<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1994
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PENNSYLVANIA MUNICIPAL PORTFOLIO
PENNSYLVANIA TAX FREE PORTFOLIO
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Please read this Prospectus carefully before investing, and keep it on file for
future reference.
A Statement of Additional Information dated December 31, 1994 has been filed
with the Securities and Exchange Commission and is available without charge
through the Distributor, SEI Financial Services Company, 680 East Swedesford
Road, Wayne, PA 19087 or by calling 1-800-342-5734. The Statement of Additional
Information is incorporated into this Prospectus by reference.
SEI Tax Exempt Trust (the "Trust") is a mutual fund that offers 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 and non-diversified portfolios of
securities. A portfolio may offer separate classes of shares 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
Trust's Pennsylvania Municipal Portfolio (the "Fixed Income Portfolio") and
Class A shares of the Trust's Pennsylvania Tax Free Portfolio (the "Money
Market Portfolio").
AN INVESTMENT IN THE PORTFOLIOS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE PENNSYLVANIA TAX FREE
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, INCLUDING BESSEMER TRUST COMPANY, N.A. OR
ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING THE BESSEMER
GROUP. 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 PRINCIPAL.
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<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
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MONEY MARKET FIXED INCOME
PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
Management/Advisory Fees (after fee waiver)/1/ .22% .37%
12b-1 Fees/2/ .06% .06%
Other Expenses .07% .05%
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Total Operating Expenses (after fee waiver)/3/ .35% .48%
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</TABLE>
1 The Manager has waived, on a voluntary basis, a portion of its fee, and
agreed to reimburse expenses; the management/advisory fees shown reflect this
voluntary waiver. The Manager reserves the right to terminate its waiver and
reimbursements at any time in its sole discretion. Absent such waiver,
management/advisory fees for the Money Market Portfolio would be .40% and for
the Fixed Income Portfolio would be .60%.
2 The 12b-1 fees shown reflect each Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fees payable are .30% by Class A
shares of the Fixed Income Portfolio and .30% by Class A shares of the Money
Market Portfolio.
3 Absent the Manager's voluntary fee waiver and reimbursements, total operating
expenses for Class A shares of the Money Market Portfolio would be .53% and
for Class A shares of the Fixed Income Portfolio would be .71%.
EXAMPLE
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An investor in Class A shares of the
Portfolios would pay the following
expenses on a $1,000 investment
assuming (1) 5% annual return and (2)
redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
Money Market Portfolio $4 $11 $20 $44
Fixed Income Portfolio $5 $15 $27 $60
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</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND 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 the Portfolios' Class A shares. A person that purchases
shares through an account with a financial institution may be charged separate
fees by that institution. The Fixed Income Portfolio also offers ProVantage
Funds shares, which are subject to the same expenses except that ProVantage
Funds shares are sold subject to a sales load and bear different distribution
costs and transfer agent costs. Additional information may be found under "The
Manager and Shareholder Servicing Agent," "Distribution" and "The Adviser."
Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charges otherwise permitted under Rules of Fair Practice of the
National Association of Securities Dealers, Inc. ("NASD").
2
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FINANCIAL HIGHLIGHTS ___________________________________________________________
The following financial highlights, for a share outstanding throughout each
period, have been audited by Arthur Andersen LLP, independent public
accountants, whose report thereon was unqualified. This information should be
read in conjunction with the Trust's financial statements and notes thereto,
which are included in the Trust's Statement of Additional Information and which
appear, along with the report of Arthur Andersen LLP. in the Trust's 1994
Annual Report to Shareholders. Additional performance information is set forth
in the 1994 Annual Report to Shareholders and is available upon request and
without charge by calling 1-800-342-5734.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Pennsylvania
Tax Free
Pennsylvania Municipal Portfolio Portfolio
--------------------------------------------------------- ------------
9/01/93 9/01/92 9/01/91 9/01/90 2/01/90 8/14/89/1/ 1/21/94/3/
to to to to to to to
8/31/94 8/31/93 8/31/92 8/31/91 8/31/90/2/ 1/31/90 8/31/94
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<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.94 $10.59 $10.29 $ 9.95 $9.98 $10.00 $ 1.00
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Investment Activities:
Net Investment Income 0.53 0.55 0.57 0.60 0.34 0.28 0.014
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Distributions:
Net Investment Income (0.53) (0.55) (0.57) (0.60) (0.34) (0.23) (0.014)
Net Realized Gain -- (0.01) (0.01) (0.003) -- (0.001) --
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Total Distributions (0.53) (0.56) (0.58) (0.60) (0.34) (0.23) (0.014)
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Net Realized and
Unrealized Gain (Loss)
on Investments and
Capital Transactions (0.42) 0.36 0.31 0.34 (0.03) (0.07) --
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Net Asset Value, End of
Period $ 10.52 $10.94 $10.59 $10.29 $9.95 $9.98 $ 1.00
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Total Return 1.14% 8.91% 8.89% 9.80% 3.12%+ 2.11%+ 2.37%*
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Ratios and Supplemental
Data
Net Assets, End of
Period (000) 125,081 153,808 114,461 83,054 64,531 53,042 18,712
Ratio of Expenses to
Average Net Assets 0.47% 0.48% 0.48% 0.50% 0.60%* 0.60%* 0.35%*
Ratio of Expenses to
Average Net Assets
Excluding Fee
Waivers 0.71% 0.70% 0.72% 0.73% 0.80%* 0.86%* 0.65%*
Ratio of Net
Investment Income to
Average Net Assets 4.90% 5.15% 5.52% 5.98% 5.88%* 6.05%* 2.37%*
Ratio of Net
Investment Income to
Average Net Assets
Excluding Fee
Waivers 4.66% 4.93% 5.28% 5.75% 5.68%* 5.79%* 2.07%*
Portfolio Turnover
Rate 25.13% 15.26% 10.54% 19.17% 20.35% 10.00% --
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</TABLE>
* Annualized
+ Return is for period indicated and has not been annualized.
1 The Pennsylvania Municipal Portfolio commenced operations on August 14, 1989.
2 In August 1990, the Trustees changed the fiscal year end of the Trust from
January 31 to August 31.
3 The Pennsylvania Tax free Portfolio commenced operations on January 21, 1994.
3
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THE TRUST ______________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate investment
portfolios. This Prospectus offers Class A shares of the Trust's Pennsylvania
Municipal Portfolio (the "Fixed Income Portfolio") and Class A shares of the
Trust's Pennsylvania Tax Free Portfolio (the "Money Market Portfolio"). The
Fixed Income Portfolio is a diversified portfolio, and the Money Market
Portfolio is non-diversified. Shares in the Fixed Income Portfolio may also be
purchased through the Portfolio's ProVantage Funds Class. Additional
information pertaining to the Trust may be obtained by writing to SEI Financial
Services Company, 680 East Swedesford Road, Wayne, PA 19087-1658 or by calling
1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES _______________________________________________________________________
PENNSYLVANIA The Fixed Income Portfolio's investment objective is to
MUNICIPAL provide current income exempt from both federal and
PORTFOLIO Pennsylvania state income taxes while preserving capital by
investing primarily in municipal securities within the
guidelines presented below.
The Fixed Income Portfolio has a fundamental policy,
under normal conditions, to be fully invested in obligations
which produce interest that is exempt from both federal and
Pennsylvania state income tax (state tax-free obligations).
Under normal circumstances, the Portfolio will invest at
least 90% (and intends to invest 100%) of its net assets in
securities the interest on which is not a preference item
for purposes of the alternative minimum tax. In addition,
for temporary defensive purposes when, in the opinion of its
investment adviser, such securities are not readily
available or of sufficient quality, the Portfolio can invest
up to 100% of its assets in securities which pay interest
which is exempt only from federal income taxes or in taxable
securities as described below.
The Fixed Income Portfolio may purchase the following
types of municipal obligations, but only if such securities,
at the time of purchase, either have the requisite rating
or, if not rated, are of comparable quality as determined by
Bessemer Trust Company, N.A., this Portfolio's investment
adviser ("Bessemer"): (i) municipal bonds rated BBB or
better by Standard & Poor's Corporation ("S&P") or Baa or
better by Moody's Investors Service, Inc. ("Moody's"); (ii)
municipal notes rated at least SP-1 by S&P or MIG-1 or
VMIG-1 by Moody's; and (iii) tax-exempt commercial paper
rated at least A-1 by S&P or Prime-1 by Moody's. Bonds rated
BBB by S&P or Baa by Moody's have speculative
characteristics. Municipal obligations owned by the Fixed
Income Portfolio which become less than the prescribed
investment quality shall be sold at a time when, in the
judgement of Bessemer, it does not substantially impact the
market value of the Portfolio.
The Fixed Income Portfolio will maintain a dollar-
weighted average portfolio maturity of seven years or less.
Each security purchased will have a maximum maturity of
fifteen years.
4
<PAGE>
PENNSYLVANIA The Money Market Portfolio's investment objective is a high
TAX FREE level of current income, free from federal income tax and,
PORTFOLIO to the extent possible, Pennsylvania personal income taxes,
consistent with preservation of capital. The Money Market
Portfolio will also attempt to maintain a constant net asset
value of $1.00 per share.
The Money Market Portfolio complies with regulations of
the Securities and Exchange Commission ("SEC") applicable to
money market funds. These regulations impose certain
quality, diversification and maturity restraints in
investments by this Portfolio. Under these regulations, the
Money Market Portfolio will maintain a dollar-weighted
average portfolio maturity of 90 days or less, and will
acquire only obligations maturing in 397 days or less.
It is a fundamental policy of the Money Market Portfolio
to invest, under normal conditions, at least 80% of its net
assets in municipal securities the interest on which, in the
opinion of bond counsel for the issuer, is exempt from
federal income tax (collectively, "Municipal Securities").
This Portfolio will, under normal conditions, invest at
least 80% of its net assets in securities the interest on
which is not a preference item for purposes of the
alternative minimum tax ("AMT") and invest at least 65% of
its total assets in municipal obligations the interest on
which is exempt from Pennsylvania personal income tax
("Pennsylvania Securities"). Pennsylvania Securities
constitute municipal obligations of the Commonwealth of
Pennsylvania and its political subdivisions or municipal
authorities and municipal obligations issued by territories
or possessions of the United States, such as Puerto Rico.
This Portfolio may invest, under normal conditions, up to
20% of its net assets in (1) Municipal Securities the
interest on which is a preference item for purposes of AMT
(although the Portfolio has no present intention of
investing in such securities), and (2) taxable securities,
including shares of other mutual funds to the extent
permitted by regulations of the SEC. In addition, for
temporary defensive purposes when its investment adviser
determines that market conditions warrant, the Money Market
Portfolio may invest up to 100% of its assets in municipal
obligations of states other than Pennsylvania or taxable
money market instruments (including repurchase agreements,
U.S. Treasury securities and obligations of certain U.S.
commercial banks or savings and loan institutions).
The Money Market Portfolio may purchase the following
types of municipal obligations, but only if such securities,
at the time of purchase, either have the requisite rating
or, if not rated, are of comparable quality as determined by
Weiss, Peck & Greer Advisers, Inc., this Portfolio's
investment adviser ("WPGA"): (i) municipal bonds rated AA or
better by S&P or Aa or better by Moody's; (ii) municipal
notes rated at least SP-2 by S&P or MIG-2 or VMIG-2 by
Moody's; (iii) tax-exempt commercial paper rated at least A-
2 by S&P or Prime-2 by Moody's.
Neither Portfolio will invest more than 25% of its assets
in municipal securities the interest on which is derived
from revenues of similar type projects. This restriction
does not apply to municipal securities in any of the
following categories: public housing
5
<PAGE>
authorities; general obligations of states and localities;
state and local housing finance authorities or municipal
utilities systems.
There could be economic, business, or political
developments which might affect all municipal securities of
a similar type. To the extent that a significant portion of
a Portfolio's assets are invested in municipal securities
payable from revenues on similar projects, the Portfolio
will be subject to the peculiar risks presented by such
projects to a greater extent than it would be if the
Portfolio's assets were not so invested. Moreover, in
seeking to attain its investment objective a Portfolio may
invest all or any part of its assets in municipal securities
that are industrial development bonds.
