<PAGE>
SEI LIQUID ASSET TRUST
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
TREASURY SECURITIES FUND
GOVERNMENT SECURITIES FUND
PRIME OBLIGATION FUND
MONEY MARKET FUND
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced
Funds 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 31, 1998, has been filed
with the Securities and Exchange Commission, and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. 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 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 funds 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 four of the Trust's money market funds (each a "Fund"
and, together, the "Funds") listed above.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND 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, NOR HAS THE SECURITIES AND EXCHANGE 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>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY GOVERNMENT PRIME MONEY
SECURITIES SECURITIES OBLIGATION MARKET
FUND FUND FUND FUND
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Management/Advisory Fees (AFTER FEE WAIVERS) (1) .41% .41% .41% .39%
12b-1 Fees None None None None
Total Other Expenses .03% .03% .03% .05%(2)
Shareholder Servicing Expenses (AFTER FEE WAIVERS) (3) .00% .00% .00% .00%
- --------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVERS) (4) .44% .44% .44% .44%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE MANAGER HAS AGREED TO WAIVE ITS FEE IN AN AMOUNT NECESSARY TO LIMIT THE
TOTAL OPERATING EXPENSES OF EACH FUND TO NOT MORE THAN .44% OF ITS AVERAGE
NET ASSETS. ABSENT THIS WAIVER, MANAGEMENT/ADVISORY FEES FOR EACH OF THE
TREASURY SECURITIES, GOVERNMENT SECURITIES, PRIME OBLIGATION AND MONEY
MARKET FUNDS WOULD BE .45%. MANAGEMENT/ADVISORY FEES HAVE BEEN RESTATED TO
REFLECT CURRENT EXPENSES.
(2) TOTAL OTHER EXPENSES FOR THE MONEY MARKET FUND ARE BASED ON ESTIMATED
AMOUNTS FOR THE CURRENT FISCAL YEAR.
(3) THE DISTRIBUTOR HAS WAIVED, ON A VOLUNTARY BASIS, ALL OR A PORTION OF ITS
SHAREHOLDER SERVICING FEE, AND THE SHAREHOLDER SERVICING EXPENSES SHOWN
REFLECT THIS WAIVER. THE DISTRIBUTOR RESERVES THE RIGHT TO TERMINATE ITS
WAIVER AT ANY TIME IN ITS SOLE DISCRETION. ABSENT SUCH WAIVER, SHAREHOLDER
SERVICING EXPENSES WOULD BE .25% FOR EACH FUND.
(4) ABSENT WAIVERS, TOTAL OPERATING EXPENSES FOR THE TREASURY SECURITIES,
GOVERNMENT SECURITIES, PRIME OBLIGATION AND MONEY MARKET FUNDS WOULD BE
.73%, .73%, .73%, AND .75%, RESPECTIVELY. ADDITIONAL INFORMATION MAY BE
FOUND UNDER "THE MANAGER," "THE ADVISER" AND "DISTRIBUTION AND SHAREHOLDER
SERVICING."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
An investor in any Fund would pay the following expenses on a $1,000 investment
assuming (1) a 5% annual return and (2) redemption at the end of each time
period: $ 5 $ 14 $ 25 $ 55
- -----------------------------------------------------------------------------------------------------------------------------------
</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 AND EXAMPLE IS TO ASSIST THE INVESTOR IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY
BORNE BY INVESTORS IN CLASS A SHARES OF THE FUNDS. THE TREASURY SECURITIES FUND
ALSO OFFERS CLASS D SHARES, WHICH ARE SUBJECT TO THE SAME EXPENSES EXCEPT THAT
CLASS D SHARES BEAR CERTAIN DISTRIBUTION AND TRANSFER AGENT COSTS. A PERSON WHO
PURCHASES SHARES THROUGH A FINANCIAL INSTITUTION MAY BE CHARGED SEPARATE FEES BY
THAT INSTITUTION. ADDITIONAL INFORMATION REGARDING THESE DIFFERENCES MAY BE
FOUND UNDER "THE MANAGER," "THE ADVISER" AND "DISTRIBUTION AND SHAREHOLDER
SERVICING."
2
<PAGE>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been audited by PricewaterhouseCoopers LLP, the Trust's independent
accountants, whose report on the financial statements including this
information, dated July 21, 1998, was unqualified. This information should be
read in conjunction with the Trust's financial statements as of and for the
fiscal year ended June 30, 1998, and notes thereto, which are incorporated by
reference to the Trust's Statement of Additional Information. Additional
performance information is set forth in the Trust's 1998 Annual Report to
Shareholders, which is available upon request and without charge by calling
1-800-342-5734. As of June 30, 1998, the Money Market Fund had not commenced
operations.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS
VALUE NET REALIZED AND FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT UNREALIZED GAINS INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME ON SECURITIES INCOME CAPITAL GAINS OF PERIOD
- ------------------------------ ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------
TREASURY SECURITIES
- --------------------
1998 $ 1.00 $ 0.05 $ -- $ (0.05) $ -- $ 1.00
1997 1.00 0.05 -- (0.05) -- 1.00
1996 1.00 0.05 -- (0.05) -- 1.00
1995 1.00 0.05 -- (0.05) -- 1.00
1994 1.00 0.03 -- (0.03) -- 1.00
1993 1.00 0.03 -- (0.03) -- 1.00
1992 1.00 0.05 -- (0.05) -- 1.00
1991 1.00 0.07 -- (0.07) -- 1.00
1990 1.00 0.08 -- (0.08) -- 1.00
1989 1.00 0.08 -- (0.08) -- 1.00
- -----------------------
GOVERNMENT SECURITIES
- -----------------------
1998 $ 1.00 $ 0.05 $ -- $ (0.05) $ -- $ 1.00
1997 1.00 0.05 -- (0.05) -- 1.00
1996 1.00 0.05 -- (0.05) -- 1.00
1995 1.00 0.05 -- (0.05) -- 1.00
1994 1.00 0.03 -- (0.03) -- 1.00
1993 1.00 0.03 -- (0.03) -- 1.00
1992 1.00 0.05 -- (0.05) -- 1.00
1991 1.00 0.07 -- (0.07) -- 1.00
1990 1.00 0.08 -- (0.08) -- 1.00
1989 1.00 0.08 -- (0.08) -- 1.00
<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME TO
RATIO OF INVESTMENT TO AVERAGE AVERAGE
NET ASSETS EXPENSES INCOME TO NET ASSETS NET ASSETS
TOTAL END OF TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING
RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ------------------------------ ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------
TREASURY SECURITIES
- --------------------
1998 5.29% $ 603,783 0.44% 5.17% 0.73% 4.88%
1997 5.10 706,232 0.44 4.98 0.74 4.68
1996 5.37 832,393 0.44 5.27 0.52 5.19
1995 5.05 1,254,888 0.44 4.93 0.54 4.83
1994 3.00 1,501,510 0.44 2.91 0.51 2.84
1993 3.03 2,219,701 0.44 2.99 0.50 2.93
1992 4.69 2,304,153 0.44 4.60 0.50 4.50
1991 7.04 2,248,497 0.44 6.80 0.47 6.80
1990 8.41 2,076,845 0.44 8.10 0.45 8.10
1989 8.51 2,318,763 0.44 8.20 0.44 8.20
- -----------------------
GOVERNMENT SECURITIES
- -----------------------
1998 5.21% $ 105,201 0.44% 5.10% 0.73% 4.81%
1997 5.09 148,606 0.44 4.98 0.71 4.71
1996 5.30 169,133 0.44 5.19 0.54 5.09
1995 5.18 200,768 0.44 5.04 0.53 4.95
1994 3.04 255,554 0.44 2.96 0.51 2.89
1993 3.05 507,832 0.44 3.00 0.50 2.94
1992 4.72 399,938 0.44 4.60 0.50 4.60
1991 7.08 520,187 0.44 6.80 0.48 6.70
1990 8.48 368,318 0.44 8.10 0.45 8.10
1989 8.69 467,056 0.44 8.30 0.46 8.30
</TABLE>
3
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED) _______________________________________________
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS
VALUE NET REALIZED AND FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT UNREALIZED GAINS INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME ON SECURITIES INCOME CAPITAL GAINS OF PERIOD
- ------------------------------ ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------
PRIME OBLIGATION
- -----------------
1998 $ 1.00 $ 0.05 $ -- $ (0.05) $ -- $ 1.00
1997 1.00 0.05 -- (0.05) -- 1.00
1996 1.00 0.05 -- (0.05) -- 1.00
1995 1.00 0.05 -- (0.05) -- 1.00
1994 1.00 0.03 -- (0.03) -- 1.00
1993 1.00 0.03 -- (0.03) -- 1.00
1992 1.00 0.05 -- (0.05) -- 1.00
1991 1.00 0.07 -- (0.07) -- 1.00
1990 1.00 0.08 -- (0.08) -- 1.00
1989 1.00 0.09 -- (0.09) -- 1.00
<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME TO
RATIO OF INVESTMENT TO AVERAGE AVERAGE
NET ASSETS EXPENSES INCOME TO NET ASSETS NET ASSETS
TOTAL END OF TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING
RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ------------------------------ ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------
PRIME OBLIGATION
- -----------------
1998 5.40% $ 947,154 0.44% 5.27% 0.73% 4.98%
1997 5.20 823,270 0.44 5.08 0.74 4.78
1996 5.39 747,852 0.44 5.27 0.53 5.18
1995 5.20 940,863 0.44 5.21 0.53 5.12
1994 3.08 918,509 0.44 3.03 0.51 2.96
1993 3.07 1,173,109 0.44 3.04 0.50 2.98
1992 4.73 1,515,554 0.44 4.70 0.49 4.60
1991 7.36 1,729,845 0.44 7.10 0.47 7.10
1990 8.57 1,804,367 0.44 8.30 0.45 8.30
1989 8.85 2,160,859 0.44 8.50 0.44 8.50
</TABLE>
Amounts designated as "--" are neither $0 or have been rounded to $0.
4
<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 and Money
Market Funds (each a "Fund" and, together, the "Funds"). The Treasury Securities
Fund also offers Class D shares. Additional information pertaining to the Trust
may be obtained by writing to SEI Investments Distribution Co., Oaks,
Pennsylvania 19456, or by calling 1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES
___________________________________________________________________________
TREASURY SECURITIES
FUND
The Treasury Securities Fund seeks to preserve principal
value and maintain a high degree of liquidity while
providing current income.
The Fund invests exclusively in U.S. Treasury
obligations and repurchase agreements involving such
obligations. The repurchase agreement dealers selected for
the Treasury Securities Fund must meet certain
creditworthiness criteria established by Standard & Poor's
Corporation ("S&P").
GOVERNMENT
SECURITIES FUND
The Government Securities Fund seeks to preserve principal
value and maintain a high degree of liquidity while
providing current income.
The Fund 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 OBLIGATION
FUND
The Prime Obligation Fund seeks to preserve principal value
and maintain a high degree of liquidity while providing
current income.
The Fund 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 or savings and loan
institutions that are members of the Federal Reserve System
or are insured by the Federal Deposit Insurance
Corporation, 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 are rated, at the time of
investment, by at least two NRSROs
5
<PAGE>
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.
MONEY MARKET FUND
The Money Market Fund seeks to preserve principal value and
maintain a high degree of liquidity while providing current
income.
The Fund invests in the following U.S. dollar
denominated obligations: (i) commercial paper issued by
U.S. and foreign issuers rated at the time of investment in
the highest short-term rating category by two or more
NRSROs, or one NRSRO if only one NRSRO has rated the
security or, if not rated, determined by the Adviser to be
of comparable quality; (ii) obligations (including
certificates of deposit, time deposits, bankers'
acceptances and bank notes) of U.S. savings and loan and
thrift 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 last
published financial statements, at the time of investment;
(iii) short-term corporate obligations issued by U.S. and
foreign issuers with a remaining term of not more than 397
days that issue commercial paper of comparable priority and
security meeting the above ratings; (iv) short-term
obligations issued by state and local governmental issuers
which are rated, at the time of investment, by at least two
NRSROs in one of the two highest municipal bond rating
categories, or, if not rated, determined by the Adviser to
be of comparable quality, and which carry yields that are
competitive with those of other types of money market
instruments of comparable quality; (v) U.S. Treasury
obligations and obligations issued or guaranteed as to
principal and interest by the agencies or instrumentalities
of the U.S. Government; (vi) U.S. dollar denominated
obligations of foreign governments, including Canadian and
Provincial Government and Crown Agency obligations; (vii)
repurchase agreements involving any of the foregoing
obligations; and (viii) custodial receipts representing
investments in component parts of U.S. Treasury
obligations.
There can be no assurance that the Funds will achieve
their respective investment objectives.
6
<PAGE>
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
In purchasing obligations, each Fund 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 each Fund 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, Rule 2a-7 provides that
funds 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 Fund's adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities
in which the fund may invest. Except to the extent that
their investment policies are more restrictive than Rule
2a-7 or that Rule 2a-7's provisions are inapplicable, each
Fund intends to comply fully with Rule 2a-7.
Securities rated in the highest rating category by at
least two NRSROs (or, if unrated, determined by the Adviser
to be of comparable quality) are "first tier" securities.
