<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
[x] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SEI TAX EXEMPT TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
same
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
-----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
N/A
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
N/A
-----------------------------------------------------------------------
[x] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
$125
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
Schedule 14a
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3) Filing Party:
SEI Tax Exempt Trust
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4) Date Filed:
February 21, 1996
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<PAGE>
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
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IMPORTANT SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------
THE DOCUMENT YOU HOLD IN YOUR HANDS CONTAINS YOUR PROXY STATEMENT AND PROXY
CARD. A PROXY CARD IS, IN ESSENCE, A BALLOT. WHEN YOU VOTE YOUR PROXY, IT
TELLS US HOW TO VOTE ON YOUR BEHALF ON IMPORTANT ISSUES RELATING TO YOUR
PORTFOLIO. IF YOU SIMPLY SIGN THE PROXY CARD WITHOUT SPECIFYING A VOTE, YOUR
SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES.
WE URGE YOU TO SPEND A FEW MINUTES WITH THE PROXY STATEMENT, FILL OUT YOUR
PROXY CARD, AND RETURN IT TO US. VOTING YOUR PROXY, AND DOING SO PROMPTLY,
ENSURES THAT THE PORTFOLIO WILL NOT NEED TO CONDUCT ADDITIONAL MAILINGS. WHEN
SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, WE HAVE TO
INCUR THE EXPENSE OF FOLLOW-UP SOLICITATIONS, WHICH MAY COST YOUR PORTFOLIO
MONEY.
PLEASE TAKE A FEW MOMENTS TO EXERCISE YOUR RIGHT TO VOTE. THANK YOU.
- -------------------------------------------------------------------------------
SEI TAX EXEMPT TRUST
<PAGE>
SEI TAX EXEMPT TRUST
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
Dear Shareholder,
A Shareholder Meeting of the Intermediate-Term Municipal Portfolio of SEI
Tax Exempt Trust (the "Trust") has been scheduled for Tuesday, April 16, 1996.
If you were a shareholder of record as of the close of business on February
22, 1996, you are entitled to vote at the meeting or any adjournment of the
meeting.
While you are, of course, welcome to join us at the meeting, most
Shareholders cast their votes by filling out and signing the enclosed proxy
card. Whether or not you plan to attend the meeting, we need your vote. Please
mark, sign, and date the enclosed proxy card and return it promptly in the
enclosed postage-paid envelope so that the maximum number of shares may be
voted.
The attached proxy statement is designed to give you information relating to
each of the Proposals on which you will be asked to consider and vote. We
encourage you to support the Trustees' recommendations. The Proposals
described in the proxy statement relate to the following matters:
1. Authorizing the Board of Trustees of the Trust to approve additional
and replacement sub-advisers for the Intermediate-Term Municipal
Portfolio without the approval of Shareholders.
2. Approving the selection of SEI Financial Management Corporation as
investment adviser for the Intermediate-Term Municipal Portfolio and
a new investment advisory agreement between the Trust, on behalf of
the Portfolio, and SEI Financial Management Corporation.
3. Approving the selection of Standish, Ayer & Wood, Inc. as sub-
adviser to the Intermediate-Term Municipal Portfolio and a new sub-
advisory agreement between SEI Financial Management and Standish,
Ayer & Wood, Inc.
Your vote is important to us. Please do not hesitate to call 1-800-DIAL SEI
if you have any questions about the Proposals under consideration. Thank you
for taking the time to consider these important Proposals and for your
investment in the SEI Funds.
Sincerely,
LOGO
David G. Lee
President and Chief Executive
Officer SEI Tax Exempt Trust
<PAGE>
SEI TAX EXEMPT TRUST
2 OLIVER STREET
BOSTON, MA 02109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 16, 1996
Notice is hereby given that a Special Meeting of shareholders of the
Intermediate-Term Municipal Portfolio (the "Portfolio") of SEI Tax Exempt
Trust (the "Trust") will be held at the offices of SEI Financial Management
Corporation ("SFM"), 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658,
on Tuesday, April 16, 1996, at 3:30 p.m.
At the meeting, shareholders of the Portfolio (the "Shareholders") will be
asked to consider and act on to a new management structure for the Portfolio,
a new adviser and sub-adviser and new advisory and sub-advisory agreements,
and other matters detailed below (the "Proposals"). The specifics of these
Proposals, which are more fully described in the attached Proxy Statement, are
as follows:
1. To authorize the Board of Trustees to appoint or replace investment
sub-advisers recommended by SFM for the Trust's Portfolio without
Shareholder approval of such sub-advisers' contracts.
2. To approve the selection of SFM as the Investment Adviser to the
Trust's Portfolio, and to approve the Investment Advisory Agreement between
the Trust, on behalf of the Portfolio, and SFM.
3. To approve the selection of Standish, Ayer & Wood, Inc. as a sub-
adviser to the Portfolio, and to approve a sub-advisory agreement between
SFM and Standish, Ayer & Wood, Inc.
