<PAGE>
SEI LIQUID ASSET TRUST
OCTOBER 30, 1995
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TREASURY SECURITIES PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
PRIME OBLIGATION PORTFOLIO
INSTITUTIONAL CASH PORTFOLIO
MONEY MARKET PORTFOLIO
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This Prospectus sets forth concisely information about the above-referenced
Portfolios that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated October 30, 1995, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling 1-800-342-
5734. The Statement of Additional Information is incorporated into this
Prospectus by reference.
SEI Liquid Asset Trust (the "Trust") is an open-end management investment
company certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in one or more professionally managed diversified
portfolios of securities. Some portfolios offer separate classes of units of
beneficial interest that differ from each other primarily in the allocation of
certain distribution expenses and minimum investment amounts. This Prospectus
offers Class A shares of each of the Trust's five money market portfolios
(each, a "Portfolio," and together, the "Portfolios") listed above.
AN INVESTMENT IN A PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES
RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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<PAGE>
ANNUAL OPERATING EXPENSES (As a percentage of average net assets)
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<TABLE>
<CAPTION>
TREASURY GOVERNMENT PRIME INSTITUTIONAL MONEY
SECURITIES SECURITIES OBLIGATION CASH MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Management/Advisory fees
(after fee waivers)/1/ .36% .36% .36% .39% .36%
12b-1 fees/2/ .04% .04% .04% .00% .04%
Other Expenses .04% .04% .04% .05% .04%/3/
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Total Operating Expenses .44%/1/ .44%/1/ .44%/1/ .44% .44%/1/
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</TABLE>
1 The Manager has agreed contractually to waive its fee in an amount that
limits the total operating expenses of such Portfolio to not more than .44%
of its average net assets, except for the Institutional Cash Portfolio for
which the waiver is voluntary and may be terminated at any time in the
Manager's sole discretion. Absent this waiver, management/advisory fees for
the Treasury Securities, Government Securities, Prime Obligation,
Institutional Cash and Money Market Portfolios, would be .45%, .45%, .45%,
.39% and .45%, respectively, and, total operating expenses for the Treasury
Securities, Government Securities, Prime Obligation and Money Market
Portfolios would be .53%, .53%, .53%, and .53%, respectively, for the fiscal
year ended June 30, 1995. Additional information may be found under "The
Manager and Shareholder Servicing Agent," "The Adviser" and "Distribution."
2 The 12b-1 fees shown reflect each Portfolio's current 12b-1 budget for
reimbursement of expenses except that there has been a waiver of any 12b-1
fees for the Institutional Cash Portfolio. Absent this waiver, total
operating expenses for the Institutional Cash Portfolio would be .48%.
3 Other Expenses for the Money Market Portfolio are based on estimated amounts
for the current fiscal year.
EXAMPLE
<TABLE>
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<CAPTION>
An investor in any Portfolio would pay the
following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end 1 YR. 3 YRS. 5 YRS. 10 YRS.
of each time period: ----- ------ ------ -------
<S> <C> <C> <C> <C>
$5.00 $14.00 $25.00 $55.00
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</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose of this
table is to assist the investor in understanding the various costs and expenses
that may be directly or indirectly borne by investors in the Portfolios. A
person who purchases shares through a financial institution may be charged
separate fees by that institution. The information set forth in the foregoing
table and example relates only to the Portfolios' Class A shares. The Treasury
Securities Portfolio also offers Class D shares, which are subject to the same
expenses except that Class D shares bear different distribution and transfer
agent costs. Additional information regarding these differences may be found
under "The Manager and Shareholder Servicing Agent," "The Adviser" and
"Distribution." Long-term shareholders may eventually pay more than the
economic equivalent of the maximum front-end sales charges otherwise permitted
by the Rules of Fair Practice (the "Rules") of the National Association of
Securities Dealers, Inc. (the "NASD").
2
<PAGE>
FINANCIAL HIGHLIGHTS ___________________________________________________________
The following financial highlights for a share outstanding throughout each
year, insofar as they relate to each of the years in the period ended June 30,
1995, have been audited by Price Waterhouse LLP, independent public
accountants, whose report thereon was unqualified. This information should be
read in conjunction with the Trust's financial statements and notes thereto
which are included in the Statement of Additional Information under the heading
"Financial Information." As of June 30, 1995, the Money Market Portfolio had
not commenced operations. Additional performance information is set forth in
the Trust's 1995 Annual Report to Shareholders, which is available upon request
and without charge by calling 1-800-342-5734.
For a Class A Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Ratio of
Distributions Net
Net Asset Distributions from Ratio of Investment
Value Net Realized and from Net Realized Net Asset Net Assets Expenses Income
Beginning Investment Unrealized Investment Capital Value End Total End of to Average to Average
of Period Income Gains on Securities Income Gains of Period Return Period (000) Net Assets Net Assets
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TREASURY SECURITIES
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1995 $1.00 $0.05 -- $(0.05) -- $1.00 5.05% 1,254,888 0.44% 4.93%
1994 1.00 0.03 -- (0.03) -- 1.00 3.00 1,501,510 0.44 2.91
1993 1.00 0.03 -- (0.03) -- 1.00 3.03 2,219,701 0.44 2.99
1992 1.00 0.05 -- (0.05) -- 1.00 4.69 2,304,153 0.44 4.60
1991 1.00 0.07 -- (0.07) -- 1.00 7.04 2,248,497 0.44 6.80
1990 1.00 0.08 -- (0.08) -- 1.00 8.41 2,076,845 0.44 8.10
1989 1.00 0.08 -- (0.08) -- 1.00 8.51 2,318,763 0.44 8.20
1988 1.00 0.06 -- (0.06) -- 1.00 6.56 2,671,802 0.44 6.40
1987 1.00 0.06 -- (0.06) -- 1.00 5.91 2,580,118 0.44 5.70
1986 1.00 0.07 -- (0.07) -- 1.00 7.40 2,041,343 0.44 7.20
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GOVERNMENT SECURITIES
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1995 $1.00 $0.05 -- $(0.05) -- $1.00 5.18% 200,768 0.44% 5.04%
1994 1.00 0.03 -- (0.03) -- 1.00 3.04 255,554 0.44 2.96
1993 1.00 0.03 -- (0.03) -- 1.00 3.05 507,832 0.44 3.00
1992 1.00 0.05 -- (0.05) -- 1.00 4.72 399,938 0.44 4.60
1991 1.00 0.07 -- (0.07) -- 1.00 7.08 520,187 0.44 6.80
1990 1.00 0.08 -- (0.08) -- 1.00 8.48 368,318 0.44 8.10
1989 1.00 0.08 -- (0.08) -- 1.00 8.69 467,056 0.44 8.30
1988 1.00 0.07 -- (0.07) -- 1.00 6.83 523,274 0.44 6.70
1987 1.00 0.06 -- (0.06) -- 1.00 5.99 479,968 0.44 5.80
1986 1.00 0.07 -- (0.07) -- 1.00 7.52 222,215 0.44 7.30
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PRIME OBLIGATION
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1995 $1.00 $0.05 -- $(0.05) -- $1.00 5.20% 940,863 0.44% 5.21%
1994 1.00 0.03 -- (0.03) -- 1.00 3.08 918,509 0.44 3.03
1993 1.00 0.03 -- (0.03) -- 1.00 3.07 1,173,109 0.44 3.04
1992 1.00 0.05 -- (0.05) -- 1.00 4.73 1,515,554 0.44 4.70
1991 1.00 0.07 -- (0.07) -- 1.00 7.36 1,729,845 0.44 7.10
1990 1.00 0.08 -- (0.08) -- 1.00 8.57 1,804,367 0.44 8.30
1989 1.00 0.09 -- (0.09) -- 1.00 8.85 2,160,859 0.44 8.50
1988 1.00 0.07 -- (0.07) -- 1.00 7.12 2,224,159 0.44 6.90
1987 1.00 0.06 -- (0.06) -- 1.00 6.08 1,851,072 0.44 5.90
1986 1.00 0.07 -- (0.07) -- 1.00 7.58 1,469,066 0.44 7.30
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INSTITUTIONAL CASH*
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1995 $1.00 $0.0003 -- $(0.0003) -- $1.00 4.94% -- 0.44% 5.19%
1994 1.00 0.0003 -- (0.0003) -- 1.00 2.60 -- 0.44 2.63
1993 1.00 0.0003 -- (0.0003) -- 1.00 2.83 -- 0.44 2.66
1992 1.00 0.0002 -- (0.0002) -- 1.00 3.47 -- 0.44 3.50
1991 1.00 0.0003 0.0001 (0.0003) (0.0001) 1.00 7.12 -- 0.42 5.90
1990 1.00 0.0008 0.0003 (0.0008) (0.0003) 1.00 10.22 -- 0.44 7.80
1989 1.00 0.0007 0.0002 (0.0007) (0.0002) 1.00 8.49 -- 0.44 6.80
1988 1.00 0.0006 0.0001 (0.0006) (0.0001) 1.00 4.02 -- 0.44 5.20
1987(1) 1.00 0.0003 -- (0.0003) -- 1.00 5.48 -- 0.44 5.30
<CAPTION>
Ratio of
Net
Ratio of Investment
Expenses Income
to Average to Average
Net Assets Net Assets
(Excluding (Excluding
Waivers) Waivers)
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<S> <C> <C>
TREASURY SECURITIES
- ----------------------------------------------------------------------------------------------------------------------------------
1995 0.54% 4.83%
1994 0.51 2.84
1993 0.50 2.93
1992 0.50 4.50
1991 0.47 6.80
1990 0.45 8.10
1989 0.44 8.20
1988 0.44 6.40
1987 0.45 5.70
1986 0.44 7.20
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GOVERNMENT SECURITIES
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1995 0.53% 4.95%
1994 0.51 2.89
1993 0.50 2.94
1992 0.50 4.60
1991 0.48 6.70
1990 0.45 8.10
1989 0.46 8.30
1988 0.44 6.70
1987 0.46 5.80
1986 0.44 7.30
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PRIME OBLIGATION
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1995 0.53% 5.12%
1994 0.51 2.96
1993 0.50 2.98
1992 0.49 4.60
1991 0.47 7.10
1990 0.45 8.30
1989 0.44 8.50
1988 0.44 6.90
1987 0.45 5.90
1986 0.44 7.30
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INSTITUTIONAL CASH*
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1995 0.44% 5.19%
1994 0.44 2.63
1993 0.44 2.66
1992 0.44 3.50
1991 0.42 5.90
1990 0.44 7.80
1989 0.44 6.80
1988 0.44 5.20
1987(1) 0.44 5.30
</TABLE>
(1) Institutional Cash Fund commenced operations on December 31, 1986.
* Annualized
Amounts designated as "--" are either $0 or have been rounded to $0.
<PAGE>
THE TRUST ______________________________________________________________________
SEI Liquid Asset Trust (the "Trust") is an open-end management investment
company that offers units of beneficial interest ("shares") in separate
diversified investment portfolios. This Prospectus offers Class A shares of the
Trust's Treasury Securities, Government Securities, Prime Obligation,
Institutional Cash and Money Market Portfolios (each a "Portfolio," and,
together, the "Portfolios"). The Treasury Securities Portfolio also offers
Class D shares. Additional information pertaining to the Trust may be obtained
by writing to SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658, or by calling 1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES _______________________________________________________________________
TREASURY The Treasury Securities Portfolio seeks to preserve
SECURITIES principal value and maintain a high degree of liquidity
PORTFOLIO while providing current income.
The Portfolio invests exclusively in U.S. Treasury
obligations and repurchase agreements involving such
obligations. The repurchase agreement dealers selected for
the Treasury Securities Portfolio must meet certain
creditworthiness criteria established by Standard & Poor's
Corporation ("S&P").
GOVERNMENT The Government Securities Portfolio seeks to preserve
SECURITIES principal value and maintain a high degree of liquidity
PORTFOLIO while providing current income.
The Portfolio invests exclusively in U.S. Treasury
obligations, obligations issued or guaranteed as to
principal and interest by agencies or instrumentalities of
the U.S. Government, and repurchase agreements involving
such obligations.
PRIME The Prime Obligation Portfolio seeks to preserve principal
OBLIGATION value and maintain a high degree of liquidity while
PORTFOLIO providing current income.
The Portfolio invests exclusively in (i) commercial paper
rated at least A-1 by S&P or Prime-1 by Moody's Investors
Service, Inc. ("Moody's") at the time of investment or, if
not rated, determined by the Adviser to be of comparable
quality; (ii) obligations (including certificates of
deposit, time deposits, bankers' acceptances and bank notes)
of U.S. commercial banks that are members of the Federal
Reserve System or the Federal Deposit Insurance Corporation
or savings and loan institutions, which banks or
institutions have total assets of $500 million or more as
shown on their most recent public financial statements, at
the time of investment, provided that such obligations are
rated in the top two short-term rating categories by two or
more nationally recognized statistical rating organizations
("NRSROs"), or one NRSRO if only one NRSRO has rated the
security at the time of investment or, if not rated,
determined by the Adviser to be of comparable quality; (iii)
short-term corporate obligations rated AAA or AA by S&P or
Aaa or Aa by Moody's at the time of investment or, if not
rated, determined by the Adviser to be of comparable
quality; (iv) short-term obligations issued by state and
local governmental issuers, which
4
<PAGE>
are rated, at the time of investment, by at least two NRSROs
in one of the two highest municipal bond rating categories,
and which carry yields that are competitive with those of
other types of money market instruments of comparable
quality; (v) U.S. Treasury obligations and obligations
issued or guaranteed as to principal and interest by
agencies or instrumentalities of the U.S. Government; and
(vi) repurchase agreements involving any of the foregoing
obligations.
The Prime Obligation Portfolio may invest in restricted
securities and may invest up to 10% of its net assets in
illiquid securities. Rule 144A Securities and Section 4(2)
commercial paper that meet the criteria established by the
Board of Trustees of the Trust may be considered liquid.
INSTITUTIONAL The Institutional Cash Portfolio seeks to preserve principal
CASH PORTFOLIO value and maintain a high degree of liquidity while
providing current income.
The Portfolio invests exclusively in U.S. Treasury
obligations.
MONEY MARKET The Money Market Portfolio seeks to preserve principal value
PORTFOLIO and maintain a high degree of liquidity while providing
current income.
The Portfolio invests in the following U.S. dollar
denominated obligations: (i) commercial paper rated in the
highest rating category by at least one NRSRO at the time of
investment or, if not rated, determined by the Adviser to be
of comparable quality; (ii) obligations (including
certificates of deposit, time deposits, bankers' acceptances
and bank notes) of U.S. savings and loan institutions, U.S.
commercial banks (including foreign branches of such banks),
and U.S. and London branches of foreign banks, provided that
such institutions (or, in the case of a branch, the parent
institution) have total assets of $1 billion or more as
shown on their most recent public financial statements, at
the time of investment; (iii) short-term corporate
obligations rated in one of the two highest rating
categories by at least one NRSRO at the time of investment,
or, if not rated, determined by the Adviser to be of
comparable quality; (iv) U.S. Treasury obligations and
obligations issued or guaranteed as to principal and
interest by the agencies or instrumentalities of the U.S.
Government; (v) repurchase agreements involving any of the
foregoing obligations; and (vi) custodial receipts
representing investments in component parts of U.S. Treasury
obligations.
The Money Market Portfolio may invest in restricted
securities and may invest up to 10% of its net assets in
illiquid securities. Rule 144A securities and Section 4(2)
commercial paper that meet the criteria established by the
Board of Trustees of the Trust may be considered liquid.
There can be no assurance that the Portfolios will
achieve their respective investment objectives.
5
<PAGE>
GENERAL
INVESTMENT
POLICIES ______________________________________________________________________
In purchasing obligations, each Portfolio complies with the
requirements of Rule 2a-7 under the 1940 Act, as that Rule
may be amended from time to time. The quality, maturity and
diversification requirements of the Government Securities
and Prime Obligation Portfolios are more restrictive than
those imposed by Rule 2a-7. If Shareholders of these
Portfolios elect to be governed by Rule 2a-7 in the future,
the Portfolios will become subject to the Rule 2a-7
restrictions applicable to the Trust's other Portfolios.
Rule 2a-7's requirements currently provide that each
Portfolio must limit its investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, each Portfolio may only invest in securities
(other than U.S. Government Securities) rated in one of the
two highest categories for short-term securities by at least
two NRSROs (or by one NRSRO if only one NRSRO has rated the
security), or, if unrated, determined by the Adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities in
which the Portfolio may invest. Purchases of unrated
securities and securities rated by only one NRSRO will be
ratified by the Trust's Board of Trustees.
Securities rated in the highest rating category (e.g., A-
1 by S&P) by at least two NRSROs (or, if unrated, determined
by the Adviser to be of comparable quality) are "first tier"
securities. Securities rated in the second highest rating
category (e.g., A-2 by S&P) by at least one NRSRO (or, if
unrated, determined by the Adviser to be of comparable
quality) are considered to be "second tier" securities. Each
Portfolio will invest, in the aggregate, no more than 5% of
its assets in second tier securities, and any investment in
any one second tier security is limited to the greater of 1%
of a Portfolio's total assets or $1 million.
The Government Securities and Prime Obligation Portfolios
may only purchase securities with a remaining maturity of
365 days or less, and, as a matter of non-fundamental
policy, will maintain a dollar-weighted average portfolio
maturity of 90 days or less. Each Portfolio may purchase
securities on a when-issued or delayed delivery basis.
For additional information regarding the Portfolios'
permitted investments and the ratings referred to above, see
"Description of Permitted Investments and Risk Factors" and
the Statement of Additional Information.
INVESTMENT
LIMITATIONS ___________________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolios. Fundamental policies
cannot be changed with respect to a Portfolio without the
consent of the holders of a majority of the Trust's or that
Portfolio's outstanding shares.
6
<PAGE>
It is a fundamental policy of each Portfolio to use its
best efforts to maintain a constant net asset value of $1.00
per share. In addition, it is a fundamental policy of each
of the Government Securities and Prime Obligation Portfolios
to invest its assets solely in the securities listed as
appropriate investments for that Portfolio.
Each Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and any securities guaranteed
thereby) if as a result more than 5% of the total assets
of the Portfolio (based on fair market value at the time
of investment) would be invested in the securities of
such issuer; provided, however, that the Treasury
Securities, Money Market and Institutional Cash
Portfolios may invest up to 25% of their total assets
without regard to this restriction as permitted by Rule
2a-7.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in (a) domestic banks and (b) obligations
issued or guaranteed by the U.S. Government or its
agencies and instrumentalities.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of that Portfolio. This borrowing
provision is included solely to facilitate the orderly
sale of portfolio securities to accommodate substantial
redemption requests if they should occur and is not for
investment purposes. All borrowings will be repaid before
making additional investments for that Portfolio and any
interest paid on such borrowings will reduce the income
of that Portfolio.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT _______________________________________________________________
SEI Financial Management Corporation (the "Manager" and the
"Transfer Agent"), 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658, a wholly-owned subsidiary of SEI
Corporation ("SEI"), provides the Trust with overall
management services, regulatory reporting, all necessary
office space, equipment, personnel and facilities, and acts
as transfer agent, dividend disbursing agent, and
shareholder servicing agent.
