaining maturity that no longer exceeds one year
(collectively, "Ineligible Obligations"), the investment adviser may either
undertake to sell such Ineligible Obligations as quickly as is financially
prudent, which may be prior to or later than the time that obligation is removed
from the Lehman Index, or may determine to retain the security. To the extent
that the investment adviser determines to retain Ineligible Obligations, such
Ineligible Obligations, together with cash and money market instruments, will
not exceed 20% of the Fund's net assets. Although the Fund retains the right to
invest up to 20% of its net assets in Ineligible Obligations, cash and money
market instruments, these items are expected to constitute less than 10% of the
net assets of the Fund. Obligations held by the Fund that became Ineligible
Obligations as a result of being rated below investment grade (which securities
are often referred to as "junk bonds") will not constitute more than 5% of the
Fund's net assets. In addition, cash holdings will not exceed 5% of the Fund's
net assets. In addition, obligations that become eligible for inclusion in the
Lehman Index during a particular month generally will not actually be included
in the Lehman Index until the next month. However, the Fund may elect to
purchase any such obligation and deem it to be included in the Lehman Index once
it becomes eligible.

The Fund generally will not hold all of the individual issues which comprise
the Lehman Index because of the large number of securities involved. Instead,
the Fund will hold a representative sample of the securities in the Index,
selecting issues to represent entire "classes" or types of securities in the
Lehman Index. Obligations included in the Lehman Index have been categorized by
MBA into sectors

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which have been organized on the basis of type of issuer, and then further
classified by quality and remaining maturities. The percentage of the Fund's
assets to be invested in the aggregate obligations included in a particular
sector of the Lehman Index will approximate, to the maximum extent feasible, the
percentage such sector represents in the Lehman Index. The Fund's ability to
duplicate the performance of the Lehman Index will depend to some extent on the
size and timing of cash flows into and out of the Portfolio, as well as on the
level of the Fund's expenses, and the capability of MBA to select a
representative sample of the securities included in the Lehman Index. To the
extent that the size of the Fund's assets limits the number of issues that the
Fund can purchase, there is more potential for deviation from the Lehman Index's
performance than at larger asset levels.

The Fund may invest in restricted securities, including Rule 144A
securities, included in the Lehman Index.

SEI VP HIGH YIELD BOND FUND--The investment objective of the SEI VP High
Yield Bond Fund is to maximize total return.

Under normal market conditions, the Fund will invest at least 65% of its
total assets in fixed income securities that are rated below investment grade,
I.E., rated below the top four rating categories by an NRSRO at the time of
purchase, or, if not rated, determined to be of comparable quality by the
advisers. Below investment grade securities are commonly referred to as "junk
bonds," and generally entail increased credit and market risk. Securities rated
in the lowest rating categories may have predominantly speculative
characteristics or may be in default.

The Fund may invest in all types of fixed income securities issued by
domestic and foreign issuers, including: (i) mortgage-backed securities;
(ii) asset-backed securities; (iii) zero coupon, pay-in-kind or deferred payment
securities; and (iv) variable and floating rate instruments.

Any assets of the Fund not invested in the fixed income securities described
above may be invested in: (i) convertible securities; (ii) preferred stocks;
(iii) equity securities; (iv) investment grade fixed income securities;
(v) money market securities; (vi) securities issued on a when-issued and
delayed-delivery basis, including TBA mortgage-backed securities; (vii) forward
foreign currency contracts; and (viii) Yankee obligations. In addition, the Fund
may purchase or write options, futures and options on futures. The Fund may also
borrow money, invest in illiquid securities and shares of other investment
companies, and lend its securities to qualified buyers.

The advisers may vary the average maturity of the securities in the Fund
without limit, and there is no restriction on the maturity of any individual
security.

This Statement of Additional Information sets forth a description of the
bond rating categories of several NRSROs. The ratings established by each NRSRO
represents its opinion of the safety of principal and interest payments (and not
the market risk) of bonds and other fixed income securities it undertakes to
rate at the time of issuance. Ratings are not absolute standards of quality, and
may not reflect changes in an issuer's creditworthiness. Accordingly, although
the advisers will consider ratings, they will perform their own analyses and
will not rely principally on ratings. The advisers will consider, among other
things, the price of the security and the financial history and condition, the
prospects and the management of an issuer in selecting securities for the Fund.

The achievement of the Fund's investment objective may be more dependent on
the adviser's own credit analysis than would be the case if the Fund invested in
higher rated securities. There is no bottom limit on the ratings of high yield
securities that may be purchased or held by the Fund.

SEI VP INTERNATIONAL FIXED INCOME FUND--The SEI VP International Fixed
Income Fund seeks to provide capital appreciation and current income through
investment primarily in investment grade, non-U.S. dollar denominated
government, corporate, mortgage-backed and asset-backed fixed income securities.

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Under normal circumstances, at least 65% of the International Fixed Income
Fund's assets will be invested in investment grade foreign government and
foreign corporate, mortgage, and/or asset-backed fixed income securities of
issuers located in at least three countries other than the United States.

The SEI VP International Fixed Income Fund will invest primarily in:
(i) fixed income securities issued or guaranteed by a foreign government or one
of its agencies, authorities, instrumentalities or political subdivisions;
(ii) fixed income securities issued or guaranteed by supranational entities;
(iii) fixed income securities issued by foreign or multinational corporations;
(iv) convertible securities issued by foreign or multinational corporations;
(v) fixed income securities issued by foreign banks or bank holding companies;
(vi) asset-backed securities; and (vii) mortgage-backed securities. All such
investments will be in investment grade securities denominated in various
currencies, including the Euro. Investment grade securities are rated in one of
the highest four rating categories by an NRSRO or determined by the adviser to
be of comparable quality at the time of purchase.

The Fund expects to be fully invested in the primary investments described
above, but may invest in obligations issued or guaranteed as to principal and
interest by the United States Government, its agencies or instrumentalities
("U.S. Government securities"), swaps, options and futures. The Fund may also
purchase and write options to buy or sell futures contracts, purchase securities
on a when-issued or delayed delivery basis and engage in short selling. The Fund
may invest up to 10% of its total assets in illiquid securities. Furthermore,
although the Fund will concentrate its investments in relatively developed
countries, the Fund may invest up to 20% of its assets in fixed income
securities of issuers in, or denominated in the currencies of, developing
countries and that are investment-grade securities or determined by the advisers
to be of comparable quality to such securities and debt obligations at the time
of purchase.

Under normal circumstances, the portfolio turnover rate for this Fund is
expected to exceed 200% per year. Higher portfolio turnover rates can result in
corresponding increases in portfolio transaction costs and taxes. The Fund will
not consider portfolio turnover a limiting factor in implementing investment
decisions which are consistent with the Fund's objectives and policies.

SEI VP EMERGING MARKETS DEBT FUND--The investment objective of the SEI VP
Emerging Markets Debt Fund is to maximize total return.

Under normal circumstances, at least 80% of the SEI VP Emerging Markets Debt
Fund's total assets will be invested in debt securities of government,
government-related and corporate issuers in emerging market countries and of
entities organized to restructure the outstanding debt of such issuers. The Fund
defines an emerging market country as any country the economy and market of
which the World Bank or the United Nations considers to be emerging or
developing. The Fund's advisers consider emerging market issuers to be companies
the securities of which are principally traded in the capital markets of
emerging market countries; that derive at least 50% of their total revenue from
either goods produced or services rendered in emerging market countries,
regardless of where the securities of such companies are principally traded;
that are organized under the laws of and have a principal office in an emerging
market country; or that are government issuers located in an emerging market
country.

Emerging market country fixed income securities in which the SEI VP Emerging
Markets Debt Fund may invest are U.S. dollar-denominated and non-U.S.
dollar-denominated corporate and government debt securities, including bonds,
notes, bills, debentures, convertible securities, warrants, bank debt
obligations, short-term paper, mortgage and other asset-backed securities,
preferred stock, loan participations and

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assignments and interests issued by entities organized and operated for the
purpose of restructuring the investment characteristics of instruments issued by
emerging market country issuers. The Fund may invest in Brady Bonds, which are
debt securities issued by debtor nations to restructure their outstanding
external indebtedness, and which comprise a significant portion of the emerging
debt market.

The Fund's investments in high yield government, government-related and
restructured debt securities will consist of: (i) debt securities or obligations
issued or guaranteed by governments, governmental agencies or instrumentalities
and political subdivisions located in emerging market countries (including
participations in loans between governments and financial institutions);
(ii) debt securities or obligations issued by government-owned, controlled or
sponsored entities located in emerging market countries (including
participations in loans between governments and financial institutions); and
(iii) interests in structured securities of issuers organized and operated for
the purpose of restructuring the investment characteristics of instruments
issued by any of the entities described above (collectively, "High Yield Foreign
Sovereign Debt Securities"). Even though many of these securities are issued by
governmental issuers, they may still be considered junk bonds on account of the
governmental issuer's poor credit rating. The Fund may also purchase investment
grade obligations of the foregoing governmental issuers.

The Fund's investments in debt securities of corporate issuers in emerging
market countries may include high yield or investment grade debt securities or
other obligations issued by: (i) banks located in emerging market countries or
by branches of emerging market country banks located in other emerging market
countries; or (ii) companies organized under the laws of an emerging market
country.

The Fund expects to be fully invested in the primary investments described
above, but may invest up to 10% of its total assets in common stock, convertible
securities, warrants or other equity securities when consistent with the Fund's
objective. The Fund will generally hold such equity investments as a result of
purchases of unit offerings of fixed-income securities which include such
securities or in connection with an actual or proposed conversion or exchange of
fixed income securities. The Fund may also enter into repurchase agreements and
reverse repurchase agreements, may purchase when-issued and delayed-delivery
securities, lend portfolio securities and invest in shares of other investment
companies. The Fund may purchase restricted securities and may invest up to 15%
of the value of its total assets in illiquid securities. The Fund may invest in
options and futures for hedging purposes, and may enter into swaps or related
transactions. The Fund may invest in receipts, zero coupon securities,
pay-in-kind bonds, Eurobonds, dollar rolls, and deferred payment securities.

The securities in which the Fund will invest will not be required to meet a
minimum rating standard and may not be rated for creditworthiness by any
internationally recognized credit rating organization. Generally, the Fund's
investments are expected to be in the lower and lowest rating categories
established by internationally recognized credit rating organizations or
determined to be of comparable quality. Such securities, commonly known as "junk
bonds," involve significantly greater risks, including price volatility and the
risk of default of payment of interest and principal, than higher rated
securities.

There is no limit on the percentage of the Fund's assets that may be
invested in non-U.S. dollar denominated securities. However, it is expected that
the majority of the Fund's assets will be denominated in U.S. dollars.

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SEI VP PRIME OBLIGATION FUND--The SEI VP Prime Obligation Fund seeks to
preserve principal value and maintain a high degree of liquidity while providing
current income.

Under normal market conditions, the Fund invests exclusively in obligations
of U.S. issuers (excluding foreign branches of U.S. banks or U.S. branches of
foreign banks) consisting of: (i) commercial paper rated, at the time of
investment, in the highest short-term rating category by two or more NRSROs or
one NRSRO if only one NRSRO has rated the security or, if not rated, determined
by the Adviser to be of comparable quality; (ii) obligations including
certificates of deposit (time deposits, bankers' acceptances and bank notes) of
U.S. commercial banks or savings and loan institutions having total assets of
$500 million or more as shown on their last published financial statements at
the time of investment and that are insured by the Federal Deposit Insurance
Corporation; (iii) corporate obligations with a remaining term of not more than
397 days of issuers that issue commercial paper of comparable priority and
security meeting the above ratings or, if not rated, determined by the Adviser
to be of comparable quality; (iv) short-term obligations issued by state and
local governmental issuers which are rated, at the time of investment, in the
highest municipal bond rating categories by at least two NRSROs, or, if not
rated, determined by the Adviser to be of comparable quality, and which carry
yields that are competitive with those of other types of money market
instruments of comparable quality; (v) U.S. Treasury obligations and obligations
issued or guaranteed as to principal and interest by the agencies or
instrumentalities of the U.S. Government; and (vi) repurchase agreements
involving any of the foregoing obligations.

There can be no assurance that any Fund will meet its objective.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

AMERICAN DEPOSITARY RECEIPTS, EUROPEAN DEPOSITARY RECEIPTS, CONTINENTAL
DEPOSITARY RECEIPTS AND GLOBAL DEPOSITARY RECEIPTS--ADRs are securities,
typically issued by a U.S. financial institution (a "depositary"), that evidence
ownership interests in a security or a pool of securities issued by a foreign
issuer and deposited with the depositary. ADRs include American Depositary
Shares and New York Shares. EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), are securities, typically issued by a non-U.S.
financial institution, that evidence ownership interests in a security or a pool
of securities issued by either a U.S. or foreign issuer. GDRs are issued
globally and evidence a similar ownership arrangement. Generally, ADRs are
designed for trading in the U.S. securities market, EDRs are designed for
trading in European securities market and GDRs are designed for trading in
non-U.S. securities markets. ADRs, EDRs, CDRs and GDRs may be available for
investment through "sponsored" or "unsponsored" facilities. A sponsored facility
is established jointly by the issuer of the security underlying the receipt and
a depositary, whereas an unsponsored facility may be established by a depositary
without participation by the issuer of the reciept's underlying security.
Holders of an unsponsored depositary receipt generally bear all the costs of the
unsponsored facility. The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through to the holders of the
receipts voting rights with respect to the deposited securities.

ASSET-BACKED SECURITIES--Asset-backed securities are 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 through credit enhancements by a
third party. Credit enhancement techniques include letters of credit, insurance
bonds, limited guarantees (which are generally provided by the issuer),
senior-subordinated structures and overcollateralization. The SEI VP Core Fixed
Income, SEI VP Bond Index, SEI VP High Yield Bond, SEI VP International Fixed
Income, and SEI VP Emerging Markets Debt Funds may invest in asset-backed
securities. A Fund may also invest in other

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asset-backed securities that may be created in the future if the Sub-Advisers
determine that they are suitable.

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 and 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 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
mortgage-backed securities. In addition, credit card receivables are unsecured
obligations of the card holder.

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

BANKERS' ACCEPTANCES--a bill of exchange or time draft drawn on and accepted
by a commercial bank. It is used by corporations to finance the shipment and
storage of goods and to furnish dollar exchange. Maturities are generally six
months or less.