Non-first tier securities rated in the second highest
rating category 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 of the
Money Market and Prime Obligation Funds 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 Fund's total
assets or $1 million, except that the Prime Obligation Fund
currently invests only in first tier securities.
The quality, maturity and diversification
requirements of the Government Securities and Prime
Obligation Funds are more restrictive than those imposed by
Rule 2a-7. The Government Securities and Prime Obligation
Funds 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. If
Shareholders of these Funds elect to modify the Funds'
investment limitations in the future, the Funds could take
advantage of certain provisions in the Rule that are more
liberal than the Funds' policies and that are followed by
the Trust's other Funds.
The Money Market and Prime Obligation Funds may
invest up to 10% of their net assets in illiquid
securities. However, restricted securities, including Rule
144A securities and Section 4(2) commercial paper, that
meet the criteria established by the Board of Trustees of
the Trust will be considered liquid.
Each Fund may purchase securities on a when-issued or
delayed delivery basis.
For additional information regarding the Funds'
permitted investments and the ratings referred to above,
see "Description of Permitted Investments and Risk Factors"
and the Statement of Additional Information.
7
<PAGE>
INVESTMENT
LIMITATIONS
________________________________________________________________________
The investment objective and certain of the investment
limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to a
Fund without the consent of the holders of a majority of
that Fund's outstanding shares.
It is a fundamental policy of each Fund 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
Funds to invest its assets solely in the securities listed
as appropriate investments for that Fund.
EACH FUND 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 Fund (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 and Money Market Funds may
temporarily 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 Fund to be invested in the
securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in (a) domestic banks and (b) obligations
issued or guaranteed by the U.S. Government or its
agencies and instrumentalities.
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 Fund. This borrowing
provision is included solely to facilitate the orderly
sale of portfolio Fund 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
Fund and any interest paid on such borrowings will
reduce the income of that Fund.
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
______________________________________________________________________
SEI Investments Fund Management ("SEI Management"),
provides the Trust with overall management services,
regulatory reporting, all necessary office space,
equipment, personnel and facilities, and acts as dividend
disbursing agent and shareholder servicing agent. SEI
Management also serves as transfer agent (the "Transfer
Agent") to Class A shares of the Trust.
8
<PAGE>
For its management services, SEI Management 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 Fund. SEI Management has contractually
agreed to waive all or a portion of its fee with respect to
each Fund in order to limit the total operating expenses of
the Class A shares of such Funds to not more than .44% of
its average daily net assets.
For the fiscal year ended June 30, 1998, each of the
Treasury Securities, Government Securities and Prime
Obligation Funds paid management fees, after waivers, of
.37% of their average daily net assets. As of June 30,
1998, the Money Market Fund had not commenced operations.
THE ADVISER
_______________________________________________________________________
Wellington Management Company, LLP (the "Adviser"), 75
State Street, Boston, Massachusetts 02109, serves as the
investment adviser to each Fund. The Adviser, under an
investment advisory agreement with the Trust, invests the
assets of the Funds and continuously reviews, supervises
and administers each Fund's investment program, subject to
the supervision of, and policies established by, the
Trustees of the Trust.
As of September 30, 1998, the Adviser had investment
management authority with respect to approximately $179
billion of assets, including the assets of the Trust and
SEI Daily Income Trust, which is an open-end management
investment company administered by the Manager. The Adviser
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 1928, and to investment
counseling clients since 1960. The Adviser is a
Massachusetts limited liability partnership, of which the
following persons are managing partners: Robert W. Doran,
Duncan M. McFarland and John R. Ryan.
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 Funds up
to $500 million, and .02% of such average daily net assets
in excess of $500 million. Such fees are allocated daily
among the Funds of the Trust on the basis of their relative
net assets. For the fiscal year ended June 30, 1998, each
of the Treasury Securities, Government Securities and Prime
Obligation Funds paid advisory fees, after fee waivers, of
.04% of their relative net assets. As of June 30, 1998, the
Money Market Fund had not commenced operations.
9
<PAGE>
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company ("SEI
Investments") serves as each Fund's distributor pursuant to
a distribution agreement with the Trust. The Funds have
adopted a shareholder service plan for their Class A shares
(the "Class A Plan").
The Funds have adopted a shareholder service plan for
Class A shares (the "Class A Service Plan") under which
firms, including the Distributor, that provide shareholder
and administrative services may receive compensation
therefor. Under the Class A Service Plan, the Distributor
may provide those services itself, or may enter into
arrangements under which third parties provide such
services and are compensated by the Distributor. Under such
arrangements, the Distributor may retain as profit any
difference between the fee it receives and the amount it
pays such third parties. In addition, the Funds may enter
into such arrangements directly. Under the Class A Service
Plan, the Distributor is entitled to receive a fee at a
negotiated annual rate of up to .25% of each Fund's average
daily net assets attributable to Class A shares that are
subject to the arrangement in return for provision of a
broad range of shareholder and administrative services,
including: maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services
provided for investments; changing dividend options;
account designations and addresses; providing
sub-accounting; providing information on share positions to
clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and
processing dividend payments.
In addition, the Treasury Securities Fund has adopted
a distribution plan for its Class D shares (the "Class D
Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "1940 Act").
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 also execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Funds' shares.
10
<PAGE>
PURCHASE AND
REDEMPTION OF SHARES
____________________________________________________________________________
Financial institutions may acquire Class A shares of the
Funds for their own account, or as a record owner on behalf
of fiduciary, agency or custody accounts, by placing orders
with the Transfer Agent (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 (or its authorized 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 each Fund 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 on which wire transfers are restricted.
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent (or its
authorized agent) prior to the determination of net asset
value on any Business Day for the order to be accepted on
that Business Day. Purchase orders received by a fund after
the determination of net asset value will be effected at
the next Business Day's net asset value. Generally, payment
for fund shares must be transmitted on the same Business
Day the order is placed. Payment for such shares may only
be transmitted or delivered in federal funds to the wire
agent. 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 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
Fund is managed to maintain a stable price of $1.00 per
share. Securities will be valued using the amortized cost
method (described in the Statement of Additional
Information). In connection with the use of amortized cost
valuation, the Fund monitors the deviation between the
amortized cost value of its assets and their market value.
Net asset value per share is determined daily as of 12:00
p.m., Eastern time, on each Business Day. Financial
institutions which purchase and redeem shares for the
accounts of their customers may impose their own cut-off
times for receipt of purchase and redemption requests
directed through them.
Shareholders who desire to redeem shares of the Fund
must place their redemption orders with the Transfer Agent
(or its authorized agent) prior to the determination of net
asset value on any Business Day. Redemption orders received
after the determination of net asset value will be effected
at the next Business Day's net asset value. The redemption
price is the net asset value per share of the Fund next
determined after receipt by the
11
<PAGE>
Transfer Agent of the redemption order. Payment on
redemption will be made as promptly as possible and, in any
event, within seven days after the redemption order is
received.
The Trust intends to generally make redemptions in
cash. The Trust may, however, make redemptions in whole or
in part by a distribution in kind of readily marketable
securities in lieu of cash. Shareholders may incur
brokerage costs on the sale of any such securities so
received in payment of redemptions.
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 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 Funds 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 Funds 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 Fund may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives.
The performance of the Class A shares will normally
be higher than the performance of the Class D shares of a
Fund because of additional distribution and transfer agent
expenses charged to Class D shares.
12
<PAGE>
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
Funds or their shareholders. In addition, state and local
tax consequences of an investment in a Fund may differ from
the federal income tax consequences described below.
Accordingly, shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state
and local income taxes. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal tax
purposes and is not combined with the Trust's other Funds.
Each Fund intends 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
DISTRIBUTIONS
Each Fund distributes substantially all of its net
investment income (including net short-term capital gains)
to shareholders. Dividends from a Fund's net investment
income are taxable to its shareholders as ordinary income
(whether received in cash or in additional shares) and
generally will not qualify for the corporate
dividends-received deduction unless derived from dividends
received by a Fund from domestic (U.S.) corporations.
Distributions to shareholders of net capital gains of the
Fund also will not qualify for the dividends received
deduction and will be taxable to shareholders as long-term
capital gain, taxable at the rate of 20% for property held
for more than one year, whether received in cash or
additional shares, and regardless of how long a shareholder
has held the shares. The Funds provide annual reports to
shareholders of the federal income tax status of all
distributions.
Dividends declared by a Fund in October, November or
December of any year and payable to shareholders of record
on a date in such a month will be deemed to have been paid
by the Fund and received by the shareholders on December 31
of the year declared if paid by the Fund at any time during
the following January.
Each Fund 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 Fund will be
required to include as part of its current income, the
imputed interest on such obligations even though the Fund
has not received any interest payments on such obligations
during that period. Because each Fund distributes all of
its net investment income to its shareholders, a Fund may
have to sell portfolio securities in order to distribute
such
13
<PAGE>
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 Funds on direct
U.S. Government obligations is exempt from tax at the state
level when received directly by a Fund, and may be exempt,
depending on the state, when received by a shareholder as
income dividends from any Fund 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 Fund 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 Fund is considered tax
exempt in their particular states.
Each sale, exchange, or redemption of any Fund'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 Funds of shares and different
classes of each Fund. All consideration received by the
Trust for shares of any Fund and all assets of such Fund
belong to that Fund 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 TRUST
The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each Fund or class of the Trust
will vote separately on matters relating solely to that
Fund 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.
14
<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 INQUIRIES
Shareholder inquiries should be directed to the Manager,
SEI Investments Fund Management, Oaks, Pennsylvania 19456.
DIVIDENDS
Substantially all of the net investment income (exclusive
of capital gains) of each Fund is periodically declared and
paid as a dividend. Dividends are paid by the Fund in
federal funds or in additional shares at the discretion of
the shareholder on the first Business Day of each month.
Dividends will be paid on the next Business Day to
shareholders who redeem all of their shares of a Fund at
any other time during the 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 INDEPENDENT
ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
PricewaterhouseCoopers LLP serves as the independent
accountants to the Trust.
CUSTODIAN AND WIRE AGENT
First Union National Bank, Broad and Chestnut Streets, P.O.
Box 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 Funds, and the associated risk factors:
BANK NOTES
Bank notes are notes used to represent debt obligations
issued by banks in large denominations.
BANKERS' ACCEPTANCE
A bankers' acceptance is a bill of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers'
acceptances are used by corporations to finance the
shipment and storage of goods. Maturities are generally six
months or less.
CERTIFICATES OF DEPOSIT
Certificates of deposit are interest-bearing instruments
with a specific maturity. They are issued by banks and
savings and loan institutions in exchange for the deposit
of funds, and normally can be traded in the secondary
market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER
Commercial paper is the term used to designate unsecured
short-term promissory notes issued by municipalities,
corporations and other entities. Maturities on these issues
vary from one to 270 days.
15
<PAGE>
DEMAND INSTRUMENTS
Certain instruments may entail a demand feature which
permits the holder to demand payment of the principal
amount of the instrument. Demand instruments may include
variable amount master demand notes.
FOREIGN SECURITIES
The Money Market Fund may invest in U.S. dollar denominated
obligations, including (i) commercial paper of issuers
domiciled outside of the United States ("Yankees"), (ii)
securities issued by foreign branches of U.S. commercial
banks and of U.S. and London branches of foreign banks, and
(iii) obligations and securities of foreign
governments,including Canadian and Provincial Government
and Crown Agency obligations. The Adviser will attempt to
minimize the risks associated with investing in foreign
obligations by investing only in those instruments which
satisfy the quality and maturity restrictions applicable to
the Fund.
ILLIQUID SECURITIES
Illiquid securities are securities which cannot be disposed
of within seven business days at approximately the price at
which they are being carried on a Fund's books. Illiquid
securities may include demand instruments with demand
notice periods exceeding seven days, securities for which
there is no active secondary market, and repurchase
agreements with durations of more than seven days in
length.
REPURCHASE AGREEMENTS
Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the
security to the seller at an agreed upon price on an agreed
upon date within a number of days from the date of
purchase. The Fund will have actual or constructive
possession of the securities held as collateral for the
repurchase agreement. A Fund bears a risk of loss in the
event the other party defaults on its obligations and the
Fund is delayed or prevented from exercising its right to
dispose of the collateral securities or if the Fund
realizes a loss on the sale of the collateral. A Fund 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 SECURITIES
Restricted securities are securities that may not be sold
freely to the public absent registration under the
Securities Act of 1933 or an exemption from registration.
Rule 144A securities are securities that have not been
registered under the Securities Act of 1933, but which may
be traded between certain institutional investors,
including investment companies. The Trust's Board of
Trustees is responsible for developing guidelines and
procedures for determining the liquidity of restricted
securities and monitoring the Adviser's implementation of
the guidelines and procedures.
TAXABLE MUNICIPAL
SECURITIES
Taxable Municipal Securities are Municipal Securities the
interest on which is not exempt from federal income tax.
Taxable Municipal Securities include "private activity
bonds" that are issued by or on behalf of states or
political subdivisions thereof to finance privately-owned
or operated facilities for business and manufacturing,
housing, sports, and pollution control and to finance
activities of and facilities for charitable institutions.