The Manager is entitled to a fee which is calculated
daily and paid monthly at an annual rate of .42% of the
average daily net assets of each Portfolio, except the
Institutional Cash Portfolio, for which the Manager is
entitled to a fee of .36% of the Portfolio's average daily
net assets. The Manager has contractually agreed to waive
all or a
7
<PAGE>
portion of its fee with respect to each Portfolio, except
the Institutional Cash Portfolio, in order to limit the
total operating expenses of the Class A shares of such
Portfolios to not more than .44% of its average daily net
assets. For the Institutional Cash Portfolio only, this
waiver is voluntary and may be terminated at any time in the
Manager's sole discretion.
For the fiscal year ended June 30, 1995, the Treasury
Securities, Government Securities, Prime Obligation and
Institutional Cash Portfolios paid management fees, after
waivers, of .33%, .33%, .33% and .36%, respectively, of
their average daily net assets. As of June 30, 1995, the
Money Market Portfolio had not commenced operations.
THE ADVISER ____________________________________________________________________
Wellington Management Company ("WMC" or the "Adviser"), 75
State Street, Boston, Massachusetts 02109, serves as the
investment adviser to each Portfolio. The Adviser, under an
investment advisory agreement with the Trust, invests the
assets of the Portfolios and continuously reviews,
supervises and administers each Portfolio's investment
program, subject to the supervision of, and policies
established by, the Trustees of the Trust.
As of September 30, 1995, the Adviser had investment
management authority with respect to approximately $102.4
billion of assets, including the assets of the Trust, SEI
Daily Income Trust and a portfolio of Insurance Investment
Products Trust, each of which is an open-end management
investment company administered by the Manager. WMC is a
professional investment counseling firm which provides
investment services to investment companies, employee
benefit plans, endowments, foundations, and other
institutions and individuals. The Adviser's predecessor
organizations have provided investment advisory services to
investment companies since 1933, and to investment
counseling clients since 1960. WMC is a Massachusetts
general partnership, of which the following persons are
managing partners: Robert W. Doran, Duncan M. McFarland and
John B. Neff.
John C. Keogh, Senior Vice President of the Adviser,
serves as portfolio manager to the Portfolios. He has been
an investment professional with the Adviser since 1983, and
has served as portfolio manager to the Treasury Securities
Portfolio since July, 1994. Prior to that date, he assisted
the portfolio manager in the management of the Portfolio.
Mr. Keogh has served as portfolio manager of the
Institutional Cash Portfolio since the Portfolio's inception
in 1986.
The Adviser is entitled to a fee which is calculated
daily and paid monthly at an annual rate of .075% of the
combined average daily net assets of the Trust's Portfolios
up to $500 million, and .02% of such average daily net
assets in excess of $500 million. Such fees are allocated
daily among the Portfolios of the Trust on the basis of
their relative net assets. For the fiscal year ended June
30, 1995, the Treasury Securities, Government Securities,
Prime Obligation, and Institutional Cash Portfolios paid
advisory fees, after fee waivers, of .03%, .03%, .03%, and
.03%, respectively, of their relative net assets.
8
<PAGE>
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan"
and "Class D Plan," and, collectively, the "Plans") pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act").
The Class A Plan provides for reimbursement for expenses
incurred by the Distributor, provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Pursuant to state law, the Distributor has voluntarily
agreed to limit the distribution-related expenses of the
Class A shares of each Portfolio to .25%. Currently, the
budget (shown here as a percentage of average daily net
assets) for each Portfolio is set at an annual rate of .04%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the distribution
of the Trust's shares, advertising expenses and promotional
and sales expenses including expenses for travel,
communication and compensation and benefits for sales
personnel. Distribution expenses not attributable to a
specific Portfolio are allocated among each of the
Portfolios of the Trust on the basis of their average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
9
<PAGE>
PURCHASE AND
REDEMPTION
OF SHARES _____________________________________________________________________
Financial institutions may acquire Class A shares of the
Portfolios for their own account, or as a record owner on
behalf of fiduciary, agency or custody accounts, by placing
orders with the Transfer Agent. Institutions that use
certain SEI proprietary systems may place orders
electronically through those systems. State securities laws
may require banks and financial institutions purchasing
shares for their customers to register as dealers pursuant
to state laws. Financial institutions may impose an earlier
cut-off time for receipt of purchase orders directed through
them to allow time for processing and transmittal of these
orders to the Transfer Agent for effectiveness on the same
day. Financial institutions which purchase shares for the
accounts of their customers may impose separate charges on
these customers for account services. Shares of the
Portfolios are offered only to residents of states in which
the shares are eligible for purchase.
Shares of each Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days"). However, money market fund
shares cannot be purchased by Federal Reserve wire on
Federal holidays restricting wire transfers.
Shareholders who desire to purchase shares must place
their orders with the Transfer Agent prior to 2:00 p.m.,
Eastern time (12:00 p.m., Eastern time for the Institutional
Cash Portfolio), on any Business Day for the order to be
accepted on that Business Day. Cash investments must be
transmitted or delivered in federal funds to the wire agent
by the close of business on the same day the order is
placed. The Trust reserves the right to reject a purchase
order when the Distributor determines that it is not in the
best interest of the Trust or shareholders to accept such
purchase order.
The Trust will send shareholders a statement after each
purchase or redemption transaction. The purchase price of
shares is the net asset value next determined after a
purchase order is received and accepted by the Trust. The
net asset value per share of each Portfolio is determined by
dividing the total market value of the Portfolio's
investments and other assets, less any liabilities, by the
total outstanding shares of that Portfolio. Net asset value
per share is determined daily as of 2:00 p.m., Eastern time
(12:00 p.m., Eastern time for the Institutional Cash
Portfolio), on each Business Day.
Shareholders who desire to redeem shares of a Portfolio
must place their redemption orders with the Transfer Agent
prior to 2:00 p.m., Eastern time (12:00 p.m., Eastern time
for the Institutional Cash Portfolio), on any Business Day.
The redemption price is the net asset value per share of the
Portfolio next determined after receipt by the Transfer
Agent of the redemption order. Payment on redemptions will
be made as promptly as possible and, in any event, within
seven days after the redemption order is received.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Trust's Transfer Agent
will be responsible for any loss, liability, cost or expense
for
10
<PAGE>
acting upon wire instructions or upon telephone instructions
that it reasonably believes to be genuine. The Trust and the
Trust's Transfer Agent will each employ reasonable
procedures to confirm that instructions communicated by
telephone are genuine, including requiring a form of
personal identification prior to acting upon instructions
received by telephone and recording telephone instructions.
If market conditions are extraordinarily active, or other
extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE ____________________________________________________________________
From time to time, the Portfolios may advertise "current
yield" and "effective compound yield." These figures will
fluctuate, as they are based on historical earnings and are
not intended to indicate future performance. The "current
yield" of the Portfolios refers to the income generated by
an investment over a seven-day period which is then
"annualized." That is, the amount of income generated by an
investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of
the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an
investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield"
because of the compounding effect of this assumed
reinvestment.
A Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives.
For each Portfolio, the performance of the Class A shares
will normally be higher than the performance of the Class D
shares of that Portfolio because of additional distribution
and transfer agent expenses charged to Class D shares.
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state, or local income tax treatment of the
Portfolios or their shareholders. In addition, state and
local tax consequences of an investment in a Portfolio may
differ from the federal income tax consequences described
below. Accordingly, shareholders are urged to consult their
tax advisers regarding specific questions as to federal,
state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional
Information.
11
<PAGE>
Tax Status of Each Portfolio is treated as a separate entity for federal
the Portfolios tax purposes and is not combined with the Trust's other
Portfolios. Each Portfolio intends to qualify for the
special tax treatment afforded regulated investment
companies under Subchapter M the Internal Revenue Code of
1986, as amended, so as to be relieved of federal income tax
on net investment company taxable income and net capital
gains (the excess of net long-term capital gain over net
short-term capital losses) distributed to shareholders.
Tax Status of Each Portfolio distributes substantially all of its net
Distributions investment income (including net short-term capital gains)
to shareholders. Dividends from a Portfolio's net investment
income are taxable to its shareholders as ordinary income
(whether received in cash or in additional shares).
Distributions of net capital gains are taxable as long-term
capital gains, regardless of how long shareholders have held
their shares and regardless of whether the distributions are
received in cash or in additional shares. Dividends and
distributions of capital gains paid by each Portfolio do not
qualify for the dividends received deduction for corporate
shareholders. Each portfolio will provide annual reports to
shareholders of the federal income tax status of all
distributions.
Dividends declared by a Portfolio in October, November or
December of any year and payable to shareholders of record
on a date in such a month will be deemed to have been paid
by the Portfolio and received by the shareholders on
December 31 of the year declared if paid by the Portfolio at
any time during the following January.
Each Portfolio intends to make sufficient distributions
prior to the end of each calendar year to avoid liability
for the federal excise tax applicable to regulated
investment companies.
With respect to investments in U.S. Treasury STRIPS,
which are sold at original issue discount and thus do not
make periodic cash interest payments, each Portfolio will be
required to include as part of its current income, the
imputed interest on such obligations even though the
Portfolio has not received any interest payments on such
obligations during that period. Because each Portfolio
distributes all of its net investment income to its
shareholders, a Portfolio may have to sell Portfolio
securities in order to distribute such imputed income, which
may occur at a time when the Adviser would not have chosen
to sell such securities and, which may result in a taxable
gain or loss.
Investment income received by the Portfolios on direct
U.S. Government obligations is exempt from tax at the state
level when received directly by a Portfolio, and may be
exempt, depending on the state, when received by a
shareholder as income dividends from any Portfolio provided
certain state-specific conditions are satisfied. Interest
received on repurchase agreements collateralized by U.S.
Government obligations normally is not exempt from state
taxation. Each Portfolio will inform shareholders annually
of the percentage of income and distributions derived from
direct U.S. Government obligations. Shareholders should
consult their tax advisers to determine whether any portion
of the income dividends received from a Portfolio is
considered tax exempt in their particular states.
12
<PAGE>
Each sale, exchange, or redemption of any Portfolio's
shares is a taxable transaction to the shareholder.
GENERAL
INFORMATION ___________________________________________________________________
The Trust SEI Liquid Asset Trust (the "Trust") was organized as a
Massachusetts business trust under a Declaration of Trust
dated July 20, 1981. The Declaration of Trust permits the
Trust to offer separate Portfolios of shares and different
classes of each Portfolio. All consideration received by the
Trust for shares of any portfolio and all assets of such
portfolio belong to that portfolio or class and are subject
to liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation material 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.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each Portfolio or class of the
Trust will vote separately on matters relating solely to
that Portfolio or class. As a Massachusetts business trust,
the Trust is not required to hold annual meetings of
shareholders, but approval will be sought for certain
changes in the operation of the Trust and for the election
of Trustees under certain circumstances. In addition, a
Trustee may be removed by the remaining Trustees or by
shareholders at a special meeting called upon written
request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a
meeting is requested, the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager, SEI
Inquiries Financial Management Corporation, 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658.
Dividends The dividends of Class A shares will normally be higher than
of Class D shares of each Portfolio because of the
additional distribution and transfer agent expenses charged
to Class D shares.
Substantially all of the net investment income (exclusive
of capital gains) of each Portfolio is periodically declared
and paid as a dividend. Dividends are paid by the Portfolio
in federal funds or in additional shares at the discretion
of the shareholder on the first
13
<PAGE>
Business Day of each month. Currently, capital gains (the
excess of net long-term capital gain over net short-term
capital loss) realized, if any, are distributed at least
annually.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Price Waterhouse LLP serves as the independent accountants
Accountants to the Trust.
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, Pennsylvania 19101 (the "Custodian"),
serves as custodian of the Trust's assets and as wire agent
of the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS AND
RISK FACTORS __________________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolios, and the associated risk
factors:
Bank Notes Bank notes are notes used to represent debt obligations
issued by banks in large denominations.
Bankers' A bankers' acceptance is a bill of exchange or time drafts
Acceptance 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.
Certificates of Certificates of deposit are negotiable interest-bearing
Deposit instruments with a specific maturity. They are issued by
banks and savings and loan institutions in exchange for the
deposit of funds, and normally can be traded in the
secondary market prior to maturity. Certificates of deposit
have penalties for early withdrawal.
Commercial Commercial paper is the term used to designate unsecured
Paper short-term promissory notes issued by municipalities,
corporations and other entities. Maturities on these issues
vary from one to 270 days. Section 4(2) commercial paper is
issued in reliance on an exemption from registration under
Section 4(2) of the Securities Act of 1933 (the "1933 Act"),
and is generally sold to institutional investors who
purchase for investment. Any resale of such commercial paper
must be in an exempt transaction, usually to an
institutional investor through the issuer or investment
dealers who make a market in such commercial paper.
Demand Demand instruments are instruments which may involve a
Instruments conditional or unconditional demand feature which permits
the holder to demand payment of the principal amount of the
instrument. They may include variable amount master demand
notes.
Foreign The Money Market Portfolio may invest in U.S. dollar
Securities denominated obligations or securities of U.S. and London
branches of foreign banks. Investments in such instruments
involve risks that are different from investments in
securities of U.S. banks. These risks may include future
unfavorable political and economic developments, possible
withholding taxes,
14
<PAGE>
seizure of foreign deposits, currency controls, interest
limitations or other governmental restrictions which might
affect payment of principal or interest. Additionally, there
may be less public information available about foreign banks
and their branches. Foreign branches of foreign banks are
not regulated by U.S. banking authorities and generally are
not bound by accounting, auditing and financial reporting
standards comparable to U.S. banks. However, the Adviser
attempts to minimize these risks by investing only in those
instruments which satisfy the high quality and maturity
restrictions applicable to a Portfolio.
Illiquid Illiquid securities are securities which cannot be sold or
Securities disposed of within seven business days at approximately the
value at which they are being carried on a Portfolio's
books. Illiquid securities may include demand instruments
with demand notice periods exceeding seven days for which
there is no secondary market, and repurchase agreements with
maturities over seven days in length.
Repurchase Repurchase agreements are agreements by which a Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed upon price on an agreed
upon date. The custodian will hold the security as
collateral for the repurchase agreement. A Portfolio bears a
risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. A
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
Restricted Restricted Securities are securities that may not be sold
Securities freely to the public absent registration under the 1933 Act,
or an exemption from registration.
Time Deposits Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Similar to a
certificate of deposit, a time deposit earns a specified
rate of interest over a definite period of time; however, it
cannot be traded in the secondary market.
U.S. Government Certain federal agencies, such as the Government National
Agency Mortgage Association ("GNMA"), have been established as
Obligations instrumentalities of the U.S. Government to supervise and
finance certain types of activities. Issues of these
agencies, while not direct obligations of the U.S.
Government, are either backed by the full faith and credit
of the United States (such as GNMA securities) or supported
by the issuing agency's right to borrow from the Treasury.
The issues of other agencies are supported only by the
credit of the instrumentality (such as Federal National
Mortgage Association securities). Any guarantee by the U.S.
Government, its agencies or instrumentalities of all
securities in which a Portfolio invests guarantees only the
payment of principal and interest on the guaranteed security
and does not guarantee the yield or value of the security or
the yield or value of shares of that Portfolio.
U.S. Treasury U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury and separately traded interest
and principal component parts of such obligations that are
15
<PAGE>
transferable through the federal book-entry system known as
Separately Traded Registered Interest and Principal
Securities ("STRIPS").
STRIPS 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 payments
of interest or principal. This discount is accreted over the
life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax
purposes. Because of these features, such securities may be
subject to greater interest rate volatility than interest-
paying investments. See also "Taxes."
Variable and Certain of the obligations purchased by a Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. 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 period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. A Portfolio will maintain with the
custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date, and no interest accrues to
a Portfolio before settlement. 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 Portfolio generally purchases securities on a
when-issued or forward commitment basis with the intention
of actually acquiring securities, a Portfolio may dispose of
a when-issued security or forward commitment prior to
settlement if the Adviser deems it appropriate to do so.
16
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses............................................... 2
Financial Highlights.................................................... 3
The Trust............................................................... 4
Investment Objectives and Policies...................................... 4
General Investment Policies............................................. 6
Investment Limitations.................................................. 6
The Manager and Shareholder Servicing Agent............................. 7
The Adviser............................................................. 8
Distribution............................................................ 9
Purchase and Redemption of Shares....................................... 10
Performance............................................................. 11
Taxes................................................................... 11
General Information..................................................... 13
Description of Permitted Investments and Risk Factors................... 14
</TABLE>
<PAGE>
PROSPECTUS
OCTOBER 30, 1995
- --------------------------------------------------------------------------------
TREASURY SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Please read this prospectus carefully before investing, and keep it on file for
future reference. It contains information that can help you decide if the
Portfolio's investment goals match your own.
A Statement of Additional Information dated October 30, 1995, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling 1-800-437-
6016. The Statement of Additional Information is incorporated by reference into
this Prospectus.
SEI Liquid Asset Trust (the "Trust") is an open-end management investment
company certain classes of which offer shareholders a convenient means of
investing their funds in one or more professionally managed diversified
portfolios of securities. The Treasury Securities Portfolio offers two classes
of shares, Class A shares and Class D shares. Class D shares differ from Class
A shares primarily in the allocation of certain distribution expenses and
transfer agent fees. Class D shares are available through SEI Financial
Services Company (the Trust's distributor), and through participating broker-
dealers, financial institutions and other organizations. This Prospectus offers
Class D shares of the Trust's Treasury Securities Portfolio (the "Portfolio").
AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES
RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
....................................................
TABLE OF
CONTENTS
<TABLE>
<S> <C>
Fund Highlights............................ 2
Portfolio Expenses......................... 4
Financial Highlights....................... 5
Your Account and Doing Business
with Us................................... 6
Investment Objective and Policies.......... 9
General Investment Policies................ 9
Investment Limitations..................... 10
The Manager and Shareholder
Servicing Agent........................... 11
The Adviser................................ 11
Distribution............................... 12
Performance................................ 13
Taxes...................................... 14
Additional Information
About Doing Business with Us.............. 15
General Information........................ 18
Description of Permitted
Investments and Risk Factors.............. 19
</TABLE>
....................................................
HOW TO READ THIS PROSPECTUS ____________________________________________________
This Prospectus gives you information that you should know about the Portfolio
before investing. Brief descriptions are also provided throughout the
Prospectus to better explain certain key points. To find these helpful guides,
look for this symbol. [SYMBOL APPEARS HERE]
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the Class D shares of
the Trust's Treasury Securities Portfolio. This summary is qualified in its
entirety by reference to the more detailed information provided elsewhere in
this Prospectus and in the Statement of Additional Information.
INVESTMENT The Treasury Securities Portfolio seeks to preserve principal
OBJECTIVE AND value and maintain a high degree of liquidity while providing
POLICIES current income. See "Investment Objective and Policies" and
"Description of Permitted Investments and Risk Factors."