Proposals 1 and 2 relate to the "Manager of Managers" structure approved by
the Trust's Board of Trustees, wherein SFM will act as investment adviser to
the Portfolio and recommend to the Trustees which investment sub-advisers to
appoint and replace for the Portfolio. Apart from Shareholder approval, this
structure requires an order of exemption from the Securities and Exchange
Commission ("SEC") before becoming operative. It is anticipated that if and
when exemptive relief is granted, the "Manager of Managers" structure will
enable the Trust to achieve a higher degree of management efficiency and will
reduce the need for Shareholder meetings in the future. In connection with the
proposed implementation of the "Manager of Managers" structure, the Trustees
have approved the selection of SFM as investment adviser to the Portfolio
under a new investment advisory agreement for the Portfolio.
Proposal 3 relates to approval of the selection of the current investment
adviser as investment sub-adviser to the Portfolio, and approval of a form of
investment sub-advisory agreement for the Portfolio. If the "Manager of
Managers" structure is implemented, and an SEC order is obtained, the Trustees
would be able, upon the recommendation of SFM and without Shareholder
approval, to replace the sub-adviser and/or appoint additional sub-advisers to
the Portfolio, and to utilize investment sub-advisory agreements for the
Portfolio whose terms are different from those currently in use by the Trust.
<PAGE>
In accordance with their own discretion, the proxies are authorized to vote
on such other business as may properly come before the Meeting.
BY ORDER OF THE BOARD OF TRUSTEES
LOGO
RICHARD W. GRANT, SECRETARY
All Shareholders are cordially invited to attend the Meeting. However, if
you are unable to be present at the Meeting, you are requested to mark, sign,
and date the enclosed proxy card and return it promptly in the enclosed,
postage-paid envelope so that the Meeting may be held and a maximum number of
shares may be voted.
Shareholders of record at the close of business on February 22, 1996 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
March 8, 1996
<PAGE>
SEI TAX EXEMPT TRUST
2 OLIVER STREET
BOSTON, MA 02109
-----------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of SEI Tax Exempt Trust (the "Trust") for use
at the Special Meeting of Shareholders to be held on April 16, 1996, at 3:30
p.m., at the offices of SEI Financial Management Corporation ("SFM"), 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, and at any adjourned session
thereof (such meeting and any adjournment thereof are hereinafter referred to
as the "Meeting"). Shareholders of the Intermediate-Term Municipal Portfolio
(the "Portfolio") of the Trust (the "Shareholders") of record at the close of
business on February 22, 1996, are entitled to vote at the Meeting. As of
February 22, 1996, the approximate number of units of beneficial interest
("shares") issued and outstanding for the Portfolio was 8,737,878.628. Each
share is entitled to one vote and each fractional share is entitled to a
proportionate fractional vote on each matter as to which such shares are to be
voted at the Meeting. Shareholders of each class of each Fund will vote
together on each Proposal relating to their Fund.
In addition to the solicitation of proxies by mail, Trustees and officers of
the Trust and officers and employees of SFM, the Manager and Shareholder
Servicing Agent for the Trust, and third parties hired for such purpose, may
solicit proxies in person or by telephone. Persons holding shares as nominees
will, upon request, be reimbursed for their reasonable expenses incurred in
sending soliciting materials to their principals. The general cost of
solicitation will be borne by the Trust, except that SFM will bear a portion
of the overall cost of the Proxy Statement relating to the approval of SFM as
investment adviser. The proxy and this Proxy Statement are being mailed to
Shareholders on or about March 8, 1996.
Shares represented by duly executed proxies will be voted in accordance with
the instructions given. Proxies may be revoked at any time before they are
exercised by a written revocation received by the President of the Trust at
680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, by properly
executing a later-dated proxy, or by attending the Meeting and voting in
person.
1
<PAGE>
INTRODUCTION
The Trust is organized as a Massachusetts business trust and is not required
to hold annual meetings of Shareholders. The Meeting is being called in order
to permit the Shareholders of the Portfolio to vote on a new management
structure, approve the selection of a new investment adviser and new sub-
adviser, and adopt new investment advisory and sub-advisory agreements in
connection with the approval of those new relationships.
SECTION I.
Section 15(a) of the Investment Company Act of 1940, as amended (the "1940
Act") requires that all contracts pursuant to which persons serve as
investment advisers to investment companies be approved by shareholders. As
interpreted, this requirement would apply to the appointment of sub-advisers
to any portfolio of the Trust for which SFM will act as investment adviser.
The SEC has granted conditional exemptions from the shareholder approval
requirements. The Trust has applied for such an exemption, and if it is
granted and this Proposal is approved, the Board of Trustees would, without
Shareholder approval, be able to appoint additional or replacement sub-
advisers (each a "Manager" and, collectively, the "Managers"). The Board would
not, however, be able to replace SFM as investment adviser to each Portfolio
of the Trust without complying with the 1940 Act and applicable regulations
governing Shareholder approval of advisory contracts.