Private activity bonds are also used to finance public
facilities such as airports, mass transit systems, ports,
parking lots, and low income housing. The payment of the
principal and interest on private activity bonds is not
backed by a pledge of tax revenues, and is dependent solely
on the ability of the facility's user to meet its financial
obligations, and may be secured by
16
<PAGE>
a pledge of real and personal property so financed.
Interest on these bonds may not be exempt from federal
income tax.
TIME DEPOSITS
Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Like a certificate of
deposit, it earns a specified rate of interest over a
definite period of time; however, it cannot be traded in
the secondary market. Time deposits with maturities of more
than seven days are considered to be illiquid.
U.S. GOVERNMENT AGENCY
OBLIGATIONS
Certain federal agencies, such as the Government National
Mortgage Association ("GNMA"), have been established as
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 Fannie Mae
securities). Any guarantee by the U.S. Government agencies
or instrumentalities of all securities in which a Fund
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 Fund.
U.S. TREASURY
OBLIGATIONS
U.S. Treasury obligations consist of bills, notes and bonds
issued by the U.S. Treasury, as well as separately traded
interest and principal component parts of such obligations,
known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"), that are transferable
through the federal book-entry system.
STRIPS are sold as zero coupon securities, 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.
VARIABLE AND FLOATING
RATE INSTRUMENTS
Certain of the obligations purchased by a Fund may carry
variable or floating rates of interest and may involve 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 DELAYED
DELIVERY SECURITIES
When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. A Fund will maintain with the
custodian a separate account with liquid 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 Fund before
settlement.
17
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights...................................................... 3
The Trust................................................................. 5
Investment Objectives and Policies........................................ 5
General Investment Policies............................................... 7
Investment Limitations.................................................... 8
The Manager............................................................... 8
The Adviser............................................................... 9
Distribution and Shareholder Servicing.................................... 10
Purchase and Redemption of Shares......................................... 11
Performance............................................................... 12
Taxes..................................................................... 13
General Information....................................................... 14
Description of Permitted Investments and Risk Factors..................... 15
</TABLE>
18
<PAGE>
PROSPECTUS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
TREASURY SECURITIES FUND
- --------------------------------------------------------------------------------
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 Fund's
investment goals match your own.
A Statement of Additional Information dated October 31, 1998, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, 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 Fund 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 Investments Distribution
Co. (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 Fund (the "Fund").
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND 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, NOR HAS THE SECURITIES AND EXCHANGE 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>
HOW TO READ THIS PROSPECTUS
- --------------------------------------------------------------------------------
This Prospectus provides information that you should know about the Fund 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.[>]
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------
The following summary provides basic information about the Class D shares of the
Trust's Treasury Securities Fund. 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 OBJECTIVE
AND POLICIES
The Treasury Securities Fund seeks to preserve principal
value and maintain a high degree of liquidity while
providing current income. See "Investment Objective and
Policies" and "Description of Permitted Investments and
Risk Factors."
UNDERSTANDING RISK
There can be no assurance that
the Fund will achieve its
investment objective. See
"Investment Objective and
Policies" and "Description of
Permitted Investments and Risk
Factors."
MANAGEMENT PROFILE
Wellington Management Company,
LLP (the "Adviser") serves as
the investment adviser to the
Fund. The Adviser is a
professional investment
counseling firm that has been
providing investment advisory
services to mutual funds since
1933. SEI Investments Fund
Management 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 Investments
Distribution Co. serves as
distributor (the "Distributor")
of the Trust's shares. See "The
Manager", "The Adviser" and
"Distribution."
...........................................................................
<TABLE>
<S> <C>
FUND HIGHLIGHTS................................... 2
TABLE OF CONTENTS
FUND EXPENSES..................................... 4
FINANCIAL HIGHLIGHTS.............................. 5
YOUR ACCOUNT AND DOING BUSINESS WITH US........... 6
INVESTMENT OBJECTIVE AND POLICIES................. 9
GENERAL INVESTMENT POLICIES....................... 9
INVESTMENT LIMITATIONS............................ 9
THE MANAGER AND THE TRANSFER AGENT................ 10
THE ADVISER....................................... 11
DISTRIBUTION...................................... 11
PERFORMANCE....................................... 12
TAXES............................................. 13
ADDITIONAL INFORMATION ABOUT DOING BUSINESS WITH
US........................................... 15
GENERAL INFORMATION............................... 17
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK
FACTORS...................................... 19
</TABLE>
...........................................................................
2
<PAGE>
YOUR ACCOUNT AND
DOING BUSINESS WITH
US
You may open an account with just $1,000, and make
additional investments with as little as $100. Redemptions
of the Fund's shares are made at net asset value per share.
See "Purchase of Shares" and "Redemption of Shares."
DIVIDENDS
Substantially all of the net
investment income (exclusive of
net capital gains) of the Fund
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/SERVICE
CONTACTS
For more information about Class
D shares, call SEI Investments
Distribution Co. at
1-800-437-6016.
...........................................................................
[>] INVESTMENT PHILOSOPHY
BELIEVING THAT NO SINGLE INVESTMENT ADVISER CAN DELIVER OUTSTANDING PERFORMANCE
IN EVERY INVESTMENT CATEGORY, ONLY THOSE ADVISERS WHO HAVE DISTINGUISHED
THEMSELVES WITHIN THEIR AREAS OF SPECIALIZATION ARE SELECTED TO ADVISE OUR
MUTUAL FUNDS.
...........................................................................
3
<PAGE>
FUND 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
FUND
----------
<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>
<S> <C>
Management/Advisory Fees (AFTER FEE WAIVER) (2) .41%
12b-1 Fees (AFTER FEE WAIVERS) (3) .20%
Other Expenses .18%
- ------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVERS) (2)(3)(4) .79%
- ------------------------------------------------------------------------
</TABLE>
(1) A CHARGE, CURRENTLY $10.00, IS IMPOSED ON WIRES OF REDEMPTION PROCEEDS OF
THE FUND'S CLASS D SHARES.
(2) THE MANAGER HAS AGREED TO WAIVE ITS FEE IN AN AMOUNT NECESSARY TO LIMIT THE
TOTAL OPERATING EXPENSES FOR CLASS D SHARES, AND THE TOTAL OPERATING
EXPENSES SHOWN REFLECT THIS WAIVER. ABSENT WAIVERS, MANAGEMENT/ADVISORY FEES
WOULD HAVE BEEN .45%.
(3) THE DISTRIBUTOR HAS WAIVED, ON A VOLUNTARY BASIS, A PORTION OF ITS 12b-1
FEE, AND THE 12b-1 FEES SHOWN REFLECT THIS WAIVER. THE DISTRIBUTOR RESERVES
ITS RIGHT TO TERMINATE THIS WAIVER AT ANY TIME IN ITS SOLE DISCRETION.
ABSENT SUCH WAIVER, 12b-1 FEES WOULD BE .25% FOR THE FUND.
(4) ABSENT WAIVERS, TOTAL OPERATING EXPENSES OF THE CLASS D SHARES OF THE FUND
WOULD BE .88%. ADDITIONAL INFORMATION MAY BE FOUND UNDER THE MANAGER, THE
ADVISER AND DISTRIBUTION.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3 5 10
1 YR. YRS. YRS. YRS.
----- ----- ----- -----
<S> <C> <C> <C> <C>
An investor in the Class D shares of the Fund would pay the
following expenses on a $1,000 investment assuming (1) a
5% annual return and (2) redemption at the end of each
time period:
Treasury Securities Fund $ 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 INFORMATION SET FORTH IN THE FOREGOING TABLE AND EXAMPLE RELATES ONLY TO THE
CLASS D SHARES. THE FUND ALSO OFFERS CLASS A SHARES, WHICH ARE SUBJECT TO THE
SAME EXPENSES, EXCEPT THERE ARE NO TRANSFER AGENT COSTS, AND THERE ARE
SHAREHOLDER SERVICING COSTS. A PERSON WHO PURCHASES SHARES THROUGH AN ACCOUNT
WITH A FINANCIAL INSTITUTION MAY BE CHARGED SEPARATE FEES BY THAT INSTITUTION.
ADDITIONAL INFORMATION MAY BE FOUND UNDER "THE MANAGER," "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 CONDUCT RULES
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (THE "NASD").
4
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following financial highlights for a share outstanding throughout each
period have been audited by PricewaterhouseCoopers LLP, the Trust's independent
accountants, whose report on the financial statements including this
information, dated July 21, 1998, was unqualified. This information should be
read in conjunction with the Trust's financial statements as of and for the
fiscal year ended June 30, 1998, and notes thereto, which are incorporated by
reference to the Trust's Statement of Additional Information. Additional
performance information is set forth in the Trust's 1998 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 THE PERIOD
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS
VALUE NET REALIZED AND FROM NET DISTRIBUTIONS NET ASSET NET ASSETS
BEGINNING INVESTMENT UNREALIZED GAINS INVESTMENT FROM REALIZED VALUE END TOTAL END OF
OF PERIOD INCOME ON SECURITIES INCOME CAPITAL GAINS OF PERIOD RETURN PERIOD (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------
TREASURY
SECURITIES
- ------------------
1998 $ 1.00 $ 0.05 $ -- $(0.05) $ -- $ 1.00 4.92% $ 238
1997 1.00 0.05 -- (0.05) -- 1.00 4.73 216
1996 1.00 0.05 -- (0.05) -- 1.00 5.01 219
1995 1.00 0.05 -- (0.05) -- 1.00 4.69 9,798
1994 (1) 1.00 0.01 -- (0.01) -- 1.00 0.50** 23
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSE TO INCOME TO
RATIO OF INVESTMENT AVERAGE AVERAGE NET
EXPENSES INCOME TO NET ASSETS ASSETS
TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING
NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------
TREASURY
SECURITIES
- ------------------
1998 0.79% 4.82% 0.88% 4.73%
1997 0.79 4.64 0.89 4.54
1996 0.79 4.92 0.87 4.84
1995 0.79 5.15 0.89 5.05
1994 (1) 0.79* 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>
YOUR ACCOUNT AND DOING BUSINESS WITH US
- --------------------------------------------------------------------------------
Class D shares of the Fund are sold on a continuous basis and may be purchased
directly from the Trust's Distributor, SEI Investments Distribution Co. Shares
may also be purchased through financial institutions, broker-dealers, or other
organizations which have established a dealer agreement or other arrangement
with the Distributor ("Intermediaries"). For more information about the
following topics, see "Additional Information About Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY, SELL AND
EXCHANGE SHARES
THROUGH
INTERMEDIARIES
Class D shares of the Fund may be purchased through
Intermediaries. Contact your Intermediary for information
on how to buy, sell and exchange shares. To allow for
processing and transmittal of orders to the Transfer Agent
(or its authorized 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 any
charges will be provided to the
customer by the Intermediary.
The shares you purchase
through an Intermediary may be
held "of record" by that
Intermediary. If you want to
transfer the registration of
shares beneficially owned by
you, but held "of record" by an
Intermediary, you should call
the Intermediary to request this change.
...........................................................................
[>] 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.
...........................................................................
HOW TO BUY SHARES
FROM THE DISTRIBUTOR
Application forms can be obtained by calling
1-800-437-6016.
OPENING AN ACCOUNT 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 Fund)." 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. Third-party checks, credit
cards, credit card checks and cash will not be accepted.
When purchases are made by check (including certified or
cashier's checks), redemption proceeds will not be
forwarded until the check providing for the investment
being redeemed has cleared (which may take up to 15 days).
BY FED WIRE
To buy shares by Fed Wire, call the Transfer Agent
toll-free at 1-800-437-6016.
AUTOMATIC INVESTMENT
PLAN ("AIP")
You may systematically buy Class D shares through
deductions from your checking or savings account, provided
these accounts are maintained through banks which are part
of the Automated Clearing House ("ACH") system. You may
purchase shares on a fixed schedule (semi-monthly or
monthly) with amounts as low as $25, or as high as
$100,000. Upon notice, the amount you commit to the AIP may
be changed or canceled at any time. The AIP is subject to
account minimum initial purchase amounts and minimum
balance maintenance requirements.
6
<PAGE>
EXCHANGING SHARES
WHEN CAN YOU
EXCHANGE SHARES?
Once payment for your shares has been received and accepted
(I.E., an account has been established), you may exchange
some or all of your shares for Class D shares of SEI
Institutional International Trust, SEI Tax Exempt Trust and
SEI Institutional Managed Trust ("SEI Funds"). Exchanges
are made at net asset value plus any applicable sales
charge.
WHEN DO SALES CHARGES
APPLY TO AN EXCHANGE?
SEI Funds' funds that are not
money market funds currently
impose a sales charge on Class D
shares. If you exchange into one
of these non-money market funds,
you 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.
...........................................................................
[>] HOW DOES AN EXCHANGE TAKE PLACE?
WHEN MAKING AN EXCHANGE, YOU AUTHORIZE THE SALE OF YOUR SHARES OF ONE OR MORE
FUNDS IN ORDER TO PURCHASE THE SHARES OF ANOTHER FUND. IN OTHER WORDS, YOU ARE
EXECUTING A SELL ORDER AND THEN A BUY ORDER. THIS SALE OF YOUR SHARES IS A
TAXABLE EVENT WHICH COULD RESULT IN A TAXABLE GAIN OR LOSS.
...........................................................................
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" fund.