UNDERSTANDING There can be no assurance that the Portfolio will achieve its
RISK investment objective. See "Investment Objective and Policies"
and "Description of Permitted Investments and Risk Factors."
MANAGEMENT Wellington Management Company (the "Adviser") serves as the
PROFILE investment adviser to the Portfolio. The Adviser is a
professional investment counseling firm which has been
providing investment advisory services to mutual funds since
1933. SEI Financial Management Corporation serves as the
manager and shareholder servicing agent of the Trust (the
"Manager"). DST Systems, Inc. ("DST") serves as transfer agent
(the "Transfer Agent") and dividend disbursing agent for the
Class D shares of the Trust. SEI Financial Services Company
serves as distributor ("Distributor") of the Trust's shares.
See "The Manager and Shareholder Servicing Agent," "The
Adviser" and "Distribution."
2
<PAGE>
................................................................................
[SYMBOL APPEARS HERE] INVESTMENT
PHILOSOPHY
Believing that no single investment adviser can deliver outstanding performance
in every investment category, only those advisers who have distinguished them-
selves within their areas of specialization are selected to advise our mutual
funds.
................................................................................
YOUR ACCOUNT You may open an account with just $1,000 and make additional
AND DOING investments with as little as $100. Redemptions of the
BUSINESS WITH Portfolio's shares are made at net asset value per share. See
US "Purchase of Shares" and "Redemption of Shares."
DIVIDENDS Substantially all of the net investment income (exclusive
of capital gains) of the Portfolio is distributed in
the form of dividends that will be declared daily and
paid monthly on the first Business Day of each month.
Any realized net capital gain is distributed at least
annually. Distributions are paid in additional shares
unless you elect to take the payment in cash. See
"Dividends."
INFORMATION/ For more information about Class D shares, call SEI Financial
SERVICE Services Company at 1-800-437-6016.
CONTACTS
3
<PAGE>
PORTFOLIO EXPENSES _____________________________________________________________
The purpose of the following table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in Class D shares.
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
SECURITIES
PORTFOLIO
----------
<S> <C>
Maximum Sales Charge Imposed On Purchases None
Maximum Sales Charge Imposed on Reinvested Dividends None
Redemption Fees/1/ None
- ----------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
SECURITIES
PORTFOLIO
----------
<S> <C>
Management/Advisory fees (after fee waiver)(/2/) .36%
12b-1 fees(/3/) .24%
Other Expenses (after fee waiver) .19%
- ------------------------------------------------------------
Total Operating Expenses (after fee waiver)(/2/) .79%
- ------------------------------------------------------------
</TABLE>
1 A charge, currently $10.00, is imposed on wires of redemption proceeds of the
Portfolio's Class D shares.
2 The Manager has agreed contractually to waive a portion of its fee in order
to limit total operating expenses for Class D shares of the Portfolio to not
more than .84% of its average daily net assets. Absent these contractual
provisions, management/advisory fees, 12b-1 fees and total operating expenses
as a percentage of net assets, respectively, would have been .45%, .29% and
.93% for the Treasury Securities Portfolio. Additional information may be
found under "The Manager and Shareholder Servicing Agent," "The Adviser" and
"Distribution."
3 The 12b-1 fee shown reflects the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fee payable by Class D shares
for the Portfolio is .55%.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in the Class D shares of
the Portfolio would pay the following
expenses on a $1,000 investment as-
suming (1) 5% annual return and (2)
redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
TREASURY SECURITIES PORTFOLIO $8 $25 $44 $98
- ----------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose of the
expense table is to assist the investor in understanding the various costs and
expenses that may be directly or indirectly borne by investors in Class D
shares of the Portfolio. A person who purchases shares through an account with
a financial institution may be charged separate fees by that institution. The
information set forth in the foregoing table and example relates only to the
Class D shares. The Portfolio also offers Class A shares, which are subject to
the same expenses, except there are no transfer agent costs, and there are
different distribution costs. Additional information may be found under "The
Manager and Shareholder Servicing Agent," "The Adviser" and "Distribution."
Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge otherwise permitted by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. (the "NASD").
4
<PAGE>
FINANCIAL HIGHLIGHTS ___________________________________________________________
The following financial highlights for a share outstanding throughout each
year, insofar as they relate to each of the years in the period ended June 30,
1995, have been audited by Price Waterhouse LLP, independent public
accountants, whose report thereon was unqualified. This information should be
read in conjunction with the Trust's financial statements and notes thereto
which are included in the Statement of Additional Information under the heading
"Financial Information." Additional performance information is set forth in the
Trust's 1995 Annual Report to Shareholders, which is available upon request and
without charge by calling 1-800-437-6016.
For a Class D Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Net Asset Distributions Distributions Ratio of
Value Net Realized and from Net from Net Asset Net Asset Expenses
Beginning Investment Unrealized Investment Realized Capital Value End Total End of to Average
of Period Income Gains on Securities Income Gains of Period Return Period (000) Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Treasury Securities
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1.00 0.05 -- (0.05) -- 1.00 4.69 9,798 0.79
1994(1) 1.00 0.01 -- (0.01) -- 1.00 0.50** 23 0.79*
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
Net
Ratio of Ratio of Investment
Net Expenses Income
Investment to Average to Average
Income Net Assets Net Assets
to Average (Excluding (Excluding
Net Assets Waivers) Waivers)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Securities
- --------------------------------------------------------------------------------------------------------------------------
1995 5.15 0.89 5.05
1994(1) 3.23* 0.98* 3.04*
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Treasury Securities Class D commenced operations on May 4, 1994.
* Annualized
** Not Annualized
Amounts designated as "--" are either $0 or have been rounded to $0.
5
<PAGE>
...............................................................................
[SYMBOL APPEARS HERE] WHAT IS AN
INTERMEDIARY?
Any entity, such as a bank, broker-dealer, other financial institution,
association or organization which has entered into an arrangement
with the Distributor to sell Class D shares to its customers.
................................................................................
YOUR ACCOUNT AND DOING BUSINESS WITH US
Class D shares of the Portfolio are sold on a continuous basis and may be
purchased directly from the Trust's Distributor, SEI Financial Services
Company. Shares may also be purchased through financial institutions, broker-
dealers, or other organizations which have established a dealer agreement or
other arrangement with SEI Financial Services Company ("Intermediaries"). For
more information about the following topics, see "Additional Information About
Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY, Class D shares of the Portfolio may be purchased through
SELL AND Intermediaries which provide various levels of shareholder
EXCHANGE services to their customers. Contact your Intermediary for
SHARES THROUGH information about the services available to you and for
INTERMEDIARIES specific instructions on how to buy, sell and exchange
shares. To allow for processing and transmittal of orders to
the Transfer Agent on the same day, Intermediaries may impose
earlier cut-off times for receipt of purchase orders. Certain
Intermediaries may charge customer account fees. Information
concerning shareholder services and any charges will be
provided to the customer by the Intermediary. Certain of
these Intermediaries may be required to register as broker-
dealers under state law.
The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should call
the Intermediary to request this change.
HOW TO BUY Application forms can be obtained by calling 1-800-437-6016.
SHARES FROM Class D shares of the Portfolio are offered only to residents
THE of states in which the shares are eligible for purchase.
DISTRIBUTOR
Opening an ccount
By Check You may buy Class D shares by mailing a completed application
and a check (or other negotiable bank instrument or money
order) payable to "Class D (Treasury Securities Portfolio)".
If you send a check that does not clear, the purchase will be
canceled and you could be liable for any losses or fees
incurred.
By Fed Wire To buy shares by Fed Wire call toll-free at 1-800-437-6016.
Automatic You may systematically buy Class D shares through deductions
Investment from your checking or savings accounts, provided these
Plan ("AIP") accounts are maintained through banks which are part of the
Automated Clearing House ("ACH") system. You may purchase
shares on a fixed schedule (semi-monthly or monthly) with
amounts as low as $25, or as high as $100,000. Upon notice,
the amount you commit to the AIP may be changed or canceled
at any time.
6
<PAGE>
...............................................................................
[SYMBOL APPEARS HERE] HOW DOES AN
EXCHANGE TAKE
PLACE?
When making an exchange, you authorize the sale of your shares of one or more
Portfolios in order to purchase the shares of another Portfolio. In other
words, you are executing a sell order and then a buy order. This sale of your
shares is a taxable event which could result in a taxable gain or loss.
................................................................................
The AIP is subject to account minimum initial purchase
amounts and minimum balance maintenance requirements.
EXCHANGING
SHARES
When Can You Once payment for your shares has been received and accepted
Exchange (i.e., an account has been established), you may exchange
Shares? ----
some or all of your shares for Class D shares of SEI Tax
Exempt Trust, SEI Daily Income Trust, SEI International Trust
and SEI Institutional Managed Trust ("SEI Funds"). Exchanges
are made at net asset value plus any applicable sales charge.
When Do Sales SEI Funds' portfolios that are not money market portfolios
Charges Apply currently impose a sales charge on Class D shares. If you
to an exchange into one of these "non-money market" portfolios, you
Exchange? will have to pay a sales charge on any portion of your
exchanged Class D shares for which you have not previously
paid a sales charge.
If you previously paid a sales charge on your Class D
shares, no additional sales charge will be assessed when you
exchange those Class D shares for other Class D shares.
If you buy Class D shares of a "non-money market" fund and
you receive a sales charge waiver, you will be deemed to have
paid the sales charge for purposes of this exchange privilege.
In calculating any sales charge payable on your exchange, the
Trust will assume that the first shares you exchange are those
on which you have already paid a sales charge. Sales charge
waivers may also be available under certain circumstances
described in the SEI Funds' prospectuses.
The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice. The
Trust also reserves the right to deny an exchange request
made within 60 days of the purchase of a "non-money market"
portfolio.
Requesting an To request an exchange, you must provide proper instructions
Exchange of in writing to the Transfer Agent. Telephone exchanges will
Shares also be accepted if you previously elected this option on
your account application.
In the case of shares held "of record" by an Intermediary
but beneficially owned by you, you should contact the
Intermediary who will contact the Transfer Agent and effect
the exchange on your behalf.
7
<PAGE>
................................................................................
[SYMBOL APPEARS HERE] WHAT IS A
SIGNATURE
GUARANTEE?
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee.
...............................................................................
HOW TO SELL To sell your shares, a written request for redemption in good
SHARES THROUGH order must be received by the Transfer Agent. Valid written
THE redemption requests will be effective on receipt. All
DISTRIBUTOR shareholders of record must sign the redemption request. The
Transfer Agent may require that the signatures on written
By Mail requests be guaranteed.
For information about the proper form of redemption
requests, call 1-800-437-6016. You may also have the proceeds
mailed to an address of record or mailed (or sent by ACH) to
a commercial bank account previously designated on the
Account Application or specified by written instruction to
the Transfer Agent. There is no charge for having redemption
requests mailed to a designated bank account.
By Telephone You may sell your shares by telephone if you previously elected
that option on the Account Application. You may have the
proceeds mailed to the address of record, wired or sent by ACH
to a commercial bank account previously designated on the
Account Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of a
valid telephone request for redemption. Wire redemption
requests may be made by calling 1-800-437-6016. A wire
redemption charge (presently $10.00) will be deducted from the
amount of the redemption.
Systematic You may establish a systematic withdrawal plan for an account
Withdrawal with a $10,000 minimum balance. Under the plan, redemptions
Plan ("SWP") can be automatically processed from accounts (monthly,
quarterly, semi-annually or annually) by check or by ACH with a
minimum redemption amount of $50.
Check-Writing Check-Writing Service is offered free of charge to Class D
shareholders in the Portfolio. You may redeem shares by
writing checks on your account for $500 or more. Once you
have signed and returned a signature card, you will receive a
supply of checks. A check may be made payable to any person,
and your account will continue to earn dividends until the
check clears.
Because of the difficulty of determining in advance the
exact value of your account, you may not use a check to close
your account. The checks are free, but your account will be
charged a fee for stopping payment of a check upon your
request or if the check cannot be honored because of
insufficient funds or other valid reasons.
8
<PAGE>
...............................................................................
[SYMBOL APPEARS HERE] WHAT ARE
INVESTMENT
OBJECTIVES AND
POLICIES?
The Portfolio's investment objective is a statement of what it seeks to
achieve. It is important to make sure that the investment objective matches
your own financial needs and circumstances. The investment policies section
spells out the types of securities in which the Portfolio invests.
................................................................................
INVESTMENT OBJECTIVE AND POLICIES _________________________________________
TREASURY The investment objective of the Treasury Securities
SECURITIES Portfolio is to preserve principal value and maintain
PORTFOLIO a high degree of liquidity while providing current income.
The Treasury Securities Portfolio invests exclusively in
U.S. Treasury obligations and repurchase agreements involving
such obligations. The repurchase agreement dealers selected for
the Treasury Securities Portfolio must meet certain
creditworthiness criteria established by Standard & Poor's
Corporation ("S&P").
There can be no assurance that the Portfolio will
achieve its investment objective.
GENERAL INVESTMENT POLICIES ____________________________________________________
In purchasing obligations, the Portfolio complies with the
requirements of Rule 2a-7 under the 1940 Act, as that Rule
may be amended from time to time. These requirements
currently provide that the Portfolio must limit its
investments to securities with remaining maturities of 397
days or less, and must maintain a dollar-weighted average
maturity of 90 days or less. In addition, the Portfolio may
only invest in securities (other than U.S. Government
Securities) rated in one of the two highest categories for
short-term securities by at least two nationally recognized
statistical rating organizations ("NRSROs") (or by one NRSRO
if only one NRSRO has rated the security), or, if unrated,
determined by the Adviser (in accordance with procedures
adopted by the Trust's Board of Trustees) to be of equivalent
quality to rated securities in which the Portfolio may
invest. Purchases of unrated securities and securities rated
by only one NRSRO will be ratified by the Trust's Board of
Trustees.
Securities rated in the highest rating category (e.g., A-1
by S&P) by at least two NRSROs (or, if unrated, determined by
the Adviser to be of comparable quality) are "first tier"
securities. Securities rated in the second highest rating
category (e.g., A-2 by S&P) by at least one NRSRO (or, if
unrated, determined by the Adviser to be of comparable
quality) are considered to be "second tier" securities. The
Portfolio will invest, in the aggregate, no more than 5% of
its assets in second tier securities, and any investment in
any one second tier security limited to the greater of 1% of
the Portfolio's total assets or $1 million.
The Portfolio may purchase securities on a when-issued or
delayed delivery basis.
9
<PAGE>
For additional information regarding the Portfolio's
permitted investments, see "Description of Permitted
Investments and Risk Factors" and the Statement of
Additional Information.
INVESTMENT LIMITATIONS _________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolio. Fundamental policies
cannot be changed with respect to the Portfolio without the
consent of the holders of a majority of the Trust's or the
Portfolio's outstanding shares. It is a fundamental policy
of the Portfolio to use its best efforts to maintain a
constant net asset value of $1.00 per share.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and any securities guaranteed
thereby) if as a result more than 5% of total assets of
the Portfolio (based on fair market value at the time of
investment) would be invested in the securities of such
issuer; provided, however, that the Portfolio may invest
up to 25% of its total assets without regard to this
restriction as permitted by Rule 2a-7.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio based on fair market
value at the time of such purchase, to be invested in the
securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in (a) domestic banks and (b) obligations
issued or guaranteed by the U.S. Government or its
agencies and instrumentalities.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of the Portfolio. This borrowing
provision is included solely to facilitate the orderly
sale of portfolio securities to accommodate substantial
redemption requests if they should occur and is not for
investment purposes. All borrowings will be repaid before
making additional investments for the Portfolio and any
interest paid on such borrowings will reduce the income
of the Portfolio.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
10
<PAGE>
................................................
[SYMBOL APPEARS HERE]
INVESTMENT
ADVISER
A Portfolio's investment adviser manages
the investment activities and is responsible
for the performance of the Portfolio. The
adviser conducts investment research, executes
investment strategies based on an assessment
of economic and market conditions, and determines
which securities to buy, hold or sell.
................................................
THE MANAGER AND SHAREHOLDER SERVICING AGENT ____________________________________
SEI Financial Management Corporation (the "Manager"), 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, a
wholly-owned subsidiary of SEI Corporation ("SEI"), provides
the Trust with overall management services, regulatory
reporting, all necessary office space, equipment, personnel
and facilities and for acting as shareholder servicing
agent.
The Manager is entitled to a fee, which is calculated
daily and paid monthly at an annual rate of .42% of the
average daily net assets of the Treasury Securities
Portfolio. The Manager has contractually agreed to waive a
portion of its fee in order to limit total operating
expenses on an annualized basis to not more than .84% of the
average daily net assets of the Class D shares of the
Portfolio on an annualized basis. For the fiscal year ended
June 30, 1995, the Portfolio paid management fees, after fee
waivers, of .33% of the Portfolio's average daily net
assets.
The Trust and DST Systems, Inc., 210 W. 10th Street,
Kansas City, Missouri, 64105, have entered into a separate
transfer agent agreement with respect to the Class D shares
of the Portfolio. Under this agreement, DST acts as the
transfer agent and dividend disbursing agent (the "Transfer
Agent") for the Class D shares of the Trust.
THE ADVISER ____________________________________________________________________
Wellington Management Company ("WMC" or the "Adviser") 75
State Street, Boston, Massachusetts 02109, serves as the
investment adviser to the Portfolio. The Adviser, under an
investment advisory agreement with the Trust, invests the
assets of the Portfolio and continuously reviews, supervises
and administers the Portfolio's investment program, subject to
the supervision of, and policies set by, the Trustees of the
Trust.
As of September 30, 1995, the Adviser had investment
management authority with respect to approximately $102.4
billion of assets, including the assets of the Trust, SEI
Daily Income Trust and a portfolio of Insurance Investment
Products Trust, each of which is an open-end money market
investment company administered by the Manager. WMC is a
professional investment counseling firm which provides
investment services to investment companies, employee benefit
plans, endowments, foundations, and other institutions and
individuals. The Adviser's predecessor organizations have
provided investment advisory services to investment companies
since 1933 and to investment counseling clients since 1960.
WMC is
11
<PAGE>
a Massachusetts general partnership, of which the following
persons are managing partners: Robert W. Doran, Duncan M.
McFarland and John B. Neff.
John C. Keogh, Senior Vice President of the Adviser,
serves as portfolio manager to the Portfolio. He has been an
investment professional with the Adviser since 1983, and has
served as portfolio manager to the Treasury Securities
Portfolio since July 1994. Prior to that date, he assisted
the portfolio manager in the management of the Portfolio.
The Adviser is entitled to a fee which is calculated
daily and paid monthly, at an annual rate of .075% of the
combined average daily net assets of the Trust's Portfolio
up to $500 million, and .02% of such assets in excess of
$500 million. Such fees are allocated daily among the
Portfolios of the Trust on the basis of their relative net
assets. For the fiscal year ended June 30, 1995, the
Treasury Securities Portfolio paid advisory fees, after fee
waivers, of .03% of its relative net assets.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan"
and "Class D Plan," and, collectively, the "Plans") pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act").