The Proposals contained in Sections I and II of this Proxy Statement are
intended to facilitate the efficient operation of the "Manager of Managers"
structure and afford the Trust increased management flexibility. Assuming SFM
is approved as investment adviser to the Portfolio, it will continuously
monitor the performance of the Managers and may from time to time recommend
that the Board of Trustees replace one or more Managers or appoint additional
Managers, depending on SFM's assessment of what combination of Managers it
believes will optimize the Portfolio's chances of achieving its investment
objective. Accordingly, while there is no way of knowing exactly how often SFM
may recommend, and the Board approve, the selection of an additional Manager,
or the replacement of an existing Manager, both of which would typically
require a Shareholder meeting, it is likely that the Manager of Managers
structure would result in more frequent Shareholder meetings than would
otherwise be the case. However, if the SEC grants the exemption, the Trustees
will not be required to call a Shareholder meeting each time a new sub-adviser
is approved. Shareholder meetings entail substantial costs which could reduce
the desired benefits of the Manager of Managers structure. These costs must be
weighed against the benefits of Shareholder scrutiny of proposed contracts
with additional or replacement Managers; however, even in the absence of
Shareholder approval, any proposal to add or replace Managers would receive
careful review. First, SFM would assess the Portfolio's needs and, if it
believed additional or replacement Managers could benefit the Portfolio, would
systematically search the relevant universe of available investment managers.
Second, any recommendations made by SFM would have to be approved by a
majority of the Trustees, including a majority of the Trustees who are not
"interested persons" within the meaning of the 1940 Act. Finally, any
selections of additional or replacement Managers would have to comply with
conditions contained in the SEC exemption, if it is granted.
2
<PAGE>
1. AUTHORIZATION FOR THE BOARD OF TRUSTEES TO APPOINT INVESTMENT SUB-ADVISERS
TO THE INTERMEDIATE-TERM MUNICIPAL PORTFOLIO OF THE TRUST WITHOUT SEEKING
APPROVAL BY THE PORTFOLIO'S SHAREHOLDERS OF THE CONTRACTS PURSUANT TO WHICH
SUCH SUB-ADVISERS SERVE.
This Proposal will facilitate the appointment of additional and replacement
sub-advisers without a Shareholder vote if SFM serves as Manager of Managers
for the Portfolio. This arrangement requires the SEC's approval of SFM's
application to implement the Manager of Managers structure.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 1.
SECTION II.
The Board of Trustees is recommending that Shareholders of the Portfolio
approve SFM as the investment adviser to the Portfolio and approve the form of
investment advisory agreement (the "Investment Advisory Agreement") between
the Trust and SFM relating to the Portfolio (which is attached as Exhibit A to
this Proxy Statement). The Trustees of the Trust, including all of the
Trustees who are not "interested persons" of the Trust, approved the
Investment Advisory Agreement with respect to the Portfolio at a meeting held
on December 4, 1995. The description of the Investment Advisory Agreement in
this Proxy Statement is qualified in its entirety by reference to the form of
the new Investment Advisory Agreement attached hereto as Exhibit A.
Other than the identity of the investment adviser, there are no material
differences between the Investment Advisory Agreement and the existing
investment advisory agreements of the other portfolios of the Trust. While the
level of compensation paid to SFM by the Portfolio for advisory services will
be .15% higher than that paid to the current adviser, SFM's contractual
management fee will be reduced by .15% for the Portfolio. As a result, the
compensation received by SFM under the Investment Advisory Agreement and the
Management Agreement will not increase from the level currently received by
SFM for its management services, and the overall cost to the Portfolio of
advisory and management services will not be increased. (See "Description of
the Investment Adviser," below.)
Duties Under the Investment Advisory Agreement. Under the Investment
Advisory Agreement, SFM will serve as investment adviser to the Portfolio and
will provide its proprietary investment adviser selection, monitoring, and
asset allocation services to the Portfolio. Subject to Board approval, SFM, in
turn, will enter into investment sub-advisory agreements with one or more sub-
advisers to exercise investment discretion over the assets (or a portion of
the assets) of the Portfolio. Consistent with its goal of using multiple
Managers to carry out the Portfolio's investment objective and policies, SFM
may provide specific portfolio security advice with respect to all or some
portion of the Portfolio's assets.
SFM will perform internal due diligence on prospective Managers for the
Portfolio and monitor Manager performance using its proprietary investment
adviser selection and monitoring process. SFM will be responsible for
communicating performance targets and evaluations to Managers, supervising
each Manager's compliance with the Portfolio's fundamental investment
objectives and policies, authorizing Managers to engage in certain investment
techniques for the Portfolio, and recommending to the Board of
3
<PAGE>
Trustees whether sub-advisory agreements should be renewed, modified or
terminated. SFM also will recommend to the Board the addition of new Managers
as it deems appropriate. (See Section I, above.)
For its investment advisory services, SFM will receive an advisory fee from
the Portfolio based on the Portfolio's assets. SFM will then pay the Managers
out of this fee.