REQUESTING AN EXCHANGE
OF SHARES
To request an exchange, you must provide proper
instructions in writing to the Transfer Agent. Telephone
exchanges will also be accepted if you previously elected
this option on your account application.
In the case of shares held "of record" by an
Intermediary but beneficially owned by you, you should
contact the Intermediary who will contact the Transfer
Agent and effect the exchange on your behalf.
HOW TO SELL SHARES
THROUGH THE
DISTRIBUTOR
To sell your shares, a written request for redemption in
good order must be received by the Transfer Agent (or its
authorized agent). Valid written redemption requests will
be effective on receipt. All shareholders of record must
sign the redemption request. The Transfer Agent may require
that the signatures on written requests be guaranteed.
BY MAIL
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
7
<PAGE>
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.
...........................................................................
[>] 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.
...........................................................................
SYSTEMATIC WITHDRAWAL
PLAN ("SWP")
You may establish a systematic withdrawal plan for an
account with a $10,000 minimum balance. Under the plan,
redemptions can be automatically processed from accounts
(monthly, quarterly, semi-annually or annually) by check or
by ACH with a minimum redemption amount of $50.
CHECK-WRITING
Check-Writing Service is offered free of charge to Class D
shareholders of the Fund. 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>
INVESTMENT OBJECTIVE
AND POLICIES
___________________________________________________________________________
TREASURY SECURITIES
FUND
The investment objective of the
Treasury Securities Fund is to
preserve principal value and
maintain a high degree of
liquidity while providing
current income.
The Treasury Securities
Fund invests exclusively in U.S.
Treasury obligations and
repurchase agreements involving
such obligations. The repurchase
agreement dealers selected for
the Fund must meet certain
creditworthiness criteria
established by Standard & Poor's
Corporation ("S&P").
There can be no assurance
that the Fund will achieve its
investment objective.
...........................................................................
[>] WHAT ARE INVESTMENT OBJECTIVES AND POLICIES?
A FUND'S INVESTMENT OBJECTIVE IS A STATEMENT OF WHAT IT SEEKS TO ACHIEVE. IT IS
IMPORTANT TO MAKE SURE THAT THE INVESTMENT OBJECTIVE MATCHES YOUR OWN FINANCIAL
NEEDS AND CIRCUMSTANCES. THE INVESTMENT POLICIES SECTION SPELLS OUT THE TYPES OF
SECURITIES IN WHICH THE FUND INVESTS.
...........................................................................
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
In purchasing obligations, the Fund 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 Fund 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.
The Fund may invest up to 10% of its net assets in
illiquid securities.
For additional information regarding the Fund's
permitted investments, see "Description of Permitted
Investments and Risk Factors" and the Statement of
Additional Information.
INVESTMENT
LIMITATIONS
________________________________________________________________________
The investment objective and certain of the investment
limitations are fundamental policies of the Fund.
Fundamental policies cannot be changed with respect to the
Fund without the consent of the holders of a majority of
the Fund's outstanding shares. It is a fundamental policy
of the Fund to use its best efforts to maintain a constant
net asset value of $1.00 per share.
9
<PAGE>
THE FUND 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 Fund (based on fair market value at the
time of investment) would be invested in the securities
of such issuer; provided, however, that the Fund may
temporarily 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 Fund 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 Fund. This borrowing
provision is included solely to facilitate the orderly
sale of portfolio securities to accommodate substantial
redemption requests if they should occur and is not for
investment purposes. All borrowings will be repaid
before making additional investments for the Fund and
any interest paid on such borrowings will reduce the
income of the Fund.
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 THE
TRANSFER AGENT ________________________________________________________________
SEI Investments Fund Management ("SEI Management"),
provides the Trust with overall management services,
regulatory reporting, all necessary office space,
equipment, personnel and facilities and for acting as
shareholder servicing agent.
For its management services, SEI Management 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 Fund. SEI Management 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 .88% of the average daily net assets of the
Class D shares of the Fund on an annualized basis. For the
fiscal year ended June 30, 1998, the Fund paid management
fees, after fee waivers, of .37% of the Fund's average
daily net assets.
The Trust and DST Systems, Inc., 1004 Baltimore
Avenue, Kansas City, Missouri, 64105, have entered into a
separate transfer agent agreement with respect to the Class
D shares of the Fund. Under this agreement, DST acts as the
transfer agent and dividend disbursing agent (the "Transfer
Agent") for the Class D shares of the Trust.
10
<PAGE>
THE ADVISER
_______________________________________________________________________
Wellington Management Company, LLP (the "Adviser") 75 State
Street, Boston, Massachusetts 02109, serves as the
investment adviser to the Fund. The Adviser, under an
investment advisory agreement
with the Trust, invests the
assets of the Fund and
continuously reviews, supervises
and administers the Fund's
investment program, subject to
the supervision of, and policies
set by, the Trustees of the
Trust.
As of September 30, 1998,
the Adviser had investment
management authority with
respect to approximately $179
billion of assets, including the
assets of the Trust and SEI
Daily Income Trust, which is an
open-end money market investment
company administered by the
Manager. The Adviser 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
1928, and to investment counseling clients since 1960. The
Adviser is a Massachusetts limited liability partnership,
of which the following persons are managing partners:
Robert W. Doran, Duncan M. McFarland and John R. Ryan.
...........................................................................
[>] INVESTMENT
ADVISER
A FUND'S INVESTMENT ADVISER MANAGES THE INVESTMENT ACTIVITIES AND IS RESPONSIBLE
FOR THE PERFORMANCE OF THE FUND. 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 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 Funds up
to $500 million, and .02% of such assets in excess of $500
million. Such fees are allocated daily among the Funds of
the Trust on the basis of their relative net assets. For
the fiscal year ended June 30, 1998, the Treasury
Securities Fund paid advisory fees, after fee waivers, of
.04% of its relative net assets.
DISTRIBUTION
_______________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company, serves
as the Fund's distributor pursuant to a distribution
agreement (the "Distribution Agreement") with the Trust.
The Fund has adopted a distribution plan for its Class D
shares (the "Class D Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund has adopted a shareholder servicing plan
for its Class A shares (the "Class A Plan").
The Class D Plan provides for payments to the
Distributor at an annual rate of .25% of the Fund's average
daily net assets attributable to Class D Shares. This
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
receives
11
<PAGE>
during any year may therefore be higher or lower than its
actual expenses. These 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 compensation payment under the
Class D Plan at a rate of .20% of the Fund'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 and at its own
expense, provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Fund's shares.
PERFORMANCE
______________________________________________________________________
From time to time, the Fund 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 Fund 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.
The Fund may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives.
12
<PAGE>
The performance of the Class A shares will normally
be higher than the performance of the Class D shares of the
Fund 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
Fund or its shareholders. In addition, state and local tax
consequences of an investment in the Fund may differ from
the federal income tax consequences described below.
Accordingly, Shareholders are urged to consult their tax
advisers regarding specific
questions as to federal, state
and local income taxes.
Additional information
concerning taxes is set forth in
the Statement of Additional
Information.
TAX STATUS OF THE FUND
The Fund is treated as a
separate entity for federal tax
purposes and is not combined
with the Trust's other Funds.
The Fund 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
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.
...........................................................................
[>] TAXES
YOU MUST PAY TAXES ON YOUR FUND'S EARNINGS WHETHER YOU TAKE YOUR PAYMENTS IN
CASH OR ADDITIONAL SHARES.
...........................................................................
TAX STATUS OF
DISTRIBUTIONS
The Fund will distribute
substantially all of its net
investment income (including net
short-term capital gains) and
net capital gain to
shareholders. Dividends from
investment company taxable
income are taxable to
shareholders as ordinary income,
whether received in cash or in
additional shares, to the extent
of the Fund's earning and
profits. Distributions of net
capital gains are taxable to
shareholders as gain from the
sale or exchange of a capital
asset held for more than one
year regardless of how long
shareholders have held their
shares and regardless of whether
the distributions are received in cash or in
...........................................................................
[>] DISTRIBUTIONS
THE FUND DISTRIBUTES INCOME DIVIDENDS AND CAPITAL GAINS. INCOME DIVIDENDS
REPRESENT THE EARNINGS FROM THE FUND'S INVESTMENTS; CAPITAL GAINS DISTRIBUTIONS
OCCUR WHEN INVESTMENTS IN THE FUND ARE SOLD FOR MORE THAN THE ORIGINAL PURCHASE
PRICE.
...........................................................................
13
<PAGE>
additional shares. Dividends and distributions of net
capital gains paid by the Fund do not qualify for the
dividends-received deduction for corporate shareholders.
The Fund will make annual reports to shareholders on the
federal income tax status of all distributions.
Dividends declared by the Fund in October, November
or December of any year and payable to shareholders of
record on a date in such a month will be deemed to have
been paid by the Fund and received by the shareholders on
December 31 of the year declared if paid by the Fund at any
time during the following January.
The Fund 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 Fund will be
required to include as part of its current income the
imputed interest on such obligations even though the Fund
has not received any interest payments on such obligations
during that period. Because the Fund distributes all of its
net investment income to its shareholders, the Fund 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 Fund on direct U.S.
Government obligations is exempt from tax at the state
level when received directly by the Fund and may be exempt,
depending on the state, when received by a shareholder as
income dividends from the Fund 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
Fund 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 Fund is considered tax exempt
in their particular states.
Each sale, exchange, or redemption of the Fund's
shares is a taxable transaction to the shareholder.
14
<PAGE>
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"). All purchase, exchange and redemption requests
received in "good order" will be effective as of the
Business Day received by the Transfer
Agent (or its authorized agent)
as long as the Transfer Agent
(or its authorized agent)
receives the order and, in the
case of a purchase request,
payment, before the time at
which the Fund determines its
net asset value per share.
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, and may impose
their own cut-off times for
receipt of purchase and
redemption requests directed
through them.
If an exchange request is
for shares of a portfolio whose
net asset value is calculated as
of a time earlier than the time
at which the Fund determines its
net asset value per share, 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.
...........................................................................
[>] 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
...........................................................................
MINIMUM INVESTMENTS
The minimum initial investment in the Fund's Class D shares
is $1,000; however, the minimum investment may be waived at
the Distributor's discretion. All subsequent purchases must
be at least $100 ($25 for payroll deductions authorized
pursuant to pre-approved payroll deduction plans). 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 MINIMUM
ACCOUNT BALANCE
Due to the relatively high cost of handling small
investments, the Fund reserves the right to redeem, at net
asset value, the shares of any shareholder if, because of
redemptions of shares by or on behalf of the shareholder,
the account of such shareholder in the Fund has a value of
less than $1,000, the minimum initial purchase amount.
Accordingly, an investor purchasing shares of the Fund in
only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any
of these shares. Before the Fund exercises its right to
redeem such shares and to send the proceeds to the
15
<PAGE>
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 Fund in an amount that will
increase the value of the account to at least $1,000. See
"Purchase and Redemption of Shares" in the Statement of
Additional Information for examples of when the right of
redemption may be suspended.
At various times, the Fund 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 up to 15 days. The Fund
intends to pay cash for all shares redeemed, but under
abnormal conditions that make payment in cash unwise,
payment may be made wholly or partly in portfolio
securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs
in converting such securities to cash.
NET ASSET VALUE
An order will be executed at a per share price equal to the
net asset value next determined after the receipt of the
purchase or redemption 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 ASSET VALUE
IS DETERMINED
Securities will be valued using the amortized cost method
(described in the Statement of Additional Information). In
connection with the use of amortized cost valuation, the
Fund monitors the deviation between the amortized cost
value of its assets and their market value. The net asset
value per share of the Fund is determined by dividing the
total market value of its investments and other assets,
less any liabilities, by the total number of outstanding
shares of the Fund.
SIGNATURE GUARANTEES
The Transfer Agent may require that the signatures on the
written request be guaranteed. You should be able to obtain
a signature guarantee from a bank, broker, dealer, certain
credit unions, securities exchange or association, clearing
agency or savings association. A notary 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.
16
<PAGE>
TELEPHONE/WIRE
INSTRUCTIONS
Redemption orders may be placed by telephone. Neither the
Trust nor the Transfer Agent will be responsible for any
loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the
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, you experience
difficulties placing redemption orders by telephone and may
wish to consider placing orders by other means.
SYSTEMATIC WITHDRAWAL
PLAN ("SWP")
Please note that if withdrawals exceed income dividends,
your invested principal in the account will be depleted.
Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net
asset value per share, your original investment could be
exhausted entirely. To participate in the SWP, you must
have your dividends automatically reinvested. You may
change or cancel the SWP at any time, upon written notice
to the Transfer Agent.
HOW TO CLOSE YOUR
ACCOUNT
An account may be closed by providing written notice to the
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 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 Funds of shares and different classes of each
Fund. Shareholders may purchase shares in Funds through two
separate classes: Class A and Class D, which provide for
variation in distribution, shareholder servicing and
transfer agent costs, voting rights, and dividends. This
Prospectus offers the Class D shares of the Trust's
Treasury Securities Fund. In addition to the Fund, the
Trust consists of the following other portfolios:
Government Securities Fund, Institutional Cash Fund, Prime
Obligation Fund, and Money Market Fund. Additional
information pertaining to the Trust may be obtained by
writing to SEI Investments Fund Management, Oaks,
Pennsylvania 19456, or by calling 1-800-437-6016. All
consideration received by the Trust for shares of any Fund
or class and all assets of such Fund or class belong to
that Fund 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.