The Class D Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio on an
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Currently, the budget (shown here as a percentage of average
daily net assets) for each Portfolio is set at an annual
rate of .04%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class D Plan, in addition to providing for the
reimbursement payments described above, provides for
payments to the Distributor at an annual rate of .25% of
each Portfolio's average daily net assets attributable to
Class D shares. This additional payment may be used to
compensate financial institutions that provide distribution-
related services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor
12
<PAGE>
receives during any year may therefore be higher or lower
than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class D Plan, the Trust will still pay the full fee and the
Distributor will realize a profit, but the Trust will not be
obligated to pay in excess of the full fee, even if the
Distributor's actual expenses are higher. Currently, the
Distributor is taking this additional compensation payment
under the Class D Plan at a rate of .20% of the Portfolio's
average daily net assets, on an annualized basis,
attributable to Class D shares.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
PERFORMANCE ____________________________________________________________________
From time to time, the Portfolio may advertise "current
yield" and "effective compound yield." These figures will
fluctuate, as they are based on historical earnings and are
not intended to indicate future performance. The "current
yield" of the Portfolio refers to the income generated by an
investment over a seven-day period which is then
"annualized." That is, the amount of income generated by an
investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of
the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an
investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield"
because of the compounding effect of this assumed
reinvestment.
13
<PAGE>
................................................................................
[SYMBOL APPEARS HERE] TAXES
You must pay taxes on your Portfolio's earnings, whether you take your
payments in cash or additional shares.
................................................................................
................................................................................
[SYMBOL APPEARS HERE] DISTRIBUTIONS
The Portfolio distributes income dividends and capital gains. Income dividends
represent the earnings from the Portfolio's investments; capital gains dis-
tributions occur when investments in the Portfolio are sold for more than the
original purchase price.
................................................................................
The Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund rating
services (such as Lipper Analytical), financial and business
publications and periodicals; (ii) broad groups of comparable
mutual funds; (iii) unmanaged indices which may assume
investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives.
For the Portfolio, the performance of the Class A shares
will normally be higher than the performance of the Class D
shares of the Portfolio because of additional distribution
and transfer agent expenses charged to Class D shares.
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action. No
attempt has been made to present a detailed explanation of
the federal, state, or local income tax treatment of the
Portfolio or its shareholders. In addition, state and local
tax consequences of an investment in the Portfolio may differ
from the federal income tax consequences described below.
Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state
and local income taxes. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio: tax purposes and is not combined with the Trust's other
Portfolios. The Portfolio intends to continue to qualify for
the special tax treatment afforded regulated investment
companies under subchapter M of the Internal Revenue Code of
1986, as amended, so as to be relieved of federal income tax on
net investment company taxable income and net capital gains
(the excess of net long-term capital gain over net short-term
capital losses) distributed to shareholders.
Tax Status of The Portfolio will distribute substantially all of its net
Distributions: investment income (including net short-term capital gains)
and net capital gain to shareholders. Dividends from net
investment company taxable income are taxable to shareholders
as ordinary income, whether received in cash or in additional
shares, to the extent of the Portfolio's earning and profits.
Distributions of net capital gains are taxable to shareholders
as long-term capital gains regardless of how long shareholders
have held their shares and regardless of whether
the distributions are received in cash or in additional
shares. Dividends and
14
<PAGE>
distributions of capital gains paid by the Portfolio do not
qualify for the dividends received deduction for corporate
shareholders. The Portfolio will make annual reports to
shareholders on the federal income tax status of all
distributions.
Dividends declared by the Portfolio in October, November
or December of any year and payable to shareholders of
record on a date in such a month will be deemed to have been
paid by the Portfolio and received by the shareholders on
December 31 of the year declared if paid by the Portfolio at
any time during the following January.
The Portfolio intends to make sufficient distributions
prior to the end of each calendar year, to avoid liability
for the federal excise tax applicable to regulated
investment companies.
With respect to investments in U.S. Treasury STRIPS,
which are sold at original issue discount and thus do not
make periodic cash interest payments, the Portfolio will be
required to include as part of its current income the
imputed interest on such obligations even though the
Portfolio has not received any interest payments on such
obligations during that period. Because the Portfolio
distributes all of its net investment income to its
shareholders, the Portfolio may have to sell portfolio
securities to distribute such imputed income, which may
occur at a time when the Adviser would not have chosen to
sell such securities and, which may result in a taxable gain
or loss.
Investment income received by the Portfolio on direct
U.S. Government obligations is exempt from tax at the state
level when received directly by the Portfolio and may be
exempt, depending on the state, when received by a
shareholder as income dividends from the Portfolio provided
certain state-specific conditions are satisfied. Interest
received on repurchase agreements collateralized by U.S.
Government obligations normally is not exempt from state
taxation. The Portfolio will inform shareholders annually of
the percentage of income and distributions derived from
direct U.S. Government obligations. Shareholders should
consult their tax advisers to determine whether any portion
of the income dividends received from the Portfolio is
considered tax exempt in their particular states.
Each sale, exchange, or redemption of the Portfolio's
shares is a taxable transaction to the shareholder.
ADDITIONAL
INFORMATION ABOUT
DOING BUSINESS
WITH US ________________________________________________________________________
Business Days You may buy, sell or exchange shares on days on which the
New York Stock Exchange is open for business ("Business
Days"). However, shares of the Portfolio cannot be purchased
by Federal Reserve wire on Federal holidays restricting wire
transfers. All purchase, exchange and redemption requests
received in "good order" will be effective as of the
Business Day received by the Transfer Agent as long as the
Transfer Agent receives the
15
<PAGE>
...............................................................................
[SYMBOL APPEARS HERE] BUY, EXCHANGE AND
SELL REQUESTS ARE IN
"GOOD ORDER" WHEN:
. The account number and portfolio name are shown
. The amount of the transaction is specified in dollars or shares
. Signatures of all owners appear exactly as they are registered on the account
. Any required signature guarantees (if applicable) are included
. Other supporting legal documents (as necessary) are present
................................................................................
order and, in the case of a purchase request, payment before
2:00 p.m., Eastern time. Otherwise the purchase will be
effective when payment is received. Broker-dealers may have
separate arrangements with the Trust regarding the sale of
Class D shares.
If an exchange request is for shares of a portfolio whose
net asset value is calculated as of a time earlier than 2:00
p.m., Eastern time, the exchange request will not be effective
until the next Business Day. Anyone who wishes to make an
exchange must have received a current prospectus of the
portfolio into which the exchange is being made before the
exchange will be effected.
Minimum The minimum initial investment in the Portfolio's Class D
Investments shares is $1,000; however, the minimum investment may be
waived at the Distributor's discretion. All subsequent
purchases must be at least $100 ($25 for payroll deductions
authorized pursuant to pre-approved payroll deduction plans).
The Trust reserves the right to reject a purchase order when
the Distributor determines that it is not in the best
interest of the Trust or its shareholders to accept such
order.
Maintaining a Due to the relatively high cost of handling small
Minimum investments, the Portfolio reserves the right to redeem, at
Account net asset value, the shares of any shareholder if, because of
Balance redemptions of shares by or on behalf of the shareholder, the
account of such shareholder in the Portfolio has a value of
less than $1,000, the minimum initial purchase amount.
Accordingly, an investor purchasing shares of the Portfolio
in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any of
these shares. Before the Portfolio exercises its right to
redeem such shares and to send the proceeds to the
shareholder, the shareholder will be given notice that the
value of the shares in his or her account is less than the
minimum amount and will be allowed 60 days to make an
additional investment in that Portfolio in an amount that
will increase the value of the account to at least $1,000.
See "Purchase and Redemption of Shares" in the Statement of
Additional Information for examples of when the right of
redemption may be suspended.
At various times, the Portfolio may receive a request to
redeem shares for which it has not yet received good payment.
In such circumstances, redemption proceeds will be forwarded
upon collection of payment for the shares; collection of
payment may take 10 or more days. The Portfolio intends to
pay cash for all shares redeemed, but under abnormal
conditions that make payment in cash unwise, payment may be
made wholly or partly in portfolio securities with a market
value equal to the redemption price. In such cases, an
investor may incur brokerage costs in converting such
securities to cash.
16
<PAGE>
Net Asset Value An order to buy shares will be executed at a per share price
equal to the net asset value next determined after the
receipt of the purchase order by the Transfer Agent (the
"offering price"). No certificates representing shares will
be issued. An order to sell shares will be executed at the
net asset value per share next determined after receipt and
effectiveness of a request for redemption in good order. Net
asset value per share is determined daily as of 2:00 p.m.,
Eastern time on any Business Day. Payment to shareholders
for shares redeemed will be made within 7 days after receipt
by the Transfer Agent of the redemption order.
How the Net The net asset value per share of the Portfolio is determined
Asset Value is by dividing the total market value of its investments and
Determined other assets, less any liabilities, by the total number of
outstanding shares of that Portfolio. Although the
methodology and procedures for determining net asset value
per share are identical for both classes of the Portfolio,
the net asset value per share of one class may differ from
that of another class because of the different distribution
fees charged to each class and the incremental transfer
agent fees charged to Class D shares.
Signature The Transfer Agent may require that the signatures on the
Guarantees written request be guaranteed. You should be able to obtain
a signature guarantee from a bank, broker, dealer, certain
credit unions, securities exchange or association, clearing
agency or savings association. Notaries public cannot
guarantee signatures. The signature guarantee requirement
will be waived if all of the following conditions apply: (1)
the redemption is for not more than $5,000 worth of shares,
(2) the redemption check is payable to the shareholder(s) of
record, and (3) the redemption check is mailed to the
shareholder(s) at his or her address of record. The Trust
and the Transfer Agent reserve the right to amend these
requirements without notice.
Telephone/Wire Redemption orders may be placed by telephone. Neither the
Instructions Trust nor the Transfer Agent will be responsible for any
loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received by
telephone and recording telephone instructions. If market
conditions are extraordinarily active, or other
extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone and may
wish to consider placing orders by other means.
Systematic Please note that if withdrawals exceed income dividends,
Withdrawal Plan your invested principal in the account will be depleted.
("SWP") Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net asset
value per share, your original investment could be exhausted
entirely. To participate in the SWP, you must have your
dividends automatically reinvested. You may change or cancel
the SWP at any time, upon written notice to the Transfer
Agent.
17
<PAGE>
How to Close An account may be closed by providing written notice to the
your Account Transfer Agent. You may also close your account by telephone
if you have previously elected telephone options on your
account application.
GENERAL INFORMATION ____________________________________________________________
The Trust SEI Liquid Asset Trust (the "Trust") was organized as a
Massachusetts business trust under a Declaration of Trust
dated July 20, 1981. The Declaration of Trust permits the
Trust to offer separate portfolios of shares and different
classes of each portfolio. Shareholders may purchase shares
in Portfolios through two separate classes: Class A and
Class D, which provide for variation in distribution and
transfer agent costs, voting rights, dividends, and the
imposition of a sales charge on the Class D shares. This
Prospectus offers the Class D shares of the Trust's Treasury
Securities Portfolio. In addition to the Portfolio, the
Trust consists of the following portfolios: Government
Securities Portfolio, Institutional Cash Portfolio, Prime
Obligation Portfolio, and Money Market Portfolio. Additional
information pertaining to the Trust may be obtained by
writing to SEI Financial Management Corporation, 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, or by
calling 1-800-437-6016. All consideration received by the
Trust for shares of any Portfolio or class and all assets of
such Portfolio or class belong to that Portfolio or class
and are subject to liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation material 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.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class of the
Trust will vote separately on matters relating solely to
that Portfolio or class. 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.
18
<PAGE>
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to DST Systems,
Inquiries Inc., P.O. Box 419240, Kansas City, MO 64141-6240.
Dividends The dividends of Class D shares will normally be lower than
of Class A shares of the Portfolio because of the additional
distribution and transfer agent expenses charged to Class D
shares. Substantially all of the net investment income
(exclusive of capital gains) of the Portfolio is distributed
in the form of dividends that will be declared daily and
paid monthly on the first Business Day of each month.
Currently, capital gains (the excess of net long-term
capital gain over net short-term capital loss) realized, if
any, are distributed at least annually.
Shareholders in the Portfolio automatically receive all
income dividends and capital gain distributions in
additional shares at the net asset value next determined
following the record date, unless the shareholder has
elected to take such payment in cash. Shareholders may
change their election by providing written notice to the
Manager at least 15 days prior to the distribution.
Dividends and distributions of the Portfolio are paid by
the Portfolio on a per-share basis. The value of each share
will be reduced by the amount of any such payment. If shares
are purchased shortly before the record date for a dividend
or the distribution of capital gains, a shareholder will pay
the full price for the shares and receive some portion of
the price back as a taxable dividend or distribution.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Price Waterhouse LLP serves as the independent accountants
Accountants to the Trust.
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, Pennsylvania 19101 (the "Custodian"),
serves as custodian of the Trust's assets and as wire agent
of the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS
AND RISK FACTORS _______________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
Repurchase Repurchase agreements are agreements by which a Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed upon price on an agreed
upon date. The custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
19
<PAGE>
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
U.S. Treasury U.S. Treasury Obligations consist of bills, notes and bonds
Obligations 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").
STRIPS are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments
of interest or principal. This discount is accreted over the
life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax
purposes. Because of these features, such securities may be
subject to greater interest rate volatility than interest
paying permitted investments. See also "Taxes."
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. The Portfolio will maintain with the
custodian a separate account, with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date and no interest accrues to
the Portfolio before settlement. 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 the Portfolio generally purchases
securities on a when-issued or forward commitment basis with
the intention of actually acquiring securities, the
Portfolio may dispose of a when-issued security or forward
commitment prior to settlement if the Adviser deems it
appropriate to do so.
20
<PAGE>
SEI LIQUID ASSET TRUST
Manager and Shareholder Servicing Agent:
SEI FINANCIAL MANAGEMENT CORPORATION
Distributor:
SEI FINANCIAL SERVICES COMPANY
Investment Adviser:
WELLINGTON MANAGEMENT COMPANY
This Statement of Additional Information is not a Prospectus. It is intended to
provide additional information regarding the activities and operations of SEI
Liquid Asset Trust (the "Trust") and should be read in conjunction with the
Trust's Class A and Class D Prospectuses, each of which is dated October 30,
1995. Prospectuses may be obtained upon request and without charge by writing
the Trust's distributor, SEI Financial Services Company, 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658, or by calling 1-800-342-5734.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust................................................................. S-2
Description of Permitted Investments...................................... S-2
Commercial Paper Ratings.................................................. S-2
The Manager and Shareholder Servicing Agent............................... S-7
The Adviser............................................................... S-8
Distribution.............................................................. S-9
Trustees and Officers of the Trust........................................ S-10
Fundamental Investment Limitations........................................ S-13
Performance............................................................... S-16
Determination of Net Asset Value.......................................... S-17
Purchase and Redemption of Shares......................................... S-18
Shareholder Services (Class D Shares)..................................... S-19
Taxes..................................................................... S-20
Portfolio Transactions.................................................... S-22
Description of Shares..................................................... S-23
Limitation of Trustees' Liability......................................... S-23
Shareholder Liability..................................................... S-23
5% Shareholders........................................................... S-24
Experts................................................................... S-26
Financial Information..................................................... S-27
</TABLE>
October 30, 1995
SEI-F-044-06
<PAGE>
THE TRUST
SEI Liquid Asset Trust (the "Trust") is a diversified, open-end management
investment company established as a Massachusetts business trust pursuant to a
Declaration of Trust dated July 20, 1981. The Declaration of Trust permits the
Trust to offer separate series ("portfolios") of units of beneficial interest
("shares") and separate classes of portfolios. Except for differences between
Class A and Class D shares pertaining to distribution plans, voting rights,
dividends and transfer agent expenses, each share of each portfolio represents
an equal proportionate interest in that portfolio with each other share of that
portfolio.
This Statement of Additional Information relates to the shares of the following
Portfolios: Treasury Securities, Government Securities, Prime Obligation,
Institutional Cash and Money Market Portfolios (each a "Portfolio" and,
together, the "Portfolios"), and any classes of the Portfolios.
DESCRIPTION OF PERMITTED INVESTMENTS
COMMERCIAL PAPER -- The Prime Obligation and Money Market Portfolios may invest
in commercial paper. Commercial paper is the term used to designate unsecured,
short-term promissory notes issued by corporations and other entities.
COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff & Phelps, Inc.
("Duff"), Thomson BankWatch ("Thomson") and IBCA Limited and IBCA, Inc.
(together, "IBCA").
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1 and 2 to indicate the relative degree of safety. Issues rated A-1+
are those with an "overwhelming degree" of credit protection. Those rated A-1,
the highest rating category, reflect a "very strong" degree of safety regarding
timely payment. Those rated A-2, the second highest rating category, reflect a
safety regarding timely payment, but not as high as A-1.
Moody's employs two designations, judged to be high grade commercial paper, to
indicate the relative repayment capacity of rated issuers as follows:
Prime-1 Superior Quality
Prime-2 Strong Quality
The rating Fitch-1 (Highest Grade) is the highest commercial paper rating
assigned by Fitch. Paper rated Fitch-1 is regarded as having the strongest
degree of assurance for timely payment.
S-2
<PAGE>
The rating Fitch-2 (Very Good Grade) is the second highest commercial paper
rating assigned by Fitch which reflects an assurance of timely payment only
slightly lower in degree than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2, the second highest rating category, is
regarded as having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals. Risk factors are
small.
The rating TBW-1 is the highest commercial paper rating assigned by Thomson.
Paper rated TBW-1 indicates a very high likelihood that principal and interest
will be paid on a timely basis. The rating TBW-2 is the second-highest rating
assigned category by Thomson. The relative degree of safety regarding timely
repayment of principal and interest is strong. However, the relative degree of
safety is not as high as for issues rated TBW-1.
The designation A1, the highest rating category established by IBCA, indicates
that the obligation is supported by a very strong capacity for timely repayment.
Those obligations rated A1+ are supported by the highest capacity for timely
repayment. Obligations rated A2, the second highest rating category, are
supported by a strong capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic or financial conditions.
DESCRIPTION OF MUNICIPAL AND CORPORATE BOND RATINGS -- Bonds rated AAA have the
highest rating S&P assigns to a debt obligation. Such a rating indicates an
extremely strong capacity to pay principal and interest. Bonds rate AA also
qualify as high-quality debt obligations. Capacity to pay principal and interest
is very strong, and in the majority of instances, they differ from AAA issues
only in small degree.
Bonds which are rated Aaa by Moody's are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
sable, 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. Bonds rated Aa are judged by
Moody's to be of high quality by all standards. Together with bonds rated Aaa,
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 risks appear
somewhat larger than in Aaa securities.
Bonds rated AAA are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions
liable to but slight market fluctuation other than through changes in the money
rate. The prime feature of an AAA bond is a showing of earnings
S-3
<PAGE>
several times or many times interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever changes
occur in conditions. Bonds rate AA are judged by Fitch to be of safety virtually
beyond question and are readily salable, whose merits are not unlike those of
the AAA class, but whose margin of safety is less strikingly broad. The issue
may be the obligation of a small company, strongly secured but influenced as to
rating by the lesser financial power of the enterprise and more local type
market.