Under this structure, the Trust will operate in a manner that is distinctly
different from virtually all other investment companies. Most investment
companies operate under a structure in which a single related group of
companies provide investment advisory, administrative, and distribution
services. Typically, the investment company pays the advisory fee to its
investment adviser which, in turn, compensates internal portfolio managers who
make specific securities selections. In contrast, the Trust will offer
investors an opportunity to access, on a pooled investment basis, the core
elements of SFM's investment adviser selection, monitoring, and asset
allocation services. Under this "Manager of Managers" approach, SFM will
recommend and, if the Trustees approve the recommendation, monitor for the
Portfolio one or more managers using a range of investment styles. (See
Section I, above.)
Duration and Termination. Unless terminated earlier, the Investment Advisory
Agreement shall continue in effect as to the Portfolio until on or about April
30, 1998, and thereafter, for periods of one year for so long as such
continuance is specifically approved with respect to the Portfolio at least
annually (i) by the vote of the holders of a majority of the outstanding
shares of the Portfolio or by the Trustees of the Trust, and (ii) by the vote
of a majority of those Trustees of the Trust who are not parties to the
Investment Advisory Agreement or "interested persons" (as that term is defined
in the 1940 Act) of any party thereto, cast in person at a meeting called for
the purpose of voting on such approval. The Investment Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at
any time without penalty by the Trustees of the Trust or with respect to the
Portfolio by a vote of a majority of the outstanding shares of the Portfolio
on not less than 30 days' nor more than 60 days' written notice to SFM. In
addition, it is terminable by SFM upon 90 days' written notice to the Trust.
SFM will discharge its responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust. The Investment Advisory Agreement
provides that SFM shall not be protected against any liability to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, or gross
negligence on its part in the performance of its duties or from reckless
disregard by SFM of its obligations or duties thereunder.
Description of the Investment Adviser. SFM is a wholly-owned subsidiary of
SEI Corporation, a financial services company located at 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658 ("SEI"). SEI was founded in 1968 and is a
leading provider of investment solutions to banks, institutional investors,
investment advisers, and insurance companies. Affiliates of SFM have provided
consulting advice to institutional investors for more than 20 years, including
advice regarding selection and evaluation of investment advisers. As of
September 30, 1995, SFM acted in a similar "manager of managers" role with
respect to $2 billion of client assets.
SFM currently serves as investment adviser, manager and/or administrator to
more than 26 investment companies, including more than 220 portfolios, which
investment companies had more than $51 billion in assets as of September 30,
1995.
4
<PAGE>
SFM serves as Manager of the Trust, pursuant to a Management Agreement dated
May 23, 1986. In connection with its role as Manager, SFM provides the Trust
with overall management services, regulatory reporting, all necessary office
space, equipment, personnel and facilities, and acts as transfer agent,
dividend disbursing agent, and shareholder servicing agent for certain classes
of the Portfolio's shares.
For its management services under the current management arrangements, SFM
is entitled to a fee which is calculated daily and paid monthly at an annual
rate of .39% of the average daily net assets of the Portfolio. SFM and the
Managers may waive all or a portion of their respective fees in order to limit
the operating expenses of a Portfolio. Any such waiver is voluntary and may be
terminated at any time in the discretion of SFM and the Managers.
For the fiscal year ended August 31, 1995, the Portfolio paid to SFM the
following management fees:
<TABLE>
<CAPTION>
FEES PAID (000) FEES WAIVED (000)
--------------- -----------------
<S> <C> <C>
Intermediate-Term Municipal Portfolio..... $288 $125
</TABLE>
Once the Manager of Managers structure is in place, SFM's management fee
will be reduced by .15% for the Portfolio in order to compensate for the
increased advisory and sub-advisory fees payable under that structure.
The table below sets forth information about the proposed level of fees
payable to SFM both as Adviser and Manager, and to the Managers, assuming that
the Shareholders approve the Manager of Managers structure:
<TABLE>
<CAPTION>
SUB-ADVISORY FEE PAID
BY SFM (BASED UPON A
PERCENTAGE OF THE
ADVISORY FEE MARKET VALUE OF THE
PAID TO SFM PORTION OF THE
UNDER NEW PORTFOLIO'S ASSETS ADMINISTRATION
PROPOSED ADVISORY MANAGED BY THE SUB- FEE PAID TO
PORTFOLIO SUB-ADVISER AGREEMENT ADVISER) SFM*
- --------- -------------- ------------ ----------------------- --------------
<S> <C> <C> <C> <C>
Intermediate-Term Standish, Ayer .33% .18% up to $125 million .24%
Municipal & Wood, Inc. .15% over $125 million
</TABLE>
- --------
* For the Portfolio, the contractual administration fee payable to SFM has
been lowered by .15% in order to compensate for the increased level of
advisory and sub-advisory fees payable under the Manager of Managers
structure. However, the total level of fees payable to SFM will remain the
same.