17
<PAGE>
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class of the
Trust will vote separately on matters relating solely to
that Fund 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 INQUIRIES
Shareholder inquiries should be directed to DST Systems,
Inc., P.O. Box 419240, Kansas City, MO 64141-6240.
DIVIDENDS
Substantially all of the net investment income (exclusive
of net capital gains) of the Fund is distributed in the
form of dividends that will be declared daily and paid
monthly on the first Business Day of each month. Dividends
will be paid on the next Business Day to shareholders who
redeem all of their shares of a Fund at any other time
during the month. Currently, net 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 Fund 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 Fund are paid by
the Fund 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 INDEPENDENT
ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
PricewaterhouseCoopers LLP serves as the independent
accountants to the Trust.
CUSTODIAN AND WIRE AGENT
First Union National Bank, Broad and Chestnut Streets, P.O.
Box 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.
18
<PAGE>
DESCRIPTION OF
PERMITTED
INVESTMENTS
AND RISK FACTORS
_________________________________________________________________
The following is a description of certain of the permitted
investments for the Fund, and the associated risk factors:
ILLIQUID SECURITIES
Illiquid Securities are securities which cannot be disposed
of within seven business days at approximately the price at
which they are being carried on a Fund's books. Illiquid
securities may include demand instruments with demand
notice periods exceeding seven days, securities for which
there is no active secondary market, and repurchase
agreements with durations of more than seven days in
length.
REPURCHASE AGREEMENTS
Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the
security to the seller at an agreed upon price on an agreed
upon date within a number of days from the date of
purchase. The Fund will have actual or constructive
possession of the securities held as collateral for the
repurchase agreement. The Fund bears a risk of loss in the
event the other party defaults on its obligations and the
Fund is delayed or prevented from exercising its right to
dispose of the collateral securities or if the Fund
realizes a loss on the sale of the collateral. The Fund
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
OBLIGATIONS
U.S. Treasury Obligations consist of bills, notes and bonds
issued by the U.S. Treasury, as well as separately traded
interest and principal component parts of such obligations,
known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"), that are transferable
through the federal book-entry system.
STRIPS are sold as zero coupon securities 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.
WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES
When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The Fund will maintain with the
custodian a separate account, with liquid 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 Fund
before settlement.
19
<PAGE>
SEI LIQUID ASSET TRUST
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
INSTITUTIONAL CASH FUND
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced Fund
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 31, 1998, has been filed
with the Securities and Exchange Commission, and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. 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 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 the Institutional Cash Fund (the "Fund").
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND 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, NOR HAS THE SECURITIES AND EXCHANGE 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>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL
CASH
FUND
-----------
<S> <C>
Management/Advisory Fees (AFTER FEE WAIVERS) (1) .36%
12b-1 Fees None
Total Other Expenses .08%
Shareholder Servicing Expenses (AFTER FEE WAIVERS) (2) .00%
- ---------------------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVERS) (3) .44%
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) THE MANAGER HAS AGREED TO WAIVE ITS FEE IN AN AMOUNT NECESSARY TO LIMIT THE
TOTAL OPERATING EXPENSES OF THE FUND TO NOT MORE THAN .44% OF ITS AVERAGE
NET ASSETS. THIS WAIVER IS VOLUNTARY AND MAY BE TERMINATED AT ANY TIME IN
THE MANAGER'S SOLE DISCRETION.
(2) THE DISTRIBUTOR HAS WAIVED, ON A VOLUNTARY BASIS, ALL OR A PORTION OF ITS
SHAREHOLDER SERVICING FEE, AND THE SHAREHOLDER SERVICING EXPENSES SHOWN
REFLECT THIS WAIVER. THE DISTRIBUTOR RESERVES THE RIGHT TO TERMINATE ITS
WAIVER AT ANY TIME IN ITS SOLE DISCRETION. ABSENT SUCH WAIVER, SHAREHOLDER
SERVICING EXPENSES WOULD BE .25% FOR THE FUND.
(3) ABSENT WAIVERS, TOTAL OPERATING EXPENSES FOR THE INSTITUTIONAL CASH FUND
WOULD BE .69%. ADDITIONAL INFORMATION MAY BE FOUND UNDER "THE MANAGER," "THE
ADVISER" AND "DISTRIBUTION AND SHAREHOLDER SERVICING."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
An investor in any Fund would pay the following expenses on a $1,000 investment
assuming (1) a 5% annual return and (2) redemption at the end of each time
period: $ 5 $ 14 $ 25 $ 55
- -----------------------------------------------------------------------------------------------------------------------------------
</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 AND EXAMPLE IS TO ASSIST THE INVESTOR IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY
BORNE BY INVESTORS IN CLASS A SHARES OF THE FUND. A PERSON WHO PURCHASES SHARES
THROUGH A FINANCIAL INSTITUTION MAY BE CHARGED SEPARATE FEES BY THAT
INSTITUTION. ADDITIONAL INFORMATION REGARDING THESE DIFFERENCES MAY BE FOUND
UNDER "THE MANAGER," "THE ADVISER" AND "DISTRIBUTION AND SHAREHOLDER SERVICING."
2
<PAGE>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been audited by PricewaterhouseCoopers LLP, the Trust's independent
accountants, whose report on the financial statements including this
information, dated July 21, 1998, was unqualified. This information should be
read in conjunction with the Trust's financial statements as of and for the
fiscal year ended June 30, 1998, and notes thereto, which are incorporated by
reference to the Trust's Statement of Additional Information. Additional
performance information is set forth in the Trust's 1998 Annual Report to
Shareholders, which is available upon request and without charge by calling
1-800-342-5734. As of June 30, 1998, the Fund was no longer offering shares.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS
VALUE NET REALIZED AND FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT UNREALIZED GAINS INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME ON SECURITIES INCOME CAPITAL GAINS OF PERIOD
- ------------------------------ ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------
INSTITUTIONAL CASH*
- -------------------
1997 $ 1.00 $ 0.0002 $ -- $(0.0002) $ -- $ 1.00
1996 1.00 0.0005 -- (0.0005) -- 1.00
1995 1.00 0.0003 -- (0.0003) -- 1.00
1994 1.00 0.0003 -- (0.0003) -- 1.00
1993 1.00 0.0003 -- (0.0003) -- 1.00
1992 1.00 0.0002 -- (0.0002) -- 1.00
1991 1.00 0.0003 0.0001 (0.0003) (0.0001) 1.00
1990 1.00 0.0008 0.0003 (0.0008) (0.0003) 1.00
1989 1.00 0.0007 0.0002 (0.0007) (0.0002) 1.00
1988 1.00 0.0006 0.0001 (0.0006) (0.0001) 1.00
<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME TO
RATIO OF INVESTMENT TO AVERAGE AVERAGE
NET ASSETS EXPENSES INCOME TO NET ASSETS NET ASSETS
TOTAL END OF TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING
RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ------------------------------ ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------
INSTITUTIONAL CASH*
- -------------------
1997 3.94% $ -- 0.44% 3.94% 0.69% 3.69%
1996 4.58 -- 0.44 4.58 0.44 4.58
1995 4.94 -- 0.44 5.19 0.44 5.19
1994 2.60 -- 0.44 2.63 0.44 2.63
1993 2.83 -- 0.44 2.66 0.44 2.66
1992 3.47 -- 0.44 3.50 0.44 3.50
1991 7.12 -- 0.42 5.90 0.42 5.90
1990 10.22 -- 0.44 7.80 0.44 7.80
1989 8.49 -- 0.44 6.80 0.44 6.80
1988 4.02 -- 0.44 5.20 0.44 5.20
</TABLE>
* ANNUALIZED
AMOUNTS DESIGNATED AS "--" ARE NEITHER $0 OR HAVE BEEN ROUNDED TO $0.
3
<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 Institutional Cash Fund. Additional information pertaining to the Trust
may be obtained by writing to SEI Investments Distribution Co., Oaks,
Pennsylvania 19456, or by calling 1-800-342-5734.
INVESTMENT OBJECTIVE
AND POLICIES
___________________________________________________________________________
The Institutional Cash Fund seeks to preserve principal
value and maintain a high degree of liquidity while
providing current income. The Fund invests exclusively in
U.S. Treasury obligations. There can be no assurance that
the Fund will achieve its investment objective.
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
In purchasing obligations, the Fund 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 Fund 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, Rule 2a-7 provides that
funds 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 Fund's adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities
in which the fund may invest. Except to the extent that
their investment policies are more restrictive than Rule
2a-7 or that Rule 2a-7's provisions are inapplicable, the
Fund intends to comply fully with Rule 2a-7.
Securities rated in the highest rating category by at
least two NRSROs (or, if unrated, determined by the Adviser
to be of comparable quality) are "first tier" securities.
Non-first tier securities rated in the second highest
rating category 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 Fund may purchase securities on a when-issued or
delayed delivery basis.
For additional information regarding the Fund's
permitted investments and the ratings referred to above,
see "Description of Permitted Investments and Risk Factors"
and the Statement of Additional Information.
4
<PAGE>
INVESTMENT
LIMITATIONS
________________________________________________________________________
The investment objective and certain of the investment
limitations are fundamental policies of the Fund.
Fundamental policies cannot be changed with respect to the
Fund without the consent of the holders of a majority of
the Fund's outstanding shares.
It is a fundamental policy of the Fund to use its
best efforts to maintain a constant net asset value of
$1.00 per share.
THE FUND 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 Fund (based on fair market value at
the time of investment) would be invested in the
securities of such issuer; provided, however, that the
Fund may temporarily 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 Fund to be invested in the
securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in (a) domestic banks and (b) obligations
issued or guaranteed by the U.S. Government or its
agencies and instrumentalities.
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 Fund. This borrowing
provision is included solely to facilitate the orderly
sale of portfolio securities to accommodate substantial
redemption requests if they should occur and is not for
investment purposes. All borrowings will be repaid
before making additional investments for the Fund and
any interest paid on such borrowings will reduce the
income of the Fund.
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
______________________________________________________________________
SEI Investments Fund Management ("SEI Management"),
provides the Trust with overall management services,
regulatory reporting, all necessary office space,
equipment, personnel and facilities, and acts as dividend
disbursing agent and shareholder servicing agent. SEI
Management also serves as transfer agent (the "Transfer
Agent") to Class A shares of the Trust.
For its management services, SEI Management is
entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .36% of the average daily net
assets of the Fund. SEI Management has contractually agreed
to waive all or a portion of its fee in order to limit the
total operating expenses of the Fund to not more than .44%
of its average daily net assets. This waiver is voluntary
and may be terminated at any time in SEI Management's sole
discretion.
For the fiscal year ended June 30, 1998, the
Institutional Cash Fund paid management fees, after
waivers, of .36% of its average daily net assets.
5
<PAGE>
THE ADVISER
_______________________________________________________________________
Wellington Management Company, LLP (the "Adviser"), 75
State Street, Boston, Massachusetts 02109, serves as the
investment adviser to the Fund. The Adviser, under an
investment advisory agreement with the Trust, invests the
assets of the Fund and continuously reviews, supervises and
administers the Fund's investment program, subject to the
supervision of, and policies established by, the Trustees
of the Trust.
As of September 30, 1998, the Adviser had investment
management authority with respect to approximately $179
billion of assets, including the assets of the Trust and
SEI Daily Income Trust, which is an open-end management
investment company administered by the Manager. The Adviser
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 1928, and to investment
counseling clients since 1960. The Adviser is a
Massachusetts limited liability partnership, of which the
following persons are managing partners: Robert W. Doran,
Duncan M. McFarland, and John R. Ryan.
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 Funds up
to $500 million, and .02% of such average daily net assets
in excess of $500 million. Such fees are allocated daily
among the Funds of the Trust on the basis of their relative
net assets. For the fiscal year ended June 30, 1998, the
Institutional Cash Fund paid advisory fees, after fee
waivers, of .00% of its relative net assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), serves as the Fund's distributor pursuant to
a distribution agreement with the Trust. The Fund has
adopted a shareholder service plan for their Class A shares
(the "Class A Plan").
The Fund has adopted a shareholder service plan for
Class A shares (the "Class A Service Plan") under which
firms, including the Distributor, that provide shareholder
and administrative services may receive compensation
therefor. Under the Class A Service Plan, the Distributor
may provide those services itself, or may enter into
arrangements under which third parties provide such
services and are compensated by the Distributor. Under such
arrangements, the Distributor may retain as profit any
difference between the fee it receives and the amount it
pays such third parties. In addition, the Fund may enter
into such arrangements directly. Under the Class A Service
Plan, the Distributor is entitled to receive a fee at a
negotiated annual rate of up to .25% of the Fund's average
daily net assets attributable to Class A shares that are
subject to the arrangement in return for
6
<PAGE>
provision of a broad range of shareholder and
administrative services, including: maintaining client
accounts; arranging for bank wires; responding to client
inquiries concerning services provided for investments;
changing dividend options; account designations and
addresses; providing sub-accounting; providing information
on share positions to clients; forwarding shareholder
communications to clients; processing purchase, exchange
and redemption orders; and processing dividend payments.
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 also execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Fund's shares.