BRADY BONDS--Certain debt obligations, customarily referred to as "Brady
Bonds," are created through the exchange of existing commercial bank loans to
foreign entities for new obligations in connection with a debt restructuring.
Brady Bonds have only been issued since 1989, and, accordingly, do not have a
long payment history. In addition, they are issued by governments that may have
previously defaulted on the loans being restructured by the Brady Bonds, so are
subject to the risk of default by the issuer. They may be fully or partially
collateralized or uncollateralized and issued in various currencies (although
most are U.S. dollar denominated) and they are actively traded in the
over-the-counter secondary market. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or floating rate discount bonds, are
generally collateralized in full as to principal due at maturity by U.S.
Treasury zero coupon obligations which have the same maturity as the Brady
Bonds. Certain interest payments on these Brady Bonds may be collateralized by
cash or securities in an amount that, in the case of fixed rate bonds, is
typically equal to between 12 and 18 months of rolling interest payments or, in
the case of floating rate bonds, initially is typically equal to between 12 and
18 months rolling interest payments based on the applicable interest rate at
that time and is adjusted at regular intervals thereafter with the balance of
interest accruals in each case being uncollateralized. Payment of interest and
(except in the case of principal collateralized Brady Bonds) principal on Brady
Bonds with no or limited collateral depends on the willingness and ability of
the foreign government to make payment. 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.

Based upon current market conditions, a Fund would not intend to purchase
Brady Bonds which, at the time of investment, are in default as to payment.
However, in light of the residual risk of Brady Bonds and, among other factors,
the history of default with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds, investments in Brady Bonds
are to be viewed as speculative. A substantial portion of the Brady Bonds and
other sovereign debt securities in which the SEI VP Emerging Markets Debt Fund
invests are likely to be acquired at a discount, which involves certain
additional considerations.

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Sovereign obligors in developing and emerging market countries are among the
world's largest debtors to commercial banks, other governments, international
financial organizations and other financial institutions. These obligors have in
the past experienced substantial difficulties in servicing their external debt
obligations, which led to defaults on certain obligations and the restructuring
of certain indebtedness. Restructuring arrangements have included, among other
things, reducing and rescheduling interest and principal payments by negotiating
new or amended credit agreements or converting outstanding principal and unpaid
interest to Brady Bonds, and obtaining new credit to finance interest payments.
Holders of certain foreign sovereign debt securities may be requested to
participate in the restructuring of such obligations and to extend further loans
to their issuers. There can be no assurance that the Brady Bonds and other
foreign sovereign debt securities in which the Fund may invest will not be
subject to similar restructuring arrangements or to requests for new credit
which may adversely affect a Fund's holdings. Furthermore, certain participants
in the secondary market for such debt may be directly involved in negotiating
the terms of these arrangements and may therefore have access to information not
available to other market participants.

CERTIFICATES OF DEPOSIT--negotiable interest bearing instruments with
specific maturities. Certificates of deposit 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 have
penalties for early withdrawal.

COMMERCIAL PAPER--the term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary
from a few days to nine months. (See "Description of Ratings".)

CONSTRUCTION LOANS--in general, are mortgages on multifamily homes that are
insured by the Federal Housing Administration (FHA) under various federal
programs of the National Housing Act of 1934 and its amendments. Several FHA
programs have evolved to ensure the construction financing and permanent
mortgage financing on multifamily residences, nursing homes, elderly residential
facilities, and health care units. Project loans typically trade in two forms:
either as FHA- or Government National Mortgage Association ("GNMA")-insured
pass-through securities. In this case, a qualified issuer issues the
pass-through securities while holding the underlying mortgage loans as
collateral. Regardless of form, all projects are government-guaranteed by the
U.S. Department of Housing and Urban Development (HUD) through the FHA insurance
fund. The credit backing of all FHA and GNMA projects derives from the FHA
insurance fund, and so projects issued in either form enjoy the full faith and
credit backing of the U.S. Government.

Most project pools consist of one large mortgage loan rather than numerous
smaller mortgages, as is typically the case with agency single-family mortgage
securities. As such, prepayments on projects are driven by the incentives most
mortgagors have to refinance, and are very project-specific in nature. However,
to qualify for certain government programs, many project securities contain
specific prepayment restrictions and penalties.

Under multifamily insurance programs, the government insures the
construction financing of projects as well as the permanent mortgage financing
on the completed structures. This is unlike the single-family mortgage market,
in which the government only insures mortgages on completed homes. Investors
purchase new projects by committing to fund construction costs on a monthly
basis until the project is built. Upon project completion, an investors
construction loan commitments are converted into a proportionate share of the
final permanent project mortgage loan. The construction financing portion of a
project trades in the secondary market as an insured Construction Loan
Certificate (CLC). When the project is completed, the investor exchanges all the
monthly CLCs for an insured Permanent Loan Certificate (PLC). The PLC is an
insured pass-through security backed by the final mortgage on the completed
property. As such, PLCs typically have a thirty-five to forty year maturity,
depending on the type of final project. There are vastly more PLCs than CLCs in
the market, owing to the long economic lives of the project structures. While
neither CLCs or PLCs are as liquid as agency single-family mortgage securities,
both are traded on

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the secondary market and would generally not be considered illiquid. The benefit
to owning these securities is a relatively high yield combined with significant
prepayment protection, which generally makes these types of securities more
attractive when prepayments are expected to be high in the mortgage market. CLCs
typically offer a higher yield due to the fact that they are somewhat more
administratively burdensome to account for.

CONVERTIBLE SECURITIES--Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both fixed
income and equity securities. Because of the conversion feature, the market
value of a convertible security tends to move with the market value of the
underlying stock. 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 a convertible security is also
affected by prevailing interest rates, the credit quality of the issuer, and any
call provisions.

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

Investments in the equity securities of small capitalization companies
involves greater risk than is customarily associated with larger, more
established companies due to the greater business risks of small size, limited
markets and financial resources, narrow product lines and the frequent lack of
depth of management. The securities of small companies are often traded
over-the-counter and may not be traded in volumes typical on a national
securities exchange. Consequently, the securities of smaller companies may have
limited market stability and may be subject to more abrupt or erratic market
movements than securities of larger, more established growth companies or the
market averages in general.

THE EURO--On January 1, 1999, the European Monetary Union (EMU) implemented
a new currency unit, the Euro, which is reshaping financial markets, banking
systems and monetary policies in Europe and other parts of the world. The
countries that initially converted or tied their currencies to the Euro include
Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Ireland,
Finland, Italy, Portugal and Spain. Implementation of this plan means that
financial transactions and market information, including share quotations and
company accounts, in participating countries will be denominated in euros. A
significant percentage of the stock exchange capitalization of the total
European market may be reflected in Euros, and participating governments will
issue their bonds in Euros. Monetary policy for participating countries will be
uniformly managed by a new central bank, the European Central Bank (ECB).

Although it is not possible to predict the eventual impact of the Euro
implementation plan on the Funds, the transition to the Euro has changed the
economic environment and behavior of investors, particularly in European
markets. For example, investors may begin to view those countries participating
in the EMU as a single entity, and the Adviser may need to adapt its investment
strategy accordingly. The process of implementing the Euro also may adversely
affect financial markets world-wide and may result in changes in the relative
strength and value of the U.S. dollar or other major currencies, as well as
possible adverse tax consequences. The ongoing transition to the Euro is likely
to have a significant impact on fiscal and monetary policy in the participating
countries and may produce unpredictable effects on trade and commerce generally.
These resulting uncertainties could create increased volatility in financial
markets world-wide.

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

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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.

Fixed income securities are considered investment grade if they are rated in
one of the four highest rating categories by an NRSRO, or, if not rated, are
determined to be of comparable quality by a Fund's Sub-Advisers. The "Appendix"
to this Prospectus sets forth a description of the bond rating categories of
several NRSROs. Ratings of each NRSRO represents its opinion of the safety of
principal and interest payments (and not the market risk) of bonds and other
fixed income securities it undertakes to rate at the time of issuance. Ratings
are not absolute standards of quality and may not reflect changes in an issuer's
creditworthiness. Fixed income securities rated BBB or Baa lack outstanding
investment characteristics, and have speculative characteristics as well. 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.

FOREIGN CURRENCY TRANSACTIONS--Certain of the Funds may enter into forward
foreign currency contracts to manage foreign currency exposure and as a hedge
against possible variations in foreign exchange rates. 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.

FOREIGN AND EMERGING MARKET SECURITIES--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 and
Yankee Certificates of Deposit and investments in Canadian Commercial Paper,
foreign securities and Europaper. In addition, a Fund may invest in ADRs traded
on registered exchanges or NASDAQ. While a Fund expects to invest primarily in
sponsored ADRs, a joint arrangement between the issuer and the depositary, some
ADRs may be unsponsored. These instruments may subject a Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to changes
in the exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations, less uniformity in accounting and reporting requirements,
the possibility that there will be less information on such securities and their
issuers available to the public, the difficulty of obtaining or enforcing court
judgments abroad, restrictions on foreign investments in other jurisdictions,
difficulties in effecting repatriation of capital invested abroad and
difficulties in transaction settlements and the effect of delay on shareholder
equity. Foreign securities may be subject to foreign taxes, and may be less
marketable than comparable U.S. securities. The value of a Fund's investments
denominated in foreign currencies will depend on the relative strengths of those
currencies and the U.S. dollar, and a Fund may be affected favorably or
unfavorably by changes in the exchange rates or exchange or currency control
regulations between foreign currencies and the U.S. dollar. Changes in foreign
currency exchange rates also may affect the value of dividends and interest
earned, gains and losses realized on the sale of securities and net investment
income and gains if any, to be distributed to shareholders by a Fund. Such
investments may also entail higher custodial fees and sales commissions than
domestic investments. Foreign issuers of securities or obligations are often
subject to accounting treatment and engage in business practices different from
those respecting domestic issuers of similar securities or obligations. Foreign
branches of

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U.S. banks and foreign banks may be subject to less stringent reserve
requirements than those applicable to domestic branches of U.S. banks.

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

In addition to the risks of investing in emerging market country debt
securities, a Fund's investment in government, government-related and
restructured debt instruments are subject to special risks, including the
inability or unwillingness to repay principal and interest, requests to
reschedule or restructure outstanding debt, and requests to extend additional
loan amounts. A Fund may have limited recourse in the event of default on such
debt instruments.

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 fund securities but rather allow a 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 fund 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, a 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 a 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, a 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 generally will not 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. A Fund will also incur costs in connection with forward foreign
currency contracts and conversions of foreign currencies into United States
dollars. A Fund will place assets in a segregated account to assure that its
obligations under forward foreign currency contracts are covered.

FUTURES AND OPTIONS ON FUTURES--Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of a
specific security at a specified future time and at a specified price. An option
on a futures contract gives the purchaser the right, in exchange for a premium,
to assume a position in a futures contract at a specified exercise price during
the term of the option. A Fund may use futures contracts and related options for
BONA FIDE hedging purposes, to offset changes in

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the value of securities held or expected to be acquired or be disposed of, to
minimize fluctuations in foreign currencies, or to gain exposure to a particular
market or instrument. A 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.

An index futures contract is a bilateral agreement 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 index value at the close of
trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the securities comprising the Index
is made; generally contracts are closed out prior to the expiration date of the
contract.

In order to avoid leveraging and related risks, when a Fund invests in
futures contracts, it will cover 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 and that amount will be marked to
market on a daily basis.

There are risks associated with these activities, including the following:
(1) the success of a hedging strategy may depend on an ability to predict
movements in the prices of individual securities, fluctuations in markets and
movements in interest rates; (2) there may be an imperfect or no correlation
between the changes in market value of the securities held by the Fund and the
prices of futures and options on futures; (3) there may not be a liquid
secondary market for a futures contract or option; (4) trading restrictions or
limitations may be imposed by an exchange; and (5) government regulations may
restrict trading in futures contracts and futures options.

A 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 a Fund's net assets.

HIGH YIELD FOREIGN SOVEREIGN DEBT SECURITIES--Investing in fixed and
floating rate high yield foreign sovereign debt securities will expose the SEI
VP Emerging Markets Debt Fund to the direct or indirect consequences of
political, social or economic changes in the 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. Countries such as those in which the Fund may
invest have historically experienced, and may continue to experience, high rates
of inflation, high interest rates, exchange rate or trade difficulties and
extreme poverty and unemployment. Many of these countries are also characterized
by political uncertainty or instability. Additional factors which may influence
the ability or willingness to service debt include, but are not limited to, a
country's cash flow situation, the availability of sufficient foreign exchange
on the date a payment is due, the relative size of its debt service burden to
the economy as a whole, and its government's policy towards the International
Monetary Fund, the World Bank and other international agencies. 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

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principal or interest when due may result in the cancellation 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 the Fund's books. Illiquid securities include demand
instruments with a demand notice period exceeding seven days, securities for
which there is no active secondary market, and repurchase agreements with
durations over 7 days in length.

The SEI VP Emerging Markets Equity Fund's Sub-Advisers believe that
carefully selected investments in joint ventures, cooperatives, partnerships,
private placements, unlisted securities and other similar situations
(collectively, "special situations") could enhance its capital appreciation
potential. Investments in special situations may be illiquid, as determined by
the SEI VP Emerging Markets Equity Fund's Sub-Advisers based on criteria
approved by the Board of Trustees. To the extent these investments are deemed
illiquid, the SEI VP Emerging Markets Equity Fund's investment in them will be
consistent with its 15% restriction on investment in illiquid securities.

INVESTMENT COMPANIES--Because of restrictions on direct investment by U.S.
entities in certain countries, investment in other investment companies may be
the most practical or only manner in which an international and global fund can
invest in the securities markets of those countries. A Fund does not intend to
invest in other investment companies unless, in the judgment of its
Sub-Advisers, the potential benefits of such investments exceed the associated
costs (which includes any investment advisory fees charged by the investment
companies) relative to the benefits and costs associated with direct investments
in the underlying securities.

Investments in closed-end investment companies may involve the payment of
substantial premiums above the net asset value of such issuers' fund securities,
and are subject to limitations under the 1940 Act. A Fund may incur tax
liability to the extent it invests in the stock of a foreign issuer that
constitutes a "passive foreign investment company."