Listed below are the names and principal occupations of each of the
directors and the principal executive officers of SFM. The principal business
address of each director and the principal executive officers, as it relates
to their duties at SFM, is 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
Alfred P. West, Jr.... Director, Chairman & Chief Executive Officer
Henry H. Greer........ Director, President & Chief Operating Officer
Carmen V. Romeo....... Director, Executive Vice President & Treasurer
Richard B. Lieb....... Executive Vice President
Edward Loughlin....... Executive Vice President; President, Asset Management Group
Charles A. Marsh...... Executive Vice President
Carl A. Guarino....... Senior Vice President
Cris Brookmyer........ Controller
Kevin P. Robins....... Senior Vice President, General Counsel & Secretary
</TABLE>
5
<PAGE>
Trustees' Consideration. At a meeting held on December 4, 1995, the Board of
Trustees reviewed SFM's qualifications to act as investment adviser to the
Portfolio, placing particular emphasis on its proposed role in recommending,
monitoring and terminating Managers, subject to Board of Trustees' oversight.
The Trustees received written and oral information regarding SFM's key
personnel, its experience in selection and evaluation of investment Managers
and research performed by SFM and others that had led SFM to recommend a
"Manager of Managers" structure (i.e., one in which SFM would act as the
investment adviser and one or more Managers would assume substantial day-to-
day investment responsibilities; see Section I, above). In recommending that
the Shareholders approve the Investment Advisory Agreement, the Trustees
carefully evaluated the experience of SFM's key personnel in institutional
investing and the quality of services SFM is expected to provide to the
Portfolio, as well as other factors relating to SFM's provision of investment
advisory services including, but not limited to: (1) the fee and expense
ratios of comparable mutual funds; (2) the performance of the Portfolio since
commencement of operations; (3) the nature and quality of the services
expected to be rendered to the Portfolio by SFM; (4) the distinct investment
objective and policies of the Portfolio; (5) the history, reputation,
qualification and background of SFM as well as the qualifications of its
personnel and its financial condition; (6) the benefits expected to be
realized as a result of the Manager of Managers structure; and (7) other
factors deemed relevant. The Trustees also reviewed the fees to be paid to SFM
in comparison to those being charged in the relevant segment of the mutual
fund business, including any benefits received by SFM or its affiliates in
connection with soft dollar payments.
In the event Shareholders of the Portfolio do not approve the selection of
SFM as investment adviser and the Investment Advisory Agreement between the
Trust, on behalf of the Portfolio, and SFM, or if the Shareholders of the
Portfolio do not approve the Manager of Managers structure discussed in
Section I of the Proxy Statement, at the Special Meeting to which this Proxy
Statement relates, or any adjournment thereof, the Trustees will consider an
appropriate course of action.
2. APPROVAL OF SFM AS THE INVESTMENT ADVISER TO THE INTERMEDIATE-TERM
MUNICIPAL PORTFOLIO, AND APPROVAL OF AN INVESTMENT ADVISORY AGREEMENT
BETWEEN THE TRUST, ON BEHALF OF THE PORTFOLIO, AND SFM.
Description of the Portfolio. The investment objective of the Portfolio is
to provide the highest level of income exempt from federal income taxes that
can be obtained, consistent with the preservation of capital. The Portfolio's
investments consist of investment grade municipal securities.
Termination of the Previous Investment Advisory Agreements. Weiss, Peck &
Greer, LLP ("WPG"), served as investment adviser to the Portfolio pursuant to
an investment advisory agreement dated April 12, 1989, and last approved by
the sole initial shareholder on April 29, 1989. The Board of Trustees voted on
December 4, 1995, to terminate the agreement based upon the Board's
determination that the selection of SFM to provide investment advisory
services as described herein will be in the best interests of the Portfolio.
The Board also approved SFM as the new investment adviser, and Standish, Ayer
& Wood, Inc. ("Standish") as sub-adviser, effective upon approval by
Shareholders.
In addition, the Board approved Standish to serve as interim investment
adviser to the Portfolio until the implementation of the proposed Manager of
Managers structure. As permitted by the 1940 Act,
6
<PAGE>
Standish may begin serving as investment adviser after Board approval but prior
to shareholder approval as the fee paid to it is less than the current
investment advisory fee. The fee structure set forth below reflects the
proposed interim fee arrangement that took effect after the investment advisory
agreement with WPG was terminated and the new interim advisory agreement with
Standish was approved by the Board. This interim investment advisory agreement
will terminate upon the approval of SFM as investment adviser.
Compensation. Under the proposed Investment Advisory Agreement, the Trust
will pay SFM a fee, which is calculated daily and paid monthly, at an annual
rate of .33% of the average daily net assets of the Portfolio. Under the
proposed interim advisory agreement, the Trust will pay Standish a fee, which
is calculated daily and paid monthly at an annual rate of .18% up to $125
million in assets and .15% over $125 million in assets. As SFM did not
previously serve as investment adviser to the Portfolio and Standish did not
serve as investment adviser or sub-adviser, the aggregate investment advisory
and sub-advisory fees paid to SFM and Standish during the last fiscal year was,
in each instance, $0. WPG received $131,000.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 2.