Municipal notes rated SP-1 by S&P have strong capacity to
pay principal and interest; municipal notes rated SP-2 by
S&P have satisfactory capacity to pay principal and
interest. Notes rated MIG-1 or VMIG-1 by Moody's are
considered to be of the best quality and notes rated MIG-2
or VMIG-2 by Moody's are considered to be of high quality.
Bonds rated AA by S&P have a very strong capacity to pay
interest and repay principal; bonds rated Aa by Moody's are
judged to be of high quality by all standards. Bonds rated
BBB by S&P have an adequate capacity to pay interest and
repay principal; bonds rated Baa by Moody's are considered
to be medium-grade obligations (i.e., neither highly
protected nor poorly secured). Bonds rated BBB by S&P or Baa
by Moody's have speculative characteristics. The highest S&P
commercial paper rating category, A-1, indicates that the
degree of safety regarding timely payment is strong;
commercial paper issuers rated Prime-1 by Moody's have a
superior ability for repayment. Capacity for timely payment
on commercial paper with the S&P designation of A-2 is
satisfactory; commercial paper issuers rated Prime-2 by
Moody's have a strong ability for repayment of senior short-
term debt obligations.
There can be no assurance that either Portfolio will be
able to achieve its investment objective or that the Money
Market Portfolio will be able to maintain a constant $1.00
net asset value per share.
GENERAL
INVESTMENT
POLICIES ____________________________________________________
Each Portfolio may invest in variable and floating rate
obligations, may purchase securities on a "when-issued"
basis, and reserves the right to engage in transactions
involving standby commitments. There will be no limit to the
percentage of portfolio securities that a Portfolio may
purchase subject to a standby commitment but the amount paid
directly or indirectly for a standby commitment held by a
Portfolio will not exceed 1/2 of 1% of the value of the
total assets of the Portfolio. The Fixed Income Portfolio
may also purchase other types of tax exempt instruments as
long as they are of a quality equivalent to the long-term
bond or commercial paper ratings stated above. Although
permitted to do so,
6
<PAGE>
the Fixed Income Portfolio has no present intention to
invest in repurchase agreements. Each Portfolio will not
invest more than 10% of its net assets in illiquid
securities.
The taxable instruments in which each Portfolio may
invest consist of U.S. Treasury obligations; obligations
issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities, whether or not backed by the
full faith and credit of the U.S. Government; obligations of
U.S. commercial banks or savings and loan institutions (not
including foreign branches of U.S. banks or U.S. branches of
foreign banks) which are members of the Federal Reserve
System, the Bank Insurance Fund and Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation
and which have total assets of $1 billion or more as shown
on their last published financial statements at the time of
investment; and repurchase agreements involving any of the
foregoing obligations.
For a description of the permitted investments and
ratings, see the "Description of Permitted Investments and
Risk Factors" and the Statement of Additional Information.
RISK FACTORS ___________________________________________________________________
Fixed Income The market value of the Fixed Income Portfolio's investments
Securities will change in response to interest rate changes and other
factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally
rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Moreover,
while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are
also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized rating
agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and
principal also affect the value of these investments.
Changes in the value of these fixed income securities will
not necessarily affect cash income derived from these
securities, but will affect this Portfolio's net asset
value.
Pennsylvania Under normal conditions the Fixed Income Portfolio will be
Risk Factors fully invested, and the Money Market Portfolio will invest
primarily, in obligations which produce interest income
exempt from federal income tax and Pennsylvania state income
tax. Accordingly, each Portfolio will have considerable
investments in Pennsylvania municipal obligations. As a
result, each Portfolio will be more susceptible to factors
which adversely affect issuers of Pennsylvania obligations
than a mutual fund which does not have as great a
concentration in Pennsylvania municipal obligations.
An investment in either Portfolio will be affected by the
many factors that affect the financial condition of the
Commonwealth of Pennsylvania. For example, financial
difficulties of the Commonwealth, its counties,
municipalities and school districts that hinder efforts to
borrow and lower credit ratings are factors which may affect
the Portfolio. See "Special Considerations Relating to
Pennsylvania Municipal Securities" in the Statement of
Additional Information.
7
<PAGE>
Non- Investment in the Money Market Portfolio, a non-diversified
Diversification mutual fund, may entail greater risk than would investment
in a diversified investment company because the
concentration in securities of relatively few issuers could
result in greater fluctuation in the total market value of
this Portfolio's holdings. Any economic, political, or
regulatory developments affecting the value of the
securities this Portfolio holds could have a greater impact
on the total value of the Portfolio's holdings than would be
the case if the portfolio securities were diversified among
more issuers. The Money Market Portfolio intends to comply
with the diversification requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). In
accordance with these requirements, the Portfolio will not
invest more than 5% of its total assets in any one issuer;
this limitation applies to 50% of the Portfolio's total
assets.
INVESTMENT
LIMITATIONS ____________________________________________________________________
The investment objectives and investment limitations are
fundamental policies of the Portfolios. Fundamental policies
cannot be changed with respect to the Trust or a
Portfolio without the consent of the holders of a majority
of the Trust's or that Portfolio's outstanding shares. It is
a fundamental policy of the Money Market Portfolio to use
its best efforts to maintain a constant net asset value of
$1.00 per share.
Neither Portfolio may:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than
5% of the total assets of the Portfolio would be invested
in the securities of such issuer. This limitation does
not apply to the Money Market Portfolio.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on current
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 investment
in obligations issued or guaranteed by the U.S. Government
or its agencies and instrumentalities or to investments in
tax-exempt securities issued by governments or political
subdivisions of governments.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of the Portfolio. All borrowings will
be repaid before making additional investments and any
interest paid on such borrowings will reduce the income of
the Portfolio.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
8
<PAGE>
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT ________________________________________________________________
SEI Financial Management Corporation (the "Manager" and the
"Transfer Agent"), a wholly-owned subsidiary of SEI
Corporation ("SEI"), provides the Trust with overall
management services, regulatory reporting, all necessary
office space, equipment, personnel and facilities, and
serves as institutional transfer agent, dividend disbursing
agent, and shareholder servicing agent.
For these services, the Manager is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .35% of the average daily net assets of the Fixed
Income Portfolio and .36% of the average daily net assets of
the Money Market Portfolio. The Manager has voluntarily
waived a portion of its fees in order to limit the total
operating expenses of Class A shares of the Fixed Income
Portfolio to not more than .48% of that Portfolio's average
daily net assets on an annualized basis and to limit the
total operating expenses of Class A shares of the Money
Market Portfolio to not more than .35% of that Portfolio's
average daily net assets on an annualized basis. The Manager
reserves the right, in its sole discretion, to terminate
these voluntary fee waivers at any time. For the fiscal year
ended August 31, 1994, the Fixed Income Portfolio paid the
manager a fee, after fee waivers, of .22% of its average
daily net assets. For the fiscal year ended August 31, 1994,
the Money Market Portfolio paid the Manager a fee of .18% of
its average daily net assets after fee waivers.
THE ADVISERS ___________________________________________________________________
Under advisory agreements with the Trust (the "Advisory
Agreements"), Bessemer Trust Company, N.A. and Weiss, Peck &
Greer Advisers, Inc. (the "Advisers" and each of these, an
"Adviser") act as the investment advisers for the Fixed
Income and Money Market Portfolios, respectively. Under the
Advisory Agreements, the Advisers make investment decisions
for the assets of the Portfolios, and continuously review,
supervise and administer the Portfolios' investment
programs. Each Adviser is independent of the Manager and SEI
and discharges its responsibilities subject to the
supervision of, and policies set by, the Trustees of the
Trust.
Bessemer Trust Bessemer Trust Company, N.A. ("Bessemer") acts as investment
Company, N.A. adviser for the Fixed Income Portfolio. Bessemer is a
wholly-owned subsidiary of The Bessemer Group ("TBG"), a
bank holding company which was organized in 1981, and
engages in investment management, fiduciary and other
personal financial services. As of September 30, 1994 total
assets under management by Bessemer were approximately $10.9
billion. The principal place of business address of Bessemer
and TBG is 630 Fifth Avenue, New York, NY 10111.
9
<PAGE>
Staats M. Pellett, Jr., CFA, Senior Vice President of
Bessemer Trust Company, N.A., and K'lon Andrews, Vice
President of Bessemer Trust Company, N.A., have acted as
portfolio managers for the Fixed Income Portfolio since its
inception. Mr. Pellett supervises tax exempt bond investment
activities for Bessemer, and has over 25 years of experience
as a municipal securities portfolio manager and analyst. Ms.
Andrews has been a municipal securities portfolio manager
for Bessemer for the past ten years.
The Glass-Steagall Act restricts the securities
activities of national banks such as Bessemer Trust Company,
N.A. but federal regulatory authorities permit national
banks to provide investment advisory and other services to
mutual funds. Should this position be challenged
successfully in court or reversed by legislation, the Trust
might have to make other investment advisory arrangements.
For its services, Bessemer is entitled to a fee, which is
calculated daily and paid monthly, at an annual rate of .25%
of the average daily net assets of the Fixed Income
Portfolio. For the fiscal year ended August 31, 1994, the
Fixed Income Portfolio paid Bessemer a fee of .15% of its
average daily net assets.
Weiss, Peck & Weiss, Peck & Greer Advisers, Inc. ("WPGA") acts as
Greer Advisers, investment adviser for the Money Market Portfolio. WPGA is a
Inc. wholly-owned subsidiary of Weiss, Peck & Greer ("WPG"), a
limited partnership founded in 1970, and engages in
investment management, venture capital management and
management buyouts. WPG has been active since its founding
in managing portfolios of tax exempt securities. As of
September 30, 1994, total assets under management were
approximately $13.4 billion. The principal business address
of WPGA and WPG is One New York Plaza, New York, NY 10004.
Janet Fiorenza acts as the portfolio manager for the
Portfolio. Ms. Fiorenza, Partner and Senior Portfolio
Manager, has been a member of the Adviser or its predecessor
since 1980.
For its services, WPGA is entitled to a fee, which is
calculated daily and paid monthly, at an annual rate of .05%
of the average daily net assets of the money market
portfolios of the Trust that are advised by WPGA up to $500
million; .04% of such assets from $500 million to $1
billion; and .03% of such assets over $1 billion. Such fees
are allocated daily among these money market portfolios on
the basis of their relative net assets. For the fiscal year
ended August 31, 1994, the Portfolio paid the Adviser a fee
of .04% of its average daily net assets.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each class of each
Portfolio has a distribution plan (the "Class A Plan" and
the "ProVantage Funds Plan", and each, a '"Distribution
Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940. The Trust intends to
10
<PAGE>
operate the Distribution Plans in accordance with their
terms and with NASD rules concerning sales charges. The
Trust may also execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
The Distribution Agreement and each Distribution Plan
provide for reimbursement for expenses incurred by the
Distributor in an amount not to exceed .30% of the average
daily net assets of each Portfolio on an annualized basis
provided those expenses are permissible as to both type and
amount under a budget. The budget must be approved and
monitored quarterly by the Trustees including those who are
not interested persons and have no financial interest in the
Plan or any related agreement.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of advertising and sales materials, the costs of
federal and state securities laws registration, advertising
expenses, and promotional and sales expenses including
expenses for travel, communication and compensation and
benefits for sales personnel. The Trust is not obligated to
reimburse the Distributor for any expenditures in excess of
the approved budget. Currently, the budget for each
Portfolio (shown here as a percentage of daily net assets)
is .06%. Distribution expenses not attributable to a
specific portfolio are allocated among each of the
portfolios of the Trust based on average net assets.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all dealers and predicated upon the amount of
shares of the Portfolios sold by the dealer.
PURCHASE AND
REDEMPTION
OF SHARES ______________________________________________________________________
Financial institutions may acquire shares of each Portfolio
for their own account or as a record owner on behalf of
fiduciary, agency or custody accounts by placing orders with
the Transfer Agent. Institutions that use certain SEI
proprietary systems may place orders electronically through
those systems. State securities laws may require banks and
financial institutions purchasing shares for their customers
to register as dealers pursuant to state laws. Financial
institutions which purchase shares for the accounts of their
customers may impose separate charges on these customers for
account services. Financial institutions may impose an
earlier cut-off time for receipt of purchase orders directed
through them to allow for processing and transmittal of
these orders to the Transfer Agent for
11
<PAGE>
effectiveness the same day. Shares of either Portfolio are
offered only to residents of states in which the shares are
eligible for purchase.