LOAN PARTICIPATIONS AND ASSIGNMENTS--Loan participations are interests in
loans to corporations or governments which are administered by the lending bank
or agent for a syndicate of lending banks, and sold by the lending bank,
financial institution or syndicate member ("intermediary bank"). In a loan
participation, the borrower will be deemed to be the issuer of the participation
interest, except to the extent the Fund derives its rights from the intermediary
bank. Because the intermediary bank does not guarantee a loan participation in
any way, a loan participation is subject to the credit risks generally
associated with the underlying borrower. In the event of the bankruptcy or
insolvency of the borrower, a loan participation may be subject to certain
defenses that can be asserted by such borrower as a result of improper conduct
by the intermediary bank. In addition, in the event the underlying borrower
fails to pay principal and interest when due, the Fund may be subject to delays,
expenses and risks that are greater than those that would have been involved if
the Fund had purchased a direct obligation of such borrower. Under the terms of
a loan participation, the Fund may be regarded as a creditor of the intermediary
bank, (rather than of the underlying borrower), so that the Fund may also be
subject to the risk that the intermediary bank may become insolvent.

Loan assignments are investments in assignments of all or a portion of
certain loans from third parties. When a Fund purchases assignments from lenders
it will acquire direct rights against the borrower on the loan. Since
assignments are arranged through private negotiations between potential
assignees and assignors, however, the rights and obligations acquired by the
Fund may differ from, and be more limited than, those held by the assigning
lender. Loan participations and assignments may be considered liquid, as
determined by the Funds' advisers based on criteria approved by the Board of
Trustees.

LOWER RATED SECURITIES--lower-rated bonds are commonly referred to as "junk
bonds" or high yield/high risk securities. These securities are rated lower than
"Baa" or "BBB" by an NRSRO. Each Fund may invest in securities rated as low as
"C" by Moody's or "D" by S&P. These ratings indicate that the

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obligations are speculative and may be in default. The SEI VP High Yield Bond,
SEI VP Emerging Markets Debt, and SEI VP Emerging Markets Equity Funds may
invest in lower rated securities (which are also known as "junk bonds"). Fixed
income securities are subject to the risk of an issuer's ability to meet
principal and interest payments on the obligation (credit risk), and may also be
subject to price volatility due to such factors as interest rate sensitivity,
market perception of the creditworthiness of the issuer and general market
liquidity (market risk). Lower rated or unrated (I.E., high yield) securities
are more likely to react to developments affecting market and credit risk than
are more highly rated securities, which primarily react to movements in the
general level of interest rates. 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 generally are not meant for short-term investing.

The high yield market is relatively new and its growth paralleled a long
period of economic expansion and an increase in merger, acquisition and
leveraged buyout activity. Adverse economic developments can disrupt the market
for high yield securities, and severely affect the ability of issuers,
especially highly leveraged issuers, to service their debt obligations or to
repay their obligations upon maturity which may lead to a higher incidence of
default on such securities. In addition, the secondary market for high yield
securities, which is concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated securities. As a result, a
Fund's Sub-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, a Fund 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 such Fund's net asset value. Prices for high yield
securities may also be affected by legislative and regulatory developments.

Lower rated or unrated fixed income obligations also present risks based on
payment expectations. If an issuer calls the obligations for redemption, a Fund
may have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If a 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.

GROWTH OF HIGH YIELD BOND, 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.

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES. Lower rated bonds are
very sensitive to adverse economic changes and corporate developments. During an
economic down turn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals, and to obtain additional financing. If the issuer
of a bond defaulted on its obligations to pay interest or principal or entered
into bankruptcy proceedings, a 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 a 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, a 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 a Fund's

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assets. If a 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 Fund's rate of return.

LIQUIDITY AND VALUATION. There may be little trading in the secondary
market for particular bonds, which may affect adversely a 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 value
and liquidity of high-yield, high-risk bonds, especially in a thin market.

TAXES. A Fund may purchase debt securities (such as zero-coupon or
pay-in-kind securities) that contain original issue discount. Original issue
discount that accretes in a taxable year is treated as earned by a Fund and
therefore is subject to the distribution requirements of the Internal Revenue
Code of 1986, as amended (the "Code"). Because the original issue discount
earned by a Fund in a taxable year may not be represented by cash income, the
Fund may have to dispose of other securities and use the proceeds to make
distributions to shareholders.

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

MORTGAGE-BACKED SECURITIES--The Funds may invest in mortgage-backed
securities issued by GNMA and certain government-related organizations such as
Fannie Mae and the Federal Home Loan Mortgage Corporation ("FHLMC"). In
addition, the SEI VP High Yield Bond Fund may invest in pools of mortgage loans
from nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Mortgage-backed securities are instruments that entitle the holder to a share of
all interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional fifteen and thirty-year
fixed-rate mortgages, graduated payment mortgages, adjustable rate mortgages and
balloon mortgages. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
Prepayment of mortgages which underlie securities purchased at a premium often
results in capital losses, while prepayment of mortgages purchased at a discount
often results in capital gains. Because of these unpredictable prepayment
characteristics, it is often not possible to predict accurately the average life
or realized yield of a particular issue. 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 a 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. 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 return to a 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 a Fund will receive
when these amounts are reinvested.

A Fund may also invest in mortgage-backed securities that are collateralized
mortgage obligations structured on pools of mortgage pass-through certificates
or mortgage loans. For purposes of determining

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the average maturity of a mortgage-backed security in its investment portfolio,
the SEI VP Core Fixed Income Fund will utilize the expected average life of the
security, as estimated in good faith by the Fund's advisers. Unlike most single
family residential mortgages, commercial real estate property loans often
contain provisions which substantially reduce the likelihood that such
securities will be prepaid. The provisions generally impose significant
prepayment penalties on loans and, in some cases there may be prohibitions on
principal prepayments for several years following origination.

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 the Fannie Mae and the FHLMC. 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. GNMA, Fannie Mae and
FHLMC each guarantee timely distributions of interest to certificate holders.
GNMA and Fannie Mae also each guarantee timely distributions of scheduled
principal.

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
GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and are backed by the full faith and credit of the United States. 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") which 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 FHLMC include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCs"). 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 FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. FHLMC has in
the past guaranteed only the ultimate collection of principal of the underlying
mortgage loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold
PCs) which also guarantee timely payment of monthly principal reductions.
Government and private guarantees do not extend to the securities' value, which
is likely to vary inversely with fluctuations in interest rates. When 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.

PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities
issued by a non-governmental entity, such as a trust. 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 have certain distinct characteristics. Commercial mortgage loans
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.
Unlike most single family residential

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mortgages, commercial real estate property loans often contain provisions which
substantially reduce the likelihood that such securities will be prepaid. The
provisions generally impose significant prepayment penalties on loans and, in
some cases there may be prohibitions on principal prepayments for several years
following origination.

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. 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 is issued with a specific fixed or floating coupon rate and has a
stated maturity or final distribution date.

REMICS: A REMIC is a CMO that qualifies for special tax treatment under the
Code and invests in certain mortgages principally secured by interests in real
property. Guaranteed REMIC pass-through certificates ("REMIC Certificates")
issued by Fannie Mae 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.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured
with two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments while the other class may receive all of the principal
payments. 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.

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. It is possible that payments on one class of parallel pay
security may be deferred or subordinated to payments on other classes. 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.

MORTGAGE DOLLAR ROLLS--Mortgage "dollar rolls" or "covered rolls," are
transactions in which a Fund sells securities (usually mortgage-backed
securities) and simultaneously contracts to repurchase typically in 30 or 60
days, substantially similar, but not identical, securities on a specified future
date. During the roll period, a Fund forgoes principal and interest paid on such
securities. A Fund is compensated by the difference between the current sales
price and the forward price for the future purchase (often referred to as the
"drop") as well as by the interest earned on the cash proceeds of the initial
sale. At the end of the roll commitment period, a Fund may or may not take
delivery of the securities it has contracted to purchase. Mortgage dollar rolls
may be renewed prior to cash settlement and initially may involve only a firm
commitment agreement by the Fund to buy a security. A "covered roll" is a
specific type of mortgage dollar roll for which there is an offsetting cash
position or cash equivalent securities position that matures on or before the
forward settlement date of the mortgage dollar roll transaction. As used herein
the term "mortgage dollar roll" refers to mortgage dollar rolls that are not
"covered rolls." If the broker-dealer to whom the Fund sells the security
becomes insolvent, the 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
the mortgage dollar roll and that the security the Fund is required to
repurchase may be worth less than the security that the Fund originally held.

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To avoid any leveraging concerns, the Fund will place liquid securities in a
segregated account in an amount sufficient to cover its repurchase obligation.

MUNICIPAL SECURITIES--The SEI VP Core Fixed Income Fund, SEI VP Bond Index
Fund, and SEI VP High Yield Bond Fund may invest in 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 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.

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NON-DIVERSIFICATION--The SEI VP International Fixed Income and SEI VP
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 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.

OBLIGATIONS OF SUPRANATIONAL AGENCIES--Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, the Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and the Nordic Investment
Bank. The governmental members, or "stockholders," usually make initial capital
contributions to the supranational entity and, in many cases, are committed to
make additional capital contributions if the supranational entity is unable to
repay its borrowings. Obligations of supranational entities may be purchased by
the SEI VP Core Fixed Income, SEI VP International Fixed Income, SEI VP Emerging
Markets Equity and SEI VP International Equity Funds.

OPTIONS--Each Fund may purchase and write put and call options on indices or
securities and enter into related closing transactions. A put option on a
security gives the purchaser of the option the right to sell, and the writer of
the option the obligation to buy, the underlying security at any time during the
option period. A call option on a security gives the purchaser of the option the
right to buy, and the writer of the option the obligation to sell, the
underlying security at any time during the option period. The premium paid to
the writer is the consideration for undertaking the obligations under the option
contract.

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. Alternatively, a Fund may choose to terminate an option position by
entering into a closing transaction. 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.

All options written on indices or securities must be covered. When a Fund
writes an option or security on an index, it will establish a segregated account
containing cash or liquid securities 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. The initial purchase (sale) of an option
contract is an "opening transaction." In order to close out an option position,
a Fund may enter into a "closing transaction," which is simply the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened. If a Fund is
unable to effect a closing purchase transaction with respect to an option it has
written, it will not be able to sell the underlying security until the option
expires or the Fund delivers the security upon exercise.

A Fund may purchase put and call options on securities 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 Fund may seek to purchase
in the future. A 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 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 Fund.

A Fund may write covered call options on securities 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 writes an

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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 Fund
will realize as profit the premium received for such option. When a call option
of which a Fund is the writer is exercised, the 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 of which a Fund is the writer is exercised, the Fund
will be required to purchase the underlying securities at a price in excess of
the market value of such securities.

A segregated account is maintained to cover the difference between the
closing price of the index and the exercise price of the index option, expressed
in dollars multiplied by a specified number. Thus, unlike options on individual
securities, the ability of a Fund to enter into closing transactions depends
upon the existence of a liquid secondary market for such transactions.

A 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.

RISK FACTORS. Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.

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 the 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.

PUT TRANSACTIONS--All of the Funds may purchase securities at a price which
would result in a yield to maturity lower than generally offered by the seller
at the time of purchase when a Fund can simultaneously acquire the right to sell
the securities back to the seller, the issuer or a third party (the "writer") at
an agreed-upon price at any time during a stated period or on a certain date.
Such a right is generally denoted as a "standby commitment" or a "put." The
purpose of engaging in transactions involving puts is to maintain flexibility
and liquidity to permit a Fund to meet redemptions and remain as fully invested
as possible in municipal securities. A Fund reserves the right to engage in put
transactions. The right to put the securities depends on the writer's ability to
pay for the securities at the time the put is exercised. A Fund would limit its
put transactions to institutions which the Fund's Sub-Advisers believe present
minimum credit risks, and the Fund's Sub-Advisers would use their best efforts
to initially determine and continue to monitor the financial strength of the
sellers of the options by evaluating their financial statements and such other
information as is available in the marketplace. It may, however, be difficult to
monitor the financial strength of the writers because adequate current financial
information may not be available. In the event that any writer is unable to
honor a put for financial reasons, a Fund would be a general creditor (I.E., on
a parity with all other unsecured creditors) of the writer. Furthermore,
particular provisions of the contract between a Fund and the writer may excuse
the writer from repurchasing the securities; for example, a change in the
published rating of the underlying municipal securities or any similar event
that has an adverse effect on the issuer's credit or a provision in the contract
that the put

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will not be exercised except in certain special cases, for example, to maintain
fund liquidity. A Fund could, however, at any time sell the underlying portfolio
security in the open market or wait until the portfolio security matures, at
which time it should realize the full par value of the security.

The securities purchased subject to a put may be sold to third persons at
any time, even though the put is outstanding, but the put itself, unless it is
an integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to that
particular Fund. Sale of the securities to third parties or lapse of time with
the put unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, a Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could, of course, sell the portfolio
security. The maturity of the underlying security will generally be different
from that of the put. There will be no limit to the percentage of fund
securities that a Fund may purchase subject to a put but the amount paid
directly or indirectly for puts which are not integral parts of the security as
originally issued will not exceed 1/2 of 1% of the value of the total assets of
such Fund calculated immediately after any such put is acquired. For the purpose
of determining the "maturity" of securities purchased subject to an option to
put, and for the purpose of determining the dollar-weighted average maturity of
a Fund including such securities, the Trust will consider "maturity" to be the
first date on which it has the right to demand payment from the writer of the
put although the final maturity of the security is later than such date.

RECEIPTS--interests in separately traded interest and principal component
parts of U.S. Government obligations that are issued by banks or brokerage firms
and are created by depositing U.S. Government obligations into a special account
at a custodian bank. The custodian holds the interest and principal payments for
the benefit of the registered owners of the certificates or receipts. The
custodian arranges for the issuance of the certificates or receipts evidencing
ownership and maintains the register. Receipts include "Treasury Receipts"
("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). TIGRs and CATS are interests in
private proprietary accounts while TRs and STRIPS (See "U.S. Treasury
Obligations") are interests in accounts sponsored by the U.S. Treasury. Receipts
are sold as zero coupon securities 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 fixed income securities.