PURCHASE AND
REDEMPTION OF SHARES
____________________________________________________________________________
Financial institutions may acquire Class A shares of the
Fund 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. Financial institutions may impose an earlier
cut-offtime 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 Fund 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 on which wire transfers are restricted.
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent (or its
authorized agent) prior to the determination of net asset
value on any Business Day for the order to be accepted on
that Business Day. Purchase orders received by a fund after
the determination of net asset value will be effected at
the next Business Day's net asset value. Generally, payment
for fund shares must be transmitted on the same Business
Day the order is placed. Payment for such shares may only
be transmitted or delivered in federal funds to the wire
agent. 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 purchase order.
7
<PAGE>
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
Fund is managed to maintain a stable price of $1.00 per
share. Securities will be valued using the amortized cost
method (described in the Statement of Additional
Information). In connection with the use of amortized cost
valuation, the Fund monitors the deviation between the
amortized cost value of its assets and their market value.
Net asset value per share is determined daily as of 12:00
p.m., Eastern time, on each Business Day. Financial
institutions which purchase and redeem shares for the
accounts of their customers may impose their own cut-off
times for receipt of purchase and redemption requests
directed through them.
Shareholders who desire to redeem shares of the Fund
must place their redemption orders with the Transfer Agent
(or its authorized agent) prior to the determination of net
asset value on any Business Day. Redemption orders received
after the determination of net asset value will be effected
at the next Business Day's net asset value. The redemption
price is the net asset value per share of the Fund next
determined after receipt by the Transfer Agent of the
redemption order. Payment on redemption will be made as
promptly as possible and, in any event, within seven days
after the redemption order is received.
The Trust intends to generally make redemptions in
cash. The Trust may, however, make redemptions in whole or
in part by a distribution in kind of readily marketable
securities in lieu of cash. Shareholders may incur
brokerage costs on the sale of any such securities so
received in payment of redemptions.
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 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 Fund 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 Fund 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
8
<PAGE>
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.
The Fund may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives.
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
Fund or its shareholders. In addition, state and local tax
consequences of an investment in the Fund may differ from
the federal income tax consequences described below.
Accordingly, shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state
and local income taxes. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal tax
purposes and is not combined with the Trust's other Funds.
The Fund intends 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 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
DISTRIBUTIONS
The Fund distributes substantially all of its net
investment income (including net short-term capital gains)
to shareholders. Dividends from the Fund's net investment
income are taxable to its shareholders as ordinary income
(whether received in cash or in additional shares) and
generally will not qualify for the corporate
dividends-received deduction unless derived from dividends
received by the Fund from domestic (U.S.) corporations.
Distributions to shareholders of net capital gains of the
Fund also will not qualify for the dividends received
deduction and will be taxable to shareholders as long-term
capital gain, taxable at the rate of 20% for property held
for more than one year, whether received in cash or
additional shares, and regardless of how long a shareholder
has held the shares. The Fund will provide annual reports
to shareholders of the federal income tax status of all
distributions.
Dividends declared by the Fund in October, November
or December of any year and payable to shareholders of
record on a date in such a month will be deemed to have
been paid by the Fund and received by the shareholders on
December 31 of the year declared if paid by the Fund at any
time during the following January.
9
<PAGE>
The Fund 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 Fund will be
required to include as part of its current income, the
imputed interest on such obligations even though the Fund
has not received any interest payments on such obligations
during that period. Because the Fund distributes all of its
net investment income to its shareholders, the Fund 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 Fund on direct U.S.
Government obligations is exempt from tax at the state
level when received directly by the Fund, and may be
exempt, depending on the state, when received by a
shareholder as income dividends from any Fund 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 fund 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 Fund is considered tax
exempt in their particular states.
Each sale, exchange, or redemption of Fund 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 Funds of shares and different
classes of each Fund. All consideration received by the
Trust for shares of any Fund and all assets of such Fund
belong to that Fund 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 TRUST
The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
10
<PAGE>
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each Fund or class of the Trust
will vote separately on matters relating solely to that
Fund 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 INQUIRIES
Shareholder inquiries should be directed to the Manager,
SEI Investments Fund Management, Oaks, Pennsylvania 19456.
DIVIDENDS
Substantially all of the net investment income (exclusive
of net capital gains) of each Fund is periodically declared
and paid as a dividend. Dividends are paid by the Fund in
federal funds or in additional shares at the discretion of
the shareholder on the first Business Day of each month.
Dividends will be paid on the next Business Day to
shareholders who redeem all of their shares of a Fund at
any other time during the month. Currently, net 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 INDEPENDENT
ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
PricewaterhouseCoopers LLP serves as the independent
accountants to the Trust.
CUSTODIAN AND WIRE AGENT
First Union National Bank, Broad and Chestnut Streets, P.O.
Box 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 Fund, and the associated risk factors:
DEMAND INSTRUMENTS
Certain instruments may entail a demand feature which
permits the holder to demand payment of the principal
amount of the instrument. Demand instruments may include
variable amount master demand notes.
ILLIQUID SECURITIES
Illiquid securities are securities which cannot be disposed
of within seven business days at approximately the price at
which they are being carried on the Fund's books. Illiquid
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<PAGE>
securities may include demand instruments with demand
notice periods exceeding seven days, securities for which
there is no active secondary market, and repurchase
agreements with durations of more than seven days in
length.
U.S. TREASURY
OBLIGATIONS
U.S. Treasury obligations consist of bills, notes and bonds
issued by the U.S. Treasury, as well as separately traded
interest and principal component parts of such obligations,
known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"), that are transferable
through the federal book-entry system.
STRIPS are sold as zero coupon securities, 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.
VARIABLE AND FLOATING
RATE INSTRUMENTS
Certain of the obligations purchased by the Fund may carry
variable or floating rates of interest and may involve 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 DELAYED
DELIVERY SECURITIES
When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The Fund will maintain with the
custodian a separate account with liquid 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 Fund
before settlement.
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TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights...................................................... 3
The Trust................................................................. 4
Investment Objective and Policies......................................... 4
General Investment Policies............................................... 4
Investment Limitations.................................................... 5
The Manager............................................................... 5
The Adviser............................................................... 6
Distribution and Shareholder Servicing.................................... 6
Purchase and Redemption of Shares......................................... 7
Performance............................................................... 8
Taxes..................................................................... 9
General Information....................................................... 10
Description of Permitted Investments and Risk Factors..................... 11
</TABLE>
13
<PAGE>
SEI LIQUID ASSET TRUST
Manager:
SEI Investments Fund Management
Distributor:
SEI Investments Distribution Co.
Investment Adviser:
Wellington Management Company, LLP
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 31,
1998. Prospectuses may be obtained upon request and without charge by writing
the Trust's distributor, SEI Investments Distribution Co., Oaks, Pennsylvania
19456, or by calling 1-800-342-5734.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust................................................................. S-2
Description of Permitted Investments...................................... S-2
The Manager............................................................... S-6
The Adviser............................................................... S-7
Distribution and Shareholder Servicing.................................... S-8
Trustees and Officers of the Trust........................................ S-9
Fundamental Investment Limitations........................................ S-12
Non-Fundamental Investment Limitations.................................... S-13
Performance............................................................... S-13
Determination of Net Asset Value.......................................... S-14
Purchase and Redemption of Shares......................................... S-15
Shareholder Services (Class D Shares)..................................... S-15
Taxes..................................................................... S-16
Fund Transactions......................................................... S-18
Description of Shares..................................................... S-19
Limitation of Trustees' Liability......................................... S-19
Shareholder Liability..................................................... S-19
5% Shareholders........................................................... S-19
Experts................................................................... S-21
Legal Counsel............................................................. S-22
Financial Statements...................................................... S-22
</TABLE>
October 31, 1998
SEI-F-004-08
<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 ("funds") of units of beneficial interest
("shares") and separate classes of portfolios. Except for differences between
Class A and Class D shares pertaining to distribution and shareholder servicing
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 Funds: Treasury Securities, Government Securities, Prime Obligation,
Institutional Cash and Money Market Funds (each a "Fund" and, together, the
"Funds"), and any classes of the Funds.
DESCRIPTION OF PERMITTED INVESTMENTS
COMMERCIAL PAPER--The Prime Obligation and Money Market Funds 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. 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
S-2
<PAGE>
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.
FOREIGN SECURITIES--The Money Market Fund may invest in U.S. dollar
denominated obligations of foreign issuers, including foreign branches of U.S.
commercial banks, and of U.S. and London branches of foreign banks. These
instruments may subject the Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in 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 Funds may invest in securities issued by the Government National
Mortgage Association ("GNMA"), a wholly-owned U.S. Government corporation which
guarantees the 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 Funds will receive monthly scheduled payments of principal and
interest. In addition, the Funds 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.
MUNICIPAL SECURITIES--The Money Market and Prime Obligation Funds may invest
in Municipal Securities. The two principal classifications of Municipal
Securities are "general obligation" and "revenue" issues. General obligation
issues are issues involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues, although the
characteristics and method of enforcement of general obligation issues may vary
according to the law applicable to the particular issuer. Revenue issues are
payable only from the revenues derived from a particular facility or class of
facilities or other specific revenue source. A Fund may also invest in "moral
obligation" issues, which are normally issued by special purpose authorities.
Moral obligation issues are not backed by the full faith and credit of the state
but are generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal Securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public facilities,
the
S-3
<PAGE>
refunding of outstanding obligations, the payment of general operating expenses,
and the extension of loans to other public institutions and facilities. Certain
private activity bonds that are issued by or on behalf of public authorities to
finance various privately-owned or operated facilities are included within the
term "Municipal Securities." Private activity bonds and industrial development
bonds are generally revenue bonds, the credit and quality of which are directly
related to the credit of the private user of the facilities.
Municipal Securities may also include general obligation notes, tax
anticipation notes, bond anticipation notes, revenue anticipation notes, project
notes, certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are sold by the Department of
Housing and Urban Development. While the issuing agency has the primary
obligation with respect to its project notes, they are also secured by the full
faith and credit of the United States through agreements with the issuing
authority which provide that, if required, the federal government will lend the
issuer an amount equal to the principal of and interest on the project notes.
The quality of Municipal Securities, both within a particular classification
and between classifications, will vary, and the yields on Municipal Securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating(s)
of the issue. In this regard, it should be emphasized that the ratings of any
nationally recognized statistical rating organization ("NRSRO") are general and
are not absolute standards of quality. Municipal Securities with the same
maturity, interest rate and rating(s) may have different yields, while Municipal
Securities of the same maturity and interest rate with different rating(s) may
have the same yield.
An issuer's obligations under its Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.
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 credit risk and are generally referred to as "gilt
edge." Interest payments are protected by a large, or an exceptionally stable,
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. 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 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 rated AA are judged by Fitch to be of safety
S-4
<PAGE>
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.
MUNICIPAL NOTE RATINGS--Moody's highest rating for state and municipal and
other short-term notes is MIG-1 and VMIG-1. Short-term Municipal Securities
rated MIG-1 or VMIG-1 are of the best quality and such securities have strong
protection afforded by established cash flows, superior liquidity support and/or
demonstrated access to the market for refinancing. Short-term Municipal
Securities rated MIG-2 and VMIG-2 are of high quality and their margins of
protection are ample, although not so large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment.
- Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
- Source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rate symbols are as follows:
SP-1. Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
REPURCHASE AGREEMENTS--The Treasury Securities, Government Securities, Prime
Obligation, and Money Market Funds 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 Fund involved bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
and the Fund is delayed or prevented from exercising its rights to dispose of
the securities held as collateral. Wellington Management Company, LLP (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 Funds to enter into
repurchase agreements only with approved banks and primary securities dealers,
as
S-5
<PAGE>
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 Funds 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 Funds, the
Funds will take actual or constructive possession of the underlying collateral.
However, if the seller defaults, the Funds could realize a loss on the sale of
the underlying security to the extent the proceeds of the sale are less than the
resale price. In addition, even though the Bankruptcy Code provides protection
for most repurchase agreements, if the seller should be involved in bankruptcy
or insolvency proceedings, the Funds may incur delay and costs in selling the
security and may suffer a loss of principal and interest if the Funds are
treated as an unsecured creditor.
U.S. GOVERNMENT AGENCY OBLIGATIONS--The Government Securities, Prime
Obligation, and Money Market Funds may invest in obligations of 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 Funds 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,
Fannie Mae 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., GNMA
Securities), 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., Fannie Mae Securities). 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 Funds 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 Fund 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 Fund. 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.
THE MANAGER
The Management Agreement, provides that SEI Investments Fund Management (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.
S-6
<PAGE>
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 Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Manager. SEI Investments and its
subsidiaries and affiliates, including the Manager, 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 and its affiliates also serve as administrator or
sub-administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Armada Funds,
Bishop Street Funds, Boston 1784 Funds-Registered Trademark-, CrestFunds, Inc.,
CUFUND, The Expedition Funds, First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., HighMark Funds,
Monitor Funds, Morgan Grenfell Investment Trust, The Nevis Funds, Oak Associates
Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc., PBHG Insurance Series
Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Index Funds, SEI Institutional International Trust, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI Tax Exempt Trust, STI
Classic Funds, STI Classic Variable Trust, TIP Funds and TIP Institutional
Funds.