Shares of each Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days").
Shareholders who desire to purchase shares for cash must
place their orders with the Transfer Agent prior to a
specified time on any Business Day for the order to be
accepted on that Business Day; the specified time is 2:00
p.m., Eastern time for the Money Market Portfolio and the
close of trading on the New York Stock Exchange (presently
4:00 p.m., Eastern time) for the Fixed Income Portfolio.
Cash investments must be transmitted or delivered in federal
funds to the wire agent by the close of business on the same
day the order is placed for the Money Market Portfolio and
on the next Business Day following the day the order is
placed for the Fixed Income Portfolio.
Purchases will be made in full or fractional shares of
the Fixed Income Portfolio calculated to three decimal
places. The Trust will send shareholders a statement of
shares owned after each transaction. The purchase price of
shares is the net asset value next determined after a
purchase order is received and accepted by the Trust plus,
in the case of ProVantage Funds shares of the Fixed Income
Portfolio, the applicable sales load. The purchase price of
shares of the Money Market Portfolio is expected to remain
constant at $1.00. The net asset value per share of each
Portfolio is determined by dividing the total value of its
investments and other assets, less any liability, by the
total outstanding shares of the Portfolio. The Money Market
Portfolio's investments will be valued by the amortized cost
method described in the Statement of Additional Information.
Net asset value per share is determined on each Business Day
as of 2:00 p.m., Eastern time for the Money Market Portfolio
and as of the close of trading on the New York Stock
Exchange (presently 4:00 p.m., Eastern time) for the Fixed
Income Portfolio.
Although the methodology and procedures for determining
net asset value per share are identical for all classes of a
Portfolio, the net asset value per share of one class of the
Fixed Income Portfolio may differ from that of another class
because of the different distribution fees charged to each
class and the incremental transfer agent fees charged to
ProVantage Funds shares. The Trust reserves the right to
reject a purchase order when the Distributor determines that
it is not in the best interest of the Trust or shareholders
to accept such purchase order.
The market value of each portfolio security is obtained
by the Manager from an independent pricing service.
Securities having maturities of 60 days or less at the time
of purchase will be valued using the amortized cost method
(described in the Statement of Additional Information),
which approximates the securities' market value. The pricing
service may use a matrix system to determine valuations of
equity and fixed income securities. This system considers
such factors as security prices, yields, maturities, call
features, ratings and developments relating to specific
securities in arriving at valuations. The pricing service
may also provide market quotations. The procedures of the
pricing
12
<PAGE>
service and its valuations are reviewed by the officers of
the Trust under the general supervision of the Trustees.
Portfolio securities for which market quotations are
available are valued at the most recently quoted bid price
on each Business Day.
Shareholders who desire to redeem shares of a Portfolio
must place their redemption orders with the Transfer Agent
prior to the calculation of net asset value on any Business
Day in order to be effective on that day. Otherwise, the
redemption orders will be effective on the next Business
Day. Payment for redemption orders from the Fixed Income
Portfolio will be made as promptly as possible and, in any
event, within five Business Days after the redemption order
is received. Payment for redemption orders from the Money
Market Portfolio received before the calculation of net
asset value will be made the same day by transfer of federal
funds. The redemption price is the net asset value per share
of the Portfolio next determined after receipt by the
Transfer Agent of an effective redemption order. Financial
institutions which redeem shares for the accounts of their
customers may impose their own procedures and cut-off times
for receipt of redemption requests directed through the
financial institution.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor its 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 its
transfer agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received by
telephone and recording telephone instructions.
If market conditions are extraordinarily active, or other
extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone, you may
wish to consider placing your order by other means.
PERFORMANCE ____________________________________________________________________
From time to time, the Money Market Portfolio may advertise
its "current yield" and "effective yield," and the Fixed
Income Portfolio may advertise its yield and total return.
Each Portfolio may also advertise a "tax equivalent yield."
These figures are based on historical earnings and are not
intended to indicate future performance. No representation
can be made concerning actual future yields or returns.
The "current yield" of the Money Market Portfolio refers
to the income generated by an investment in the Portfolio
over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized". That is,
the amount of income generated by the 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" (also called "effective compound yield")
is calculated similarly but, when annualized, the income
earned by an investment in the Portfolio is assumed to be
reinvested. The effective
13
<PAGE>
yield will be slightly higher than the current yield because
of the compounding effect of this assumed reinvestment.
The yield of the Fixed Income Portfolio refers to the
annualized income generated by a hypothetical investment,
net of any sales charge imposed in the case of ProVantage
Funds shares, in the Portfolio over a specified 30-day
period. The yield is calculated by assuming that the income
generated by the investment during that period generated
each period over one year and is shown as a percentage of
the investment. The total return of the Fixed Income
Portfolio refers to the average compounded rate of return to
a hypothetical investment for designated time periods
(including, but not limited to, the period from which the
Portfolio commenced operations through the specified date),
assuming that the entire investment is redeemed at the end
of each period and assuming the reinvestment of all dividend
and capital gain distributions.
The "tax equivalent yield" is calculated by determining
the rate of return that would have been achieved on a fully
taxable investment to produce the after-tax equivalent of a
Portfolio's yield, assuming certain tax brackets for a
shareholder.
For any Portfolio, the performance on Class A shares will
normally be higher than that on ProVantage Funds shares
because of the sales load (when applicable) and additional
distribution and transfer agent expenses charged to
ProVantage Funds shares.
A Portfolio may periodically compare its performance to
that of other mutual funds tracked by mutual fund rating
services (such as Lipper Analytical) or by financial and
business publications and periodicals, broad groups of
comparable mutual funds, unmanaged indices which may assume
investment of dividends but generally do not reflect
deductions for administrative and management costs, or other
investment alternatives. The Fixed Income Portfolio may
quote Morningstar, Inc., a service that ranks mutual funds
on the basis of risk-adjusted performance. The Fixed Income
Portfolio may use long-term performance of these capital
markets to demonstrate general long-term risk versus reward
scenarios and could include the value of a hypothetical
investment in any of the capital markets. The Fixed Income
Portfolio may also quote financial and business publications
and periodicals as they relate to fund management,
investment philosophy, and investment techniques.
The Fixed Income Portfolio may quote various measures of
volatility and benchmark correlation in advertising and may
compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price
fluctuations or total returns to a benchmark while measures
of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot
be calculated precisely.
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
14
<PAGE>
attempt has been made to present a detailed explanation of
the federal, state or local income tax treatment of the
Portfolio or its shareholders. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state and local income taxes. State
and local tax consequences of an investment in the
Portfolios may differ from the federal income tax
consequences described below. Additional information
concerning taxes is set forth in the Statement of Additional
Information.
Tax Status of Each Portfolio is treated as a separate entity for federal
each Portfolio income tax purposes and is not combined with the Trust's
other portfolios. Each Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), so
as to be relieved of federal income tax on net investment
company taxable income and net capital gain (the excess of
net long-term capital gain over net short-term capital loss)
distributed to shareholders.
Tax Status of Each Portfolio intends to distribute substantially all of
Distributions its net investment income (including net short-term capital
gain) to shareholders. If, at the close of each quarter of
its taxable year, at least 50% of the value of a Portfolio's
total assets consists of obligations the interest on which
is excludable from gross income, the Portfolio may pay
"exempt-interest dividends" to its shareholders. Those
dividends constitute the portion of the aggregate dividends
designated by the Portfolio equal to the excess of the
excludable interest over certain amounts disallowed as
deductions. In determining net exempt-interest income,
expenses of each Portfolio are allocated to gross tax-exempt
interest income in the proportion that the gross amount of
such interest income bears to the Portfolio's total gross
income, excluding net capital gains. Exempt-interest
dividends are excludable from a shareholder's gross income
for federal income tax purposes but may have certain
collateral federal tax consequences including alternative
minimum tax consequences. In addition, the receipt of
exempt-interest dividends may cause persons receiving Social
Security or Railroad Retirement benefits to be taxable on a
portion of such benefits. See the Statement of Additional
Information.
Current federal tax law limits the types and volume of
bonds qualifying for the federal income tax exemption of
interest, which may have an effect on the ability of a
Portfolio to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the
payment of "exempt-interest" dividends.
Any dividends paid out of income realized by a Portfolio
on taxable securities will be taxable to shareholders as
ordinary income (whether received in cash or in additional
shares) to the extent of the Portfolio's earnings and
profits and will not qualify for the dividends-received
deduction for corporate shareholders. Distributions to
shareholders of net capital gains of a Portfolio also will
not qualify for that deduction and will be taxable to
shareholders as long-term capital gain, whether received in
cash or additional shares, and regardless of how long a
shareholder has held the shares.
15
<PAGE>
Dividends declared by a Portfolio in October, November or
December of any year and payable to shareholders of record
on a date in any such month will be deemed to have been paid
by the Portfolio and received by the shareholders on
December 31 of that year if paid by the Portfolio at any
time during the following January. Each Portfolio makes
annual reports to shareholders of the federal income tax
status of distributions.
Interest on indebtedness incurred or continued by a
shareholder in order to purchase or carry shares of a
Portfolio is not deductible for federal income tax purposes.
Furthermore, the Portfolios may not be an appropriate
investment for persons (including corporations and other
business entities) who are "substantial users" (or persons
related to "substantial users") of facilities financed by
industrial development bonds or private activity bonds. Such
persons should consult their tax advisers before purchasing
shares.
Each Portfolio will report annually to its shareholders
the portion of dividends that is taxable and the portion
that is tax-exempt based on income received by the Portfolio
during the year to which the dividends relate.
Each Portfolio intends to make sufficient distributions
prior to the end of each calendar year to avoid liability
for federal excise tax.
State Taxes Distributions paid by a Portfolio to shareholders will not
be subject to the Pennsylvania personal income tax or to the
Philadelphia School District investment net income tax to
the extent that the distributions are attributable to
interest received by the Portfolio from its investments in
(i) obligations issued by the Commonwealth of Pennsylvania,
any public authority, commission, board of agency created by
the Commonwealth of Pennsylvania or any public authority
created by such political subdivision, and (ii) obligations
of the United States, the interest and gains from which are
statutorily free from state taxation in the Commonwealth or
the United States. Distributions by a Portfolio to a
Pennsylvania resident that are attributable to most other
sources will not be exempt from the Pennsylvania personal
income tax or (for residents of Philadelphia) the
Philadelphia School District investment net income tax.
Distributions paid by a Portfolio which are excludable as
exempt income for federal tax purposes are not subject to
the Pennsylvania corporate net income tax.
Shares purchased as an investment in a Portfolio are
exempt from Pennsylvania county personal property taxes and
(as to residents of Pittsburgh) from personal property taxes
imposed by the City of Pittsburgh and the School District of
Pittsburgh to the extent that the Portfolio's investments
consist of obligations which are themselves exempt from
taxation in Pennsylvania.
Each Portfolio intends to invest primarily in obligations
that produce interest exempt from federal and Pennsylvania
taxes. If a Portfolio invests in obligations that are not
exempt for Pennsylvania purposes but are exempt for Federal
purposes, a portion of the Portfolio's distributions will be
subject to Pennsylvania personal income tax.
16
<PAGE>
GENERAL
INFORMATION ____________________________________________________________________
The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated March 15, 1982. The
Declaration of Trust permits the Trust to offer separate
portfolios of shares and different classes of each
portfolio. In addition to the Portfolios, the Trust consists
of the following portfolios: Tax Free Portfolio,
Institutional Tax Free Portfolio, California Tax Exempt
Portfolio, Intermediate-Term Municipal Portfolio, Kansas Tax
Free Income Portfolio, Massachusetts Intermediate-Term
Municipal Portfolio, Bainbridge Tax Exempt Portfolio,
California Intermediate-Term Municipal Portfolio and New
York Intermediate-Term Municipal Portfolio. All
consideration received by the Trust for shares of any
portfolio and all assets of such portfolio belong to that
portfolio and would be subject to liabilities related
thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class will vote
separately on matters relating solely to that portfolio or
class, such as any distribution plan. As a Massachusetts
business trust, the Trust is not required to hold annual
meetings of shareholders but approval will be sought for
certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining Trustees
or by shareholders at a special meeting called upon written
request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a
meeting is requested the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial information semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager. SEI
Inquiries Financial Management Corporation, 680 E. Swedesford Road,
Wayne, Pennsylvania, 19087.