REITS--REITs are trusts that invest primarily in commercial real estate or
real estate-related loans. A REIT is not taxed on income distributed to its
shareholders or unitholders if it complies with regulatory requirements relating
to its organization, ownership, assets and income, and with a regulatory
requirement that it distribute to its shareholders or unitholders at least 95%
of its taxable income for each taxable year. Generally, REITs can be classified
as Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs invest the
majority of their assets directly in real property and derive their income
primarily from rents and capital gains from appreciation realized through
property sales. Mortgage REITs invest the majority of their assets in real
estate mortgages and derive their income primarily from interest payments.
Hybrid REITs combine the characteristics of both Equity and Mortgage REITs. By
investing in REITs indirectly through the Fund, shareholders will bear not only
the proportionate share of the expenses of the Fund, but also, indirectly,
similar expenses of underlying REITs.

A Fund may be subject to certain risks associated with the direct
investments of the REITs. REITs may be affected by changes in the value of their
underlying properties and by defaults by borrowers or tenants. Mortgage REITs
may be affected by the quality of the credit extended. Furthermore, REITs are
dependent on specialized management skills. Some REITs may have limited
diversification and may be subject to risks inherent in financing a limited
number of properties. REITs depend generally on their ability to generate cash
flow to make distributions to shareholders or unitholders, and may be subject to

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defaults by borrowers and to self-liquidations. In addition, a REIT may be
affected by its failure to qualify for tax-free pass-through of income under the
Code or its failure to maintain exemption from registration under the 1940 Act.

REPURCHASE AGREEMENTS--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. A Fund involved bears a
risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations and the Fund is delayed or prevented from exercising
its rights to dispose of the collateral securities. A Fund's Sub-Advisers enter
into repurchase agreements only with financial institutions that they deem 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 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 a 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. A Fund's
Sub-Advisers will monitor compliance with this requirement. Under all repurchase
agreements entered into by a Fund, the Custodian or its agent must take
possession of the underlying collateral. However, if the seller defaults, a 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, a Fund may
incur delay and costs in selling the security and may suffer a loss of principal
and interest if the Fund is treated as an unsecured creditor.

SECURITIES LENDING--in order to generate additional income, each Fund may
lend 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. A Fund will continue to
receive interest on the loaned securities while simultaneously earning interest
on the investment of the cash collateral in U.S. Government securities. However,
a Fund will normally pay lending fees to such broker-dealers and related
expenses from the interest earned on invested collateral. There may be risks of
delay in receiving additional collateral or risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans are made only to borrowers deemed by
the Fund's Sub-Advisers to be of good standing and when, in the judgment of the
Fund's Sub-Advisers, the consideration which can be earned currently from such
securities loans justifies the attendant risk. Any loan may be terminated by
either party upon reasonable notice to the other party. Each Fund may use the
Distributor as a broker in these transactions.

SHORT SALES--Selling securities short involves selling securities the Fund
does not own (but has borrowed) in anticipation of a decline in the market price
of such securities. To deliver the securities to the buyer, the seller must
arrange through a broker to borrow the securities and, in so doing, the seller
becomes obligated to replace the securities borrowed at their market price at
the time of replacement. In a short sale, the proceeds the seller receives from
the sale are retained by a broker until the seller replaces the borrowed
securities. The seller may have to pay a premium to borrow the securities and
must pay any dividends or interest payable on the securities until they are
replaced. A Fund may only 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 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.

STOCK INDEX FUTURES--A stock index futures contract is a bilateral agreement
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
index value at the close of trading of the contract and the price at which

S-28
<PAGE>
the futures contract is originally struck. No physical delivery of the
securities comprising the index is made; generally contracts are closed out
prior to the expiration date of the contract.

In order to avoid leveraging and related risks, when a 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.

The SEI VP S&P 500 Index Fund may invest in stock index futures. No price is
paid upon entering into futures contracts. Instead, a Fund is required to
deposit an amount of cash or U.S. Treasury securities known as "initial margin."
Subsequent payments, call "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 nature of initial and variation margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of funds to
finance the transactions. Rather, the margin is in the nature of a performance
bond or good-faith deposit on the contract that is returned to the Fund upon
termination of the contract, assuming all contractual obligations have been
satisfied. Positions in futures contracts may be closed only on an exchange or
board of trade providing a secondary market for such futures contracts. The
value of the contract usually will vary in direct proportion to the total face
value. Market value of a stock index futures position is defined as the closing
value of the Index multiplied by 500 times the number of contracts held.

The Fund's ability to effectively utilize futures contracts depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index. In
addition, the purchase of a futures contract involves the risk that the Fund
could lose more than the original margin deposit required to initiate a futures
transaction.

In considering the proposed use of futures contracts, particular note should
be taken that futures contracts relate to the anticipated levels at some point
in the future not to the current level of the underlying instrument; thus, for
example, trading of stock index futures may not reflect the trading of the
securities which are used to formulate an index or even actual fluctuations in
the relevant index itself. There is, in addition, a risk that movements in the
price of futures contracts will not correlate with the movement in prices of the
stock index being tracked. There may be several reasons unrelated to the value
of the underlying securities which causes this situation to occur. First, all
participants in the futures market are subject to initial and variation margin
requirements. If, to avoid meeting additional margin deposit requirements or for
other reasons, investors choose to close a significant number of futures
contracts through offsetting transactions, distortions in the normal price
relationship between the securities markets and the futures markets may occur.
Second, because the deposit requirements in the futures market are less onerous
than margin requirements in the securities market, there may be increased
participation by speculators in the futures market which may also cause
temporary price distortions. The Fund will not engage in transactions in futures
contracts for speculative purposes.

STRUCTURED SECURITIES--The SEI VP Emerging Markets Debt Fund may invest a
portion of its assets 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

S-29
<PAGE>
("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 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 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--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 a Fund's performance. Interest rate swaps, mortgage swaps, currency
swaps and other types of swap agreements such as caps, floors and collars are
designed to permit the purchaser to preserve a return or spread on a particular
investment or portion of its portfolio, and to protect against any increase in
the price of securities a Fund anticipates purchasing at a later date.

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

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. 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, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party.

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.

Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. Depending on how they are used, swap agreements
may increase or decrease the overall volatility of the Fund's investments and
their share price or yield.

TIME DEPOSITS--a non-negotiable receipt 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 are considered to be illiquid
securities. The SEI VP High Yield Bond, SEI VP International Fixed Income, SEI
VP Emerging Markets Equity and SEI VP International Equity Funds may invest in
time deposits.

S-30
<PAGE>
U.S. GOVERNMENT AGENCY OBLIGATIONS--Obligations issued or guaranteed by
agencies of the U.S. Government, including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by instrumentalities of the
U.S. Government, including, among others, the FHLMC, the Federal Land Banks and
the U.S. Postal Service. Some of these securities are supported by the full
faith and credit of the U.S. Treasury (E.G., GNMA securities), 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). Agencies of the
United States Government that issue obligations, including, among others, Export
Import Bank of the United States, Farmers Home Administration, Federal Farm
Credit System, Federal Housing Administration, Government National Mortgage
Association, Maritime Administration, Small Business Administration and The
Tennessee Valley Authority. A Fund may purchase securities issued or guaranteed
by the GNMA which represent participations in Veterans Administration and
Federal Housing Administration backed mortgage pools.

Guarantees of principal by agencies or instrumentalities of the U.S.
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 or to the value of a Fund's shares.

U.S. TREASURY OBLIGATIONS--bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal Securities ("STRIPS"). No
Fund may actively trade STRIPS. STRIPS are sold as zero coupon securities; for
more information, see "Zero Coupon Securities."

U.S. TREASURY RECEIPTS--U.S. Treasury receipts are interests in separately
traded interest and principal component parts of U.S. Treasury obligations that
are issued by banks or brokerage firms and are created by depositing U.S.
Treasury notes and obligations into a special account at a custodian bank. The
custodian holds the interest and principal payments for the benefit of the
registered owners of the certificates of receipts. The custodian arranges for
the issuance of the certificates or receipts evidencing ownership and maintains
the register.

VARIABLE AND FLOATING RATE INSTRUMENTS--Certain obligations may carry
variable or floating rates of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear interest at rates that are
not fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or some
other reset period, and may have a floor or ceiling on interest rate changes.
These instruments may involve a demand feature and may include variable amount
master demand notes available through the Custodian, or otherwise. 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. The quality of the underlying credit must, in the opinion of the
Fund's managers, be equivalent to the long-term bond or commercial paper ratings
applicable to permitted investments for each Fund. Each Fund's Sub-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. 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.

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 fund maturity.

S-31
<PAGE>
WARRANTS--Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--involve the purchase of debt
obligations on a when-issued basis, in which case delivery and payment normally
take place within 45 days after the date of commitment to purchase. 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. These
securities are subject to market fluctuation due to changes in market interest
rates, and it is possible that the market value at the time of settlement could
be higher or lower than the purchase price if the general level of interest
rates has changed. Although a Fund generally purchases securities on a
when-issued or forward commitment basis with the intention of actually acquiring
securities, a Fund may dispose of a when-issued security or forward commitment
prior to settlement if it deems it appropriate to do so. When investing in
when-issued securities, a Fund will not accrue income until delivery of the
securities and will invest in such securities only for purposes of actually
acquiring the securities and not for purposes of leveraging.

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.

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.

A Fund will establish a segregated account and maintain liquid assets in an
amount at least equal in value to that Fund's commitments to purchase
when-issued securities. If the value of these assets declines, the 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.

YANKEE OBLIGATIONS--Yankee obligations ("Yankees") are U.S.
dollar-denominated instruments of foreign issuers who either register with the
SEC or issue under Rule 144A under the Securities Act of 1933. These obligations
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 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 a Fund will adhere to the same quality
standards as those utilized for the selection of domestic debt obligations.

YEAR 2000 TRANSITION--The Funds and their service providers do not appear to
have been adversely affected by computer problems related to the transition to
the year 2000. However, there remains a risk that such problems could arise or
be discovered in the future. Year 2000 related problems also may negatively
affect issuers whose securities the Funds purchases, which could have an impact
on the value of your investment.

ZERO COUPON SECURITIES--Zero coupon securities are securities that are sold
at a discount to par value, and securities on which interest payments are not
made during the life of the security. Upon maturity, the holder is entitled to
receive the par value of the security. While interest payments are not made on
such securities, holders of such securities are deemed to have received "phantom
income" annually. Because a Fund will distribute its "phantom income" to
shareholders, to the extent that shareholders elect to receive dividends in cash
rather than reinvesting such dividends in additional shares, the Fund will have
fewer assets with which to purchase income producing securities. Pay-in-kind
securities pay interest in either cash or additional securities, at the issuer's
option, for a specified period. Pay-in-kind

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<PAGE>
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. Pay-in-kind securities are
securities that have interest payable by delivery of additional securities. Upon
maturity, the holder is entitled to receive the aggregate par value of the
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.

To avoid any leveraging concerns, the Fund will place cash or liquid
securities in a segregated account in an amount sufficient to cover its
repurchase obligation. Zero coupon, pay-in-kind and deferred payment securities
may be subject to greater fluctuation in value and lesser liquidity in the event
of adverse market conditions than comparably rated securities paying cash
interest at regular interest payment periods. STRIPS and receipts (TRs, TIGRs
and CATS) are sold as zero coupon securities, that is, fixed income securities
that have been stripped of their unmatured interest coupons. Zero coupon
securities 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 accreted 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.

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 dated one
or more years into the future, after which the issuer is obligated to pay
interest until maturity, usually at a higher rate than if interest were payable
from the date of issuance and may also make interest payments in kind (e.g.,
with identical zero coupon securities). Such corporate zero coupon securities,
in addition to the risks identified above, are subject to the risk of the
issuer's failure to pay interest and repay principal in accordance with the
terms of the obligation. A Fund must accrete the discount or interest on
high-yield bonds structured as zero coupon securities as income even though it
does not receive a corresponding cash interest payment until the security's
maturity or payment date. A Fund may have to dispose of its securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing cash to satisfy distribution requirements. A Fund accrues income
with respect to the securities prior to the receipt of cash payments.

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<PAGE>
DESCRIPTION OF RATINGS

MOODY'S RATINGS DEFINITIONS

LONG TERM

<TABLE>
<S> <C>
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 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.
</TABLE>

SHORT-TERM

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

- Leading market positions in well-established industries.

- High rates of return on funds employed.

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<PAGE>
- Conservative capitalization structure 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
ability 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.

NOT PRIME Issuers rated Not Prime do not fall within any of the Prime rating
categories.

STANDARD & POOR'S RATINGS DEFINITIONS

A Standard & Poor's corporate or municipal debt rating is a current
assessment of 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 creditor's 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

INVESTMENT GRADE

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

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

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

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<PAGE>
<TABLE>
<S> <C>
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.
</TABLE>

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 exposure to adverse conditions.

<TABLE>
<S> <C>
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
payment 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.
</TABLE>

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.

<TABLE>
<S> <C>
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 the debt service requirements is largely or
entirely dependent upon the successful timely completion of
the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no
comment on the likelihood of, or the risk of default upon
failure of such completion. The investor should exercise his
own judgement with respect to such likelihood and risk.
</TABLE>

S-36
<PAGE>
<TABLE>
<S> <C>
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.
</TABLE>

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

*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 ratings. 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.

NOTE: 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 '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.

SHORT-TERM

<TABLE>
<S> <C>
A-1 This highest category indicates that the degree of safety
regarding timely payment is strong. Debt determined to
possess extremely strong safety characteristics is denoted
with a plus sign (+) designation.
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 Debt carrying this designation has an adequate capacity for
timely payment. It is, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
B Debt rated "B" is regarded as having only speculative
capacity for timely payment.
C This rating is assigned to short-term debt obligations with
a doubtful capacity for payment.
D This rating indicates that the obligation is in payment
default.
</TABLE>

DUFF AND PHELPS, INC. RATINGS DEFINITIONS

<TABLE>
<S> <C>
AAA Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury
debt.
AA+ High credit quality. Protection factors are strong. Risk is
AA- modest but may vary slightly from time to time because of
economic conditions.
</TABLE>

S-37
<PAGE>
<TABLE>
<S> <C>
A+ Protection factors are average but adequate. However, risk
A- factors are more variable and greater in periods of economic
stress.
BBB+ Below average protection factors but still considered
BBB- sufficient for prudent investment. Considerable variability
in risk during economic cycles.
BB+ Below investment grade but deemed likely to meet obligations
BB when due. Present or prospective financial protection
BB- factors fluctuate according to industry conditions or
company fortunes. Overall quality may move up or down
frequently within this category.
B+ Below investment grade and possessing risk that obligations
B will not be met when due. Financial protection factors will
B- fluctuate widely according to economic cycles, industry
conditions and/or company fortunes. Potential exists for
frequent changes in the rating within this category or into
a higher or lower rating grade.
CCC Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal,
interest or preferred dividends. Protection factors are
narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.
DP Preferred stock with dividend arrearages.
</TABLE>

SHORT-TERM RATINGS

<TABLE>
<S> <C>
Duff 1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection
factors. Risk factors are minor.
Duff 1- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors.
Risk factors are very small.