The Manager has agreed contractually to waive its fee in order to limit
operating expenses of the Funds 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 Fund 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 Fund to an
extent which would result in the Fund's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code 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, 1996, 1997 and 1998, the Funds paid fees
to the Manager as follows:
<TABLE>
<CAPTION>
MANAGEMENT FEES PAID MANAGEMENT FEES WAIVED
--------------------------------------------- ---------------------------------------------
1996 1997 1998 1996 1997 1998
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Treasury Securities Fund............ $ 3,979,872 $ 2,666,177 $ 2,584,546 $ 981,184 $ 383,785 $ 270,932
Government Securities Fund.......... $ 621,433 $ 676,893 $ 496,201 $ 198,391 $ 42,733 $ 50,528
Prime Obligation Fund............... $ 2,773,884 $ 3,030,793 $ 3,583,757 $ 786,431 $ 418,795 $ 338,143
Institutional Cash Fund............. $ 9,292 $ 7,595 $ -- $ -- $ -- $ --
Money Market Fund * * * * * *
</TABLE>
- ------------------------------
* Not in operation during such period.
THE ADVISER
The Trust and Wellington Management Company, LLP ("the Adviser") 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
S-7
<PAGE>
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 Fund 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 Fund, by a majority of the outstanding shares of that Fund, on not
less than 30 days' nor more than 60 days' written notice to the Adviser, or by
the Adviser on 90 days' written notice to the Trust.
The Adviser 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 Funds based
upon their relative net assets.
For the fiscal years ended June 30, 1996, 1997, and 1998 the Funds paid the
Adviser advisory fees as follows:
<TABLE>
<CAPTION>
ADVISORY FEES PAID
---------------------------------------------
1996 1997 1998
------------- ------------- -------------
<S> <C> <C> <C>
Treasury Securities Fund.......................... $ 381,950 $ 261,109 $ 243,175
Government Securities Fund........................ $ 63,381 $ 61,539 $ 46,569
Prime Obligation Fund............................. $ 274,922 $ 296,290 $ 334,016
Institutional Cash Fund........................... $ -- $ -- $ --
Money Market Fund................................. * * *
</TABLE>
- ------------------------
* Not in operation during such period.
DISTRIBUTION AND SHAREHOLDER SERVICING
The Trust has adopted a Distribution Agreement for the Funds dated November
29, 1982. The Trust has also adopted a Class D Distribution Plan (the "Class D
Plan") for the Treasury Securities Fund 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 Class D
Plan and the Distribution Agreement are in the best interests of the
Shareholders. Continuance of the Class D Plan must be approved annually by a
majority of the Trustees of the Trust, and by a majority of the Trustees who are
not "interested persons" of the Trust as that term is defined in the 1940 Act,
and who have no direct or indirect financial interest in the operation of a
Distribution Plan or in any agreements related thereto ("Qualified Trustees").
The Class D Plan requires that quarterly written reports of amounts spent under
the Plan and the purposes of such expenditures be furnished to and reviewed by
the Trustees. The Class D Plan may not be amended to increase materially the
amount which may be spent thereunder without approval by a majority of the
outstanding shares of the Fund. All material amendments of the Class D Plan will
require approval by a majority of the Trustees of the Trust and of the Qualified
Trustees.
The Class D Plan provides that the Trust will pay the Distributor a fee on
the Class D shares of the Fund. The Distributor may use this fee for: (i)
compensation for its services in connection with distribution assistance or
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.
S-8
<PAGE>
The Funds have adopted a shareholder servicing plan for its Class A shares
(the "Class A Plan"). Under this Plan, the Distributor may perform, or may
compensate other service providers for performing, the following shareholder and
administrative services: maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services provided on investments;
assisting clients in changing dividend options, account designations and
addresses; sub-accounting; providing information on share positions to clients;
forwarding shareholder communications to clients; processing purchase, exchange
and redemption orders; and processing dividend payments. Under the Service Plan,
the Distributor may retain as a profit any difference between the fee it
receives and the amount it pays to third parties.
For the fiscal year ended June 30, 1998, the Funds incurred the following
distribution expenses:
<TABLE>
<CAPTION>
AMOUNT PAID TO
3RD PARTIES BY SFS
FOR DISTRIBUTOR
TOTAL BASIS RELATED SERVICES
FUND/CLASS ($AMOUNT) POINTS ($AMOUNT)
- ------------------------------------------------------------------------------- ------------- ----------- -------------------
<S> <C> <C> <C>
CLASS D
Treasury Securities Fund..................................................... $ 484 .20% $ 484
</TABLE>
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Monitor Funds, Morgan Grenfell
Investment Trust, Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor
Funds, Inc., PBHG Insurance Series, Inc., The Pillar Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International
Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic
Variable Trust, TIP Funds and TIP Institutional Funds, each of which is an
open-end management investment company managed by SEI Investments Fund
Management or its affiliates and, except for PBHG Advisor Funds, Inc.,
distributed by SEI Investments Distribution Co.
ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees*--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of, the Manager and the
Distributor, 1981-1994, Trustee of The Advisors' Inner Circle Fund, The Arbor
Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds, Marquis
Funds-Registered Trademark-, Oak Associates Funds, Pillar Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI Institutional
International Trust and SEI Tax Exempt Trust.
WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, the Manager and the Distributor, Director and
Secretary of SEI Investments and Secretary of, the Manager and the Distributor,
Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition
Funds, Marquis Funds-Registered Trademark-, Oak Associates Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Fund, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI Institutional
International Trust and SEI Tax Exempt Trust.
S-9
<PAGE>
F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--President, Orange County
Publishing Co., Inc.; Publisher, Paoli News and Paoli Republican; and Editor,
Paoli Republican, October 1981-January 1997. President, H&W Distribution, Inc.,
since July 1984. Executive Vice President, Trust Department, Harris Trust and
Savings Bank and Chairman of the Board of Directors of The Harris Trust Company
of Arizona before January 1981. Trustee of SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Institutional International Trust, SEI Tax
Exempt Trust, STI Classic Funds and STI Classic Variable Trust.
FRANK E. MORRIS (DOB 12/30/23)--Trustee**--Peter Drucker Professor of
Management, Boston College, 1989-1990. President, Federal Reserve Bank of
Boston, 1968-1988, Trustee of The Advisors' Inner Circle Fund, The Arbor Fund,
The Expedition Funds, Marquis Funds-Registered Trademark-, Oak Associates Funds,
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, and SEI Tax Exempt Trust.
JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads,
from September 1987-December 1993. Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, and SEI Tax Exempt Trust.
GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991-December 1996; Chief Financial Officer, Noble Partners, L.P.,
March 1991-December 1996; Treasurer and Clerk, Peak Asset Management, Inc.,
since 1991; Trustee, Navigator Securities Lending Trust, since 1995, Trustee of
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, and SEI Tax Exempt Trust.
EDWARD D. LOUGHLIN (DOB 03/07/51)--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments and the Manager since 1997. Senior Vice President, SEI
Investments, 1986-1991; Vice President, SEI Investments, 1981-1986.
TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, the
Manager and the Distributor since 1995. Associate, Dewey Ballantine (law firm),
1994-1995. Associate, Winston & Strawn (law firm), 1991-1994.
LYDIA A. GAVALIS (DOB 06/05/64)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Manager and the
Distributor since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange, 1989-1998.
KATHY HEILIG (DOB 12/21/58)--Vice President and Assistant
Secretary--Treasurer of SEI Investments Company since 1997; Assistant Controller
of SEI Investments Company since 1995; Vice President of SEI Investments Company
since 1991; Director of Taxes of SEI Investments Company 1987 to 1991. Tax
Manager, Arthur Anderson LLP prior to 1987.
JOSEPH M. O'DONNELL (DOB 11/13/54)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Manager and the
Distributor since 1998. Vice President and General Counsel, FPS Services, Inc.,
1993-1997. Staff Counsel and Secretary, Provident Mutual Family of Funds,
1990-1993.
SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant
Secretary--Secretary of the Distributor since 1998; Vice President of the
Distributor since 1988. Vice President and Assistant Secretary of the Manager
since 1988. Assistant Secretary of the Distributor from 1988 to 1998.
CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, the
Manager and the Distributor since August 1997. Branch Chief, Division of
Enforcement, U.S. Securities and Exchange Commission, January 1995-August
S-10
<PAGE>
1997. Senior Counsel--Division of Enforcement, U.S. Securities and Exchange
Commission, September 1992-January 1995. Staff Attorney--Division of
Enforcement, U.S. Securities and Exchange Commission, September 1990-September
1992.
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, the
Manager and the Distributor since 1994. Assistant Secretary of SEI Investments
since 1992; Secretary of the Manager since 1994. Vice President, General Counsel
and Assistant Secretary of the Manager and the Distributor, 1992-1994.
Associate, Morgan, Lewis & Bockius LLP (law firm), 1988-1992.
KATHRYN L. STANTON (DOB 11/19/58)--Vice President and Assistant
Secretary--General Counsel, Investment Systems and Services since 1997. Deputy
General Counsel of SEI Investments since 1996. Vice President and Assistant
Secretary of SEI Investments, the Manager and the Distributor since 1994;
Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Manager and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.
(1997-1998). Partner, Groom and Nordberg, Chartered, 1996-1997. Associate
General Counsel, Riggs Bank, N.A., 1991-1995.
RICHARD W. GRANT (DOB 10/25/45)--Secretary--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, the Manager and the Distributor.
MARK. E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Investments Mutual Fund
Services and Vice President of the Manager since 1996. Vice President of the
Distributor since December 1997. Vice President, Fund Accounting, BISYS Fund
Services September 1995 to November 1996, Senior Vice President and Site
Manager, Fidelity Investments 1981 to September 1995.
- ------------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.
**Messrs. Gooch, Storey, Morris and Sullivan serve as members of the Audit
Committee of the Trust.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
Compensation of officers and affiliated Trustees of the Trust is paid by SEI
Management.
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-11
<PAGE>
The following table sets forth information about the compensation paid to
the Trustees for the fiscal year ended May 31, 1998:
<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT TOTAL
COMPENSATION BENEFITS ESTIMATED COMPENSATION FROM
FROM ACCRUED ANNUAL REGISTRANT AND
REGISTRANT AS PART OF BENEFITS FUND COMPLEX PAID TO
FOR FYE FUND UPON DIRECTORS FOR FYE
NAME OF PERSON AND POSITION 5/31/98 EXPENSES RETIREMENT 5/31/98
- --------------------------------------------- ------------ ----------- ---------- -----------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee.................... $-- N/A N/A $ --
William M. Doran, Trustee.................... $-- N/A N/A $ --
F. Wendell Gooch, Trustee.................... $14,086 N/A N/A $101,000 on services on
8 boards
Frank E. Morris, Trustee..................... $14,086 N/A N/A $101,000 on service on
8 boards
James M. Storey, Trustee..................... $14,086 N/A N/A $101,000 on service on
8 boards
George J. Sullivan, Trustee.................. $14,086 N/A N/A $101,000 on services on
8 boards
</TABLE>
Mr. Edward W. Binshadler is a Trustee Emeritus of the Trust. Mr. Binshadler
serves as a consultant to the Audit Committee and receives as compensation,
$5,000 per Audit Committee meeting attended.
FUNDAMENTAL INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of each Fund
which cannot be changed with respect to a Fund without the consent of the
holders of a majority of that Fund's outstanding shares. The term "majority of
outstanding shares" means the vote of (i) 67% or more of a Fund's shares present
at a meeting, if more than 50% of the outstanding shares of a Fund are present
or represented by proxy, or (ii) more than 50% of a Fund's outstanding shares,
whichever is less.
No Fund may:
1. Make loans, except that any Fund may purchase or hold debt instruments in
accordance with its investment objective and policies and may enter into
repurchase agreements, provided that repurchase agreements maturing in more
than seven days, restricted securities and other illiquid securities are not
to exceed, in the aggregate, 10% of the Fund's total assets.
2. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings, as described in the Prospectus, in aggregate amounts not to
exceed 10% of the net assets of such Fund taken at fair market value at the
time such loan is incurred.
3. Invest in companies for the purpose of exercising control.
4. Acquire more than 10% of the voting securities of any one issuer.
5. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts including futures contracts. However,
subject to its permitted investments, any Fund may purchase obligations
issued by companies which invest in real estate, real estate limited
partnerships, commodities or commodities contracts.
6. Make short sales of securities, maintain a short position or purchase
securities on margin, except that a Fund may obtain short-term credits as
necessary for the clearance of security transactions.
7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a Portfolio security.
8. Purchase securities of other investment companies except as permitted by the
1940 Act and the rules and regulations thereunder and, in any event, may not
purchase securities of other open-end investment companies. Under these
rules and regulations, the Funds are prohibited from acquiring
S-12
<PAGE>
the securities of other investment companies if, as a result of such
acquisition, a Fund owns more than 3% of the total voting stock of an
investment company; securities issued by any one investment company
represent more than 5% of the total Fund assets; or securities (other than
treasury stock) issued by all investment companies represent more than 10%
of the total assets of a Fund. These investment companies typically incur
fees that are separate from those fees incurred directly by a Fund. A Fund's
purchase of such investment companies results in the layering of expenses
such that shareholders would indirectly bear a proportionate share of such
investment companies' expenses, including advisory fees.
9. 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.
10. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or any
investment adviser of the Trust owns beneficially more than of 1% of the
shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than of 1% of such shares or securities
together own more than 5% of such shares or securities.
11. Purchase securities of any company which has (with predecessors) a record of
less than three years' continuing operations, except (i) obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, or
(ii) municipal securities which are rated by at least two nationally
recognized municipal bond rating services, if, as a result, more than 5% of
the total assets (taken at fair market value) of the Fund would be invested
in such securities.
12. Purchase warrants, puts, calls, straddles, spreads or combinations thereof.
13. Invest in interests in oil, gas or other mineral exploration or development
programs.
14. 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
The following investment limitation is a non-fundamental policy of the Trust
and may be changed without shareholder approval.
1. The Government Securities and Prime Obligation Funds must maintain an
average dollar-weighted Fund maturity of 90 days or less.
PERFORMANCE
From time to time, each Fund 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 Fund 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.
S-13
<PAGE>
The Funds 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 Fund invests in, changes in interest rates
on money market instruments, changes in the expenses of the Funds and other
factors.
Yields are one basis upon which investors may compare the Funds 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.
For the seven-day period ended June 30, 1998 the Funds' yield and effective
yield were as follows:
<TABLE>
<CAPTION>
7-DAY
EFFECTIVE
FUND/CLASS CLASS 7-DAY YIELD YIELD
- -------------------------------------------------- -------- ------------ ------------
<S> <C> <C> <C>
Treasury Securities............................... Class A 5.20 5.34
Class D 4.85 4.97
Government Securities............................. Class A 5.08 5.21
Prime Obligation.................................. Class A 5.22 5.36
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 Funds 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 Fund would receive
if it sold the instrument. During periods of declining interest rates, the daily
yield of a Fund may tend to be higher than a like computation made by a company
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio securities. Thus,
if the use of amortized cost by the Trust resulted in a lower aggregate
portfolio value on a particular day, a prospective investor in a Fund would be
able to obtain a somewhat higher yield than would result from investment in a
company utilizing solely market values, and existing shareholders in the Fund
would experience a lower yield. The converse would apply 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 Fund 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 Fund 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 risks or that unrated instruments are of
S-14
<PAGE>
comparable quality in accordance with guidelines established by the Trustees.
The Trustees must approve or ratify the purchase of any unrated securities. In
addition, investments in second tier securities are subject to the further
constraints that (i) no more than 5% of a Fund's assets may be invested in such
securities in the aggregate, and (ii) any investment in such securities of one
issuer is limited to the greater of 1% of the Fund's total assets or $1 million.
The regulations also require the Trustees to establish procedures which are
reasonably designed to stabilize the net asset value per unit at $1.00 for each
Fund. 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 Fund's current net asset value per unit calculated
using available market quotations from each Fund'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 Fund incurs a significant
loss or liability, the Trustees have the authority to reduce pro rata the number
of shares of that Fund in each shareholder's account and to offset each
shareholder's pro rata portion of such loss or liability from the shareholder's
accrued but unpaid dividends or from future dividends.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions of shares of the Funds may be made on any day the
New York Stock Exchange is open for business. Currently, the following holidays
are observed by the Trust: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or evaluation of the portfolio securities is not reasonably
practicable, or for such other periods as the SEC may by order permit. The Trust
also reserves the right to suspend sales of shares of the Fund 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.
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 Funds 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 Fund which provides for
the holder in escrow by the Manager of 5% of the total amount intended to be
purchased until such
S-15
<PAGE>
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.
DISTRIBUTION INVESTMENT OPTION: Distributions of dividends and capital
gains made by the Funds may be automatically invested in shares of one of the
Funds if shares of the Fund are available for sale. Such investments will be
subject to initial investment minimums, as well as additional purchase minimums.
A shareholder considering the Distribution Investment Option should obtain and
read the prospectus of the Funds 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 Funds has a one-time right to reinvest the redemption proceeds in shares of
the Fund at their net asset value as of the time of reinvestment. Such a
reinvestment must be made within 30 days of the redemption and is limited to the
amount of the redemption proceeds. Although redemptions and repurchases of
shares are taxable events, a reinvestment within such 30-day period in the same
fund is considered a "wash sale" and results in the inability to recognize
currently all or a portion of a loss realized on the original redemption for
federal income tax purposes. The investor must notify the Transfer Agent at the
time the trade is placed that the transaction is a reinvestment.
EXCHANGE PRIVILEGE: Some or all of the shares of the Fund 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 Institutional International Trust and SEI
Institutional Managed Trust or at their net asset value for Class D shares of
other Funds 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 Fund'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 Fund to be exchanged and the purchase of the
shares of the other Fund. 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 Funds, and
thus the purchase of shares of the other Funds, may be delayed for up to seven
days if the Funds determine that such delay would be in the best interest of all
of its shareholders. Investment dealers which have satisfied criteria
established by the Funds may also communicate a shareholder's Exchange Request
to the Funds subject to the restrictions set forth above. No more than five
exchange requests may be made in any one telephone Exchange Request.
TAXES
The following is only a summary of certain tax considerations generally
affecting a Fund 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.
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<PAGE>
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 changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated herein.
Each Fund 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
Funds expects to eliminate or reduce to a nominal amount the federal income
taxes to which such Fund may be subject.
In order to qualify for treatment as a RIC, a Fund 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 the excess of net short-term capital gain
over net long-term capital loss) (the "Distribution Requirement") and also must
meet several additional requirements. Among these requirements are the
following: (i) at least 90% of a Fund's gross income each taxable year must be
derived from dividends, interest, payments with respect to securities loans, and
gains from the sale or other disposition of stock or securities, or other income
derived with respect to its business of investing in such stock or securities;
(ii) at the close of each quarter of a Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other 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 Fund's assets and that does not represent
more than 10% of the outstanding voting securities of such issuer; and (iii) at
the close of each quarter of a Fund's taxable year, not more than 25% of the
value of its assets may be invested in securities (other than U.S. government
securities or the securities of other 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 Fund owns at least 20% of the voting power of such issuers.
Notwithstanding the Distribution Requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), a
Fund will be subject to a nondeductible 4% federal excise tax to the extent it
fails to distribute by the end of any calendar year at least 98% of its ordinary
income for that year and 98% of its capital gain net income (the excess of short
and long-term capital gains over short and long-term capital losses) for the
one-year period ending on October 31 of that year, plus certain other amounts.
Each Fund intends to make sufficient distributions to avoid liability for the
federal excise tax. A Fund may in certain circumstances be required to liquidate
Fund investments in order to make sufficient distributions to avoid federal
excise tax liability at a time when the investment advisor might not otherwise
have chosen to do so, and liquidation of investments in such circumstances may
affect the ability of a Fund to satisfy the requirements for qualification as a
RIC.
Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than twelve months, and otherwise will be treated
as short-term capital gain or loss. However, if shares on which a shareholder
has received a net capital gain distribution are subsequently sold, exchanged or
redeemed and such shares have been held for six months or less, any loss
recognized will be treated as long-term capital loss to the extent of the net
capital gain distribution. Long-term capital gains are currently taxed at a
maximum rate of 20% and short-term capital gains are currently taxed at ordinary
income tax rates.
If a Fund fails to qualify as a RIC for any year, all of its taxable income
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and its distributions (including
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<PAGE>
capital gains distributions) generally will be taxable as ordinary income
dividends to its shareholders, subject to the dividends received deduction for
corporate shareholders.
A Fund will be required in certain cases to withhold and remit to the United
States Treasury 31% of amounts payable to any shareholder who (1) has provided
the Fund either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to properly report such payments of interest or dividends, or (3) who has failed
to certify to the Fund that such shareholder is not subject to backup
withholding.
STATE TAXES
A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Depending upon state and
local law, distributions by the Fund to shareholders and the ownership of shares
may be subject to state and local taxes. Shareholders should consult their own
tax advisers regarding the affect of federal, state and local taxes in their own
individual circumstances.
FUND 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 Fund transactions. In placing orders, it is the Trust's policy to seek
to obtain the best net results taking into account such factors as price
(including the applicable dealer spread), size, type and difficulty of the
transaction involved, the firm's general execution and operational facilities,
and the firm's risk in positioning the securities involved. While the 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 Funds 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 Funds 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 Fund orders with qualified broker-dealers
who recommend the Trust to clients, and may, when a number of brokers and
dealers can provide best price and execution on a particular transaction,
consider such recommendations by a broker or dealer in selecting among
broker-dealers.
For the Trust's fiscal years ended June 30, 1996, 1997 and 1998, no
brokerage fees were paid.
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<PAGE>
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Fund, each of which represents an equal proportionate interest in
that Fund. Each share of a Fund upon liquidation of that Fund entitles a
shareholder to a pro rata share in the net assets of that Fund, 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 portfolio of shares or classes of portfolio. Any consideration
received by the Trust for shares of any additional Fund and assets in which such
consideration is invested would belong to that Fund 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.
5% SHAREHOLDERS
As of October 1, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Funds. The Trust believes that most of the shares
referred to below were held by the persons indicated in accounts for their
fiduciary, agency, or custodial customers.
TREASURY SECURITIES FUND:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
Lebanon Valley National Bank...................... 31,323,050 5.00%
Attn: Cathy Hirschbock
P.O. Box 448
Lebanon, Pennsylvania 17042-0448
The Farmers Company............................... 47,352,850 7.56%
c/o Farmers First Bank-Lititz
Attn: Wendy Basehoar
P.O. Box 1000
Lititz, Pennsylvania 17543-7000
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
Repub & Co........................................ 73,669,900 11.77%
c/o Imperial Trust Company
Attn: Shirley Matthews
201 N. Figueroa Street, #610
Los Angeles, California 90012-2629
City National Bank As Fiduciary for Various
Accounts.......................................... 41,010,626 6.55%
Attn: Richard Bolokowicz
400 N. Roxbury Drive, 7th Floor
Beverly Hills, California 90210-5021
The Fulton Company................................ 51,296,400 8.19%
c/o Fulton Bank Trust Dept.
Attn: Dennis Patrick
One Penn Square
Lancaster, Pennsylvania 17602-2853
Smith & Co........................................ 95,171,820 15.20%
c/o First Security Bank of Utah, N.A.
Attn: Money Market/Mutual Fund Desk
P.O. Box 25297
Salt Lake City, Utah 84125-0297
First Security Bank of Utah, N.A.................. 84,261,780 13.44%
Cash Management (Cash Sweep Account)
Attn: Bill Wilcox
61 South Main Street
Salt Lake City, Utah 84111-1909
</TABLE>
GOVERNMENT SECURITIES FUND:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
SEI Trust Company................................. 7,141,554 7.75%
c/o SEI Corporation
Attn: Eileen Bonaduce
P.O. Box 1100
Oaks, Pennsylvania 19456-1100
United Jersey Bank................................ 18,898,233 20.51%
Attn: Joe Guittari
210 Main Street, 7th Floor
Hackensack, New Jersey 07601-7372
Torrington Savings Bank........................... 6,815,601 7.40%
Attn: Richard Kittredge
P.O. Box 478
Torrington, Connecticut 06790-0478
Westwood Trust.................................... 23,697,317 23.54%
Attn: Operations
200 Crescent Court, Suite 300
Dallas, Texas 75201-7838
</TABLE>
S-20
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
First National Bank of Commerce................... 5,899,060 6.40%
Attn: Trust Accounting/Cash Management
925 Common Street
New Orleans, Louisiana 70112-2336
CoreStates Bank................................... 12,784,203 13.87%
Broad And Chestnut Streets
P.O. Box 7618
Philadelphia, Pennsylvania 19101
</TABLE>
PRIME OBLIGATION FUND:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
BHC Securities Inc................................ 278,283,623 16.26%
Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, Pennsylvania 19103-7042
SEI Trust Company................................. 195,599,622 18.05%
c/o SEI Corporation
Attn: Sandra Crawford
P.O. Box 1100
Oaks, Pennsylvania 19456-1100
Repub & Co........................................ 81,278,088 7.50%
c/o Imperial Trust Company
Attn: Shirley Matthews
201 N. Figueroa Street, #610
Los Angeles, California 90012-2629
F&M Company....................................... 58,313,563 5.38%
c/o F&M Bank-Winchester
Attn: Roxanne Caniford
P.O. Box 2800
Winchester, Virginia 22604-2000
Smith & Co........................................ 225,414,376 20.89%
c/o First Security Bank of Utah, N.A.
Attn: Money Market/Mutual Fund Desk
P.O. Box 25297
Salt Lake City, Utah 84125-0297
First Security Bank of Utah, N.A.................. 139,051,386 12.83%
Cash Management (Cash Sweep Account)
Attn: Bill Wilcox
61 South Main Street
Salt Lake City, Utah 84111-1909
</TABLE>
EXPERTS
The financial statements incorporated by reference in this Statement of
Additional Information have been incorporated by reference in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
S-21
<PAGE>
LEGAL COUNSEL
Morgan, Lewis & Bockius serves as counsel to the Trust.
FINANCIAL STATEMENTS
The Trust's financial statements for the fiscal year ended June 30, 1998,
including notes thereto and the report of PricewaterhouseCoopers LLP thereon,
are herein incorporated by reference. A copy of the 1998 Annual Report must
accompany the delivery of this Statement of Additional Information.
S-22