Dividends The net investment income (exclusive of capital gains) of
each Portfolio is distributed in the form of dividends. The
Money Market Portfolio declares dividends daily, and
shareholders of record at the close of each Business Day
will be entitled to receive that day's dividend.
17
<PAGE>
The Money Market Portfolio pays dividends on the first
Business Day of each month. The Fixed Income Portfolio
declares dividends periodically, and shareholders of record
on the last record date of each period will be entitled to
receive the periodic dividend distribution, which is
generally paid on the 10th Business Day of the following
month. If any net capital gains are realized by either
Portfolio, they will be distributed annually. Shareholders
automatically receive all income dividends and capital gain
distributions in additional shares, 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.
The dividends on Class A shares of the Fixed Income
Portfolio are normally higher than those on ProVantage Funds
shares because of the additional distribution and transfer
agent expenses charged to ProVantage Funds shares.
Counsel and Morgan, Lewis & Bockius serves as counsel to the Trust.
Independent Arthur Andersen LLP serves as the independent public
Public accountants of the Trust.
Accountants
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, PA 19101, serves as Custodian of the
Trust's assets and acts as wire agent of certain cash of the
Trust. The Custodian holds cash, securities and other assets
of the Trust as required by the Investment Company Act of
1940, as amended.
DESCRIPTION OF
PERMITTED
INVESTMENTS
AND RISK FACTORS _______________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolios, and the associated risk
factors:
Bankers' Bankers' acceptances are bills of exchange or time drafts
Acceptances 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 Certificates of deposit are interest bearing instruments
Deposit 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 Commercial Paper is a term used to describe unsecured short-
Paper term promissory notes issued by banks, municipalities,
corporations and other entities. Maturities on these issues
vary from a few to 270 days.
Municipal Municipal Securities consist of (i) debt obligations issued
Securities by or on behalf of public authorities to obtain funds to be
used for various public facilities, for refunding
18
<PAGE>
outstanding obligations, for general operating expenses and
for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial
development bonds issued by or on behalf of public
authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated
facilities.
General obligation bonds are backed by the taxing power
of the issuing municipality. Revenue bonds are backed by the
revenues of a project or facility, tolls from a toll bridge,
for example. Certificates of participation represent an
interest in an underlying obligation or commitment such as
an obligation issued in connection with a leasing
arrangement. The payment of principal and interest on
private activity and industrial development bonds generally
is dependent solely on the ability of the facility's user to
meet its financial obligations and the pledge, if any, of
real and personal property so financed as security for such
payment.
Municipal notes include general obligation notes, tax
anticipation notes, revenue anticipation notes, bond
anticipation notes, certificates of indebtedness, demand
notes and construction loan notes and participation
interests in municipal notes. Municipal bonds include
general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds and
participation interests in municipal bonds.
Repurchase Repurchase Agreements are agreements by which a person, such
Agreements as the Portfolio, 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 Custodian will hold the
security as collateral for the repurchase agreement. The
Portfolio bears a risk of loss in the event the other party
defaults on its obligations and the Portfolio is delayed or
prevented from its right to dispose of the collateral
securities or if the Portfolio realizes a loss on the sale
of the collateral securities. The Portfolio will enter into
repurchase agreements only with financial institutions
deemed to present minimal risk of bankruptcy during the term
of the agreement based on established guidelines. Repurchase
agreements are considered loans under the Investment Company
Act of 1940.
Restraints on Investments by a money market fund are subject to
Investments by limitations imposed under regulations adopted by the
Money Market Securities and Exchange Commission. Under these regulations,
Funds money market funds may only acquire obligations that present
minimal credit risk 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 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 rating category or, if
unrated, determined to be of comparable quality ("second
tier security"). A security is not considered to be unrated
if its issuer has outstanding obligations of comparable
priority and security that have a short-term rating. In the
case of taxable money market funds, investments in second
tier securities are
19
<PAGE>
subject to the further constraints in that (i) no more than
5% of a Portfolio's assets may be invested in second tier
securities and (ii) any investment in securities of any one
such issuer is limited to the greater of 1% of the
Portfolio's total assets or $1 million. A taxable money
market fund may also hold more than 5% of its assets in
first tier securities of a single issuer for three "business
days" (that is, any day other than a Saturday, Sunday or
customary business holiday).
Standby Securities subject to standby commitments or puts permit the
Commitments and holder thereof to sell the securities at a fixed price prior
Puts to maturity. Securities subject to a standby commitment or
put may be sold at any time at the current market price.
However, unless the standby commitment or put was an
integral part of the security as originally issued, it may
not be marketable or assignable; therefore, the standby
commitment or put would only have value to the Portfolio
owning the security to which it relates. In certain cases, a
premium may be paid for a standby commitment or put, which
premium will have the effect of reducing the yield otherwise
payable on the underlying security. The Portfolio will limit
standby commitment or put transactions to institutions
believed to present minimal credit risk.
Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest, and may involve a conditional or unconditional
Instruments demand feature. Such instruments bear interest at rates
which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on
interest rate changes. There is a risk that the current
interest rate on such obligations may not accurately reflect
existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.
When-Issued and When-issued or delayed delivery basis transactions involve
Delayed the purchase of an instrument with payment and delivery
Delivery taking place in the future. Delivery of and payment for
Securities these securities may occur a month or more after the date of
the purchase commitment. The Portfolio will maintain with
the custodian a separate account with liquid high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date and no interest accrues to
the Portfolio before settlement. These securities are
subject to market fluctuation due to changes in market
interest rates and it is possible that the market value at
the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has
changed. Although a Portfolio generally purchases securities
on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its
portfolio, a Portfolio may dispose of a when-issued security
or forward commitment prior to settlement if it deems
appropriate.
20
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<S> <C>
Annual Operating Expenses............. 2
Financial Highlights.................. 3
The Trust............................. 4
Investment Objectives and Policies.... 4
General Investment Policies........... 6
Risk Factors.......................... 7
Investment Limitations................ 8
The Manager and Shareholder Servicing
Agent................................. 9
</TABLE>
<TABLE>
<S> <C>
The Advisers.......................... 9
Distribution.......................... 10
Purchase and Redemption of Shares..... 11
Performance........................... 13
Taxes................................. 14
General Information................... 17
Description of Permitted Investments
and Risk Factors..................... 18
</TABLE>
<PAGE>
PROSPECTUS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- --------------------------------------------------------------------------------
Please read this Prospectus carefully before investing, and keep it on file for
future reference. It contains information that can help you decide if the
Portfolio's investment goals match your own.
A Statement of Additional Information dated December 31, 1994 has been filed
with the Securities and Exchange Commission and is available without charge
through the Distributor, SEI Financial Services Company, 680 East Swedesford
Road, Wayne, PA 19087 or by calling 1-800-437-6016. The Statement of Additional
Information is incorporated into this Prospectus by reference.
SEI Tax Exempt Trust (the "Trust") is a mutual fund that offers shareholders a
convenient means of investing their funds in one or more professionally managed
diversified and non-diversified portfolios of securities. The Pennsylvania Mu-
nicipal Portfolio, an investment portfolio of the Trust, offers two classes of
shares, Class A shares and ProVantage Funds shares. ProVantage Funds shares
differ from Class A shares primarily in the imposition of sales charges and the
allocation of certain distribution expenses and transfer agent fees. ProVantage
Funds shares are available through SEI Financial Services Company (the Trust's
distributor) and through participating broker-dealers, financial institutions
and other organizations. This Prospectus offers the ProVantage Funds shares of
the fixed income portfolio (the "Portfolio") listed above.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, INCLUDING BESSEMER TRUST COMPANY, N.A. OR
ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING THE BESSEMER
GROUP. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, IN-
CLUDING POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
<PAGE>
..........................
TABLE OF
CONTENTS
<TABLE>
<S> <C>
Fund Highlights.. 2
Portfolio
Expenses........ 4
Your Account and
Doing Business
with ProVantage
Funds........... 5
Investment
Objective and
Policies........ 9
General
Investment
Policies........ 10
Risk Factors..... 11
Investment
Limitations..... 11
The Manager and
Shareholder
Servicing Agent. 12
The Adviser...... 12
Distribution..... 13
Performance...... 15
Taxes............ 16
Additional
Information
About Doing
Business with
Us.............. 18
General
Information..... 22
Description of
Permitted
Investments and
Risk Factors.... 24
</TABLE>
..........................
HOW TO READ THIS PROSPECTUS ____________________________________________________
This Prospectus gives you information that you should know about the Portfolio
before investing. Brief descriptions are also provided throughout the
Prospectus to better explain certain key points. To find these helpful guides,
look for this symbol. [SYMBOL APPEARS HERE]
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the ProVantage Funds
shares of the Trust's Pennsylvania Municipal Portfolio. This summary is
qualified in its entirety by reference to the more detailed information
provided elsewhere in this Prospectus and in the Statement of Additional
Information.
INVESTMENT The Pennsylvania Municipal Portfolio seeks to provide current
OBJECTIVE AND income exempt from both federal and Pennsylvania state income
POLICIES taxes while preserving capital by investing primarily in mu-
nicipal securities. See "Investment Objective and
Policies," "General Invest-
ment Policies" and "Descrip-
tion of Permitted Investments
and Risk Factors."
UNDERSTANDING Shares of the Portfolio, like
RISK shares of any mutual fund,
will fluctuate in value and
when you sell your shares,
they may be worth more or
less than what you paid for
them. The Portfolio invests
in obligations which produce
interest that is exempt from
federal and Pennsylvania
state income tax, and that is
not a preference item for
purposes of the alternative
minimum tax. The investment
policies of the Portfolio en-
tails certain risks and con-
siderations of which an in-
vestor should be aware. The
Portfolio will invest primar-
ily in Pennsylvania municipal
securities, and will be af-
fected by factors affecting
the Commonwealth of Pennsyl-
vania or its municipalities.
The value of fixed income
funds and the fixed income
securities in which they in-
vest tend to vary inversely
with interest rates and may
be affected by other market
and economic factors as well.
In addi-
tion, there is no assurance that the Portfolio will achieve
its investment objective. See "Investment Objective and Poli-
cies" and "Description of Permitted Investments and Risk Fac-
tors."
MANAGEMENT Bessemer Trust Company, N.A. (the "Adviser") serves as the
PROFILE investment adviser of the Portfolio. The Adviser and its par-
ent engage in investment management, fiduciary and other per-
sonal financial services. SEI Financial Management Corpora-
tion serves as the manager, shareholder servicing agent and
transfer agent of the Trust (the "Manager" or the "Transfer
Agent"). SEI Financial Services Company acts as distributor
("Distributor") of the Trust's shares. See "The Manager and
Shareholder Servicing Agent," "The Adviser" and
"Distribution."
2
<PAGE>
..........................
[SYMBOL PROVANTAGE
APPEARS FUNDS
HERE]
Believing that
no single in-
vestment manager
can deliver out-
standing perfor-
mance in every
investment cate-
gory, only those
advisers who
have distin-
guished them-
selves within
their areas of
specialization
are selected to
advise our mu-
tual funds.
..........................
YOUR ACCOUNT You may open an account with just $1,000 and make additional
AND DOING investments with as little as $100. ProVantage Funds shares
BUSINESS WITH of the Portfolio are offered at net asset value per share
PROVANTAGE plus a maximum sales charge at the time of purchase of 3.50%.
FUNDS Shareholders who purchase higher amounts may qualify for a
reduced sales charge. Redemptions of the Portfolio's shares
are made at net asset value per share. See "Your Account and
Doing Business with ProVantage Funds."
DIVIDENDS The net investment income
(exclusive of capital gains)
of the Portfolio is declared
periodically and is paid as
a dividend on the tenth
Business Day of each month.
Any realized net capital
gain is distributed at least
annually. Distributions are
paid in additional shares
unless the shareholder
elects to take the payment
in cash. See "General
Information-- Dividends."
INFORMATION/ For more information about ProVantage Funds call SEI
SERVICE Financial Services Company at 1-800-437-6016.
CONTACTS
3
<PAGE>
PORTFOLIO EXPENSES _____________________________________________________________
The purpose of the following table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the ProVantage Funds shares.