Bonds rated Duff-1 are judged by Duff to be of the highest credit quality with
negligible risk factors; only slightly more than U.S. Treasury debt. Bonds rated
Duff-2, are judged by Duff to be of high credit quality with strong protection
factors. Risk is modest but may vary slightly from time to time because of
economic conditions.
Bonds which are rated AAA are judged by Thomson to be of the highest category.
The ability to repay principal and interest on a timely basis is very high.
Bonds rated AA are judged by Thomson to be of a superior ability to repay
principal and interest on a timely basis, with limited incremental risk compared
to issues rated in the highest category.
Obligations rated AAA by IBCA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly. Obligations for which there is a very
low expectation of investment risk are rated AA by IBCA. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk albeit not very
significantly.
FOREIGN SECURITIES -- The Money Market Portfolio may invest U.S. dollar
denominated obligations of foreign branches of U.S. commercial banks and of U.S.
and London branches of foreign banks. These instruments may subject the
Portfolio to investment risks that differ in some respects from those related to
investments in obligations of U.S. domestic issuers. Such risks include future
adverse political and economic developments, the possible imposition of
withholding taxes on interest or other income, possible seizure,
nationalization, or expropriation of foreign deposits, the possible
establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks.
GNMA SECURITIES -- The Prime Obligation, Money Market and Government Securities
Portfolios may invest in securities issued by the Government National Mortgage
Association ("GNMA"), a wholly-owned U.S. Government Securities corporation
which guarantees the
S-4
<PAGE>
timely payment of principal and interest. However, any premiums paid to purchase
these instruments are not subject to GNMA guarantees. The market value and
interest yield of these instruments can vary due to market interest rate
fluctuations and early prepayments of underlying mortgages.
These securities represent ownership in a pool of Federally insured mortgage
loans. GNMA certificates consist of underlying mortgages with a maximum maturity
of 30 years. However, due to scheduled and unscheduled principal payments, GNMA
certificates have a shorter average maturity and, therefore, less principal
volatility than a comparable 30-year mortgage-backed bond. Since prepayment
rates vary widely, it is not possible to accurately predict the average maturity
of a particular GNMA pool. The scheduled monthly interest and principal payments
relating to mortgages in the pool will be "passed through" to investors. GNMA
securities differ from conventional bonds in that principal is paid back to the
certificate holders over the life of the loan rather than at maturity. As a
result, the Portfolios will receive monthly scheduled payments of principal and
interest. In addition, the Portfolios may receive unscheduled principal payments
representing prepayments on the underlying mortgages. Any prepayments will be
reinvested at the then prevailing interest rate.
Although GNMA certificates may offer yields higher than those available from
other types of U.S. Government Securities, GNMA certificates may be less
effective than other types of securities as a means of "locking in" attractive
long-term rates because of the prepayment feature. Due to this prepayment
feature, GNMA certificates tend not to increase in value as much as most other
debt securities when interest rates decline.
REPURCHASE AGREEMENTS -- The Treasury Securities, Government Securities, Prime
Obligation, and Money Market Portfolios may enter into repurchase agreements,
which are agreements under which securities are acquired from a securities
dealer or bank subject to resale on an agreed upon date and at an agreed upon
price which includes principal and interest. The Portfolio involved bears a risk
of loss in the event that the other party to a repurchase agreement defaults on
its obligations and the Portfolio is delayed or prevented from exercising its
rights to dispose of the securities held as collateral. Wellington Management
Company ("WMC" or the "Adviser") enters into repurchase agreements only with
financial institutions which it deems to present minimal risk of bankruptcy
during the term of the agreement based on guidelines established by and
periodically reviewed by the Board of Trustees. These guidelines currently
permit the Portfolios 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 the Portfolios will provide that the underlying security at all times
shall have a value at least equal to 102% of the price stated in the agreement.
This underlying security will be marked to market daily. The Adviser monitors
compliance with this requirement. Under all repurchase agreements entered into
by the Portfolios, CoreStates Bank, N.A. (the "Custodian") or its agent must
take possession of the underlying collateral. However, if the seller defaults,
the Portfolios could realize a loss on the sale of the underlying security to
S-5
<PAGE>
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, the Portfolios may incur delay and costs in selling the security
and may suffer a loss of principal and interest if the Portfolios are treated as
an unsecured creditor.
U.S. GOVERNMENT AGENCY OBLIGATIONS -- The Government Securities, Prime
Obligation, and Money Market Portfolios may invest in agencies of the United
States Government which consist of obligations issued by, among others, the
Export Import Bank of the United States, Farmers Home Administration, Federal
Farm Credit Bank, Federal Housing Administration, Government National Mortgage
Association, Maritime Administration, Small Business Administration, and The
Tennessee Valley Authority. The Government Securities, Prime Obligation, and
Money Market Portfolios may purchase securities guaranteed by the Government
National Mortgage Association, which represent participation in Veterans
Administration and Federal Housing Administration backed mortgage pools.
Obligations of instrumentalities of the United States Government include
securities issued by, among others, Federal Home Loan Banks, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association and the United States Postal Service. Some
of these securities are supported by the full faith and credit of the United
States Treasury (e.g., Government National Mortgage Association), others are
supported by the right of the issuer to borrow from the Treasury, and still
others are supported only by the credit of the instrumentality (e.g., Federal
National Mortgage Association). 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 the value of the
obligation prior to maturity. The Portfolios do not intend to purchase
securities issued by the World Bank, the Inter-American Development Bank or the
Asian Development Bank.
VARIABLE OR FLOATING RATE INSTRUMENTS -- Each Portfolio may invest in variable
or floating rate instruments, which may involve a demand feature and may include
variable amount master demand notes which may or may not be backed by bank
letters of credit. 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 Adviser, be equivalent to the
quality ratings applicable to permitted investments for each Portfolio. The
Adviser 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.
S-6
<PAGE>
THE MANAGER AND SHAREHOLDER SERVICING AGENT
The Management Agreement, dated October 31, 1986, provides that SEI Financial
Management Corporation (the "Manager") 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 Management Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Manager in the performance of its duties or from reckless disregard of its
duties and obligations thereunder.
The Management Agreement, unless terminated sooner as provided therein, shall
remain in effect for two years after the date of the Agreement and shall
continue in effect for successive periods of one year if such continuance is
specifically approved at least annually (i) by the Trustees of the Trust and
(ii) by the vote of a majority of the Trustees of the Trust who are not parties
to the Management Agreement or interested persons (as that term is defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of any such
party, cast in person at a Board of Trustees meeting called for the purpose of
voting on such approval. The Agreement may be terminated at any time and without
penalty by the Trustees of the Trust or by the Manager on not less than 30 days'
nor more than 60 days' written notice to the other party thereto. Any notice
under the Management Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at the designated mailing
address of such party.
The Manager, a wholly-owned subsidiary of SEI Corporation ("SEI"), was organized
as a Delaware corporation in 1969, and has its principal business offices at 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658. Alfred P. West, Jr., Henry
H. Greer and Carmen V. Romeo constitute the Board of Directors of the Manager.
Mr. West serves as the Chairman of the Board of Directors, President and Chief
Executive Officer of SEI. Mr. Greer serves as Director, President and Chief
Operating Officer of SEI. SEI and its subsidiaries are leading providers of
funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors and
money managers. The Manager also serves as manager/administrator to these other
mutual funds: SEI Daily Income Trust; SEI Tax Exempt Trust; SEI Index Funds; SEI
Institutional Managed Trust; SEI International Trust; Stepstone Funds; The
Compass Capital Group; FFB Lexicon Funds; The Advisors' Inner Circle Fund; The
Pillar Funds; CUFUND; STI Classic Funds; CoreFunds, Inc.; First American Funds,
Inc.; First American Investment Funds, Inc.; Rembrandt Funds(R); The Arbor Fund;
1784 Funds; The PBHG Funds, Inc.; Marquis/sm/ Funds; Morgan Grenfell Investment
Trust; Inventor Funds; Insurance Investment Products Trust; Bishop Street Funds;
Conestoga Family of Funds; The Achievement Funds Trust; CrestFunds, Inc.(C); and
STI Classic Variable Trust.
The Manager has agreed contractually to waive its fee in order to limit
operating expenses of the Portfolios to not more than .44% of average net assets
of the Class A shares and .84% of average net assets of the Class D shares. As
to the Institutional Cash Portfolio only, this waiver is voluntary and may be
terminated at any time. Shareholders will be notified in advance if and when the
waiver is terminated. The Manager will not be required to bear expenses of any
S-7
<PAGE>
Portfolio to an extent which would result in the Portfolio's inability to
qualify as a regulated investment company under provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). The term "expenses" is
defined in such laws or regulations, and generally excludes brokerage
commissions, distribution expenses, taxes, interest, litigation and
extraordinary expenses.
For the fiscal years ended June 30, 1993, 1994 and 1995, the Portfolios
paid fees to the Manager as follows:
<TABLE>
<CAPTION>
========================================================================================================
MANAGEMENT FEES PAID MANAGEMENT FEES WAIVED
---------------------------------------------------------------------------------
1993 1994 1995 1993 1994 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Treasury Securities $9,581,000 $7,482,000 $4,160,873.22 $1,353,000 $1,252,000 $1,226,700.66
Portfolio
- --------------------------------------------------------------------------------------------------------
Prime Obligation $6,308,000 $4,330,000 $3,352,356.97 $ 890,000 $ 763,000 $ 884,036.50
Portfolio
- --------------------------------------------------------------------------------------------------------
Government $1,997,000 $1,505,000 $ 794,731.78 $ 278,000 $ 264,000 $ 221,071.85
Securities Portfolio
- --------------------------------------------------------------------------------------------------------
Institutional Cash $ 14,000 $ 10,000 $ 7,878.60 $ 0 $ 0 $ 0
Portfolio
- --------------------------------------------------------------------------------------------------------
Money Market * * * * * *
Portfolio
========================================================================================================
</TABLE>
* Not in operation during such period.
THE ADVISER
The Trust and Wellington Management Company ("WMC") have entered into an
investment advisory agreement (the "Advisory Agreement") dated October 30,
1985. The Advisory Agreement provides that the 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.
The continuance of the Advisory Agreement after the first two (2) years of
the Agreement must be specifically approved at least annually (i) by the
vote of a majority of the outstanding shares of that Portfolio or by the
Trustees, and (ii) by the vote of a majority of the Trustees who are not
parties to the Advisory Agreement or "interested persons" of any party
thereto, cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement will terminate automatically in the
event of its assignment, and is terminable at any time without penalty by
the Trustees of the Trust or, with respect to a Portfolio, by a majority of
the outstanding shares of that Portfolio, on not less than 30 days' nor
more than 60 days' written notice to the Adviser, or by the Adviser on 90
days' written notice to the Trust.
S-8
<PAGE>
WMC, Adviser to the Portfolios, is entitled to a fee for its investment advisory
services, which is calculated daily and paid monthly at the following annual
rates: .075% of the Trust's daily net assets up to $500 million, and .02% of the
Trust's daily net assets in excess of $500 million. The fee is allocated among
the Portfolios based upon their relative net assets.
For the fiscal years ended June 30, 1993, 1994 and 1995 the Portfolios paid WMC
advisory fees as follows:
<TABLE>
<CAPTION>
=========================================================================
ADVISORY FEES PAID
--------------------------------------
1993 1994 1995
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Securities Portfolio $ 603,000 $ 514,000 $395,983.29
- -------------------------------------------------------------------------
Prime Obligation Portfolio $ 397,000 $ 299,000 $311,042.13
- -------------------------------------------------------------------------
Government Securities Portfolio $ 126,000 $ 103,000 $ 74,686.68
- -------------------------------------------------------------------------
Institutional Cash Portfolio $ 1,000 $ 0 $ 0
- -------------------------------------------------------------------------
Money Market Portfolio * * *
=========================================================================
</TABLE>
* Not in operation during such period.
DISTRIBUTION
The Trust has adopted a Distribution Agreement for the Portfolios dated November
29, 1982. The Trust has also adopted a Class A Distribution Plan (the "Class A
Plan") and a Class D Distribution Plan (the "Class D Plan" and, together with
the Class A Plan, the "Plans") for the Portfolios in accordance with Rule 12b-1
under the 1940 Act, which regulates the circumstances under which an investment
company may directly or indirectly bear expenses relating to the distribution of
its shares. In this regard, the Board of Trustees has determined that the Plans
and the Distribution Agreement are in the best interests of the Shareholders.
Continuance of the Plans must be approved annually by a majority of the Trustees
of the Trust, and by a majority of the trustees who are not "interested persons"
of the Trust as that term is defined in the 1940 Act, and who have no direct or
indirect financial interest in the operation of a Distribution Plan or in any
agreements related thereto ("Qualified Trustees"). The Plans require that
quarterly written reports of amounts spent under the Plans and the purposes of
such expenditures be furnished to and reviewed by the Trustees. The Plans may
not be amended to increase materially the amount which may be spent thereunder
without approval by a majority of the outstanding shares of the Portfolio
affected. All material amendments of the Plans will require approval by a
majority of the Trustees of the Trust and of the Qualified Trustees.
In addition to the reimbursement of allowable expenses, the Class D Plan
provides that the Trust will pay the Distributor a fee on the Class D shares of
the Portfolio. The Distributor may use this fee for (i) compensation for its
services in connection with distribution assistance or
S-9
<PAGE>
provision of shareholder services or (ii) payments to financial institutions and
intermediaries such as banks, savings and loan associations, insurance companies
and investment counselors, broker-dealers and the Distributor's affiliates and
subsidiaries as compensation for services or reimbursement of expenses incurred
in connection with distribution assistance or provision of shareholder services.
For the fiscal year ended June 30, 1995, the Portfolios incurred the following
distribution expenses:
<TABLE>
<CAPTION>
===================================================================================================================================
PORTFOLIO/CLASS TOTAL BASIS AMOUNT PAID TO 3RD SALES ADVERTISING PROSPECTUS COSTS OTHER
($AMOUNT) POINTS PARTIES BY SFS FOR EXPENSES ($ AMOUNT) PRINTING & ASSOCIATED
DISTRIBUTOR RELATED ($AMOUNT) MAILING COSTS WITH
SERVICES (NEW REGISTRATION
($ AMOUNT) SHAREHOLDERS FEES
ONLY ($AMOUNT)
($ AMOUNT)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury $570,122.85 .04% $0 $570,122.85 $0 $0 $0 $0
Securities
- ------------------------------------------------------------------------------------------------------------------------------------
Government $106,233.11 .04% $0 $106,233.11 $0 $0 $0 $0
Securities
- ------------------------------------------------------------------------------------------------------------------------------------
Prime $435,935.89 .04% $0 $435.935.89 $0 $0 $0 $0
Obligation
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional $ 0 0% $0 $ 0 $0 $0 $0 $0
Cash
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market * * * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS D
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury $ 10,981.35 .20% $0 $ 10,981.35 $0 $0 $0 $0
Securities
====================================================================================================================================
</TABLE>
* Not in operation during such period.
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Executive Officers of the Trust and their principal occupations
for the last five years are set forth below. Each may have held other positions
with the named companies during that period. Unless otherwise noted, the
business address of each Trustee and Executive Officer is SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-
1658. Certain officers of the Trust also serve as trustees and/or officers of
SEI Daily Income Trust, SEI Institutional Managed Trust, SEI Tax Exempt Trust,
SEI Index Funds, SEI International Trust, Stepstone Funds, The Compass Capital
Group, FFB Lexicon Funds, The Advisors' Inner Circle Fund, The Pillar Funds,
CUFUND, STI Classic Funds, CoreFunds, Inc., First American Funds, Inc., First
American Investment Funds, Inc., Rembrandt Funds(R), The Arbor Fund, 1784 Funds,
The PBHG Funds, Inc., Bishop Street Funds, Conestoga Family of Funds, Insurance
Investment Products Trust, Marquis/sm/ Funds, Morgan Grenfell Investment
S-10
<PAGE>
Trust, The Achievement Funds Trust, CrestFunds, Inc., STI Classic Variable
Trust, and Inventor Funds, open-end management investment companies which are
managed by SEI Financial Management Corporation and/or distributed by SEI
Financial Services Company.
ROBERT A. NESHER - Chairman of the Board of Trustees* - Retired since 1994.
Executive Officer - Executive Vice President of SEI 1986-1994. Director and
Executive Vice President of the Manager and Executive Vice President of the
Distributor 1981-1994.
RICHARD F. BLANCHARD - Trustee** - P.O. Box 76, Canfield Road, Convent Station,
NJ 07961. Private Investor. Director of AEA Investors Inc. (acquisition and
investment firm) June 1981-86, Director of Baker Hughes Corp. (oil service
company) 1976-88. Director of Imperial Clevite Industries (transportation
equipment company) 1981-87. Executive Vice President of American Express Company
(financial services company), responsible for the investment function, before
June 1981.
WILLIAM M. DORAN - Trustee* - 2000 One Logan Square, Philadelphia, PA 19103.
Partner of Morgan, Lewis & Bockius LLP, counsel to the Trust, Manager and
Distributor, Director and Secretary of SEI and Secretary of the Manager and
Distributor.
F. WENDELL GOOCH - Trustee** - P.O. Box 190, Paoli, IN 47454. President, Orange
County Publishing Co., Inc., since October 1981. Publisher of the Paoli News and
the Paoli Republican and Editor of the Paoli Republican since January 1981,
President, H & W Distribution, Inc. since July 1984. Executive Vice President,
Trust Department, Harris Trust and Savings Bank and Chairman of the Board of
Directors of The Harris Trust Company of Arizona before January 1981.
FRANK E. MORRIS - Trustee** - 105 Walpole Street, Dover, MA 02030. Retired since
1990. Peter Drucker Professor of Management, Boston College, 1989-1990.
President, Federal Reserve Bank of Boston, 1968-1988.
JAMES M. STOREY - Trustee** - Ten Post Office Square, Boston, MA 02109. Partner,
Dechert Price & Rhodes (law firm).
DAVID G. LEE - President, Chief Executive Officer - Senior Vice President of the
Manager and Distributor since 1993. Vice President of the Manager and
Distributor 1991-1993. President, GW Sierra Trust Funds before 1991.
CARMEN V. ROMEO - Treasurer, Assistant Secretary - Director, Executive Vice
President, Chief Financial Officer and Treasurer of SEI since 1977. Director and
Treasurer of the Manager and Distributor since 1981.
SANDRA K. ORLOW - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of the Manager and Distributor since 1988. Corporate Legal
Assistant, Omni Exploration (oil and gas investment) prior to 1983.
S-11
<PAGE>
ROBERT B. CARROLL - Vice President, Assistant Secretary - Vice President,
Assistant Secretary of SEI Corporation, the Manager and Distributor since 1994.
United States Securities and Exchange Commission, Division of Investment
Management, 1990-1994. Associate, McGuire, Woods, Battle & Boothe (law firm)
prior to 1990.