GOOD GRADE

Duff 2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are small.

SATISFACTORY GRADE

Duff 3 Satisfactory liquidity and other protection factors qualify
issue as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is
expected.

NON-INVESTMENT GRADE

Duff 4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high
degree of variation.

DEFAULT

Duff 5 Issuer failed to meet scheduled principal and/or interest
payments.
</TABLE>

FITCH IBCA RATINGS DEFINITIONS

LONG-TERM

<TABLE>
<S> <C>
INVESTMENT GRADE
AAA Highest credit quality. "AAA" ratings denote the lowest
expectation of credit risk. They are assigned only in case
of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.
</TABLE>

S-38
<PAGE>
<TABLE>
<S> <C>
AA Very high credit quality. "AA" ratings denote a very low
expectation of credit risk. They indicate very strong
capacity for timely payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable
events.
A High credit quality. "A" ratings denote a low expectation of
credit risk. The capacity for timely payment of financial
commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances
or in economic conditions than is the case for higher
ratings.
BBB Good credit quality. "BBB" ratings indicate that there is
currently a low expectation of credit risk. The capacity for
timely payment of financial commitments is considered
adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity.
This is the lowest investment-grade category.

SPECULATIVE GRADE
BB Speculative. "BB" ratings indicate that there is a
possibility of credit risk developing, particularly as the
result of adverse economic change over time; however,
business or financial alternatives may be available to allow
financial commitments to be met. Securities rated in this
category are not investment grade.
B Highly speculative. "B" ratings indicate that significant
credit risk is present, but a limited margin of safety
remains. Financial commitments are currently being met;
however, capacity for continued payment is contingent upon a
sustained, favorable business and economic environment.
CCC High default risk. Default is a real possibility. Capacity
CC for meeting financial commitments is solely reliant upon
C sustained, favorable business or economic developments. A
"CC" rating indicates that default of some kind appears
probable. "C" ratings signal imminent default.
DDD Default. The ratings of obligations in this category are
DD based on their prospects for achieving partial or full
D recovery in a reorganization or liquidation of the obligor.
While expected recovery values are highly speculative and
cannot be estimated with any precision, the following serve
as general guidelines. "DDD" obligations have the highest
potential for recovery, around 90%-100% of outstanding
amounts and accrued interest. "DD" indicates potential
recoveries in the range of 50%-90%, and "D" the lowest
recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or
all of their obligations. Entities rated "DDD" have the
highest prospect for resumption of performance or continued
operation with or without a formal reorganization process.
Entities rated "DD" and "D" are generally undergoing a
formal reorganization or liquidation process; those rated
"DD" are likely to satisfy a higher portion of their
outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
</TABLE>

SHORT-TERM

<TABLE>
<S> <C>
F1 Highest credit quality. Indicates the Best capacity for
timely payment of financial commitments; may have an added
"+" to denote any exceptionally strong credit feature.
F2 Good credit quality. A satisfactory capacity for timely
payment of financial commitments, but the margin of safety
is not as great as in the case of the higher ratings.
F3 Fair credit quality. The capacity for timely payment of
financial commitments is adequate; however, near-term
adverse changes could result in a reduction to
non-investment grade.
B Speculative. Minimal capacity for timely payment of
financial commitments, plus vulnerability to near-term
adverse changes in financial and economic conditions.
C High default risk. Default is a real possibility. Capacity
for meeting financial commitments is solely reliant upon a
sustained, favorable business and economic environment.
D Default. Denotes actual or imminent payment default.
</TABLE>

S-39
<PAGE>
NOTES TO LONG-TERM AND SHORT-TERM RATINGS: "+" or "-" may be appended to a
rating to denote relative status within major rating categories. Such suffixes
are not added to the "AAA" long-term rating category, to categories below "CCC,"
or to short-term ratings other than "F1".

"NR" indicates that Fitch IBCA does not rate the issuer or issue in
question.

"WITHDRAWN": A rating is withdrawn when Fitch IBCA deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.

RATINGALERT: Ratings are placed on RatingAlert to notify investors that
there is a reasonable probability of a rating change and the likely direction of
such change. These are designated as "Positive," indicating a potential upgrade,
"Negative," for a potential downgrade, or "Evolving", if ratings may be raised,
lowered or maintained. RatingAlert is typically resolved over a relatively short
period.

THOMSON BANKWATCH RATINGS DEFINITIONS

<TABLE>
<S> <C>
AAA Bonds rated AAA indicate that the ability to repay principal
and interest on a timely basis is very high.
AA Bonds rated AA indicate a superior ability to repay
principal and interest on a timely basis, with limited
incremental risk compared to issues rated in the highest
category.
A Bonds rated A indicate the ability to repay principal and
interest is strong. Issues rated A could be more vulnerable
to adverse developments (both internal and external) than
obligations with higher ratings.
BBB Bonds rated BBB indicate an acceptable capacity to repay
principal and interest. Issues rated BBB are, however, more
vulnerable to adverse developments (both internal and
external) than obligations with higher ratings.
BB While not investment grade, the BB rating suggests that the
likelihood of default is considerably less than for
lower-rated issues. However, there are significant
uncertainties that could affect the ability to adequately
service debt obligations.
B Issues rated B show a higher degree of uncertainty and
therefore greater likelihood of default than higher-rated
issues. Adverse developments could well negatively affect
the payment of interest and principal on a timely basis.
CCC Issues rated "CCC" clearly have a high likelihood of
default, with little capacity to address further adverse
changes in financial circumstances.
CC "CC" is applied to issues that are subordinate to other
obligations rated "CCC" and are afforded less protection in
the event of bankruptcy or reorganization.
D Default
</TABLE>

Ratings in the Long-Term Debt categories may include a plus (+) or minus (-)
designation, which indicates where within the respective category the issue is
placed.

SHORT-TERM RATINGS

<TABLE>
<S> <C>
TBW-1 The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.
TBW-2 The second-highest category; while the degree of safety
regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for
issues rated "TBW-1".
TBW-3 The lowest investment-grade category; indicates that while
the obligation is more susceptible to adverse developments
(both internal and external) than those with higher ratings,
the capacity to service principal and interest in a timely
fashion is considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
</TABLE>

S-40
<PAGE>
INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations are fundamental policies of the Trust
and may not be changed without shareholder approval.

A Fund may not:

1. With respect to 75% of its total assets, (i) purchase 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 isser; or
(ii) acquire more than 10% of the outstanding voting securities of any one
issuer. This restriction does not apply to the SEI VP International Fixed
Income and SEI VP Emerging Markets Debt Funds.

2. Purchase any securities which could cause more than 25% of its total assets
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 securities issued or guaranteed
by the United States Government, it 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 making 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
loaned 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.

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

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

NON-FUNDAMENTAL POLICIES

The following investment limitations are non-fundamental policies of the
Trust and may be changed without shareholder approval.

A 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,

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<PAGE>
and (iii) make short sales "against the box" or in compliance with the SEC's
position regarding the asset segregation requirements of section 18 of the
1940 Act.

4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act or any rule or order thereunder.

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.

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

THE ADMINISTRATOR AND TRANSFER AGENT

SEI Investments Fund Management ("SEI Management" or the "Administrator")
provides the Trust with overall administrative services, regulatory reporting,
all necessary office space, equipment, personnel and facilities, and acts as
dividend disbursing agent. SEI Management also serves as transfer agent (the
"Transfer Agent") for the Funds. For these administrative services, SEI
Management is entitled to a fee, which is calculated daily and paid monthly, as
a percentage of the average daily net assets of each Fund at the following
rates:

<TABLE>
<CAPTION>
FUND ADMINISTRATION FEE
- ------------------------------------------------------------ ------------------
<S> <C>
SEI VP Large Cap Value Fund................................. 0.35%
SEI VP Large Cap Growth Fund................................ 0.35%
SEI VP S&P 500 Index Fund................................... 0.22%
SEI VP Small Cap Value Fund................................. 0.35%
SEI VP Small Cap Growth Fund................................ 0.35%
SEI VP International Equity Fund............................ 0.45%
SEI VP Emerging Markets Equity Fund......................... 0.65%
SEI VP Bond Index Fund...................................... 0.35%
SEI VP Core Fixed Income Fund............................... 0.28%
SEI VP High Yield Bond...................................... 0.35%
SEI VP International Fixed Income Fund...................... 0.60%
SEI VP Emerging Markets Debt Fund........................... 0.65%
SEI VP Prime Obligation Fund................................ 0.42%
</TABLE>

SEI Investments Management Corporation ("SIMC") and SEI Management have
agreed, on a voluntary basis, to waive a portion of their
Management/Administration Fees and/or reimburse Other Expenses to the extent
necessary to keep Total Operating Expenses from exceeding certain levels. The
Total Operating Expenses reflect anticipated fee waivers.

The Administration Agreement provides that the Administrator 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.

After an initial term, the continuance of the Administration Agreement must
be specifically approved: (i) by the vote of a majority of the Trustees or by
the vote of a majority of the outstanding voting securities of the Fund; and
(ii) by the vote of a majority of the Trustees of the Trust who are not parties
to the Administration Agreement or an "interested person" (as that term is
defined in the 1940 Act) of any party thereto, cast in person at a meeting
called for the purpose of voting on such approval. The Administration Agreement
is terminable at any time as to any Fund without penalty by the Trustees of the
Trust, by a vote

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<PAGE>
of a majority of the outstanding shares of the Fund or by SEI Management on not
less than 30 days' nor more than 60 days' written notice. This Agreement shall
not be assignable by either party without the written consent of the other
party.

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

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 Code. The term
"expenses" is defined in such laws or regulations, and generally excludes
brokerage commissions, distribution expenses, taxes, interest and extraordinary
expenses.

THE ADVISER AND THE SUB-ADVISERS

SIMC (or the "Adviser") is a wholly-owned subsidiary of SEI Investments a
financial services company. The principal business address of SIMC and SEI
Investments is Oaks, Pennsylvania, 19456. SEI Investments was founded in 1968,
and is a leading provider of investment solutions to banks, institutional
investors, investment advisers and insurance companies. Affiliates of SIMC have
provided consulting advice to institutional investors for more than 20 years,
including advice regarding selection and evaluation of money managers. SIMC
currently serves as manager to more than 46 investment companies, including more
than 387 funds, with more than $53.4 billion in assets as of October 31, 1999.

SIMC is the investment Adviser for each of the Funds, and operates as a
"manager of managers." As Adviser, SIMC oversees the investment advisory
services provided to the Funds and may manage the cash portion of the Funds'
assets. Pursuant to separate sub-advisory agreements with SIMC, and under the
supervision of the Adviser and the Board of Trustees, a number of sub-advisers
(the "Sub-Advisers") are responsible for the day-to-day investment management of
all or a discrete portion of the assets of the Funds. Sub-Advisers are selected
for the Funds based primarily upon the research and recommendations of SIMC,
which evaluates quantitatively and qualitatively a Sub-Adviser's skills and
investment results in managing assets for specific asset classes, investment
styles and strategies.

Subject to Board review, SIMC allocates and, when appropriate, reallocates
the Funds' assets among Sub-Advisers, monitors and evaluates Sub-Adviser
performance, and oversees Sub-Adviser compliance with the Funds' investment
objectives, policies and restrictions. SIMC HAS ULTIMATE RESPONSIBILITY FOR THE
INVESTMENT PERFORMANCE OF THE FUNDS DUE TO ITS RESPONSIBILITY TO OVERSEE
SUB-ADVISERS AND RECOMMEND THEIR HIRING, TERMINATION AND REPLACEMENT.

SIMC and the Trust have 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

S-43
<PAGE>
unaffiliated with SIMC for the Funds without submitting the sub-advisory
agreements to a vote of the Fund's shareholders. The exemptive relief permits
SIMC to disclose only the aggregate amount payable by SIMC to the Sub-Advisers
under all such sub-advisory agreements for each Fund. The Funds will notify
shareholders in the event of any addition or change in the identity of its
Sub-Advisers.

For its management services, SIMC is entitled to a fee, which is calculated
daily and paid monthly, at the following annual rates (shown as a percentage of
the average daily net assets of each Fund):

<TABLE>
<CAPTION>
FUND ADVISORY FEE
- ------------------------------------------------------------ ------------
<S> <C>
SEI VP Large Cap Value Fund................................. 0.35%
SEI VP Large Cap Growth Fund................................ 0.40%
SEI VP S&P 500 Index Fund................................... 0.03%
SEI VP Small Cap Value Fund................................. 0.65%
SEI VP Small Cap Growth Fund................................ 0.65%
SEI VP International Equity Fund............................ 0.51%
SEI VP Emerging Markets Equity Fund......................... 1.05%
SEI VP Emerging Markets Debt Fund........................... 0.85%
SEI VP Core Fixed Income Fund............................... 0.28%
SEI VP Bond Index Fund...................................... 0.07%
SEI VP High Yield Bond Fund................................. 0.49%
SEI VP International Fixed Income Fund...................... 0.30%
SEI VP Prime Obligation Fund................................ 0.08%
</TABLE>

SIMC pays the Sub-Advisers a fee out of its advisory fee, which fee is based
on a percentage of the average monthly market value of the assets managed by
each Sub-Adviser.

THE SUB-ADVISERS

ACADIAN ASSET MANAGEMENT, INC.--Acadian Asset Management, Inc. ("Acadian")
serves as a Sub-Adviser for a portion of the assets of the SEI VP International
Equity Fund. As of March 31, 2000, Acadian managed approximately $ billion in
assets invested globally.

ALLIANCE CAPITAL MANAGEMENT L.P.--Alliance Capital Management L.P.
("Alliance") serves as a Sub-Adviser for a portion of the assets of the SEI VP
Large Cap Growth Fund. As of March 31, 2000, Alliance managed over $ billion
in assets.