SECTION III.
The Board of Trustees is recommending that Shareholders approve Standish as
investment sub-adviser to the Portfolio and approve the form of investment sub-
advisory agreement (the "Investment Sub-Advisory Agreement") between SFM and
Standish, a copy of which is attached as Exhibit B to this Proxy Statement. The
Trustees, including all the Trustees who are not "interested persons" of the
Trust, approved the Investment Sub-Advisory Agreement with respect to the
Portfolio at a meeting held on December 4, 1995. The description of the
Investment Sub-Advisory Agreement in this Proxy Statement is qualified in its
entirety by reference to the form of the Investment Sub-Advisory Agreement
attached hereto as Exhibit B. The investment sub-advisory agreement between SFM
and Standish has not yet been negotiated, and the signed sub-advisory agreement
may differ from the form of investment sub-advisory agreement attached as
Exhibit B.
The Sub-Adviser. Standish will serve as investment sub-adviser (the "Sub-
Adviser") to the Portfolio. Under the Manager of Managers structure, SFM will
have general oversight responsibility for the investment advisory services
provided to the Portfolio, including formulating the Portfolio's investment
policies and analyzing economic trends affecting the Portfolio. SFM will be
responsible for managing the allocation of assets among the Portfolio's
proposed Sub-Adviser and future Sub-Advisers and directing and evaluating the
investment services provided by the Sub-Adviser, including its adherence to the
Portfolio's investment objectives and policies and the Portfolio's investment
performance and may provide specific portfolio security advice. In accordance
with the Portfolio's investment objectives and policies, and under the
supervision of SFM and the Trust's Board of Trustees, the Sub-Adviser will be
responsible for the day-to-day investment management of all or a discrete
portion of the assets of a Portfolio. The Sub-Adviser is authorized to make
investment decisions for the Portfolio and place orders on behalf of the
Portfolio to effect the investment decisions made.
In addition, SFM will monitor the compliance of the Sub-Adviser with
regulatory and tax regulations, such as those relating to portfolio
concentration and diversification. For the most part, compliance with
7
<PAGE>
these requirements by the Sub-Adviser with respect to its portion of the
Portfolio will assure compliance by the Portfolio as a whole. In addition, SFM
will monitor positions taken by the Sub-Adviser and will notify the Sub-Adviser
to any developing situations to help ensure that investments do not run afoul
of the short-short test or the wash sale rules. To the extent that having
multiple Sub-Advisers responsible for investing separate portions of a
Portfolio's assets creates the need for coordination among the Sub-Advisers,
there is an increased risk that the Portfolio will not comply with these
regulatory and tax requirements.
It is possible that different Sub-Advisers to the same portfolio could take
opposite actions within a short period of time with respect to a particular
security. For example, one Sub-Adviser could buy a security for a portfolio and
shortly thereafter another Sub-Adviser could sell the same security from the
portion of the portfolio's assets allocated to it. If in these circumstances
the securities could be transferred from one Sub-Adviser's portion of a
portfolio to another, the portfolio could avoid transaction costs and could
avoid creating possible wash sales and short-short gains under the Code. Such
transfers are not practicable, but the Sub-Advisers and SFM do not believe that
there will be material adverse effects on a portfolio as a result. First, it
does not appear likely that there will be substantial overlap in the securities
acquired for a portfolio by various Sub-Advisers. Moreover, the Sub-Advisers
would probably only rarely engage in the types of offsetting transactions
described above, especially within a short time period. Therefore, it is a
matter of speculation whether offsetting transactions would result in any
significant increases in transaction costs or have significant tax
consequences. With respect to the latter, SFM and the Sub-Advisers will
establish procedures with respect to the short-short test which are designed to
prevent realization of short-short gains in excess of the limits of the
Internal Revenue Code of 1986, as amended. It is true that wash sales could
occur in spite of the efforts of SFM, but it is believed that the benefits of
using multiple managers outweighs the consequences of any wash sales.
SFM is currently seeking an exemptive order from the SEC that would permit
SFM, with the approval of the Trust's Board of Trustees, to retain Sub-Advisers
for a Portfolio without submitting the accompanying sub-advisory agreement to a
vote of the Portfolio's Shareholders. If granted, the exemptive relief will
permit the non-disclosure of amounts payable by SFM under such sub-advisory
agreements. The Trust will notify Shareholders in the event of any change in
the identity of the Sub-Adviser to a Portfolio. Until or unless this exemptive
order is granted, if one of the Sub-Advisers is terminated or departs from a
Portfolio with multiple Sub-Advisers, the Portfolio will handle such
termination or departure in one of two ways. First, the Portfolio may propose
that a new Sub-Adviser be appointed to manage that portion of the Portfolio's
assets managed by the departing Sub-Adviser. In this case, the Portfolio would
be required to submit to the vote of the Portfolio's Shareholders the approval
of an investment sub-advisory contract with the new sub-adviser. In the
alternative, the Portfolio may decide to allocate the departing Sub-Adviser's
assets among the remaining Sub-Advisers. This allocation would not require new
investment sub-advisory contracts with the remaining Sub-Advisers, and
consequently no Shareholder approval would be necessary. If the Manager of
Managers structure is approved, the Trustees will be able to instruct SFM to
add or replace sub-advisers without Shareholder approval.