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PENNSYLVANIA
MUNICIPAL PORTFOLIO
-------------------
<S> <C>
Maximum Sales Load Imposed on Purchases 3.50%
Maximum Sales Load Imposed on Reinvested Dividends none
Redemption Fees /1/ none
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- -----------------------------------------------------------------------
Management/Advisory Fees (after fee waiver) /2/ .37%
12b-1 Fees (after fee waiver) /3/ .31%
Other Expenses .20%
- -----------------------------------------------------------------------
Total Operating Expenses (after fee waivers) /4/ .88%
- -----------------------------------------------------------------------
</TABLE>
1 A charge, currently $10.00, is imposed on wires of redemption proceeds of the
Portfolio's ProVantage Funds shares.
2 The Manager has waived, on a voluntary basis, a portion of its fees, and the
Management/Advisory fees shown reflect this voluntary waiver. The Manager
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, the Management/Advisory Fees for the
Portfolio would be .60%.
3 The 12b-1 fees shown reflect the Portfolio's current 12b-1 budget for
reimbursement of expenses and the Distributor's voluntary waiver of a portion
of its compensatory fee. The Distributor reserves the right to terminate its
waiver at any time in its sole discretion. The maximum 12b-1 fees payable by
ProVantage Funds shares of the Portfolio are .60%.
4 Absent the voluntary fee waivers described above, Total Operating Expenses
for ProVantage Funds shares of the Portfolio would be 1.11%.
EXAMPLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment assuming (1) imposition of the
maximum sales load, (2) 5% annual return and (3)
redemption at the end of each time period: $44 $62 $82 $140
- ------------------------------------------------------------------------------
</TABLE>
"Other Expenses" is based on estimated amounts for the current fiscal year. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
A person who purchases shares through a financial institution may be charged
separate fees by that institution. The information set forth in the foregoing
table and example relates only to the Portfolio's ProVantage Funds shares (a
class of shares of the Portfolio). The Portfolio also offers Class A shares
which are subject to the same expenses, except there are no sales charges and
different distribution and transfer agent costs. Additional information may be
found under "The Manager and Shareholder Servicing Agent," "Distribution" and
"The Adviser."
The rules of the Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for reduced sales charges. See "Additional Information About Doing
Business with ProVantage Funds."
Long-term shareholders may pay more than the economic equivalent of the maximum
front end sales charge permitted by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. ("NASD").
4
<PAGE>
.........................
[SYMBOL WHAT IS
APPEARS AN
HERE] INTERMEDIARY?
Any entity, such
as a bank, bro-
ker-dealer,
other financial
institution, as-
sociation or or-
ganization which
has entered into
an arrangement
with the Dis-
tributor to sell
ProVantage Funds
shares to its
customers.
..........................
YOUR ACCOUNT AND DOING BUSINESS
WITH PROVANTAGE FUNDS __________________________________________________________
ProVantage Funds shares of the Portfolio are sold on a continuous basis and may
be purchased directly from the Trust's Distributor, SEI Financial Services
Company. Shares may also be purchased through financial institutions, broker-
dealers, or other organizations which have established a dealer agreement or
other arrangement with SEI Financial Services Company ("Intermediaries"). For
more information about the following topics, see "Additional Information About
Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY,
SELL AND ProVantage Funds shares of the Portfolio may be purchased
EXCHANGE through Intermediaries which provide various levels of
SHARES THROUGH shareholder services to their customers. Contact your
INTERMEDIARIES Intermediary for information about the services available to
you and for specific
instructions on how to buy,
sell and exchange shares. To
allow for processing and
transmittal of orders to the
Distributor on the same day,
Intermediaries may impose
earlier cut-off times for
receipt of purchase orders.
Certain Intermediaries may
charge customer account fees.
Information concerning
shareholder services and any
charges will be provided to
the customer by the
Intermediary. Certain of these
Intermediaries may be required
to register as broker-dealers
under state law.
The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should call
the Intermediary to request this change.
HOW TO BUY Application forms can be obtained by calling SEI Financial
SHARES FROM Services Company at 1-800-437-6016. ProVantage Funds shares
THE of the Portfolio are offered only to residents of states in
DISTRIBUTOR which the shares are eligible for purchase.
Opening an You may buy ProVantage Funds shares by mailing a completed
Account application and a check (or other negotiable bank instrument
By Check or money order) payable to "ProVantage Funds (Portfolio
Name)." If you send a check that does not clear, the purchase
will be canceled and you could be liable for any losses or
fees incurred.
By Fed Wire To buy shares by Fed Wire call SEI Financial
Services Company toll-free at 1-800-437-6016.
Automatic You may systematically buy ProVantage Funds shares through
Investment deductions from your checking or savings accounts, provided
Plan ("AIP") 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 maintained balance requirements.
5
<PAGE>
OTHER Your purchase is subject to a sales charge which varies
INFORMATION depending on the size of your purchase. The following table
ABOUT BUYING shows the regular sales charges on ProVantage Funds shares
SHARES of the Portfolio to a "single purchaser," together with the
reallowance paid to dealers and the agency commission paid
Sales Charges to brokers (collectively the "commission"):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SALES CHARGE REALLOWANCE AND
SALES CHARGE AS AS APPROPRIATE BROKERAGE COMMISSION
A PERCENTAGE OF PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE NET AMOUNT INVESTED OFFERING PRICE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(less than) $50,000 3.50% 3.63% 3.00%
$50,000 but (less than) $100,000 3.00% 3.09% 2.50%
$100,000 but (less than) $250,000 2.50% 2.56% 2.00%
$250,000 but (less than) $500,000 2.00% 2.04% 1.50%
$500,000 but (less than) $1,000,000 1.50% 1.52% 1.25%
$1,000,000 but (less than) $2,000,000 1.00% 1.01% 1.00%
$2,000,000 but (less than) $4,000,000 .50% .50% .50%
Over $4,000,000 none none none
- ----------------------------------------------------------------------------------------------
</TABLE>
The commissions shown in the table above apply to sales
through Intermediaries. Under certain circumstances,
commissions up to the amount of the entire sales charge may
be re-allowed to certain Intermediaries, who might then be
deemed to be "underwriters" under the Securities Act of
1933, as amended. Commission rates may vary among the
Trust's portfolios.
Right of A Right of Accumulation allows you, under certain
Accumulation circumstances, to combine your current purchase with the
current market value of previously purchased shares of the
Portfolio and ProVantage Funds shares of other portfolios
("Eligible Portfolios") in order to obtain a reduced sales
charge.
Letter of A Letter of Intent allows you, under certain circumstances,
Intent to aggregate anticipated purchases over a 13-month period to
obtain a reduced sales charge.
Sales Charge Certain shareholders may qualify for a sales charge waiver.
Waiver To determine whether or not you qualify for a sales charge
waiver see "Additional Information About Doing Business with
Us." Shareholders who qualify for a sales charge waiver must
notify the Transfer Agent before purchasing shares.
6
<PAGE>
..........................
[SYMBOL HOW DOES AN
APPEARS EXCHANGE TAKE
HERE] PLACE?
When making an
exchange, you
authorize the
sale of your
shares of one or
more Portfolios
in order to pur-
chase the shares
of another Port-
folio. In other
words, you are
executing a sell
order and then a
buy order. This
sale of your
shares is a tax-
able event which
could result in
a taxable gain
or loss.
.........................
EXCHANGING Once good payment for your shares has been received and
SHARES accepted (i.e., an account has been established), you may
When Can You exchange some or all of your shares for ProVantage Funds
Exchange shares of the Trust or of SEI Liquid Asset Trust, SEI Daily
Shares? Income Trust, SEI International Trust, and SEI Institutional
Managed Trust ("SEI Funds"). Exchanges are made at net asset
value plus any applicable sales charge.
When Do Sales SEI Funds' portfolios that
Charges Apply are not money market
to an portfolios currently impose
Exchange? a sales charge on ProVantage
Funds shares. If you
exchange into one of these
"non-money market"
portfolios, you will have to
pay a sales charge on any
portion of your exchanged
ProVantage Funds shares for
which you have not
previously paid a sales
charge.
If you previously paid a
sales charge on your
ProVantage Funds shares, no
additional sales charge will
be assessed when you
exchange those ProVantage
Funds shares for other
ProVantage Funds shares.
If you buy ProVantage Funds 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 portfolios'
prospectuses.
The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice. The
Trust also reserves the right to deny an exchange request
made within 60 days of the purchase of a non-money market
portfolio.
Requesting an To request an exchange, you must provide proper instructions
Exchange of in writing to the Transfer Agent. Telephone exchanges will
Shares also be accepted if you previously elected this option on
your account application.
In the case of shares held "of record" by an Intermediary
but beneficially owned by you, you should contact the
Intermediary who will contact the Transfer Agent and effect
the exchange on your behalf.
7
<PAGE>
..........................
[SYMBOL WHAT IS A
APPEARS SIGNATURE
HERE] GUARANTEE?
A signature
guarantee veri-
fies the authen-
ticity of your
signature and
may be obtained
from any of the
following:
banks, brokers,
dealers, certain
credit unions,
securities ex-
change or asso-
ciation, clear-
ing agency or
savings associa-
tion. A notary
public cannot
provide a signa-
ture guarantee.
..........................
HOW TO SELL To sell your shares, a written request for redemption in good
SHARES THROUGH order must be received by the Transfer Agent. Valid written
THE redemption requests will be effective on receipt. All
DISTRIBUTOR shareholders of record must sign the redemption request.
For information about the proper form of redemption
By Mail requests, call 1-800-437-6016. You may also have the proceeds
mailed to an address of record or
mailed (or sent by ACH) to a
commercial bank account
previously designated on the
Account Application or
specified by written
instruction to SEI Financial
Services Company. 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 or
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
SEI Financial Services Company at 1-800-437-6016, who will
subtract a wire redemption charge (presently $10.00) from the
amount of the redemption.
Systematic You may establish a systematic withdrawal plan for an account
Withdrawal with a $10,000 minimum balance. Under the plan, redemptions
Plan ("SWP") can be automatically processed from accounts (monthly,
quarterly, semi-annually or annually) by check or by ACH with
a minimum redemption amount of $50.
8
<PAGE>
..........................
WHAT ARE
[SYMBOL INVESTMENT
APPEARS OBJECTIVES
HERE] AND
POLICIES?
The Portfolio's
investment ob-
jective 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 circumstanc-
es. The invest-
ment policies
section spells
out the types of
securities in
which the Port-
folio invests.
..........................
INVESTMENT
OBJECTIVE AND
POLICIES _______________________________________________________________________
The Portfolio's investment
objective is to provide
current income exempt from
both Federal and
Pennsylvania state income
taxes while preserving
capital by investing
primarily in municipal
securities within the
guidelines presented below.
There is no assurance that
this investment objective
will be met.
The Pennsylvania
Municipal Portfolio has a
fundamental policy, under
normal conditions, to be
fully invested in
obligations which produce
interest that is exempt from
both federal and
Pennsylvania state income
tax (state tax-free
obligations). These
include municipal obligations issued by the Commonwealth of
Pennsylvania and its political subdivisions or municipal
authorities, and municipal obligations issued by territories
or possessions of the United States, such as Puerto Rico.
Under normal circumstances, the Portfolio will invest at
least 90% (and intends to invest 100%) of its net assets in
securities the interest on which is not a preference item for
purposes of the alternative minimum tax. In addition, for
temporary defensive purposes when, in the opinion of the
Adviser, such securities are not readily available or of
sufficient quality, the Portfolio can invest up to 100% of
its assets in securities which pay interest which is exempt
only from federal income taxes or in taxable securities as
described below.
The Portfolio may purchase the following types of
municipal obligations, but only if such securities, at the
time of purchase, either have the requisite rating or, if not
rated, are of comparable quality as determined by Bessemer
Trust Company, N.A., the Portfolio's investment adviser
("Bessemer" or the "Adviser"): (i) municipal bonds rated BBB
or better by Standard and Poor's Corporation ("S&P") or Baa
or better by Moody's Investors Service, Inc. ("Moody's");
(ii) municipal notes rated at least SP-1 by S&P or MIG-1 or
VMIG-1 by Moody's; and (iii) tax-exempt commercial paper
rated at least A-1 by S&P or Prime-1 by Moody's. Bonds rated
BBB by S&P or Baa by Moody's have speculative
characteristics. Municipal obligations owned by the Portfolio
which become less than the prescribed investment quality
shall be sold at a time when, in the judgment of the Adviser,
it does not substantially impact the market value of the
Portfolio.