ARTISAN PARTNERS LIMITED PARTNERSHIP--Artisan Partners Limited Partnership
("Artisan") serves as a Sub-Adviser for a portion of the assets of the SEI VP
Small Cap Value Fund. As of March 31, 2000, Artisan had approximately
$ billion in assets under management.

BLACKROCK FINANCIAL MANAGEMENT, INC.--BlackRock Financial Management, Inc.
("BlackRock") serves as a Sub-Adviser to a portion of the assets of the SEI VP
Core Fixed Income Fund. As of March 31, 2000, BlackRock had $ billion in
assets under management.

BLACKROCK INTERNATIONAL, LTD.--BlackRock International, Ltd. ("BlackRock
International") serves as a sub-adviser to a potion of the assets of the SEI VP
International Equity Fund. As of March 31, 2000, BlackRock International has
approximately $ billion in assets under management.

CAPITAL GUARDIAN TRUST COMPANY--Capital Guardian Trust Company ("CGTC")
serves as a Sub-Adviser to a portion of the assets of the SEI VP International
Equity Fund. CGTC has managed international portfolios since 1978, and as of
March 31, 2000, managed a total of over $ billion primarily for institutional
clients.

CORONATION ASSET MANAGEMENT (PROPRIETARY) LIMITED--Coronation Asset
Management (Proprietary) Limited ("Coronation") serves as a Sub-Adviser for a
portion of the assets of the SEI

S-44
<PAGE>
VP Emerging Markets Equity Fund. As of March 31, 2000, Coronation had
approximately $ billion in assets under management.

CREDIT SUISSE ASSET MANAGEMENT LLC/AMERICAS--Credit Suisse Asset
Management LLC/ Americas ("Credit Suisse") serves as the Sub-Adviser for the SEI
VP High Yield Bond Fund. As of March 31, 2000, Credit Suisse managed
approximately $ billion in assets.

CREDIT SUISSE ASSET MANAGEMENT LIMITED--Credit Suisse Asset Management
Limited ("Credit Suisse") acts as a Sub-Adviser for a portion of the assets of
the SEI VP Emerging Markets Equity Fund. Credit Suisse managed approximately
$ billion as of March 31, 2000.

FIRSTAR INVESTMENT RESEARCH & MANAGEMENT COMPANY, LLC--Firstar Investment
Research & Management Company, LLC ("FIRMCO") serves as a Sub-Adviser for a
portion of the assets of the SEI VP Core Fixed Income Fund. As of March 31,
2000, it had approximately $ billion in assets under management.

LSV ASSET MANAGEMENT, L.P.--LSV Asset Management, L.P. ("LSV") serves as a
Sub-Adviser to a portion of the assets of the SEI VP Large Cap Value Fund. As of
March 31, 2000, LSV managed approximately $ billion in client assets.

MAZAMA CAPITAL MANAGEMENT, LLC--Mazama Capital Management, LLC ("Mazama")
serves as Sub-Adviser for a portion of the assets of the SEI V.P. Small Cap
Growth Fund. As of March 31, 2000, Mazama had approximately $ million in
assets under management.

MELLON BOND ASSOCIATES, LLP--Mellon Bond Associates, LLP ("MBA") serves as
Sub-Adviser to the SEI VP Bond Index Fund. As of March 31, 2000, MBA had
approximately $ billion in assets under management.

MELLON EQUITY ASSOCIATES, LLP--Mellon Equity Associates, LLP ("Mellon
Equity") serves as a Sub-Adviser to a portion of the assets of each of the SEI
VP Large Cap Value Fund and the SEI VP Small Cap Value Fund. Mellon Equity had
discretionary management authority with respect to approximately $ billion of
assets as of March 31, 2000.

MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.--Morgan Stanley Dean
Witter Investment Management Inc. ("MSDW") acts as a Sub-Adviser for a portion
of the assets of the SEI VP Emerging Markets Equity Fund. As of March 31, 2000,
MSDW had approximately $ billion in assets under management.

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT--Nicholas-Applegate Capital Management
("Nicholas-Applegate") serves as a Sub-Adviser to a portion of the assets of the
SEI VP Small Cap Growth Fund. As of March 31, 2000, Nicholas-Applegate had
discretionary management authority with respect to approximately $ billion of
assets.

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.--Nomura Corporate
Research and Asset Management Inc. ("Nomura") serves as an adviser for a portion
of the assets of the SEI VP High Yield Bond Fund. As of March 31, 2000, Nomura
had approximately $ billion in assets under management.

OECHSLE INTERNATIONAL ADVISERS, LLC--Oechsle International Advisers LLC
("Oechsle") serves as a Sub-Adviser to a portion of the assets of the
International Equity Fund. As of March 31, 2000, Oechsle had approximately
$ million in assets under management.

PROVIDENT INVESTMENT COUNSEL, INC.--Provident Investment Counsel, Inc.
("Provident") serves as a Sub-Adviser for a portion of the assets of the SEI VP
Large Cap Growth Fund. As of March 31, 2000, Provident had over $ billion in
client assets under management.

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<PAGE>
RS INVESTMENT MANAGEMENT, L.P.--RS Investment Management, L.P. ("RSIM"),
acts as a Sub-Adviser for a portion of the assets of the SEI VP Small Cap Growth
Fund. RSIM is a registered investment adviser and as of March 31, 2000 had
approximately $ billion in assets under management.

SALOMON BROTHERS ASSET MANAGEMENT INC--Salomon Brothers Asset Management Inc
("SBAM") serves as a Sub-Adviser for the assets of the SEI VP Emerging Markets
Debt Fund. SBAM is a registered investment adviser and as of March 31, 2000 had
approximately $ billion in client assets under management.

SANFORD C. BERNSTEIN & CO., INC.--Sanford C. Bernstein & Co., Inc.
("Bernstein"), serves as a Sub-Adviser to a portion of the assets of the SEI VP
Large Cap Value Fund. Bernstein managed approximately $ billion in assets as
of March 31, 2000.

SAWGRASS ASSET MANAGEMENT, LLC--Sawgrass Asset Management, LLC ("Sawgrass")
serves as a Sub-Adviser for a portion of the assets of the SEI VP Small Cap
Growth Fund. As of March 31, 1999, Sawgrass had approximately $325 million in
assets under management.

SECURITY CAPITAL GLOBAL CAPITAL MANAGEMENT INCORPORATED--Security Capital
Global Capital Management Incorporated ("Security Capital") serves as
Sub-Adviser for a portion of the assets of the SEI V.P. Small Cap Value Fund. As
of March 31, 2000, Security Capital had approximately $ billion in assets under
management.

SG PACIFIC ASSET MANAGEMENT, INC., AND SGY ASSET MANAGEMENT (SINGAPORE)
LIMITED AND SG YAMAICHI ASSET MANAGEMENT CO., LTD.--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 SEI VP International
Equity and SEI VP Emerging Markets Equity Funds. SG Yamaichi and its affiliates
currently manage over $ billion in assets worldwide.

STRATEGIC FIXED INCOME, L.L.C.--Strategic Fixed Income, L.L.C. ("Strategic")
serves as the Sub-Adviser for the SEI VP International Fixed Income Fund. As of
March 31, 2000, Strategic managed $ billion of client assets. The principal
address of Strategic is 1001 Nineteenth Street North, Suite 1720, Arlington,
Virginia 22209.

TCW FUNDS MANAGEMENT INC.--TCW Funds Management Inc. ("TCW") acts as a
Sub-Adviser for a portion of the assets of the SEI VP Large Cap Growth Fund. As
of March 31, 2000, TCW had approximately $ billion of assets under management.

WELLINGTON MANAGEMENT COMPANY LLP--Wellington Management Company LLP
("WMC"), serves as the investment Sub-Adviser for the SEI VP Prime Obligation
Fund. As of March 31, 2000, WMC had discretionary management authority with
respect to approximately $ billion in assets.

WESTERN ASSET MANAGEMENT COMPANY--Western Asset Management Company
("Western") serves as a Sub-Adviser for a portion of the assets of the SEI VP
Core Fixed Income Fund. As of March 31, 2000, Western managed approximately
$ billion in client assets.

WORLD ASSET MANAGEMENT, LLC--World Asset Management, LLC ("World") serves as
a Sub-Adviser to the S&P 500 Index Fund. As of March 31, 2000, World had
approximately $ billion in assets under management.

The Advisory Agreement and certain of the sub-advisory agreements provide
that SIMC (or any Sub-Adviser) 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. In addition, certain of the
sub-advisory agreements provide that the Sub-Adviser shall not be protected
against any liability to the Trust or its 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.

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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 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 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 Adviser or Sub-Adviser, or by the
Adviser or Sub-Adviser on 90 days' written notice to the Trust.

DISTRIBUTION AND SHAREHOLDER SERVICING

SEI Investments Distribution Co. (the "Distributor") serves as each Fund's
distributor pursuant to a distribution agreement (the "Distribution Agreement")
with the Trust. No compensation is paid to the Distributor under the
Distribution Agreement for distribution services for the shares of any Fund.

The Fund may execute brokerage or other agency transactions through the
Distributor, for which the Distributor may receive compensation.

The Distributor may, from time to time and at its own expense, provide
promotional incentives, in the form of cash or other compensation, to certain
financial institutions whose representatives have sold or are expected to sell
significant amounts of the Funds' shares.

The Distributor, a wholly-owned subsidiary of SEI Investments, and the Trust
are parties to a distribution agreement ("Distribution Agreement"). The
Distribution Agreement shall be reviewed and ratified at least annually (i) by
the Trust's Trustees or by the vote of a majority of the outstanding shares of
the Trust, and (ii) by the vote of a majority of the Trustees of the Trust who
are not parties to the Distribution Agreement or interested persons (as defined
in the 1940 Act) of any party to the Distribution Agreement, cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement will terminate in the event of any assignment, as defined in the 1940
Act, and is terminable with respect to a particular Fund on not less than sixty
days' notice by the Trust's Trustees, by vote of a majority of the outstanding
shares of such Fund or by the Distributor. The Distributor will receive no
compensation for the distribution of Fund shares.

Although banking laws and regulations prohibit banks from distributing
shares of open-end investment companies such as the Trust, according to an
opinion issued to the staff of the SEC by the Office of the Comptroller of the
Currency, financial institutions are not prohibited from acting in other
capacities for investment companies, such as providing shareholder services.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of financial institutions in connection with providing
shareholder services, the Trust may be required to alter materially or
discontinue its arrangements with such financial institutions.

TRUSTEES AND OFFICERS OF THE TRUST

The 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, Alpha Select
Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CNI Charter Funds, CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment
Funds, Inc., First American Strategy Funds, Inc.,

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HighMark Funds, Huntington Funds, The Nevis Fund, Inc., Oak Associates Funds,
The Parkstone Advantage Fund, The Parkstone Group of Funds, The PBHG
Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
International Trust, SEI Institutional Investments Trust, SEI Institutional
Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds,
STI Classic Variable Trust and TIP Funds, each of which is an open-end
management investment company managed by SEI Management or its affiliates and
distributed by SEI Investments Distribution Co.

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
Administrator and the Distributor, 1981-1994. Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, The Expedition Funds, Oak Associates Funds, Pillar
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Managed Trust, SEI Institutional International Trust, SEI
Institutional Investments 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) since 1976 counsel to
the Trust, SEI Investments, the Adviser, the Administrator and the Distributor.
Director and Secretary of SEI Investments. Trustee of The Advisors' Inner Circle
Fund. The Arbor Fund, The Expedition Funds, Oak Associates Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Managed Trust, SEI Institutional International Trust, SEI Institutional
Investments 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 Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Institutional Investments 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, Oak Associates Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust,
SEI Institutional International Trust, SEI Institutional Investments 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 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
The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition Funds, Oak
Associate Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional International Trust,
SEI Institutional Investments Trust, SEI Liquid Asset 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, since 1993. Executive Vice President of the Adviser and the
Administrator since 1994. Senior Vice President, SEI Investments, 1986-1991;
Vice President of the Distributor 1981-1986.

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<PAGE>
TIMOTHY D. BARTO (DOB 03/28/68)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Adviser, the
Administrator and Distributor since December 1999. Associate at Dechert Price &
Rhoads (1997-1999). Associate at Richter, Miller & Finn (1994-1997).

TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Vice President, Assistant Secretary and General Counsel of SEI
Investments, the Adviser, the Administrator 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 SEI Investments since January 1998. Vice
President of the Administrator and Distributor since May 1999. Vice President
and Assistant Secretary of the Adviser Corporation since December 1999.
Associate, Paul Weiss, Rifkind, Wharton & 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 SEI Investments, the
Adviser, the Administrator and the Distributor since 1998. Assistant General
Counsel and Director of Arbitration, Philadelphia Stock Exchange, 1989-1998.

CHRISTINE M. MCCULLOUGH (DOB 12/05/60)--Vice President and Assistant
Secretary--Employed by SEI Investments since November 1, 1999. Vice President
and Assistant Secretary of the Adviser, the Administrator and Distributor since
December 1999. Associate at White and Williams LLP, 1991-1999. Associate at
Montgomery, Walker and Rhoads, 1990-1991.

CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, the
Adviser, the Administrator 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 of SEI Investments, the Adviser, the
Administrator and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Adviser and the Administrator since
1994. Vice President, General Counsel and Assistant Secretary of the Adviser,
the Administrator 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 SEI Investments, the
Adviser, 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 Administrator and
the Distributor.

MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial
Officer--President and Senior Vice President of Fund Accounting and
Administration of the Administrator since 1998. Vice President of Fund
Accounting and Administration of the Administrator, 1996-1998.Vice President of
the Distributor since December 1997. Vice President, Fund 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.

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<PAGE>
Compensation of officers and affiliated Trustees of the Trust is paid by SEI
Management. The Trust pays the fees for unaffiliated Trustees.

Mr. Edward W. 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 current yield of the SEI VP Prime Obligation Fund is calculated daily
based upon the 7 days ending on the date of calculation ("base period"). The
yield is computed by determining the net change (exclusive of capital changes)
in the value of a hypothetical pre-existing shareholder account having a balance
of one share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts and dividing such net change by
the value of the account at the beginning of the same period to obtain the base
period return and multiplying the result by (365/7). Realized and unrealized
gains and losses are not included in the calculation of the yield.