TODD CIPPERMAN - Vice President, Assistant Secretary - Vice President, Assistant
Secretary of SEI, the Administrator and Distributor since May, 1995, Associate,
Dewey Ballantine (law firm) 1994-1995, Associate, Winston & Strawn (law firm)
1991-1995.
JOSEPH LYDON - Vice President, Assistant Secretary - Director of Business
Administration, SEI Corporation since April, 1995; Vice President of Fund Group,
Vice President of the Advisor -Dreman Value Management, LP, President of Dreman
Financial Services, Inc. from 1989 to 1995.
KATHRYN L. STANTON - Vice President, Assistant Secretary - Vice President,
Assistant Secretary of SEI Corporation, the Manager and Distributor since 1994;
Associate, Morgan, Lewis & Bockius LLP (law firm), 1989 to 1994.
KEVIN P. ROBINS - Vice President, Assistant Secretary - Senior Vice President
and General Counsel of SEI and the Distributor since 1994. Vice President and
Assistant Secretary of the Manager and Distributor 1992-1994. Associate, Morgan,
Lewis & Bockius LLP (law firm) prior to 1992.
JEFFREY A. COHEN - Controller, Assistant Secretary - SEI Corporation, 1991 to
present. Senior Accountant, Price Waterhouse, 1988 to 1991.
RICHARD W. GRANT - Secretary - 2000 One Logan Square, Philadelphia, PA 19103.
Partner, Morgan, Lewis & Bockius LLP, counsel to the Trust, Manager and
Distributor.
JOHN H. GRADY, JR. - Assistant Secretary - 1800 M Street, N.W., Washington,
D.C., 20036, Partner, since 1995 and Associate, 1993-1995, Morgan, Lewis &
Bockius LLP, counsel to the Trust, Manager and Distributor; Associate, Ropes &
Gray, 1988 to 1993.
_______________________________
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.
**Messrs. Blanchard, Gooch, Storey and Morris serve as members of the Audit
Committee of the Trust.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
Compensation of officers and affiliated Trustees of the Trust is paid by the
Manager.
S-12
<PAGE>
The following table sets forth information about the compensation paid to the
Trustees for the fiscal year ended June 30, 1995:
<TABLE>
<CAPTION>
=====================================================================================================
PENSION OR
AGGREGATE RETIREMENT TOTAL COMPENSATION
COMPENSATION BENEFITS ESTIMATED FROM REGISTRANT AND
FROM ACCRUED AS ANNUAL FUND COMPLEX PAID TO
NAME OF PERSON AND REGISTRANT FOR PART OF FUND BENEFITS UPON DIRECTORS FOR FYE
POSITION FYE 6/30/95 EXPENSES RETIREMENT 6/30/95
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, N/A N/A N/A N/A
Trustee*
- -----------------------------------------------------------------------------------------------------
Edward W. Binshadler, $ 37,500 N/A N/A $37,500 for services on
Trustee** 7 boards
- -----------------------------------------------------------------------------------------------------
Richard F. Blanchard, $ 82,500 N/A N/A $82,500 for services on
Trustee 7 boards
- -----------------------------------------------------------------------------------------------------
William M. Doran, N/A N/A N/A N/A
Trustee*
- -----------------------------------------------------------------------------------------------------
F. Wendell Gooch, $ 90,625 N/A N/A $90,625 for services on
Trustee 7 boards
- -----------------------------------------------------------------------------------------------------
Frank E. Morris, $ 112,000 N/A N/A $112,000 for services
Trustee on 7 boards
- -----------------------------------------------------------------------------------------------------
James M. Storey, $ 112,000 N/A N/A $112,000 for services
Trustee on 7 boards
=====================================================================================================
</TABLE>
*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.
**Retired as of December, 1994.
FUNDAMENTAL INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of each Portfolio
which cannot be changed with respect to a Portfolio without the consent of the
holders of a majority of that Portfolio's outstanding shares. The term "majority
of outstanding shares" means the vote of (i) 67% or more of a Portfolio's shares
present at a meeting, if not more than 50% of the outstanding shares of a
Portfolio are present or represented by proxy, or (ii) more than 50% of a
Portfolio's outstanding shares, whichever is less.
No Portfolio may:
1. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of the total assets of that
Portfolio. This borrowing
S-13
<PAGE>
provision is included solely to facilitate the orderly sale of portfolio
securities to accommodate substantial redemption requests if they should
occur and is not for investment purposes. All borrowings by a Portfolio
will be repaid before making additional investments for that Portfolio and
any interest on such borrowings will reduce the income of that Portfolio.
2. Make loans, except that any Portfolio may purchase or hold debt instruments
in accordance with its investment objective and policies and may enter into
repurchase agreements, provided that repurchase agreements maturing in more
than seven days, restricted securities and other illiquid securities are
not to exceed, in the aggregate, 10% of the Portfolio's total assets.
3. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings, as described in the Prospectus, in aggregate amounts not to
exceed 10% of the net assets of such Portfolio taken at fair market value
at the time such loan is incurred.
4. Invest in companies for the purpose of exercising control.
5. Acquire more than 10% of the voting securities of any one issuer.
6. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts including futures contracts. However,
subject to its permitted investments, any Portfolio may purchase
obligations issued by companies which invest in real estate, real estate
limited partnerships, commodities or commodities contracts.
7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that a Portfolio may obtain short-term credits
as necessary for the clearance of security transactions.
8. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
9. Purchase securities of other investment companies except as permitted by
the 1940 Act and the rules and regulations thereunder and, in any event,
may not purchase securities of other open-end investment companies. Under
these rules and regulations, the Portfolios are prohibited from acquiring
the securities of other investment companies if, as a result of such
acquisition, a Portfolio owns more than 3% of the total voting stock of an
investment company; securities issued by any one investment company
represent more than 5% of the total Portfolio assets; or securities (other
than treasury stock) issued by all investment companies represent more than
10% of the total assets of a Portfolio. These investment companies
typically incur fees that are separate from those fees incurred directly by
a Portfolio. A Portfolio's purchase of such investment companies results in
the layering of expenses such that shareholders would indirectly bear a
proportionate share of such investment companies' expenses, including
advisory fees.
S-14
<PAGE>
10. Issue senior securities (as defined in the Investment Company Act of 1940)
except in connection with permitted borrowings as described in the
Prospectus and this Statement of Additional Information or as permitted by
rule, regulation or order of the Securities and Exchange Commission.
11. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or any
investment adviser of the Trust owns beneficially more than 1/2 of 1% of
the shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 1/2 of 1% of such shares or
securities together own more than 5% of such shares or securities.
12. Purchase securities of any company which has (with predecessors) a record
of less than three years' continuing operations, except (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (ii) municipal securities which are rated by at least
two nationally recognized municipal bond rating services, if, as a result,
more than 5% of the total assets (taken at fair market value) of the
Portfolio would be invested in such securities.
13. Purchase warrants, puts, calls, straddles, spreads or combinations thereof.
14. Invest in interests in oil, gas or other mineral exploration or development
programs.
15. Purchase restricted securities (securities which must be registered under
the Securities Act of 1933 before they may be offered or sold to the
public) or other illiquid securities except as described in the Prospectus
and this Statement of Additional Information.
Except with respect to the limitation on investing in illiquid securities, the
foregoing percentages will apply at the time of the purchase of a security and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of a purchase of such security.
NON-FUNDAMENTAL INVESTMENT LIMITATIONS
1. The Government Securities and Prime Obligations Portfolios must maintain an
average dollar-weighted portfolio maturity of 90 days or less.
ADDITIONAL RESTRICTIONS
The following are non-fundamental investment limitations that are currently
required by one or more states in which the Trust sells shares of the
Portfolios. These limitations are in addition to, and in some cases more
restrictive than, the fundamental and non-fundamental investment limitations
listed above. A limitation may be changed or eliminated without shareholder
S-15
<PAGE>
approval if the relevant state changes or eliminates its policy regarding such
investment restriction. As long as a Portfolio's shares are registered for sale
in such states, it may not:
1. Invest more than 10% of its total assets in illiquid securities, including
securities which are not readily marketable or are restricted.
2. Invest more than 15% of its assets in restricted securities. For purposes
of this limitation, securities exempted from registration under the 1933
Act, including Section 4(2) commercial paper, are considered to be
restricted securities.
PERFORMANCE
From time to time, each Portfolio may advertise its yield. These figures will be
based on historical earnings and are not intended to indicate future
performance.
The current yield of each Portfolio is calculated daily based upon the seven
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 Portfolios compute their 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)/365/7/ - 1}. The
current and the effective yields reflect the reinvestment of net income earned
daily on portfolio assets.
Actual yields will depend on such variables as asset quality, average asset
maturity, the type of instruments a Portfolio invests in, changes in interest
rates on money market instruments, changes in the expenses of the Portfolios and
other factors.
Yields are one basis upon which investors may compare the Portfolios with other
money market funds; however, yields of other money market mutual funds and other
investment vehicles may not be comparable because of the factors set forth above
and differences in the methods used in valuing portfolio instruments.
S-16
<PAGE>
For the seven-day period ended June 30, 1995 the Portfolios' yield and effective
yield were as follows:
<TABLE>
<CAPTION>
================================================================================
7-DAY EFFECTIVE
PORTFOLIO/CLASS CLASS 7-DAY YIELD YIELD
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Securities Class A 5.62 5.78
---------------------------------------------------
Class D 5.27 5.40
- --------------------------------------------------------------------------------
Government Securities Class A 5.53 5.68
- --------------------------------------------------------------------------------
Prime Obligation Class A 5.66 5.82
- --------------------------------------------------------------------------------
Institutional Cash Class A N/A N/A
- --------------------------------------------------------------------------------
Money Market Class A N/A N/A
================================================================================
</TABLE>
DETERMINATION OF NET ASSET VALUE
Securities of the Portfolios 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 a Portfolio would
receive if it sold the instrument. During periods of declining interest rates,
the daily yield of a Portfolio 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 the Trust resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in a
Portfolio would be able to obtain a somewhat higher yield than would result from
investment in a company utilizing solely market values, and existing
shareholders in the Portfolio would experience a lower yield. The converse would
apply in a period of rising interest rates.
The Trust's use of amortized cost valuation and the maintenance of the net asset
value of each Portfolio at $1.00 are permitted by Rule 2a-7, under the 1940 Act,
provided that certain conditions are met. Under Rule 2a-7, a money market
portfolio must maintain a dollar-weighted average maturity in the Portfolio 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," which means they are (i) rated, at the time of investment, by at
least two nationally recognized statistical rating organizations (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 minimal credit
S-17
<PAGE>
risks or that unrated instruments are of comparable quality in accordance with
guidelines established by the Trustees. The Trustees must approve or ratify the
purchase of any unrated securities or securities rated by only one rating
organization. In addition, investments in second tier securities are subject to
the further constraints that (i) no more than 5% of a 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 Portfolio'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 unit at $1.00 for each Portfolio. However, there is no assurance that
the Trust will be able to meet this objective. The Trust's procedures include
the determination of the extent of deviation, if any, of each Portfolio's
current net asset value per unit calculated using available market quotations
from each Portfolio's amortized cost price per unit 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 any Portfolio incurs a significant loss or
liability, the Trustees have the authority to reduce pro rata the number of
shares of that Portfolio 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
Purchases and redemptions of shares of the Funds may be made on any day the New
York Stock Exchange is open for business. Currently, the following holidays are
observed by the Trust: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or evaluation of the portfolio securities is not reasonably
practicable, or for such other periods as the SEC may be order permit. The Trust
also reserves the right to suspend sales of shares of the Portfolio for any
period during which the New York Stock Exchange, the Manager, the Adviser, the
Distributor and/or the Custodian are not open for business.
State Securities laws regarding sub-administrators may differ from the
interpretations of federal law expressed herein and banks and financial
institutions acting in that capacity may be required to register as dealers
pursuant to state law.
S-18
<PAGE>
SHAREHOLDER SERVICES (CLASS D SHARES)
STOP-PAYMENT REQUESTS: Investors may request a stop payment on checks by
providing the Trust with a written authorization to do so. Oral requests will be
accepted provided that the Trust promptly receives a written authorization. Such
requests will remain in effect for six months unless renewed or canceled. The
Trust will use its best efforts to effect stop-payment instructions, but does
not promise or guarantee that such instructions will be effective. Shareholders
requesting stop payment will be charged a $20 service fee per check which will
be deducted from their accounts.
RIGHT OF ACCUMULATION: A shareholder qualifies for cumulative quantity
discounts when his new investment, together with the current market value of all
holdings of that shareholder in certain eligible portfolios reaches a discount
level. See "Purchase and Redemption of Shares" in the Prospectuses for the sales
charge on quantity purchases.
LETTER OF INTENT: The reduced sales shares are also applicable to the aggregate
amount of purchases made by any such purchaser previously enumerated within a
13-month period pursuant to a written Letter of Intent provided by the
Distributor, and not legally binding on the signer or a Portfolio which provides
for the holder in escrow by the Manager of 5% of the total amount intended to be
purchased until such purchase is completed within the 13-month period. A Letter
of Intent may be dated to include shares purchased up to 90 days prior to the
date of the Letter of Intent is signed. The 13-month period begins on the date
of the earliest purchase. If the intended investment is not completed, the
Manager will surrender an appropriate number of the escrowed shares for
redemption in order to realize the difference between the sales charge imposed
under the Letter of Intent and the sales charge that would have otherwise been
imposed.
DISTRIBUTION INVESTMENT OPTION: Distributions of dividends and capital gains
made by the Portfolios may be automatically invested in shares of one of the
Portfolios if shares of the Portfolio are available for sale. Such investments
will be subject to initial investment minimums, as well as additional purchase
minimums. A shareholder considering the Distribution Investment Option should
obtain and read the prospectus of the Portfolios and/or classes in which such
automatic investments are to be made and consider the differences in investment
objectives and policies before making any investment.
REINSTATEMENT PRIVILEGE: A shareholder who has redeemed shares of any of the
Portfolios has a one-time right to reinvest the redemption proceeds in shares of
the Portfolio at their net asset value as of the time of reinvestment. Such a
reinvestment must be made within 30 days of the redemption and is limited to the
amount of the redemption proceeds. Although redemptions and repurchases of
shares are taxable events, a reinvestment within such 30-day period in the same
fund is considered a "wash sale" and results in the inability to recognize
currently all or a portion of a loss realized on the original redemption for
federal income tax purposes. The investor must notify the Transfer Agent at the
time the trade is placed that the transaction is a reinvestment.
S-19
<PAGE>
EXCHANGE PRIVILEGE: Some or all of the shares of the Portfolio for which payment
has been received (i.e., an established account) may be exchanged, at their net
----
asset value, plus any applicable sales charge, for Class D shares of the Trust,
SEI Tax Exempt Trust, SEI Daily Income Trust, SEI International Trust and SEI
Institutional Managed Trust or at their net asset value for Class D shares of
other portfolios of such trusts that do not have sales charges. Exchanges will
be made only after proper instructions in writing or by telephone (an "Exchange
Request") are received for an established account by the Distributor.
A shareholder may exchange a Portfolio's Class D shares, for which good payment
has been received, in his account at any time, regardless of how long he has
held his shares.
Each Exchange Request must be in proper form (i.e., if in writing, signed by the
----
record owner(s) exactly as the shares are registered; if by telephone, proper
account identification is given by the dealer or shareholder of record), and
each exchange must involve either shares having an aggregate value of at least
$1,000 or all the shares in the account. Each exchange involves the redemption
of the shares of a Portfolio to be exchanged and the purchase of the shares of
the other Portfolio. Any gain or loss on the redemption of the shares exchanged
is reportable on the shareholder's Federal income tax return, unless such shares
were held in a tax-deferred retirement plan or other tax-exempt account. If the
Exchange Request is received by the Distributor in writing or by telephone on
any Business Day, as defined in the Prospectuses of the Trust, prior to the
close of the New York Stock Exchange, the exchange will be effective on that day
if all the restrictions set forth above have been complied with at that time.
However, payment of the redemption proceeds by the Portfolios, and thus the
purchase of shares of the other Portfolios, may be delayed for up to seven days
if the Portfolios determine that such delay would be in the best interest of all
of its shareholders. Investment dealers which have satisfied criteria
established by the Portfolios may also communicate a shareholder's Exchange
Request to the Portfolios subject to the restrictions set forth above. No more
than five exchange requests may be made in any one telephone Exchange Request.
TAXES
The following is only a summary of certain tax considerations generally
affecting a Portfolio and its shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisors
with specific reference to their own tax situations, including their state and
local tax liabilities.
FEDERAL INCOME TAXES
The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (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
S-20
<PAGE>
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 Portfolio intends to qualify as a regulated investment company ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each of the
Portfolios expects to eliminate or reduce to a nominal amount the federal income
taxes to which such Portfolio may be subject.
In order to qualify for treatment as a RIC, a Portfolio must distribute annually
to its shareholders at least the sum of 90% of its net interest income
excludable from gross income plus 90% of its investment company taxable income
(generally, net investment income plus net short-term capital gain) (the
"Distribution Requirement") and also must meet several additional requirements.
Among these requirements are the following: (i) at least 90% of a Portfolio's
gross income each taxable year must be derived from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities, or other income derived with respect to its
business of investing in such stock or securities; (ii) less than 30% of a
Portfolio's gross income each taxable year must be derived from the sale or
other disposition of stocks, securities or certain other investments held for
less than three months; (iii) at the close of each quarter of a Portfolio'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 RIC's,
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 Portfolio's
assets and that does not represent more than 10% of the outstanding voting
securities of such issuer; and (iv) at the close of each quarter of a
Portfolio'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 RIC's) of any one issuer or of two or more issuers which are engaged in
the same, similar or related trades or businesses if the Portfolio owns at least
20% of the voting power of such issuers.
Notwithstanding the Distribution Requirement described above, which only
requires a Portfolio to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), a
Portfolio 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 gains over short and long-term capital losses)
for the one-year period ending on October 31 of that year, plus certain other
amounts.
If capital gain distributions have been made with respect to shares that are
sold at a loss after being held for six months or less, the loss is treated as a
long-term capital loss to the extent of the previous capital gain distributions.
If a Portfolio fails to qualify as a RIC for any year, all of its taxable income
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and its distributions (including capital gains
distributions) will be taxable as ordinary income dividends
S-21
<PAGE>
to its shareholders, subject to the dividends received deduction for corporate
shareholders. Otherwise, distributions to shareholders generally will not be
eligible for the dividends received deduction.
STATE TAXES
A Portfolio is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Depending upon state and
local law, distributions by the Portfolio to shareholders and the ownership of
shares may be subject to state and local taxes.
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 Adviser is 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 Adviser
generally seeks reasonably competitive spreads or commissions, the Trust will
not necessarily be paying the lowest spread or commission available. The Trust's
policy of investing in securities with short maturities will result in high
portfolio turnover. The Trust will not purchase portfolio securities from any
affiliated person acting as principal except in conformity with the regulations
of the Securities and Exchange Commission.