Trustees' Consideration. The Trustees of the Trust, including all of the
Trustees who are not "interested persons" of the Trust, approved the general
form of the Investment Sub-Advisory Agreement with respect to the Portfolio at
a meeting held on December 4, 1995. The Trustees received written and oral
information from both SFM and the proposed Sub-Adviser. SFM recommended the
selection of the
8
<PAGE>
proposed Sub-Adviser and reviewed the considerations and the search process
that had led to the recommendation. The Trustees also met with representatives
of the proposed Sub-Adviser and considered information about key personnel,
investment philosophy and process and performance track record, among other
factors. In recommending that the Shareholders approve the Investment Sub-
Advisory Agreement, the Trustees carefully evaluated the investing experience
of the proposed Sub-Adviser's key personnel and the quality of services the
proposed Sub-Adviser can be expected to provide to the Portfolio, including,
but not limited to: (1) the fee and expense ratios of comparable mutual funds;
(2) the performance of the Portfolio since commencement of operations; (3) the
nature and quality of the services expected to be rendered to the Portfolio by
the proposed Sub-Adviser; (4) the distinct investment objective and policies of
the Portfolio; (5) the history, reputation, qualification and background of the
proposed Sub-Adviser as well as the qualifications of its personnel and its
financial condition; (6) its performance records; (7) the benefits expected to
be realized as a result of the Manager of Managers structure; and (8) other
factors deemed relevant. The Trustees also reviewed the fees to be paid to the
Sub-Adviser in comparison to those being charged in the relevant segment of the
mutual fund business, including any benefits received by the Sub-Adviser or its
affiliates in connection with soft dollar payments.
Duties Under the Investment Sub-Advisory Agreement. Under the Investment Sub-
Advisory Agreement, the Sub-Adviser makes the investment decisions for the
assets of the Portfolio allocated to it by SFM (if the Portfolio has more than
one Sub-Adviser), and continuously reviews, supervises, and administers the
Portfolio's investment program with respect to these assets. The Sub-Adviser is
independent of SFM and discharges its responsibilities subject to the
supervision of SFM and the Trustees of the Trust and in a manner consistent
with the Portfolio's investment objectives, policies and limitations.
Duration and Termination. Unless terminated earlier, the Investment Sub-
Advisory Agreement shall continue in effect as to the Portfolio through April
30, 1998, and thereafter, for periods of one year for so long as such
continuance is specifically approved at least annually (i) by the vote of the
holders of a majority of the outstanding shares of such Portfolio or by the
Trustees of the Trust, and (ii) by the vote of a majority of those Trustees of
the Trust who are not parties to the Investment Advisory Agreement or
Investment Sub-Advisory Agreement or who are not "interested persons" (as that
term is defined in the 1940 Act) of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. If the Manager of
Managers structure is approved by the Shareholders of the Portfolio, the
Trustees may add and replace Sub-Advisers without Shareholder approval. This
structure requires an order of exemption from the SEC before becoming
operative. If SFM obtains exemptive relief from the SEC permitting it to engage
a Sub-Adviser without first obtaining approval of the Investment Sub-Advisory
Agreement from a majority of the outstanding voting securities of the
Portfolio(s) involved, the Investment Sub-Advisory Agreement shall become
effective upon its approval by the Trust's Board of Trustees. Any Sub-Adviser
so selected and approved shall be without the protection accorded by
shareholder approval of an investment adviser's receipt of compensation under
Section 36(b) of the 1940 Act.
The Investment Sub-Advisory Agreement will terminate automatically in the
event of its assignment or in the event that SFM's Investment Advisory
Agreement is terminated. The Investment Sub-Advisory Agreement is terminable at
any time without penalty by the Trustees of the Trust, or, with respect to the
Portfolio, by a vote of a majority of the outstanding shares of such Portfolio
on not less than 30 days' nor more than 60 days' written notice to such
Portfolio's Sub-Adviser. In addition, the Portfolio's Investment
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<PAGE>
Sub-Advisory Agreement is terminable by such Portfolio's Sub-Adviser upon 90
days' written notice to the Trust or SFM.
In the event Shareholders of the Portfolio do not approve the adoption of an
Investment Sub-Advisory Agreement at the Meeting to which this Proxy Statement
relates, or any adjournment thereof, the Trustees will consider the appropriate
course of action.
3. APPROVAL OF AN INVESTMENT SUB-ADVISER AND THE INVESTMENT SUB-ADVISORY
AGREEMENT FOR THE INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
The Board of Trustees is recommending that Shareholders of the Portfolio
approve Standish as a Sub-Adviser to the Portfolio and approve the form of
Investment Sub-Advisory Agreement between SFM and Standish.