The SEI VP Prime Obligation Fund computes its effective compound yield by
determining the net changes, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula: Effective Yield = [(Base Period Return + 1)TO THE POWER OF
365/7] - 1. The current and the effective yields reflect the reinvestment of net
income earned daily on portfolio assets.

The yield of a non-money market Fund refers to the annualized income
generated by an investment in such Fund over a specified 30-day period ending on
the date of the most recent balance sheet. 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.

Actual yield will depend on such variables as asset quality, average asset
maturity, the type of instruments a Fund invests in, changes in interest rates
on money market instruments, changes in the expenses of the Fund and other
factors.

The total return of a non-money market 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.

The Funds may, from time to time, compare their performance to other mutual
funds tracked by mutual fund rating services, to broad groups of comparable
mutual funds or to unmanaged indices which

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<PAGE>
may assume investment of dividends but generally do not reflect deductions for
administrative and management costs.

From time to time the Trust may include the names of clients of the Adviser
in advertisements and/or sales literature for the Trust.

DETERMINATION OF NET ASSET VALUE

Each Fund's securities are valued by SEI Management. SEI Management values
securities pursuant to valuations provided by an independent pricing service
(generally the last quoted sale price) for each Fund except the SEI VP Prime
Obligation Fund. Fund's 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.

Information about the market value of each portfolio security may be
obtained by SEI Management from an independent pricing service. The pricing
service relies primarily on prices of actual market transactions as well as
trader quotations. However, the pricing service may use a matrix system to
determine valuations of fixed income securities. 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 used by the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.

Securities with remaining maturities of 60 days or less and all of the
securities of the SEI VP Prime Obligation Fund will be valued by the amortized
cost method, which involves valuing a security at its cost on the date of
purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by this method, is higher or lower than the
price the Trust would receive if it sold the instrument. During periods of
declining interest rates, the daily yield of a Fund may tend to be higher than a
like computation made by a company with identical investments utilizing a method
of valuation based upon market prices and estimates of market prices for all of
its portfolio securities. Thus, if the use of amortized cost by a Fund resulted
in a lower aggregate portfolio value on a particular day, a prospective investor
in a Fund would be able to obtain a somewhat higher yield that would result from
investment in a company utilizing solely market values, and existing
shareholders in the Fund would experience a lower yield. The converse would
apply during a period of rising interest rates.

The Trust's use of amortized cost valuation with respect to SEI VP Prime
Obligation Fund and the maintenance of the Fund net asset value at $1.00 are
permitted, provided certain conditions are met, by Rule 2a-7, promulgated by the
SEC under the 1940 Act. Under Rule 2a-7, as amended, a money market portfolio
must maintain a dollar-weighted average maturity of 90 days or less and not
purchase any instrument having a remaining maturity of more than 397 days. In
addition, money market funds may acquire only U.S. dollar denominated
obligations that present minimal credit risks and that are "eligible
securities." An "eligible security" is one that is (i) rated, at the time of
investment, by at least two NRSROs (one if it is the only organization rating
such obligation) in the highest short-term rating category or, if unrated,
determined to be of comparable quality (a "first tier security"), or (ii) rated
according to the foregoing criteria in the second highest short-term rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). The Adviser will determine that an obligation presents

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minimal credit risks or that unrated instruments are of comparable quality in
accordance with guidelines established by the Trustees. In addition, investments
in second tier securities are subject to the further

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<PAGE>
constraints that (i) no more than 5% of a money market portfolio's assets may be
invested in such securities in the aggregate, and (ii) any investment in such
securities of one issuer is limited to the greater of 1% of the Fund's total
assets or $1 million. The regulations also require the Trustees to establish
procedures which are reasonably designed to stabilize the net asset value per
share at $1.00 for the Fund. However, there is no assurance that the Trust will
be able to meet this objective for the Fund. The Trust's procedures include the
determination of the extent of deviation, if any, of the Fund's current net
asset value per share calculated using available market quotations from the
Fund's amortized cost price per share at such intervals as the Trustees deem
appropriate and reasonable in light of market conditions and periodic reviews of
the amount of the deviation and the methods used to calculate such deviation. In
the event that such deviation exceeds 1/2 of 1%, the Trustees are required to
consider promptly what action, if any, should be initiated, and, if the Trustees
believe that the extent of any deviation may result in material dilution or
other unfair results to shareholders, the Trustees are required to take such
corrective action as they deem appropriate to eliminate or reduce such dilution
or unfair results to the extent reasonably practicable. In addition, if the Fund
incurs a significant loss or liability, the Trustees have the authority to
reduce pro rata the number of shares of the Fund in each shareholder's account
and to offset each shareholder's PRO RATA portion of such loss or liability from
the shareholder's accrued but unpaid dividends or from future dividends.

PURCHASE AND REDEMPTION OF SHARES

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 a 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
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.

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 fund securities is not reasonably practicable, or
for such other periods as the SEC may by order permit. The Trust also reserves
the right to suspend sales of shares of the Funds for any period during which
the New York Stock Exchange, the Manager, the Administrator, the Distributor,
the Sub-Advisers and/or the Custodian are not 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.

The securities may be traded on foreign markets on days other than Business
Days or the net asset value of a Fund may be computed on days when such foreign
markets are closed. In addition, foreign markets may close at times other than
4:00 p.m. Eastern time. As a consequence, the net asset value of a share of a
Fund may not reflect all events that may affect the value of the Fund's foreign
securities unless the Sub-Advisers determine that such events materially affect
net asset value in which case net asset value will be determined by
consideration of other factors.

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.

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

Each Fund is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other Funds. Each Fund intends to qualify
as a regulated investment company ("RIC") under Subchapter M of the Code so that
it will be relieved of federal income tax on that part of its income that is
distributed to shareholders. In order to qualify for treatment as a RIC, a Fund
must distribute annually to its shareholders at least 90% of its investment
company taxable income (generally, net investment income plus the excess, if
any, of net short-term capital gain over net long-term capital losses)
("Distribution Requirement") and also must meet several additional requirements.
Among these requirements are the following: (i) at least 90% of a Fund's gross
income each taxable year must be derived from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock, securities or foreign currencies, or other income derived with respect to
its business of investing in such stock or securities or currencies; (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
the Fund controls and which are engaged in the same, similar, or related trades
or businesses.

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

Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than twelve months and otherwise will be treated
as a short-term capital gain or loss. However, if shares on which a shareholder
has received a net capital gain distribution are subsequently sold, exchanged or
redeemed and such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent of the net
capital gain distribution.

Long-term capital gains are currently taxed at a maximum rate of 20% and
short-term capital gains are currently taxed at ordinary income tax rates.

If a Fund fails to qualify as a RIC for any year, all of its income will be
subject to federal income 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 eligible corporate shareholders.

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

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<PAGE>
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.

Dividends and interest received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries and United States
possessions that would reduce the yield on a Fund's securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
taxes. Foreign countries generally do not impose taxes on capital gains with
respect to investments by foreign investors. If more than 50% of the value of a
Fund's total assets at the close of its taxable year consists of securities of
foreign corporations, a Fund will be eligible to, and will, file an election
with the Internal Revenue Service that will enable shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
United States possessions income taxes paid by a Fund. Pursuant to the election,
a Fund will treat those taxes as dividends paid to its shareholders. Each
shareholder will be required to include a proportionate share of those taxes in
gross income as income received from a foreign source and must treat the amount
so included as if the shareholder had paid the foreign tax directly. The
shareholder may then either deduct the taxes deemed paid by him or her in
computing his or her taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit (subject to significant
limitations) against the shareholder's federal income tax. If a Fund makes the
election, it will report annually to its shareholders the respective amounts per
share of the Fund's income from sources within, and taxes paid to, foreign
countries and United States possessions.

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 affect
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 Sub-Advisers are responsible for placing orders
to execute portfolio 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
Sub-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.

The money market securities in which a Fund invests are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the
Sub-Advisers will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Money market securities are generally traded on a net basis and do
not normally involve either brokerage commissions or transfer taxes. The cost of
executing portfolio securities transactions of a Fund will primarily consist of
dealer spreads and underwriting commissions.

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 of the SEC. Under these provisions, the Distributor
is permitted to receive and retain compensation for effecting fund transactions
for a Fund on an exchange. These provisions further require that commissions
paid to the Distributor by the Trust for exchange

S-55
<PAGE>
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, a 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.

Consistent with their duty to obtain best execution, Sub-Advisers may
allocate brokerage or principal business to certain broker-dealers in
recognition of the sale of Fund shares. In addition, a Fund's adviser or
sub-advisers may place Fund orders with qualified broker-dealers who recommend
the Trust to clients, and may, when a number of brokers and dealers can provide
best execution of 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 a Fund's
Sub-Advisers may, consistent with the interests of the Fund, select brokers on
the basis of the research services they provide to the Fund's 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 Sub-Adviser will be in addition to and not in lieu of the
services required to be performed by a Fund's Sub-Advisers under the Advisory
and/or Sub-Advisory Agreements. If in the judgement of a Fund's Sub-Advisers the
Funds, or other accounts managed by the Fund's Sub-Advisers, will be benefitted
by supplemental research services, the Fund's Sub-Advisers are authorized to pay
brokerage commissions to a broker furnishing such services which are in excess
of commissions which another broker may have charged for effecting the same
transaction. The expenses of a Fund's Sub-Advisers will not necessarily be
reduced as a result of the receipt of such supplemental information.

In connection with transactions effected for Funds operating within the
"Manager of Managers" structure, under this policy, the various firms that serve
as money managers to certain Funds of the Trust, in the exercise of investment
discretion over the assets of a Fund, may direct a portion of a 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.

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. 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 funds. Share certificates
representing the shares will not be issued.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for
his or her own willful defaults and, if reasonable care has been exercised in
the selection of officers, agents, employees or administrators, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.

S-56
<PAGE>
VOTING

Each share held entitles the shareholder of record to one vote. The
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 the
shareholders requesting the meeting.

Where this Statement of Additional Information states that a Fund's
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
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 Fund's outstanding shares, whichever is less.

CUSTODIANS

First Union National Bank, Broad and Chestnut Streets, P.O. Box 7618,
Philadelphia, Pennsylvania 19101 acts as custodian and wire agent for the assets
of SEI VP Large Cap Growth, SEI VP Large Cap Value, SEI VP S&P 500 Index, SEI VP
Small Cap Growth, SEI VP Small Cap Value, SEI VP Core Fixed Income, SEI VP Bond
Index, SEI VP High Yield Bond and SEI VP Prime Obligation Funds. State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts, 02110, acts
as custodian for the assets of SEI VP International Equity, SEI VP Emerging
Markets Equity, SEI VP International Fixed Income and SEI VP Emerging Markets
Debt Fund. First Union National Bank and State Street Bank and Trust Company
(each a "Custodian," and, together, the "Custodians") holds cash, securities and
other assets of the respective Funds for which they act as Custodians as
required by the 1940 Act.

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
(i) 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 (ii) provides for indemnification out of the
Trust property for any shareholders held personally liable for the obligations
of the Trust.

EXPERTS

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

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as counsel to the Trust.

S-57
<PAGE>
PART C: OTHER INFORMATION

ITEM 23. EXHIBITS:

(a) Agreement and Declaration of Trust dated December 14, 1998, is
incorporated by reference to Exhibit (a) of Registrant's Initial Registration
Statement, filed December 31, 1998.

(b) By-Laws are incorporated by reference to Exhibit (a) of Registrant's
Initial Registration Statement, filed December 31, 1998.

(d)(1) Investment Advisory Agreement between the Registrant and SEI
Investments Management Corporation ("SIMC") is incorporated by reference to
exhibit (d)(1) of Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 333-70013) filed with the SEC on October 12,
1999.

(d)(2) Form of Investment Sub-Advisory Agreements between SIMC and
[Sub-Adviser] is incorporated by reference to exhibit (d)(2) of Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No.
333-70013) filed with the SEC on October 12, 1999.

(e) Distribution Agreement between the Registrant and SEI Investments
Distribution Co. is incorporated by reference to exhibit (e) of Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No.
333-70013) filed with the SEC on October 12, 1999.

(f) Not Applicable.

(g)(1) Form of Custodian Agreement with between the Registrant and First
Union National Bank is incorporated by reference to exhibit (g)(1) of
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A (File No. 333-70013) filed with the SEC on October 12, 1999.

(g)(2) Custodian Agreement with between the Registrant and State Street Bank
and Trust Company to be filed by later amendment.

(h)(1) Administration Agreement between the Registrant and SEI Investments
Fund Management is incorporated by reference to exhibit (h)(1) of Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No.
333-70013) filed with the SEC on October 12, 1999.

(i) Opinion and Consent of Counsel, Morgan, Lewis & Bockius LLP, to be
filed by later amendment.

(j) Opinion and Consent of Independent Public Accountants, to be filed by
later amendment.

(k) Not Applicable.

(n) Not Applicable.

(p) Code of Ethics to be filed by later amendment.

(q) Powers of Attorney for Robert A. Nesher, William M. Doran, Mark E.
Nagle, George J. Sullivan, Jr., James M. Storey and Edward D. Loughlin are
incorporated by reference to Exhibit (a) of Registrant's Initial Registration
Statement, filed December 31, 1998.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

See the Prospectus and the Statement of Additional Information regarding the
Registrant's control relationships. SEI Investments Management Corporation
(formerly, SEI Financial Management Corporation) is the owner of all beneficial
interest in the Administrator and is a subsidiary of SEI Investments Company,
which also controls the distributor of the Registrant, SEI Investments
Distribution Co. (formerly, SEI Financial Services Company), as well as to other
corporations engaged in providing various

2
<PAGE>
financial and record keeping services, primarily to bank trust departments,
pension plan sponsors, and investment managers.

ITEM 25. INDEMNIFICATION:

Article VII of the Agreement and Declaration of Trust empowers the Trustees
of the Trust, to the full extent permitted by law, to purchase with Trust assets
insurance for indemnification from liability and to pay for all expenses
reasonably incurred or paid or expected to be paid by a Trustee or officer in
connection with any claim, action, suit or proceeding in which he or she becomes
involved by virtue of his or her capacity or former capacity with the Trust.