The Portfolio will maintain a dollar-weighted average
portfolio maturity of seven years or less. Each security
purchased will have a maximum maturity of fifteen years.
The Portfolio will not invest more than 25% of its assets
in municipal securities the interest on which is derived from
revenues of similar type projects. This restriction does not
apply to municipal securities in any of the following
categories: public housing authorities; general obligations
of states and localities; state and local housing finance
authorities or municipal utilities systems.
9
<PAGE>
There could be economic, business, or political
developments which might affect all municipal securities of
a similar type. To the extent that a significant portion of
the Portfolio's assets are invested in municipal securities
payable from revenues on similar projects, the Portfolio
will be subject to the peculiar risks presented by such
projects to a greater extent than it would be if the
Portfolio's assets were not so invested. Moreover, in
seeking to attain its investment objective the Portfolio may
invest all or any part of its assets in municipal securities
that are industrial development bonds.
GENERAL
INVESTMENT
POLICIES _______________________________________________________________________
The Portfolio may invest in variable and floating rate
obligations, may purchase securities on a "when-issued"
basis, and reserves the right to engage in transactions
involving standby commitments. There will be no limit to the
percentage of portfolio securities that the Portfolio may
purchase subject to a standby commitment but the amount paid
directly or indirectly for a standby commitment held by the
Portfolio will not exceed 1/2 of 1% of the value of the
total assets of the Portfolio. The Portfolio may also
purchase other types of tax exempt instruments as long as
they are of a quality equivalent to the long-term bond or
commercial paper ratings stated above. Although permitted to
do so, the Portfolio has no present intention to invest in
repurchase agreements. The Portfolio will not invest more
than 10% of its net assets in illiquid securities.
The taxable securities in which the Portfolio may invest
consist of U.S. Treasury Obligations; obligations issued or
guaranteed by the U.S. Government or by its agencies or
instrumentalities whether or not backed by the full faith
and credit of the U.S. Government; obligations of U.S.
commercial banks or savings and loan institutions (not
including foreign branches of U.S. banks or U.S. branches of
foreign banks) which are members of the Federal Reserve
System, the Bank Insurance Fund and Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation
and which have total assets of $1 billion or more as shown
on their last published financial statements at the time of
investment; and repurchase agreements involving any of the
foregoing obligations.
Municipal notes rated SP-1 by S&P have strong capacity to
pay principal and interest; notes rated MIG-1 or VMIG-1 by
Moody's are considered to be of the best quality. Bonds
rated BBB by S&P have an adequate capacity to pay interest
and repay principal; bonds rated Baa by Moody's are
considered to be medium-grade obligations (i.e., neither
highly protected nor poorly secured). The highest S&P
commercial paper rating category, A-1, indicates that the
degree of safety regarding timely payment is strong and
commercial paper issuers rated Prime-1 by Moody's have a
superior ability for repayment.
For a description of the permitted investments and
ratings, see the "Description of Permitted Investments and
Risk Factors" and the Statement of Additional Information.
10
<PAGE>
RISK FACTORS ___________________________________________________________________
Fixed Income The market value of the Portfolio's fixed income investments
Securities will change in response to interest rate changes and other
factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally
rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Moreover,
while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are
also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized rating
agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and
principal also affect the value of these investments.
Changes in the value of these fixed income securities will
not necessarily affect cash income derived from these
securities, but will affect the Portfolio's net asset value.
Under normal conditions the Portfolio will be fully invested
Pennsylvania in obligations which produce interest income exempt from
Risk Factors federal income tax and Pennsylvania state income tax.
Accordingly, the Portfolio will have considerable
investments in Pennsylvania municipal obligations. As a
result, the Portfolio will be more susceptible to factors
which adversely affect issuers of Pennsylvania obligations
than a mutual fund which does not have as great a
concentration in Pennsylvania municipal obligations.
An investment in the Portfolio will be affected by the
many factors that affect the financial condition of the
Commonwealth of Pennsylvania. For example, financial
difficulties of the Commonwealth, its counties,
municipalities and school districts that hinder efforts to
borrow and lower credit ratings are factors which may affect
the Portfolio. See "Additional Considerations Relating to
Pennsylvania Municipal Securities" in the Statement of
Additional Information.
INVESTMENT LIMITATIONS _________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolio. Fundamental policies
cannot be changed with respect to the Trust or the Portfolio
without the consent of the holders of a majority of the
Trust's or the Portfolio's outstanding shares.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than
5% of the total assets of the Portfolio would be invested
in the securities of such issuer.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on current
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 obligations
11
<PAGE>
issued or guaranteed by the U.S. Government or its agencies
and instrumentalities or to investments in tax-exempt
securities issued by governments or political subdivisions
of governments.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of the Portfolio. All borrowings will
be repaid before making additional investments and any
interest paid on such borrowings will reduce the income
of the Portfolio.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT ________________________________________________________________
SEI Financial Management Corporation (the "Manager" or the
"Transfer Agent"), a wholly-owned subsidiary of SEI
Corporation ("SEI"), provides the Trust with overall
management services, regulatory reporting, all necessary
office space, equipment, personnel, and facilities, and
serves as the Trust's transfer agent, dividend disbursing
agent, and shareholder servicing agent.
For these services, the Manager is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .35% of the average daily net assets of the
Portfolio. In addition, the Manager has voluntarily agreed
to waive a portion of its fees proportionately in order to
limit the total operating expenses of the ProVantage Funds
shares of the Portfolio to not more than .88% of the
Portfolio's average daily net assets attributable to the
ProVantage Funds shares on an annualized basis. The Manager
reserves the right, in its sole discretion, to terminate
this voluntary fee waiver at any time. For the fiscal year
ended August 31, 1994, the Portfolio paid the Manager a fee
of .22% of its average daily net assets after fee waivers.
In addition, the Trust and the Manager have entered into
a separate transfer agent agreement with respect to the
ProVantage Funds under which the Manager is entitled to a
fee of .15% of the average daily net assets of the
ProVantage Funds plus out-of-pocket costs.
THE ADVISER ____________________________________________________________________
Bessemer Trust Company, N.A. (the "Adviser") acts as the
Portfolio's investment adviser under an advisory agreement
with the Trust (the "Advisory Agreement"). Under the
Advisory Agreement, the Adviser makes the investment
decisions for the assets of the Portfolio, and continuously
reviews, supervises, and administers the Portfolio's
investment program. The Adviser is independent of the
Manager and SEI, and discharges its responsibilities subject
to the supervision of, and policies set by, the Trustees of
the Trust.
12
<PAGE>
..........................
[SYMBOL INVESTMENT
APPEARS ADVISER
HERE]
A Portfolio's
investment ad-
viser manages
the investment
activities and
is responsible
for the perfor-
mance of the
Portfolio. The
adviser conducts
investment re-
search, executes
investment
strategies based
on an assessment
of economic and
market condi-
tions, and de-
termines which
securities to
buy, hold or
sell.
..........................
The Glass-Steagall Act
restricts the securities
activities of national banks
such as Bessemer Trust
Company, N.A. but federal
regulatory authorities
permit such national banks
to provide investment
advisory and other services
to mutual funds. Should this
position be challenged
successfully in court or
reversed by legislation, the
Trust might have to make
other investment advisory
arrangements.
The Adviser is a wholly-
owned subsidiary of The
Bessemer Group ("TBG"), a
bank holding company which
was organized in 1981, and
engages
in investment management, fiduciary, and other personal
financial services. As of September 30, 1994, total assets
under management by the Adviser were approximately $10.9
billion. The principal place of business address of the
Adviser and TBG is 630 Fifth Avenue, New York, NY 10111.
Staats M. Pellett, Jr., CFA, Senior Vice President of
Bessemer Trust Company, N.A., and K'lon Andrews, Vice
President of Bessemer Trust Company, N.A., have acted as
portfolio managers for the Portfolio since its inception. Mr.
Pellet supervises tax exempt bond investment activities for
the Adviser, and has over 25 years experience as a municipal
securities portfolio manager and analyst. Ms. Andrews has
been a municipal securities portfolio manager for the Adviser
for the past ten years.
The Adviser is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .25% of the
average daily net assets of the Portfolio. For the fiscal
year ended August 31, 1994, the Portfolio paid the Adviser a
fee of .15% of its average daily net assets.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a wholly-
owned subsidiary of SEI, serves as the Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement"), which applies to Class A and
ProVantage Funds shares of the Portfolio. Each Class has a
separate distribution plan ("Class A Plan" and "ProVantage
Funds Plan," collectively the "Plans"). The Trust may also
execute brokerage or other agency transactions through the
Distributor for which the Distributor may receive usual and
customary compensation. The Trust intends to operate the
Distribution Plans in accordance with their terms and with
the NASD rules concerning sales charges.
The Distribution Agreement and the Plans provide for
reimbursement for expenses incurred by the Distributor in an
amount not to exceed .30% of the Portfolio's average daily
net assets on an annualized basis provided those expenses are
permissible as to both type and amount under a budget, and
the ProVantage Funds Plan provides for additional payments
for distribution and shareholder services, as described
below. The budget must
13
<PAGE>
be approved and monitored quarterly by the Trustees
including those who are not interested persons and have no
financial interest in the Plan or any related agreement.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of advertising and sales materials, the costs of
federal and state securities laws registration, advertising
expenses, and promotional and sales expenses including
expenses for travel, communication, and compensation and
benefits for sales personnel. The Trust is not obligated to
reimburse the Distributor for any expenditures in excess of
the approved budget. Currently, the budget for the Portfolio
is set at an annual rate of .06% of its average daily net
assets. Distribution expenses not attributable to a specific
portfolio are allocated among each of the portfolios of the
Trust based on average net assets.
The ProVantage Funds Plan, in addition to providing for
the reimbursement payments described above, provides for
payments to the Distributor at an annual rate of .30% of the
Portfolio's average daily net assets attributable to
ProVantage Funds shares. These additional payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
may be used to compensate the Distributor for its services
in connection with distribution assistance or provision of
shareholder services. Some or all of these payments may be
used to pay financial institutions and intermediaries such
as banks, savings and loan associations, insurance
companies, investment counselors, broker-dealers and the
Distributor's affiliates and subsidiaries for services or
reimbursement of expenses incurred in connection with
distribution assistance or provision of shareholder
services. If the Distributor's expenses are less than its
fees under the ProVantage Funds Plan, the Trust will still
pay the full payment and the Distributor will realize a
profit, but the Trust will not be obligated to pay in excess
of the full fee, even if the Distributor's actual expenses
are higher. Currently, the Distributor is taking this
additional "compensation" payment under the ProVantage Funds
Plan at a rate of only .25% of the Portfolio's average daily
net assets, on an annualized basis, attributable to
ProVantage Funds shares.
These institutions may also charge separate fees to their
customers. 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.
Certain financial institutions offering shares to their
customers may be required to register as dealers pursuant to
state laws.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers,
trips, and vacation packages, to all dealers selling shares
of the Portfolios. Such promotional incentives will be
offered uniformly to all dealers and predicated upon the
amount of shares of the Portfolios sold by the dealer.
14
<PAGE>
PERFORMANCE ____________________________________________________________________
The performance on the ProVantage Funds shares will normally
be lower than the performance on the Class A shares of the
Portfolio because of the imposition of the sales charge and
additional distribution and transfer agent expenses charged
to the ProVantage Funds shares.
From time to time, the Portfolio may advertise yield and
total return. These figures will be based on historical
earnings and are not intended to indicate future
performance. No representation can be made concerning actual
future yields or returns. The total return of the Portfolio
refers to the average compounded rate of return to a
hypothetical investment for designated time periods
(including, but not limited to, the period from which the
Portfolio commenced operations through the specified date),
assuming that the entire investment is redeemed at the end
of each period and assuming the reinvestment of all dividend
and capital gain distributions.
From time to time, the Portfolio may also advertise yield
and tax equivalent yield. The yield of these Portfolios
refers to the annualized income generated by a hypothetical
investment, net of any sales charge imposed in the case of
ProVantage Funds shares, in the Portfolio over a specified
30-day period. The yield is calculated by assuming that the
income generated by the investment during that period
generated each period over one year and is shown as a
percentage of the investment. A tax equivalent yield is
calculated by determining the rate of return that would have
been achieved on a fully taxable investment to produce the
after-tax equivalent of the Portfolio's yield, assuming
certain tax brackets for a shareholder.