The Trust does not expect to use one particular dealer, but, subject to the
Trust's policy of seeking the best net results, dealers who provide supplemental
investment research to the Adviser may receive orders for transactions by the
Trust. Information so received will be in addition to and not in lieu of the
services required to be performed by the Adviser under the Advisory Agreements,
and the expenses of the Adviser will not necessarily be reduced as a result of
the receipt of such supplemental information.
The money market securities in which certain of the Portfolios invest are traded
primarily in the over-the-counter market. Where possible, the Adviser 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
generally are traded on a net basis and normally do not involve either brokerage
commissions or transfer taxes. The cost of executing portfolio securities
transactions of the Portfolio will primarily consist of dealer spreads and
underwriting commissions.
Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Adviser may place portfolio orders with qualified broker-
dealers who recommend the Trust to clients, and may, when a number of
S-22
<PAGE>
brokers and dealers can provide best price and execution on a particular
transaction, consider such recommendations by a broker or dealer in selecting
among broker-dealers.
For the Trust's fiscal years ended June 30, 1993, 1994 and 1995, no brokerage
fees were paid.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Portfolio, each of which represents an equal proportionate
interest in that Portfolio. Each share of a Portfolio upon liquidation of that
Portfolio entitles a shareholder to a pro rata share in the net assets of that
Portfolio, after taking into account certain distribution expenses. Shareholders
have no preemptive rights. The Declaration of Trust provides that the Trustees
of the Trust may create additional portfolios of shares or classes of
portfolios. Any consideration received by the Trust for shares of any additional
Portfolio and assets in which such consideration is invested would belong to
that Portfolio and would be subject to the liabilities related thereto. 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
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 willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the possibility of the shareholders' incurring financial loss appears
remote because the Trust's Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust, and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees. The Declaration
of Trust provides for indemnification out of the Trust's property for any
shareholder held personally liable for the obligations of the Trust.
S-23
<PAGE>
5% SHAREHOLDERS
As of October 5, 1995, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Portfolios. The Trust believes that most of the shares
referred to below were held by the persons indicated in accounts for their
fiduciary, agency, or custodial customers.
TREASURY SECURITIES PORTFOLIO CLASS A SHARES:
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Funds
- ---------------- ---------------- -----------------
<S> <C> <C>
First Hawaiian Bank 255,829,356.51 20.31%
Financial Management Group (FIDAC)
Attn: Dolores Mollring
P.O. Box 3200
Honolulu, HI 96847
Bank of America NT&SA 111,264,115.04 8.83%
Attn: Common Trust Funds Unit #8239
P.O. Box 3577, Terminal Annex
Los Angeles, CA 90051
North American Trust Company 77,585,312.17 6.16%
Attn: David Hilbish
225 Broadway, Suite 200
San Diego, CA 92101
The Fulton Company 163,648,232.62 12.99%
c/o Fulton Bank Trust Department
Attn: Dennis Patrick
One Penn Square
Lancaster, PA 17602
TREASURY SECURITIES PORTFOLIO CLASS D SHARES:
Sumitomo Bank Trustee, FBO 6,394.91 33.81%
Laurie Huey Cust FBO
Michelle Huey UGMA CA
874 Shore Breeze Drive
Sacramento, CA 95831
</TABLE>
S-24
<PAGE>
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Funds
- ---------------- ---------------- ----------------
<S> <C> <C>
Sumitomo Bank Trustee, FBO 6,394.91 33.81%
Laurie Huey Cust FBO
Megan Huey UGMA CA
874 Shore Breeze Drive
Sacramento, CA 95831
Robert H. Gibson & 3,000.00 15.86%
Diane E Gibson Jtten
P.O. Box 207
209 County Road 443
Grand Lake, CO 80447
Sukhavati Temple 1,013.05 5.35%
74 Old Main Street
South Yarmouth, MA 02664
Joseph F. King 1,061.11 5.61%
P.O. Box 2336
Ramona, CA 92065
Paul Shih & 1,044.98 5.52%
Wen-Chen Shih Jtten
17381 Coronado Lane
Huntington Beach, CA 92647
GOVERNMENT SECURITIES PORTFOLIO:
United Jersey Bank 33,253,184.21 16.47%
Attn: Joseph Guittari
P.O. Box 547
Hackensack, NJ 07602
Vose & Co. 64,790,981.07 32.08%
c/o Fleet/Norstar Services
One East Avenue
Funds Central NY/RO/3090
Rochester, NY 14638-0001
CoreStates Bank, N.A. 20,933,007.46 10.37%
Attn: James Quinlan
Penn Mutual Insurance Building
Philadelphia, PA 19106
</TABLE>
S-25
<PAGE>
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Funds
- ---------------- ---------------- -----------------
<S> <C> <C>
PRIME OBLIGATION PORTFOLIO:
BHC Securities Inc. 49,978.881.73 5.70%
Attn: Cash Sweeps Department
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, PA 19103
Eagle Trust Company 52,684,107.18 6.01%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087
Republic & Co. 86,530,300.00 9.86%
c/o Imperial Trust Company
Attn: Shirley Matthews
201 N. Figueroa Street, #610
Los Angeles, CA 90012
CoreStates Bank, N.A. 103,807,482.77 11.83%
Attn: James Quinlan
Penn Mutual Insurance Building
Philadelphia, PA 19106
Smith & Co. 123,244,202.31 14.05%
c/o First Security Bank of Utah, N.A.
Attn: Money Market/Mutual Fund Desk
P.O. Box 25297
Salt Lake City, UT 84125
</TABLE>
EXPERTS
The financial statements in this Statement of Additional Information and the
financial highlights included in the Prospectuses have been audited by Price
Waterhouse LLP, independent public accountants, as indicated in their report,
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said report.
S-26
<PAGE>
FINANCIAL STATEMENTS
Following are the audited financial statements of the Trust for the fiscal year
ended June 30, 1995, and the Report of Independent Accountants of Price
Waterhouse LLP dated August 11, 1995, relating to the financial statements and
financial highlights of the Trust.
S-27
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--June 30, 1995
TREASURY SECURITIES PORTFOLIO
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
Description Par (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 55.4%
U.S. Treasury Bills
6.380%, 08/10/95 $ 230,000 $ 228,441
6.126%, 09/14/95 97,000 95,814
6.133%, 09/14/95 90,000 88,899
6.068%, 10/26/95 42,000 41,207
5.598%, 12/21/95 203,000 197,757
5.600%, 12/21/95 50,000 48,707
----------
Total U.S. Treasury Obligations
(Cost $700,825,036) 700,825
----------
REPURCHASE AGREEMENTS -- 45.1%
Donaldson, Lufkin & Jenrette
Securities (A)
6.15%, dated 06/30/95, matures 07/03/95, repurchase
price $170,087,125 (collateralized by U.S. Treasury
Bills par value $19,464,000, matures 09/28/95: U.S.
Treasury Notes total par value $73,960,000, 5.625%-
6.875%, 02/28/97-01/15/00: U.S Treasury Bond par value
52,900,000, 11.75%,matures 11/15/14: total market
value $173,400,428) 170,000 170,000
Lehman Brothers (A)
6.20%, dated 06/30/95, matures 07/03/95, repurchase
price $2,448,264 (collateralized by U.S. Treasury Note
par value $2,446,000, 6.50%, matures 04/30/97: market
value $2,496,871) 2,447 2,447
Nomura Securities International (A)(B)
5.95%, dated 06/23/95, matures 07/24/95, repurchase
price $114,584,092 (collateralized by U.S. Treasury
Bills par value $14,470,000, matures 05/30/96: U.S.
Treasury Notes total par value $92,015,000, 5.75%-
6.875%, 04/30/97-08/15/04: U.S. Treasury Bond par
value $5,026,000, 12.00%, matures 08/15/13: total
market value $116,280,217) 114,000 114,000
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Value
Description Par (000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Swiss Bank Corporation (A)
6.17%, dated 06/30/95, matures 07/03/95, repurchase
price $283,673,780 (collateralized by U.S. Treasury
Bills total par value $39,335,000, 07/13/95-
06/27/96: U.S. Treasury Notes total par value
$281,797,000, 3.875%-8.50%, 08/15/95-05/15/05: U.S.
Treasury Bonds total par value $385,000, 7.625%-
12.00%, 08/15/13-02/15/25: total market value
$319,966,232) $ 283,528 $ 283,528
----------
Total Repurchase Agreements
(Cost $569,975,000) 569,975
----------
Total Investments -- 100.5%
(Cost $1,270,800,036) 1,270,800
----------
OTHER ASSETS AND LIABILITIES -- (0.5%)
Other Asset and Liabilities, Net (6,114)
----------
NET ASSETS:
Portfolio shares of Class A (unlimited
authorization -- no par value) based on
1,254,737,326 outstanding shares of beneficial
interest 1,254,737
Portfolio shares of Class D (unlimited
authorization -- no par value) based on 9,796,527
outstanding shares of beneficial interest 9,797
Accumulated net realized gain on investments 152
----------
Total Net Assets -- 100.0% $1,264,686
==========
Net Asset Value, Offering and Redemption Price Per
Share -- Class A $ 1.00
==========
Net Asset Value, Offering and Redemption Price Per
Share --Class D $ 1.00
==========
</TABLE>
(A) Tri-party repurchase agreement
(B) Term repurchase agreement
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--June 30, 1995
GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Description Par (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 95.7%
Federal Farm Credit Bank
6.230%, 09/29/95 $ 3,150 $ 3,103
Federal Home Loan Bank
6.311%, 08/01/95 10,000 9,948
6.340%, 08/18/95 10,000 9,919
6.183%, 09/06/95 6,000 5,933
Federal Home Loan Mortgage
6.105%, 08/01/95 10,000 9,949
5.942%, 09/05/95 9,550 9,448
5.929%, 09/25/95 1,000 986
5.775%, 11/01/95 1,120 1,099
5.969%, 11/27/95 5,000 4,881
Federal National Mortgage
5.690%, 07/05/95 (A) 22,000 22,000
6.101%, 08/04/95 20,000 19,888
6.306%, 08/07/95 9,320 9,262
6.083%, 08/14/95 35,650 35,392
6.350%, 08/28/95 9,000 8,912
6.281%, 09/29/95 10,000 9,850
6.116%, 10/03/95 350 345
6.371%, 10/03/95 1,030 1,014
5.876%, 10/04/95 1,005 990
Student Loan Marketing
5.700%, 07/05/95 (A) 15,400 15,400
5.860%, 07/05/95 (A) 8,000 8,035
5.885%, 07/05/95 (A) 5,800 5,817
--------
Total U.S. Government Agency Obligations
(Cost $192,171,309) 192,171
--------
REPURCHASE AGREEMENT -- 4.7%
Lehman Brothers (B)
6.2%,dated 06/30/95, matures 07/03/95, repurchase price
$9,428,869 (collateralized by U.S. Treasury Note par
value $9,420,000, 6.50%, matures 04/30/97: market value
$9,615,915) 9,424 9,424
--------
Total Repurchase Agreement
(Cost $9,424,000) 9,424
--------
Total Investments -- 100.4%
(Cost $201,595,309) 201,595
--------
OTHER ASSETS AND LIABILITIES -- (0.4%)
Other Assets and Liabilities, Net (827)
--------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Description Par (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS:
Portfolio Shares (unlimited authorization -- no par
value) based on 200,789,702 outstanding shares of
beneficial interest $ 200,790
Accumulated net realized loss on investments (21)
Distributions in excess of net investment income (1)
---------
Total Net Assets -- 100.0% $ 200,768
=========
Net Asset Value, Offering and Redemption Price per Share $ 1.00
=========
(A) Variable rate instrument. The rate reflected on the Statement of Net Assets
is the rate in effect on June 30, 1995.
(B) Tri-party repurchase agreement.
The accompanying notes are an integral part of the financial statements.
PRIME OBLIGATION PORTFOLIO
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 16.9%
Federal Home Loan Bank
6.238%, 07/10/95 $ 7,000 $ 6,989
6.315%, 08/23/95 14,385 14,257
Federal Home Loan Mortgage
5.958%, 09/08/95 3,940 3,896
Federal National Mortgage
5.690%, 07/05/95 (A) 30,000 30,000
6.225%, 07/17/95 10,000 9,973
6.706%, 07/26/95 30,000 29,867
5.945%, 11/13/95 10,000 9,786
Student Loan Marketing
5.700%, 07/05/95 (A) 24,000 24,000
5.710%, 07/05/95 (A) 7,000 7,001
5.720%, 07/05/95 (A) 15,000 15,004
5.720%, 07/05/95 (A) 8,000 8,000
---------
Total U.S. Government Agency Obligations
(Cost $158,773,184) 158,773
---------
COMMERCIAL PAPER -- 69.7%
American Express Credit
6.030%, 07/17/95 10,000 9,973
6.100%, 07/21/95 10,000 9,966
5.900%, 10/19/95 6,000 5,892
American General
6.000%, 07/26/95 10,000 9,958
American General Finance
5.940%, 07/31/95 10,000 9,951
5.700%, 09/15/95 10,000 9,880
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
PRIME OBLIGATION PORTFOLIO
<TABLE>
- --------------------------------------------------------------
<CAPTION>
Description Par (000) Value (000)
- --------------------------------------------------------------
<S> <C> <C>
American Home Products (B)
5.970%, 08/09/95 $ 9,000 $ 8,942
Associates Corporation of North America
5.950%, 07/27/95 10,000 9,957
5.950%, 08/07/95 15,000 14,908
Bear Stearns Companies
5.950%, 07/10/95 10,000 9,985
5.980%, 07/11/95 8,000 7,987
5.840%, 08/04/95 15,000 14,917
Beneficial Corporation
6.000%, 07/06/95 15,000 14,988
5.940%, 08/09/95 10,000 9,936
5.900%, 09/21/95 10,000 9,866
Central & South West Corporation
6.010%, 08/04/95 10,000 9,943
5.870%, 09/22/95 15,000 14,797
Ciesco LP
5.970%, 07/13/95 10,000 9,980
5.930%, 08/11/95 20,000 19,865
CIT Group Holdings
6.100%, 07/05/95 10,000 9,993
6.100%, 07/24/95 10,000 9,961
5.680%, 12/06/95 10,000 9,751
Corporate Asset Funding
5.970%, 08/02/95 10,000 9,947
CSW Credit
5.950%, 08/15/95 5,000 4,963
Dean Witter Discover
6.000%, 07/26/95 8,000 7,967
Delaware Funding
5.960%, 07/18/95 4,966 4,952
5.950%, 08/08/95 10,000 9,937
5.970%, 08/14/95 15,000 14,890
Ford Motor Credit
6.000%, 07/20/95 15,000 14,953
5.950%, 09/05/95 15,000 14,836
5.740%, 09/29/95 8,000 7,885
General Electric Capital
5.920%, 09/05/95 15,000 14,836
5.700%, 09/20/95 15,000 14,808
5.700%, 11/02/95 5,000 4,902
IBM Credit
6.040%, 07/12/95 15,000 14,972
International Lease Finance
6.000%, 07/12/95 10,000 9,982
5.950%, 07/17/95 6,300 6,283
5.720%, 10/27/95 10,000 9,812
John Deere Capital
5.940%, 08/01/95 20,000 19,898
5.680%, 11/21/95 10,000 9,774
</TABLE>
<TABLE>
- -----------------------------------------------------------------
<CAPTION>
Description Par (000) Value (000)
- -----------------------------------------------------------------
<S> <C> <C>
McKenna Triangle
6.010%, 07/12/95 $ 4,300 $ 4,292
Merrill Lynch
5.950%, 07/17/95 20,000 19,947
Norwest Corporation
6.000%, 07/24/95 10,000 9,962
Norwest Financial
6.000%, 08/01/95 10,000 9,948
Philip Morris Companies
5.960%, 08/03/95 14,000 13,923
6.000%, 08/07/95 10,000 9,938
Prudential Funding
5.970%, 07/13/95 10,000 9,980
5.940%, 07/27/95 15,000 14,936
Puerto Rico Development Bank
6.020%, 07/19/95 8,000 7,976
6.010%, 07/20/95 20,000 19,937
Riverwood Funding
5.950%, 07/26/95 10,000 9,959
Sears Roebuck Acceptance
6.100%, 07/11/95 12,000 11,980
6.030%, 07/24/95 10,000 9,961
Toshiba America
5.950%, 09/08/95 5,000 4,943
5.870%, 11/13/95 22,150 21,662
Transamerica Finance
6.100%, 07/10/95 16,000 15,976
6.000%, 07/27/95 10,000 9,957
Whirlpool Corporation
6.020%, 08/01/95 5,000 4,974
Zeneca Wilmington Incorporation
6.000%, 07/05/95 9,000 8,994
--------
Total Commercial Paper
(Cost $656,238,515) 656,238
--------
CERTIFICATES OF DEPOSIT -- 3.0%
First Alabama Bank
6.120%, 07/21/95 11,000 11,000
First National Bank of Boston
6.020%, 07/18/95 10,000 10,000
West One Bank
6.000%, 10/02/95 7,000 7,000
--------
Total Certificates of Deposit
(Cost $28,000,000) 28,000
--------
FLOATING RATE INSTRUMENTS -- 8.8%
Allstate (A)
6.163%, 08/01/95 10,000 10,000
Corestates Capital (A)
6.090%, 01/05/96 10,000 10,000
People's Security Funding Agreement (A)(B)
6.360%, 08/01/95 33,000 33,000
</TABLE>
3
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--June 30, 1995
PRIME OBLIGATION PORTFOLIO
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
Description Par (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
SMM Trust 1994-B (A)(B)
6.238%, 08/11/95 $ 10,000 $ 10,000
SMM Trust 1995-I (A)(B)
6.082%, 05/29/96 20,000 19,995
--------
Total Floating Rate Instrument
(Cost $82,994,703) 82,995
--------
REPURCHASE AGREEMENT -- 2.0%
Lehman Brothers (C)
6.20%, dated 06/30/95, mature 07/03/95, repurchase
price $18,694,654 (collateralized by U.S. Treasury
Note par value $3,684,000, 6.50%, matures 04/30/97:
U.S. Treasury Bills, par value $15,733,000, matures
12/28/95: total market value $19,069,632) 18,685 18,685
--------
Total Repurchase Agreement
(Cost $18,685,000) 18,685
--------
Total Investments -- 100.4%
(Cost $944,691,402) 944,691
--------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Description Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES -- ( 0.4%)
Other Assets and Liabilities, Net $ (3,828)
--------
NET ASSETS:
Portfolio shares (unlimited authorization--no par value) based
on 940,882,322 outstanding shares of beneficial interest 940,882
Accumulated net realized loss on investments (19)
--------
Total Net Assets -- 100.0% $940,863
========
Net Asset Value, Offering and Redemption Price Per Share $ 1.00
========
</TABLE>
(A) Variable rate instrument. The rate reflected on the Statement of Net Assets
is the rate in effect on June 30,1995.