Article VI of the By-Laws of the Trust provides that the Trust shall
indemnify any person who was or is a party or is threatened to be made a party
to any proceeding by reason of the fact that such person is and other amounts or
was an agent of the Trust, against expenses, judgments, fines, settlement and
other amounts actually and reasonable incurred in connection with such
proceeding if that person acted in good faith and reasonably believed his or her
conduct to be in the best interests of the Trust. Indemnification will not be
provided in certain circumstances, however, including instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the duties
involved in the conduct of the particular office involved.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to the Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable in the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:

Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of the adviser and each sub-adviser
is or has been, at any time during the last two fiscal years, engaged for his
own account or in the capacity of director, officer, employee, partner or
trustee are as follows:

ACADIAN ASSET MANAGEMENT, INC.

Acadian Asset Management, Inc. ("Acadian") is a sub-adviser for the
Registrant's SEI VP International Equity Fund. The principal address of Acadian
is Two International Place, 26th Floor, Boston, Massachusetts 02110. Acadian is
an investment adviser registered under the Advisers Act.

John Robert Chisholm -- --
Executive Vice President, co-
CIO
</TABLE>

3
<PAGE>

Churchill Gibson Franklin -- --
Executive Vice President,
Marketing Director

Barry Bennett White Foley, Hoag & Eliot Partner
Clerk
</TABLE>

ALLIANCE CAPITAL MANAGEMENT L.P.

Alliance Capital Management L.P. ("Alliance") is a sub-adviser for the
Registrant's SEI VP Large Cap Growth Fund. The principal business address of
Alliance is 1345 Avenue of the Americas, New York, New York 10105. Alliance is
an investment adviser registered under the Advisers Act.

<TABLE>
<CAPTION>
NAME AND POSITION
WITH INVESTMENT ADVISER OTHER COMPANY POSITION WITH OTHER COMPANY
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Alliance Capital Management
Corporation
General Partner

Luis Javier Bastida Banco Bilbao Vizcaya CFO & Member of the Executive
Director of General Partner Committee

John L. Blundin -- --
Executive Vice President of
General Partner

David Remson Brewer, Jr. -- --
Sr. Vice President, General
Counsel & Secretary of
General Partner

Donald Hood Brydon AXA Investment Managers S.A. Chairman & CEO
Director of General Partner

Bruce William Calvert -- --
Vice Chairman, CEO,
Director of General Partner

Henri de la Croix de Castries AXA SEVP-Financial Services &
Director of General Partner Life Division

John Donato Carifa -- --
President, COO, Director of
General Partner
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
NAME AND POSITION
WITH INVESTMENT ADVISER OTHER COMPANY POSITION WITH OTHER COMPANY
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Kathleen Ann Corbet -- --
Executive Vice President &
Chief of Investment
Operations of General
Partner

Kevin C. Dolan AXA Senior Vice President
Director of General Partner

Denis Duverne AXA Senior Vice President
Director of General Partner

Alfred Harrison -- --
Vice Chairman, Director of
General Partner

Herve Hatt AXA Senior Vice President
Director of General Partner

Michael Hegarty The Equitable Life Assurance President, COO & Director
Director of General Partner Society of the United
States

Robert Gene Hysterberg -- --
Senior Vice President of
General Partner

Jean-Pierre Hellebuyck AXA Chairman
Director of General Partner

Benjamin Duke Holloway -- --
Director of General Partner

Nelson Rudolph Jantzen -- --
Senior Vice President of
General Partner

Robert Henry Joseph, Jr. -- --
Sr. Vice Pres., CFO of
General Partner

Wayne D. Lyski -- --
Executive Vice President of
General Partner

Mark Randall Manley -- --
Senior Vice President,
Counsel, Compliance
Officer & Assistant
Secretary of General
Partner
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
NAME AND POSITION
WITH INVESTMENT ADVISER OTHER COMPANY POSITION WITH OTHER COMPANY
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Edward D. Miller The Equitable Companies Inc. President & CEO
Director of General Partner

The Equitable Life Assurance Chairman, President & CEO
Society of the United
States

Peter D. Noris The Equitable Life Assurance EVP & CIO
Director of General Partner Society of the United
States

Joseph Edward Potter -- --
Senior Vice President of
General Partner

Frank Savage -- --
Director of General Partner

Alden Merle Stewart -- --
Executive Vice President of
General Partner

Stanley B. Tulin The Equitable Life Insurance Vice Chairman & CFO
Director of General Partner Society of the United
States

Dave Harrel Williams The Equitable Companies Inc. Director
Chairman of the Board, CEO &
Director of General Partner

Reba White Williams -- --
Director of General Partner

Robert Bruce Zoellick Center for Strategic and President & CEO
Director of General Partner International Studies

Harry Lewis Carr, Jr. -- --
Chairman of Shields/Alliance
Division of General Partner

Michael Francis Deltino -- --
Chairman of Regent Division
of General Partner
</TABLE>

6
<PAGE>
ARTISAN PARTNERS LIMITED PARTNERSHIP

Artisan Partners Limited Partnership ("Artisan") is a sub-adviser for the
SEI VP Small Cap Value Fund. The principal business address of Artisan is
1000 N. Water Street, Suite 1770, Milwaukee, Wisconsin 53202. Artisan is an
investment adviser registered under the Advisers Act.

<TABLE>
<CAPTION>
NAME AND POSITION
WITH INVESTMENT ADVISER OTHER COMPANY POSITION WITH OTHER COMPANY
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Andrew A. Ziegler Artisan Distributors LLC Officer
Chief Executive Officer

Lawrence A. Totsky Artisan Distributors LLC Officer
Chief Financial Officer

Mark L. Yockey
Portfolio Manager

Carlene M. Ziegler Heidrick & Struggles Independent Director
Portfolio Manager

Scott C. Satterwhite
Portfolio Manager

Andrew C. Stephens
Portfolio Manager

Darren W. DeVore
Marketing & Client Service

Michael Steinrueck --
Marketing & Client Service

Marina T. Carlson
Portfolio Manager

Michael C. Roos Artisan Distributors LLC Officer
Managing Director
</TABLE>

BLACKROCK FINANCIAL MANAGEMENT, INC.

BlackRock Financial Management, Inc. ("BlackRock") is a sub-adviser for the
Registrant's SEI VP Core Fixed Income Fund. The principal business address of
BlackRock is 345 Park Avenue, 30th Floor, New York, New York 10154. BlackRock is
an investment adviser registered under the Advisers Act.

BlackRock International, Ltd. Managing Director
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
NAME AND POSITION
WITH INVESTMENT ADVISER NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Keith Thomas Anderson BlackRock Financial Managing Director
Managing Director Management, Inc.

BlackRock Advisors, Inc. Managing Director

BlackRock (Japan) Inc. Managing Director

BlackRock International, Ltd. Managing Director

BlackRock Institutional Managing Director
Management Corporation

Provident Advisers, Inc. Managing Director

Paul L. Audet BlackRock International, Ltd. Chief Financial Officer,
Chief Financial Officer, Managing Director
Managing Director

BlackRock Financial Chief Financial Officer,
Management, Inc. Managing Director

BlackRock Advisors, Inc. Chief Financial Officer,
Managing Director

BlackRock (Japan) Inc. Chief Financial Officer,
Managing Director

BlackRock Institutional Chief Financial Officer,
Management Corporation Managing Director

BlackRock, Inc. Chief Financial Officer,
Managing Director

NC Investment Holdings, LLC Chief Financial Officer,
Managing Director

PNC Asset Management, Inc. Chief Financial Officer,
Managing Director

PNC Investment Chief Financial Officer,
Holdings, Inc. Managing Director

Bartholomew Angelo Battista BlackRock Financial Vice President, Regulatory
Vice President, Regulatory Management, Inc. Compliance
Compliance

BlackRock Advisors, Inc. Vice President, Regulatory
Compliance
</TABLE>

8
<PAGE>

BlackRock International, Ltd. Vice President, Regulatory
Compliance

BlackRock Institutional Vice President, Regulatory
Management Corporation Compliance

Robert Peter Connolly BlackRock, Inc. General Counsel
Managing Director, General
Counsel, Secretary

BlackRock Financial Managing Director, Counsel,
Management, Inc. Secretary

BlackRock Advisors, Inc. Managing Director, Counsel,
Secretary

BlackRock (Japan) Inc. Managing Director, Counsel,
Secretary

BlackRock International, Ltd. Managing Director, Counsel,
Secretary

BlackRock Institutional Managing Director, Counsel,
Management Corporation Secretary

Provident Advisers, Inc. General Counsel, Assistant
Secretary

Laurence Douglas Fink BlackRock, Inc. Chairman, CEO, Director
Chairman, CEO & Director

BlackRock Financial Chairman, CEO, Director
Management, Inc.

BlackRock Advisors, Inc. Chairman, CEO, Director

BlackRock (Japan) Inc. Chairman, CEO, Director

BlackRock International, Ltd Chairman, CEO, Director

BlackRock Institutional Chairman, CEO, Director
Management

Provident Advisers, Inc. Chairman, CEO, Director
</TABLE>

9
<PAGE>

BlackRock Advisors, Inc. Managing Director

BlackRock (Japan) Inc. Managing Director

BlackRock International, Ltd. Managing Director

BlackRock Institutional Managing Director
Management Corporation

Provident Advisers, Inc. Managing Director

Henry Gabbay BlackRock Financial Managing Director, Portfolio
Managing Director, Portfolio Management, Inc. Compliance
Compliance

BlackRock, Inc. Managing Director, Portfolio
Compliance

BlackRock Advisors, Inc. Managing Director, Portfolio
Compliance

BlackRock (Japan) Inc. Managing Director, Portfolio
Compliance

BlackRock International, Ltd. Managing Director, Portfolio
Compliance

BlackRock Institutional Managing Director, Portfolio
Management Corporation Compliance

Provident Advisers, Inc. Chief Compliance Officer

Bennett William Golub BlackRock, Inc. Managing Director
Managing Partner

BlackRock Advisors, Inc. Managing Director

BlackRock (Japan) Inc. Managing Director

BlackRock International, Ltd. Managing Director

BlackRock Institutional Managing Director
Management Corporation

Provident Advisers, Inc. Managing Director
</TABLE>

10
<PAGE>

BlackRock Financial Vice Chairman, Director
Management, Inc.

BlackRock Advisors, Inc. Vice Chairman, Director

BlackRock (Japan) Inc. Vice Chairman, Director

BlackRock International, Ltd. Vice Chairman, Director

BlackRock Institutional Vice Chairman, Director
Management Corporation

Provident Advisers, Inc. Vice Chairman, Director

James Joseph Lillis BlackRock, Inc. Treasurer, Assistant
Treasurer, Assistant Secretary
Secretary

BlackRock Advisors, Inc. Treasurer, Assistant
Secretary

BlackRock (Japan) Inc. Treasurer, Assistant
Secretary

BlackRock International, Ltd. Treasurer, Assistant
Secretary

BlackRock Institutional Treasurer, Assistant
Management Corporation Secretary

Provident Advisers, Inc. Treasurer, Assistant
Secretary

Paul Phillip Matthews, II BlackRock Financial Managing Director
Managing Director Management, Inc.

BlackRock Advisors, Inc. Managing Director

BlackRock (Japan) Inc. Managing Director

BFM International, Ltd. Managing Director

BlackRock Institutional Managing Director
Management Corporation

Provident Advisers, Inc. Managing Director

Barbara Goldman Novick BlackRock, Inc. Managing Director
Managing Director

BlackRock Advisors, Inc. Managing Director
</TABLE>

11
<PAGE>

BlackRock International, Ltd. Managing Director

BlackRock Institutional Managing Director
Management Corporation

Provident Advisers, Inc. Managing Director

Karen Horwitz Sabath BlackRock, Inc. Managing Director
Managing Director

BlackRock Advisors, Inc. Managing Director

BlackRock (Japan) Inc. Managing Director

BlackRock International, Ltd. Managing Director

BlackRock Institutional Managing Director
Management Corporation

Provident Advisers, Inc. Managing Director

Ralph Lewis Schlosstein BlackRock, Inc. President, Director
President, Director

BlackRock Financial President, Director
Management, Inc.

BlackRock Advisors, Inc President, Director

BlackRock (Japan) Inc. President, Director

BlackRock International, Ltd. President, Director

BlackRock Institutional President, Director
Management

Provident Advisers, Inc. President, Director

Susan Lynne Wagner BlackRock, Inc. Chief Financial Officer,
Chief Financial Officer, Secretary
Secretary

BlackRock Advisors, Inc. Chief Financial Officer,
Secretary

BlackRock (Japan) Inc. Chief Financial Officer,
Secretary
</TABLE>

12
<PAGE>

BlackRock Institutional Chief Financial Officer,
Management Corporation Secretary

Provident Advisers, Inc. Chief Financial Officer,
Secretary
</TABLE>

BLACKROCK INTERNATIONAL, LTD.

BlackRock International, Ltd. ("BlackRock International") is a sub-adviser
for the Registrant's International Equity Fund. The principal address of
BlackRock is 7 Castle Street, Edinburgh, EH23AM Scotland, United Kingdom.
BlackRock International is an investment adviser registered under the Advisers
Act.

BlackRock International, Ltd. Managing Director

Keith Thomas Anderson BlackRock Financial Managing Director
Managing Director Management, Inc.

BlackRock Advisors, Inc. Managing Director

BlackRock (Japan) Inc. Managing Director

BlackRock International, Ltd. Managing Director

BlackRock Institutional Managing Director
Management Corporation

Provident Advisers, Inc. Managing Director

Paul L. Audet BlackRock International, Ltd. Chief Financial Officer,
Chief Financial Officer, Managing Director
Managing Director

BlackRock Financial Chief Financial Officer,
Management, Inc. Managing Director

BlackRock Advisors, Inc. Chief Financial Officer,
Managing Director

BlackRock (Japan) Inc. Chief Financial Officer,
Managing Director

BlackRock Institutional Chief Financial Officer,
Management Corporation Managing Director

BlackRock, Inc. Chief Financial Officer,
Managing Director

NC Investment Holdings, LLC Chief Financial Officer,
Managing Director
</TABLE>

13
<PAGE>

PNC Investment Chief Financial Officer,
Holdings, Inc. Managing Director

Bartholomew Angelo Battista BlackRock Financial Vice President, Regulatory
Vice President, Regulatory Management, Inc. Compliance
Compliance

BlackRock Advisors, Inc. Vice President, Regulatory
Compliance

BlackRock (Japan) Inc. Vice President, Regulatory
Compliance