The Portfolio may periodically compare its performance to
that of other mutual funds tracked by mutual fund rating
services (such as Lipper Analytical) or by financial and
business publications and periodicals, to broad groups of
comparable mutual funds, unmanaged indices which may assume
investment of dividends but generally do not reflect
deductions for administrative and management costs, or other
investment alternatives. The Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. The Portfolio may use
long-term performance of these capital markets to
demonstrate general long-term risk versus reward scenarios
and could include the value of a hypothetical investment in
any of the capital markets. The Portfolio may also quote
financial and business publications and periodicals as they
relate to fund management, investment philosophy, and
investment techniques.
The Portfolio may quote various measures of volatility
and benchmark correlation in advertising and may compare
these measures to those of other funds. Measures of
volatility attempt to compare historical share price
fluctuations or total returns to a benchmark while measures
of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot
be calculated precisely.
15
<PAGE>
..........................
[SYMBOL
APPEARS TAXES
HERE]
You must pay
taxes on your
Portfolio's
earnings,
whether you take
your payments in
cash or addi-
tional shares.
..........................
..........................
[SYMBOL
APPEARS DISTRIBUTIONS
HERE]
The Portfolio
distributes in-
come dividends
and capital
gains. Income
dividends repre-
sent the earn-
ings from the
Portfolio's in-
vestments; capi-
tal gains dis-
tributions occur
when investments
in the Portfolio
are sold for
more than the
original pur-
chase price.
..........................
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial, or administrative action.
No attempt has been made to present a detailed explanation of
the federal, state, or local income tax treatment of the
Portfolio or its shareholders. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state, and local income taxes. State
and local tax consequences of an investment in the Portfolio
may differ from the federal income tax consequences described
below. Additional information concerning taxes is set forth
in the Statement of Additional Information.
Tax Status of The Portfolio is treated as
the Portfolio: a separate entity for
federal income tax purposes
and is not combined with the
Trust's other Portfolios.
The Portfolio intends to
continue to qualify for the
special tax treatment
afforded regulated
investment companies
("RICs") under Subchapter M
of the Internal Revenue Code
of 1986, as amended (the
"Code"), so
as to be relieved of federal income tax on net investment
company taxable income and net capital gain (the excess of
net long term capital gain over net short term capital loss)
distributed to shareholders.
Tax Status of The Portfolio intends to
Distributions: distribute substantially all
of its net investment income
(including net short-term
capital gain) to
shareholders. If, at the
close of each quarter of its
taxable year, at least 50%
of the value of the
Portfolio's total assets
consists of obligations the
interest on which is
excludable from gross
income, the Portfolio may
pay "exempt-interest
dividends" to its
shareholders. Those
dividends constitute the
portion of the aggregate
dividends designated by the
Portfolio equal to the
excess of the
excludable interest over certain amounts disallowed as
deductions. In determining net exempt-interest income,
expenses of each Portfolio are allocated to gross tax-exempt
interest income in the proportion that the gross amount of
such interest income bears to the Portfolio's total gross
income, excluding net capital gains. Exempt-interest
dividends are excludable from a shareholder's gross income
for federal income tax purposes but may have certain
collateral federal tax consequences including alternative
minimum tax consequences. In addition, the receipt of exempt-
interest dividends may cause persons receiving Social
Security or Railroad Retirement benefits to be taxable on a
portion of such benefits. See the Statement of Additional
Information.
Current federal tax law limits the types and volume of
bonds qualifying for the federal income tax exemption of
interest, which may have an effect on the ability of the
16
<PAGE>
Portfolio to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the
payment of "exempt-interest" dividends.
Any dividends paid out of income realized by the
Portfolio on taxable securities will be taxable to
shareholders as ordinary income (whether received in cash or
in additional shares) to the extent of the Portfolio's
earnings and profits and will not qualify for the dividends-
received deduction for corporate shareholders. Distributions
to shareholders of net capital gains of the Portfolio also
will not qualify for that deduction and will be taxable to
shareholders as long term capital gain, whether received in
cash or additional shares, and regardless of how long a
shareholder has held the shares.
Dividends declared by the Portfolio in October, November,
or December of any year and payable to shareholders of
record on a date in any such month will be deemed to have
been paid by the Portfolio and received by the shareholders
on December 31 of that year if paid by the Portfolio during
the following January. The Portfolio makes annual reports to
shareholders of the federal income tax status of
distributions.
Interest on indebtedness incurred or continued by a
shareholder in order to purchase or carry shares of the
Portfolio is not deductible for federal income tax purposes.
Furthermore, the Portfolio may not be an appropriate
investment for persons (including corporations and other
business entities) who are "substantial users" (or persons
related to "substantial users") of facilities financed by
industrial development bonds or private activity bonds. Such
persons should consult their tax advisers before purchasing
shares.
The Portfolio will report annually to its shareholders
the portion of dividends that is taxable and the portion
that is tax-exempt based on income received by the Portfolio
during the year to which the dividends relate.
The Portfolio intends to make sufficient distributions
prior to the end of each calendar year to avoid liability
for federal excise tax.
Pennsylvania Distributions paid by the Portfolio to shareholders will not
Taxes be subject to the Pennsylvania personal income tax or to the
Philadelphia School District investment net income tax to
the extent that the distributions are attributable to
interest received by the Portfolio from its investments in
(i) obligations issued by the Commonwealth of Pennsylvania,
any public authority, commission, board of agency created by
the Commonwealth of Pennsylvania, or any public authority
created by such political subdivision, and (ii) obligations
of the United States, the interest and gains from which are
statutorily free from state taxation in the Commonwealth or
the United States. Distributions by a Portfolio to a
Pennsylvania resident that are attributable to most other
sources will not be exempt from the Pennsylvania personal
income tax or (for residents of Philadelphia) the
Philadelphia School District investment net income tax.
Distributions paid by the Portfolio which are excludable as
exempt income for federal tax purposes are not subject to
the Pennsylvania corporate net income tax.
Shares purchased as an investment in the Portfolio are
exempt from Pennsylvania county personal property taxes and
(as to residents of Pittsburgh) from personal property
17
<PAGE>
..........................
BUY, EXCHANGE
[SYMBOL AND SELL
APPEARS REQUESTS ARE
HERE] IN "GOOD
ORDER" WHEN:
. The account
number and
portfolio name
are shown
. The amount of
the transac-
tion is speci-
fied in dol-
lars or shares
. Signatures of
all owners ap-
pear exactly
as they are
registered on
the account
. Any required
signature
guarantees (if
applicable)
are included
. Other support-
ing legal doc-
uments (as
necessary) are
present
..........................
taxes imposed by the City of Pittsburgh and the School
District of Pittsburgh to the extent that the Portfolio's
investments consist of obligations which are themselves
exempt from taxation in Pennsylvania.
The Portfolio intends to invest primarily in obligations
which produce interest exempt from Federal and Pennsylvania
taxes. If the Portfolio invests in obligations that are not
exempt for Pennsylvania purposes but are exempt for Federal
purposes, a portion of the Portfolio's distributions will be
subject to Pennsylvania personal income tax.
Shareholders are advised to consult with their tax
advisers for more detailed information concerning
Pennsylvania tax matters.
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 (a "Business
Day"). All purchase, exchange, and redemption requests
received in "good order" will be effective as of the Business
Day received by the
Distributor as long as the
Distributor receives the
order and, in the case of a
purchase request, payment
before the close of trading
on the New York Stock
Exchange (presently 4:00
p.m. Eastern time).
Otherwise the purchase will
be effective when payment is
received. Broker-dealers may
have separate arrangements
with ProVantage Funds.
If an exchange request is
for shares of a portfolio
whose net asset value is
calculated as of a time
earlier than the close of
trading on the New York
Stock Exchange (presently
4:00 p.m. Eastern time), the
exchange request will not be
effective until the next
Business Day. Anyone who
wishes to make an exchange
must have received a current
prospectus of the portfolio
into which the exchange is
being made before the
exchange will be effected.
Minimum The minimum initial investment in the Portfolio's ProVantage
Investments Funds Class is $1,000; however, the minimum investment may be
waived at the Distributor's discretion. All subsequent
purchases must be at least $100 ($25 for payroll deductions
authorized pursuant to pre-approved payroll deduction plans).
The Trust reserves the right to reject a purchase order when
the Distributor determines that it is not in the best
interest of the Trust or its shareholders to accept such
order.
Maintaining a Due to the relatively high cost of handling small
Minimum investments, the Portfolio reserves the right to redeem, at
Account net asset value, the shares of any shareholder if, because of
Balance redemptions of shares by or on behalf of the shareholder, the
account of such shareholder
18
<PAGE>
in the Portfolio has a value of less than $1,000, the
minimum initial purchase amount. Accordingly, an investor
purchasing shares of the Portfolio in only the minimum
investment amount may be subject to such involuntary
redemption if he or she thereafter redeems any of these
shares. Before the Portfolio exercises its right to redeem
such shares and to send the proceeds to the shareholder, the
shareholder will be given notice that the value of the
shares in his or her account is less than the minimum amount
and will be allowed 60 days to make an additional investment
in the Portfolio in an amount that will increase the value
of the account to at least $1,000. See "Purchase and
Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may
be suspended.
At various times, the Portfolio may be requested to
redeem shares for which it has not yet received good
payment. In such circumstances, redemption proceeds will be
forwarded upon collection of payment for the shares;
collection of payment may take 10 or more days. The
Portfolio intends to pay cash for all shares redeemed, but
under abnormal conditions that make payment in cash unwise,
payment may be made wholly or partly in portfolio securities
with a market value equal to the redemption price. In such
cases, an investor may incur brokerage costs in converting
such securities to cash.
Net Asset Value An order to buy shares will be executed at a per share price
equal to the net asset value next determined after the
receipt of the purchase order by the Distributor plus any
applicable sales charge (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 as of the close of trading on the New
York Stock Exchange (presently 4:00 p.m. Eastern time) on
each Business Day. Payment to shareholders for shares
redeemed will be made within 7 days after receipt by the
Distributor of the redemption order.
How the Net The net asset value per share of the Portfolio is determined
Asset Value is by dividing the total market value of its investments and
Determined other assets, less any liabilities, by the total number of
outstanding shares of the Portfolio. The Portfolio may use a
pricing service to obtain the most recently quoted bid price
of each fixed income security held by the Portfolio.
Unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price.
Net asset value per share is determined daily as of the
close of trading on the New York Stock Exchange (presently
4:00 p.m. Eastern time) on each Business Day. Purchases will
be made in full and fractional shares of the Portfolio
calculated to three decimal places. Although the methodology
and procedures for determining net asset value per share are
identical for both classes of the Portfolio, the net asset
value per share of one class may differ from that of another
class because of the different distribution fees charged to
each class and the incremental transfer agent fees charged
to ProVantage Funds shares.
19
<PAGE>
Rights of In calculating the sales charge rates applicable to current
Accumulation purchases of the Portfolio's shares, a "single purchaser"
(defined below) is entitled to combine current purchases
with the current market value of previously purchased shares
of the Portfolio and ProVantage Funds shares of other
portfolios ("Eligible Portfolios") which are sold subject to
a comparable sales charge.
The term "single purchaser" refers to (i) an individual,
(ii) an individual and spouse purchasing shares of the
Portfolio for their own account or for trust or custodial
accounts of their minor children, or (iii) a fiduciary
purchasing for any one trust, estate, or fiduciary account,
including employee benefit plans created under Sections 401
or 457 of the Code, including related plans of the same
employer. Furthermore, under this provision, purchases by a
single purchaser shall include purchases by an individual
for his or her own account in combination with (i) purchases
of that individual and spouse for their joint accounts or
for trust and custodial accounts for their minor children
and (ii) purchases of that individual's spouse for his or
her own account. To be entitled to a reduced sales charge
based upon shares already owned, the investor must ask the
Distributor for such reduction at the time of purchase and
provide the account number(s) of the investor, the investor
and spouse, and their children (under age 21). The Portfolio
may amend or terminate this right of accumulation at any
time as to subsequent purchases.