(B) Private Placement
(C) Tri-party repurchase agreement
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--June 30, 1995
<TABLE>
<CAPTION>
------------- ------------
INSTITUTIONAL
CASH MONEY MARKET
PORTFOLIO PORTFOLIO
------------- ------------
<S> <C> <C>
ASSETS:
Cash $ 100 $ 100
----- -----
Total assets 100 100
----- -----
NET ASSETS:
Portfolio shares (unlimited authorization--no par
value) based on 100 outstanding shares of
beneficial interest 100 100
----- -----
Total net assets $ 100 $ 100
===== =====
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE CLASS A $1.00 $1.00
===== =====
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--June 30, 1995
<TABLE>
<CAPTION>
---------- ---------- ---------- -------------
TREASURY GOVERNMENT PRIME INSTITUTIONAL
SECURITIES SECURITIES OBLIGATION CASH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Interest Income $68,880 $13,256 $57,035 $101
------- ------- ------- ----
EXPENSES:
Management fee 5,388 1,016 4,236 8
Less management fees waived (1,227) (221) (884) --
Investment advisory fee 396 75 311 --
Custodian/wire agent fees 164 28 113 --
Professional fees 51 10 33 --
Trustee fees 23 4 18 --
Registration & filing fees 176 28 122 --
Distribution fees 581 106 436 --
Insurance 31 6 24 --
Other fees 67 12 29 --
------- ------- ------- ----
Total expenses 5,650 1,064 4,438 8
------- ------- ------- ----
NET INVESTMENT INCOME 63,230 12,192 52,597 93
------- ------- ------- ----
Net realized gain from security
transactions 240 39 55 --
------- ------- ------- ----
NET INCREASE IN NET ASSETS FROM
OPERATIONS $63,470 $12,231 $52,652 $ 93
======= ======= ======= ====
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--for the fiscal years ended June 30
<TABLE>
<CAPTION>
------------------------- ------------------------
TREASURY GOVERNMENT
SECURITIES SECURITIES
------------------------- ------------------------
1995 1994 1995 1994
------------------------- ------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 63,230 $ 51,915 $ 12,192 $ 10,615
Net realized gain from
security transactions 240 181 39 78
----------- ------------ ----------- -----------
Net increase in net
assets resulting from
operations 63,470 52,096 12,231 10,693
----------- ------------ ----------- -----------
DIVIDENDS DISTRIBUTED
FROM:
Net investment income:
Class A (62,948) (51,915) (12,193) (10,615)
Class D (282) -- -- --
Net realized gains:
Class A -- (91) -- --
Class D -- -- -- --
----------- ------------ ----------- -----------
Total dividends
distributed (63,230) (52,006) (12,193) (10,615)
----------- ------------ ----------- -----------
CAPITAL SHARE
TRANSACTIONS (ALL AT
$1.00 PER SHARE):
Class A:
Proceeds from shares
issued 9,652,814 11,652,775 1,544,000 2,184,077
Shares issued in lieu of
cash distributions 823 1,963 579 545
Cost of shares
repurchased (9,900,410) (12,373,107) (1,599,403) (2,436,978)
----------- ------------ ----------- -----------
Decrease in net assets
derived from Class A
transactions (246,773) (718,369) (54,824) (252,356)
----------- ------------ ----------- -----------
Class D
Proceeds from shares
issued 25,743 39 -- --
Shares issued in lieu of
cash distributions 2 -- -- --
Cost of shares
repurchased (15,971) (16) -- --
----------- ------------ ----------- -----------
Increase in net assets
derived from Class D
transactions 9,774 23 -- --
----------- ------------ ----------- -----------
Decrease in net assets
derived from capital
share transactions (236,999) (718,346) (54,824) (252,356)
----------- ------------ ----------- -----------
Net decrease in net
assets (236,759) (718,256) (54,786) (252,278)
----------- ------------ ----------- -----------
NET ASSETS:
Beginning of Period 1,501,445 2,219,701 255,554 507,832
----------- ------------ ----------- -----------
End of Period $ 1,264,686 $ 1,501,445 $ 200,768 $ 255,554
=========== ============ =========== ===========
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--for the fiscal years ended June 30
<TABLE>
<CAPTION>
------------------------ --------------------
PRIME INSTITUTIONAL
OBLIGATION CASH
------------------------ --------------------
1995 1994 1995 1994
------------------------ --------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 52,597 $ 31,230 $ 93 $ 58
Net realized gain (loss) from
security transactions 55 (34) -- --
----------- ----------- --------- ---------
Net increase in net assets
resulting from operations 52,652 31,196 93 58
----------- ----------- --------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Class A (52,597) (31,230) (93) (58)
Class D -- -- -- --
Net realized gains:
Class A -- -- -- --
Class D -- -- -- --
----------- ----------- --------- ---------
Total dividends distributed (52,597) (31,230) (93) (58)
----------- ----------- --------- ---------
CAPITAL SHARE TRANSACTIONS
(ALL AT $1.00 PER SHARE):
Class A:
Proceeds from shares issued 9,162,056 8,520,028 163,880 261,773
Shares issued in lieu of cash
distributions 11,333 7,599 -- --
Cost of shares repurchased (9,151,091) (8,782,192) (163,880) (261,773)
----------- ----------- --------- ---------
Increase (decrease) in net
assets derived from Class A
transactions 22,298 (254,565) -- --
----------- ----------- --------- ---------
Class D
Proceeds from shares issued -- -- -- --
Shares issued in lieu of cash
distributions -- -- -- --
Cost of shares repurchased -- -- -- --
----------- ----------- --------- ---------
Increase (decrease) in net
assets derived from Class D
transactions -- -- -- --
----------- ----------- --------- ---------
Increase (decrease) in net
assets derived from capital
share transactions 22,298 (254,565) -- --
----------- ----------- --------- ---------
Net increase (decrease) in
net assets 22,353 (254,599) -- --
----------- ----------- --------- ---------
NET ASSETS:
Beginning of Period 918,510 1,173,109 -- --
----------- ----------- --------- ---------
End of Period $ 940,863 $ 918,510 -- --
=========== =========== ========= =========
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SEI Liquid Asset Trust--for the fiscal years ended June 30
For a Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Net Asset Distributions Distributions Ratio of
Value Net Realized and from Net from Net Asset Net Assets Expenses
Beginning Investment Unrealized Investment Realized Capital Value End Total End of to Average
of Period Income Gains on Securities Income Gains of Period Return Period (000) Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TREASURY SECURITIES
-------------------
CLASS A
1995 $1.00 $ 0.05 -- $ (0.05) -- $1.00 5.05% 1,254,888 0.44%
1994 1.00 0.03 -- (0.03) -- 1.00 3.00 1,501,510 0.44
1993 1.00 0.03 -- (0.03) -- 1.00 3.03 2,219,701 0.44
1992 1.00 0.05 -- (0.05) -- 1.00 4.69 2,304,153 0.44
1991 1.00 0.07 -- (0.07) -- 1.00 7.04 2,248,497 0.44
1990 1.00 0.08 -- (0.08) -- 1.00 8.41 2,076,845 0.44
1989 1.00 0.08 -- (0.08) -- 1.00 8.51 2,318,763 0.44
1988 1.00 0.06 -- (0.06) -- 1.00 6.56 2,671,802 0.44
1987 1.00 0.06 -- (0.06) -- 1.00 5.91 2,580,118 0.44
1986 1.00 0.07 -- (0.07) -- 1.00 7.40 2,041,343 0.44
CLASS D
1995 1.00 0.05 -- (0.05) -- 1.00 4.69 9,798 0.79
1994(1) 1.00 0.01 -- (0.01) -- 1.00 0.50** 23 0.79*
GOVERNMENT SECURITIES
---------------------
CLASS A
1995 $1.00 $ 0.05 -- $ (0.05) -- $1.00 5.18% 200,768 0.44%
1994 1.00 0.03 -- (0.03) -- 1.00 3.04 255,554 0.44
1993 1.00 0.03 -- (0.03) -- 1.00 3.05 507,832 0.44
1992 1.00 0.05 -- (0.05) -- 1.00 4.72 399,938 0.44
1991 1.00 0.07 -- (0.07) -- 1.00 7.08 520,187 0.44
1990 1.00 0.08 -- (0.08) -- 1.00 8.48 368,318 0.44
1989 1.00 0.08 -- (0.08) -- 1.00 8.69 467,056 0.44
1988 1.00 0.07 -- (0.07) -- 1.00 6.83 523,274 0.44
1987 1.00 0.06 -- (0.06) -- 1.00 5.99 479,968 0.44
1986 1.00 0.07 -- (0.07) -- 1.00 7.52 222,215 0.44
PRIME OBLIGATION
----------------
CLASS A
1995 $1.00 $ 0.05 -- $ (0.05) $1.00 5.20% 940,863 0.44%
1994 1.00 0.03 -- (0.03) -- 1.00 3.08 918,509 0.44
1993 1.00 0.03 -- (0.03) -- 1.00 3.07 1,173,109 0.44
1992 1.00 0.05 -- (0.05) -- 1.00 4.73 1,515,554 0.44
1991 1.00 0.07 -- (0.07) -- 1.00 7.36 1,729,845 0.44
1990 1.00 0.08 -- (0.08) -- 1.00 8.57 1,804,367 0.44
1989 1.00 0.09 -- (0.09) -- 1.00 8.85 2,160,859 0.44
1988 1.00 0.07 -- (0.07) -- 1.00 7.12 2,224,159 0.44
1987 1.00 0.06 -- (0.06) -- 1.00 6.08 1,851,072 0.44
1986 1.00 0.07 -- (0.07) -- 1.00 7.58 1,469,066 0.44
INSTITUTIONAL CASH*
-------------------
CLASS A
1995 $1.00 $0.0003 -- $ (0.0003) -- $1.00 4.94% -- 0.44%
1994 1.00 0.0003 -- (0.0003) -- 1.00 2.60 -- 0.44
1993 1.00 0.0003 -- (0.0003) -- 1.00 2.83 -- 0.44
1992 1.00 0.0002 -- (0.0002) -- 1.00 3.47 -- 0.44
1991 1.00 0.0003 0.0001 (0.0003) (0.0001) 1.00 7.12 -- 0.42
1990 1.00 0.0008 0.0003 (0.0008) (0.0003) 1.00 10.22 -- 0.44
1989 1.00 0.0007 0.0002 (0.0007) (0.0002) 1.00 8.49 -- 0.44
1988 1.00 0.0006 0.0001 (0.0006) (0.0001) 1.00 4.02 -- 0.44
1987(2) 1.00 0.0003 -- (0.0003) -- 1.00 5.48 -- 0.44
<CAPTION>
Ratio of
Net
Ratio of Ratio of Investment
Net Expenses Income
Investment to Average to Average
Income Net Assets Net Assets
to Average (Excluding (Excluding
Net Assets Waivers) Waivers)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TREASURY SECURITIES
-------------------
CLASS A
1995 4.93% 0.54% 4.83%
1994 2.91 0.51 2.84
1993 2.99 0.50 2.93
1992 4.60 0.50 4.50
1991 6.80 0.47 6.80
1990 8.10 0.45 8.10
1989 8.20 0.44 8.20
1988 6.40 0.44 6.40
1987 5.70 0.45 5.70
1986 7.20 0.44 7.20
CLASS D
1995 5.15 0.89 5.05
1994(1) 3.23* 0.98* 3.04*
GOVERNMENT SECURITIES
---------------------
CLASS A
1995 5.04% 0.53% 4.95%
1994 2.96 0.51 2.89
1993 3.00 0.50 2.94
1992 4.60 0.50 4.60
1991 6.80 0.48 6.70
1990 8.10 0.45 8.10
1989 8.30 0.46 8.30
1988 6.70 0.44 6.70
1987 5.80 0.46 5.80
1986 7.30 0.44 7.30
PRIME OBLIGATION
----------------
CLASS A
1995 5.21% 0.53% 5.12%
1994 3.03 0.51 2.96
1993 3.04 0.50 2.98
1992 4.70 0.49 4.60
1991 7.10 0.47 7.10
1990 8.30 0.45 8.30
1989 8.50 0.44 8.50
1988 6.90 0.44 6.90
1987 5.90 0.45 5.90
1986 7.30 0.44 7.30
INSTITUTIONAL CASH*
-------------------
CLASS A
1995 5.19% 0.44% 5.19%
1994 2.63 0.44 2.63
1993 2.66 0.44 2.66
1992 3.50 0.44 3.50
1991 5.90 0.42 5.90
1990 7.80 0.44 7.80
1989 6.80 0.44 6.80
1988 5.20 0.44 5.20
1987(2) 5.30 0.44 5.30
</TABLE>
(1) Treasury Securities Class D commenced operations on May 4, 1994.
(2) Institutional Cash Fund commenced operations on December 31, 1986.
* Annualized
** Not Annualized
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------
SEI Liquid Asset Trust--June 30, 1995
1. ORGANIZATION
SEI Liquid Asset Trust (the "Trust") was organized as a Massachusetts business
trust under a Declaration of Trust dated July 20, 1981.
The Trust is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company with five portfolios:
the Treasury Securities Portfolio, the Government Securities Portfolio, the
Prime Obligation Portfolio, the Institutional Cash Portfolio and the Money Mar-
ket Portfolio (the "Portfolios"). The Trust is registered to offer Class A
shares of the portfolios and Class D (formerly the ProVantage Funds) shares of
the Treasury Securities Portfolio and the Prime Obligation Portfolio. The as-
sets of each Portfolio are segregated and a shareholder's interest is limited
to the Portfolio in which shares are held. As of June 30, 1995 the Money Market
Portfolio had not commenced operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust.
Security Valuation--Investment securities are stated at amortized cost, which
approximates market value. Under this valuation method, purchase discounts and
premiums are accreted and amortized ratably to maturity and are included in in-
terest income.
Federal Income Taxes--It is each Portfolio's intention to continue to qualify
as a regulated investment company and distribute all of its taxable income. Ac-
cordingly, no provision for Federal income taxes is required.
Repurchase Agreements--Securities pledged as collateral for Repurchase Agree-
ments are held by the Portfolio's custodian bank until maturity of the Repur-
chase Agreement. Provisions of the Agreement and procedures adopted by the Man-
ager of the Trust ensure that the market value of the collateral, including ac-
crued interest thereon, is sufficient in the event of default by the
counterparty.
The Trust also invests in tri-party repurchase agreements. Securities held as
collateral for tri-party repurchase agreements are maintained in a segregated
account by the broker's custodian bank until maturity of the repurchase agree-
ment. Provisions of the agreements ensure that the market value of the collat-
eral, including accrued interest thereon, is sufficient in the event of de-
fault.
If the counterparty defaults and the value of the collateral declines or if
the counterparty enters an insolvency proceeding, realization of the collateral
by the Trust may be delayed or limited.
Discount and Premium Amortization--All amortization is calculated using the
effective interest method over the holding period of the security. Amortization
of premiums and discounts is currently included in interest income.
Expenses--Expenses of the Trust which are not directly associated to a spe-
cific Portfolio are allocated on the basis of relative net asset value of the
affected Portfolios.
Classes--Expenses of a class of shares of beneficial interest are borne by
that class. Income, expenses and realized gains/losses are allocated to the re-
spective classes on the basis of relative daily net assets.
Other--Security transactions are accounted for on the date the securities are
purchased or sold. Costs used in determining realized gains and losses on the
sale of investment securities are those of the specific securities sold. Dis-
tributions from net investment income are declared on a daily basis and are
payable on the first business day of the following month. Any net realized cap-
ital gains of the Portfolios are distributed to the shareholders of the af-
fected Portfolios annually.
3. MANAGEMENT, INVESTMENT ADVISORY AND DISTRIBUTION AGREEMENTS
SEI Financial Management Corporation (the "Manager") provided management, ad-
ministrative and shareholder services to the Trust for an annual fee, which is
calculated daily and paid monthly, of .42% of the average daily net assets of
each Portfolio with the exception of the Institutional Cash Portfolio for which
the fee is calculated at an annual rate of .36%. The Manager has agreed to bear
certain expenses of the Trust so that the total expenses do not exceed .44% of
average daily net assets annually. For the fiscal year ended June 30, 1995 the
manage-
10
<PAGE>
- --------------------------------------------------------------------------------
ment fee was $10,636,000 of which $2,332,000 was waived by the Manager in ac-
cordance with the expense limitation discussed above.
In addition, the Trust and the Manager have entered into a separate Transfer
Agent Agreement with respect to Class D shares under which DST Systems, Inc. is
entitled to a fee of .15% of the average daily net assets of Class D plus out-
of-pocket costs.
Wellington Management Company serves as the Investment Adviser of the Trust.
For its services, the Investment Adviser receives an annual fee equal to .075%
of the Trust's average daily net asset value up to $500 million and .02% of
such net asset value in excess of $500 million. At June 30, 1995, the Invest-
ment Adviser was a holder of beneficial interest in the Trust. The fees of the
Investment Adviser are paid monthly.
SEI Financial Services Company ("SFS") acts as the distributor of the shares
of the Trust under a Distribution Agreement and Distribution Plans which pro-
vide for the Trust to reimburse SFS for its distribution expenses. Reimburse-
ment for expenses incurred by SFS may not exceed .30% of a Portfolio's average
daily net assets. Distribution expenses include, among other items, the compen-
sation and benefits of sales personnel incurred by SFS in connection with the
promotion and sale of shares. Distribution expenses not attributable to a spe-
cific Portfolio are allocated among the Portfolios on the basis of their rela-
tive average daily net assets.
In addition, the Treasury Securities Portfolio and the Prime Obligation Port-
folio have registered an additional class of shares, Class D shares, for which
a separate distribution plan has been adopted. The Class D Distribution Plan
(the "Class D" Plan) provides for additional payments to the distributor of
.25% of each of the Class D shares average daily net assets. As of the fiscal
year end, SFS is taking a fee under the Class D Plan of only .20% of each of
the Class D average daily net assets.
4. TRANSACTIONS WITH AFFILIATES
Certain officers and/or Trustees of the Trust are also officers and/or Direc-
tors of the Manager or SFS. Compensation of officers and affiliated Trustees of
the Trust is paid by the Manager and/or SFS.
CoreStates N.A., which is a Trust shareholder, acts as Custodian and Wire
Agent for the Trust.
5. CAPITAL LOSS CARRYOVERS
At June 30, 1995, the Portfolios had a capital loss carryover, to the extent
provided in regulations, for Federal income tax purposes as follows:
<TABLE>
<S> <C>
Government Securities Portfolio: $16,295 expiring in 2001
Prime Obligation
Portfolio: $67,346 expiring in 2000
5,140 expiring in 2003
</TABLE>
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
SEI Liquid Asset Trust:
In our opinion, the accompanying statement of net assets and statement of
assets and liabilities, and the related statements of operations and of changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of the Treasury Securities Portfolio, the
Government Securities Portfolio, the Prime Obligation Portfolio, the
Institutional Cash Portfolio and the Money Market Portfolio (constituting SEI
Liquid Asset Trust, hereafter referred to as the "Trust") at June 30, 1995, the
results of each of their operations, the changes in each of their net assets
and the financial highlights for each of the respective periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at June 30, 1995, by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
August 11, 1995