Letter of By submitting a Letter of Intent (the "Letter") to the
Intent Distributor, a single purchaser may purchase shares of the
Portfolio and the other Eligible Portfolios during a 13-
month period at the reduced sales charge rates applying to
the aggregate amount of the intended purchases stated in the
Letter. The Letter may apply to purchases made up to 90 days
before the date of the Letter. It is the shareholder's
responsibility to notify the Transfer Agent at the time the
Letter is submitted that there are prior purchases that may
apply.
Five percent (5%) of the total amount intended to be
purchased will be held in escrow by the Distributor until
such purchase is completed within the 13-month period. The
13-month period begins on the date of the earliest purchase.
If the intended investment is not completed, the Manager
will surrender an appropriate number of the escrowed shares
for redemption in order to realize the difference between
the sales charge on the shares purchased at the reduced rate
and the sales charge otherwise applicable to the total
shares purchased. Such purchasers may include the value of
all their shares of the Portfolio and of any of the other
Eligible Portfolios in the Trust towards the completion of
such Letter.
Reinstatement A shareholder who has redeemed shares of any portfolio of
Privilege the Trust has a one-time right to reinvest the redemption
proceeds in shares of another portfolio of the Trust 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
portfolio 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
20
<PAGE>
income tax purposes. The investor must notify the Transfer
Agent at the time the trade is placed that the transaction
is a reinvestment.
Sales Charge No sales charge is imposed on shares of the Portfolio: (i)
Waivers issued in plans of reorganization, such as mergers, asset
acquisitions, and exchange offers, to which the Trust is a
party; (ii) sold to dealers or brokers that have a sales
agreement with the Distributor ("participating broker-
dealers") for their own account or for retirement plans for
employees or sold to present employees of dealers or brokers
that certify to the Distributor at the time of purchase that
such purchase is for their own account; (iii) sold to
present employees of SEI or one of its affiliates, or of any
entity which is a current service provider to the Trust;
(iv) sold to tax-exempt organizations enumerated in Section
501(c) of the Code or qualified employee benefit plans
created under Sections 401, 403(b)(7), or 457 of the Code
(but not IRAs or SEPs); (v) sold to fee-based clients of
banks, financial planners, and investment advisers; (vi)
sold to clients of trust companies and bank trust
departments; (vii) sold to trustees and officers of the
Trust; (viii) purchased with proceeds from the recent
redemption of another class of shares of a portfolio of the
Trust, SEI Tax-Exempt Trust, SEI Institutional Managed
Trust, SEI International Trust, SEI Liquid Asset Trust, or
SEI Daily Income Trust; (ix) purchased with the proceeds
from the recent redemption of shares of a mutual fund with
similar investment objectives and policies (other than
ProVantage Funds) for which a front-end sales charge was
paid (this offer will be extended, to cover shares on which
a deferred sales charge was paid, if permitted under
regulatory authorities' interpretation of applicable law);
or (x) sold to participants or members of certain affinity
groups, such as trade associations or membership
organizations, which have entered into arrangements with the
Distributor.
Members of affinity groups such as trade associations or
membership organizations which have entered into
arrangements relating to waivers of sales charges with the
Distributor should contact the Distributor at 1-800-437-6016
for more information.
The Distributor has also entered into arrangements with
certain affinity groups and broker dealers wherein their
members or clients are entitled to percentage-based
discounts from the otherwise applicable sales charge for
purchase of ProVantage Fund shares. Currently, the only
percentage-based discount equals 50%. Please contact the
Distributor at 1-800-437-6016 for more information.
An investor relying upon any of the categories of waivers
of the sales charge must qualify such waiver in advance of
the purchase with the Distributor or the financial
institution or intermediary through which shares are
purchased by the investor.
The waiver of the sales charge under circumstances (viii)
and (ix) above applies only if the following conditions are
met: the purchase must be made within 60 days of the
redemption; the Distributor must be notified in writing by
the investor, or his or her agent, at the time a purchase is
made; and a copy of the investor's account statement showing
such redemption must accompany such notice. The waiver
policy with respect to
21
<PAGE>
the purchase of shares through the use of proceeds from a
recent redemption as described in clauses (viii) and (ix)
above will not be continued indefinitely and may be
discontinued at any time without notice. Investors should
call the Distributor at 1-800-437-6016 to confirm
availability prior to initiating the procedures described in
clauses (viii) and (ix) above.
Signature The Transfer Agent may require that the signatures on the
Guarantees written request be guaranteed. You should be able to obtain
a signature guarantee from a bank, broker, dealer, certain
credit unions, securities exchange or association, clearing
agency, or savings association. Notaries public cannot
guarantee signatures. The signature guarantee requirement
will be waived if all of the following conditions apply: (1)
the redemption is for not more than $5,000 worth of shares,
(2) the redemption check is payable to the shareholder(s) of
record, and (3) the redemption check is mailed to the
shareholder(s) at his or her address of record. The Trust
and the Transfer Agent reserve the right to amend these
requirements without notice.
Telephone/Wire Redemption orders may be placed by telephone. Neither the
Instructions Trust nor the Transfer Agent will be responsible for any
loss, liability, cost, or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the Trust's
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received by
telephone and recording telephone instructions. If market
conditions are extraordinarily active, or other
extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone, you may
wish to consider placing your order by other means.
Systematic Please note that if withdrawals exceed income dividends,
Withdrawal Plan your invested principal in the account will be depleted.
("SWP") Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net asset
value per share, your original investment could be exhausted
entirely. To participate in the SWP, you must have your
dividends automatically reinvested. You may change or cancel
the SWP at any time, upon written notice to the Transfer
Agent.
How to Close An account may be closed by providing written notice to the
your Account Transfer Agent. You may also close your account by telephone
if you have previously elected telephone options on your
account application.
GENERAL INFORMATION ____________________________________________________________
The Trust SEI Tax Exempt Trust (the "Trust") was organized as a
Massachusetts business trust under a Declaration of Trust
dated March 15, 1982. The Declaration of Trust permits the
Trust to offer separate portfolios of shares and different
classes of each portfolio. Shareholders may purchase shares
in the Portfolio through two separate classes: Class A and
ProVantage Funds, which provide for variation in
distribution and transfer agent costs,
22
<PAGE>
voting rights, dividends, and the imposition of a sales load
on the ProVantage Funds. This Prospectus relates to the
ProVantage Funds Shares of the Trust's Pennsylvania
Municipal Portfolio. In addition to the Portfolio, the Trust
consists of the following portfolios: Tax Free Portfolio,
Institutional Tax Free Portfolio, California Tax Exempt
Portfolio, Intermediate-Term Municipal Portfolio, Kansas Tax
Free Income Portfolio, Massachusetts Intermediate-Term
Municipal Portfolio, California Intermediate-Term Municipal
Portfolio, Bainbridge Tax Exempt Portfolio, New York
Intermediate-Term Municipal Portfolio, and Pennsylvania Tax
Free Portfolio. Additional information pertaining to the
Trust may be obtained by writing to SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, Pennsylvania
19087 or by calling 1-800-437-6016. All consideration
received by the Trust for shares of any portfolio and all
assets of such portfolio belong to that portfolio and would
be subject to liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit, and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation, and other
extraordinary expenses, brokerage costs, interest charges,
taxes, and organization expenses.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class will vote
separately on matters relating solely to that portfolio or
class, such as any distribution plan. As a Massachusetts
business trust, the Trust is not required to hold annual
meetings of shareholders but approval will be sought for
certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining Trustees
or by shareholders at a special meeting called upon written
request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a
meeting is requested the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial information semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager, SEI
Inquiries Financial Management Corporation, P.O. Box 451, Wayne,
Pennsylvania, 19087-0451.
Dividends The net investment income (exclusive of capital gains) of
the Portfolio is determined and declared periodically as a
dividend for shareholders of record as of the close of
business on that day. Dividends are paid by the Portfolio in
cash or in additional shares at the discretion of the
shareholder on the tenth Business Day of each month. If any
net capital gains are realized, they will be distributed by
the Portfolio annually.
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Shareholders automatically receive all income dividends
and capital gain distributions in additional shares at the
net asset value next determined following the record date,
unless the shareholder has elected to take such payment in
cash. Shareholders may change their election by providing
written notice to the Manager at least 15 days prior to the
distribution.
The dividends on ProVantage Funds shares will normally be
lower than on Class A shares of the Portfolio because of the
additional distribution and transfer agent expenses charged
to ProVantage Funds shares.
Counsel and Morgan, Lewis & Bockius serves as counsel to the Trust.
Independent Arthur Andersen LLP serves as the independent public
Public accountants of the Trust.
Accountants
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, PA 19101, serves as Custodian of the
Trust's assets and acts as wire agent of certain cash of the
Trust. The Custodian holds cash, securities, and other
assets of the Trust as required by the Investment Company
Act of 1940.
DESCRIPTION
OF PERMITTED
INVESTMENTS AND
RISK FACTORS ___________________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors.
Bankers' Bankers' acceptances are bills of exchange or time drafts
Acceptances 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 Certificates of deposit are interest bearing instruments
Deposit 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 Commercial Paper is a term used to describe unsecured short-
Paper term promissory notes issued by banks, municipalities,
corporations and other entities. Maturities on these issues
vary from a few to 270 days.
Municipal Municipal Securities consist of (i) debt obligations issued
Securities by or on behalf of public authorities to obtain funds to be
used for various public facilities, for refunding
outstanding obligations, for general operating expenses and
for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial
development bonds, issued by or on behalf of public
authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated
facilities.
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General obligation bonds are backed by the taxing power
of the issuing municipality. Revenue bonds are backed by the
revenues of a project or facility (tolls from a toll bridge,
for example). Certificates of participation represent an
interest in an underlying obligation or commitment such as
an obligation issued in connection with a leasing
arrangement. The payment of principal and interest on
private activity and industrial development bonds generally
is dependent solely on the ability of the facility's user to
meet its financial obligations and the pledge, if any, of
real and personal property so financed as security for such
payment.
Municipal notes include general obligation notes, tax
anticipation notes, revenue anticipation notes, bond
anticipation notes, certificates of indebtedness, demand
notes and construction loan notes and participation
interests in municipal notes. Municipal bonds include
general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds and
participation interests in municipal bonds.
Repurchase Repurchase Agreements are agreements by which a person, such
Agreements as a Portfolio, 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 custodian will hold the
security as collateral for the repurchase agreement. The
Portfolio bears a risk of loss in the event the other party
defaults on its obligations and the Portfolio is delayed or
prevented from exercising its right to dispose of the
collateral or if the Portfolio realizes a loss on the sale
of the collateral. The Portfolio will enter into repurchase
agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the
agreement based on established guidelines. Repurchase
agreements are considered loans under the Investment Company
Act of 1940.
Standby Securities subject to standby commitments or puts permit the
Commitments and holder thereof to sell the securities at a fixed price prior
Puts to maturity. Securities subject to a standby commitment or
put may be sold at any time at the current market price.
However, unless the standby commitment or put was an
integral part of the security as originally issued, it may
not be marketable or assignable; therefore, the standby
commitment or put would only have value to the Portfolio
owning the security to which it relates. In certain cases, a
premium may be paid for a standby commitment or put. This
premium will have the effect of reducing the yield otherwise
payable on the underlying security. The Portfolio will limit
standby commitment or put transactions to institutions
believed to present minimal credit risk.
Variable and Certain of the obligations may carry variable or floating
Floating Rate rates of interest, or may involve a conditional or
Instruments unconditional demand feature. Such instruments bear interest
at rates which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly, or
some other reset period, and may have a floor or ceiling on
interest rate charges. There is a risk that the current
interest rate on such obligations may not accurately reflect
existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.
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When-Issued and When-issued or delayed delivery basis transactions involve
Delayed the purchase of an instrument with payment and delivery
Delivery taking place in the future. Delivery of and payment for
Securities these securities may occur a month or more after the date of
the purchase commitment. The Portfolio will maintain with
the custodian a separate account with liquid high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date and no interest accrues to
the Portfolio before settlement. These securities are
subject to market fluctuation due to changes in market
interest rates and it is possible that the market value at
the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has
changed. Although the Portfolio generally purchases
securities on a when-issued or forward commitment basis with
the intention of actually acquiring securities for its
portfolio, the Portfolio may dispose of a when-issued
security or forward commitment prior to settlement if it
deems appropriate.
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