Compensation. Under the proposed Investment Sub-Advisory Agreement, SFM will
pay Standish a fee, which is calculated and paid monthly, based on the annual
percentage rate of .18% up to $125 million and .15% over $125 million of the
average monthly market value of the assets of the Portfolio.
As shown in the table below, total operating expenses for the Portfolio will
be higher under the proposed Manager of Managers structure, because, unlike the
previous investment adviser, Standish is not expected to waive a portion of its
fees.
<TABLE>
<CAPTION>
PRIOR FEE CURRENT FEE
ARRANGEMENT ARRANGEMENT
WITH WPG WITH STANDISH
----------- -------------
<S> <C> <C>
Total Operating Expenses.............................. .55%/1/ .60%/2/
</TABLE>
- --------
/1/Reflects fee waivers, including WPG's advisory fee waivers and SFM's
management fee waivers.
/2/Reflects continued management fee waivers by SFM.
Description of Standish, Ayer & Wood, Inc. Standish is a Massachusetts
corporation with its principal business address at One Financial Center, Suite
26, Boston, Massachusetts 02111. Standish was founded in 1933, and as of
January 15, 1996, it had approximately $29.4 billion in assets under
management. Standish's clients include corporations, endowments, foundations,
pension and profit sharing plans, and other investment companies.
The Portfolio's assets will be managed by Raymond J. Kubiak, CFA. Mr. Kubiak
has 15 years experience in public finance and is a Vice President and Director
of Standish. He has been with Standish since March, 1988.
10
<PAGE>
Listed below are the names, titles and principal occupations of the
principal executive officer and of each member of the Board of Directors of
Standish. The principal business address of the principal executive officer
and the members of the Board of Trustees, as it relates to their duties at
Standish, is One Financial Center, Suite 26, Boston, MA 02111. No Trustee of
the Trust purchased or sold interests in Standish during the Trust's most
recent fiscal year.
<TABLE>
<CAPTION>
NAME TITLE PRINCIPAL OCCUPATION
---- ----- --------------------
<S> <C> <C>
Caleb F. Aldrich........ Director Vice President
Nicholas S. Battelle.... Director Vice President
Walter M. Cabot......... Director Senior Advisor
David H. Cameron........ Director Vice President
Karen K. Chandor........ Director Vice President
Davis B. Clayson........ Managing Director Vice President
Richard C. Doll......... Director Vice President
Dolores S. Driscoll..... Managing Director Vice President
Mark A. Flaherty........ Director Vice President, Trader
Maria D. Furman......... Director Vice President
James E. Hollis, III.... Director Vice President
Raymond J. Kubiak....... Director Vice President
Edward H. Ladd.......... Chairman and Director --
Laurence A. Manchester.. Director Vice President
David W. Murray......... Director Vice President, Treasurer
George W. Noyes......... Director President
Arthur H. Parker, II.... Director Vice President
Howard B. Rubin......... Director Vice President
Austin C. Smith......... Director Vice President, Portfolio Manager
David C. Stuehr......... Director Vice President
James J. Sweeney........ Director Vice President
Ralph S. Tate........... Director Vice President
Richard S. Wood......... Director, Secretary Vice President
</TABLE>
Standish also serves as the investment adviser to two (2) other registered
investment companies with similar investment objectives. The approximate net
assets of such funds and the fees payable are set forth below.
<TABLE>
<CAPTION>
TRUST ANNUAL FEE NET ASSETS
----- ---------- ----------
<S> <C> <C>
Standish Intermediate Tax Exempt Bond Fund......... .40% $31.5 million
Standish Massachusetts Intermediate Tax Exempt Bond
Fund.............................................. .40% $32.4 million
</TABLE>
SECTION IV.
GENERAL INFORMATION ABOUT THE TRUST AND OTHER MATTERS
Distribution. SEI Financial Services Company ("SFS"), a wholly-owned
subsidiary of SEI acts as the Distributor of the Trust's shares pursuant to a
Distribution Agreement dated January 22, 1987, between
11
<PAGE>
the Trust and SFS. Alfred P. West, Jr. serves as Chairman of the Board and
Chief Executive Officer of SFS and SEI, and Henry H. Greer serves as Director,
President and Chief Operating Officer of SFS and SEI. William M. Doran, a
Trustee of the Trust, is a Director and Secretary of SEI.
Portfolio Transactions. For the fiscal year ended August 31, 1995, the
Portfolio paid no brokerage commissions to affiliates.
5% Shareholders. As of February 22, 1996, the following persons were the
only persons who were, to the knowledge of the Trust, beneficial owners of 5%
or more of shares of the Portfolio voting at this Meeting.
<TABLE>
<CAPTION>
NAME AND
ADDRESS OF
BENEFICIAL PERCENTAGE OF
OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
---------- ---------------- ------------------
<S> <C> <C>
Paco.................................... 513,314.305 5.88%
c/o Bank of America NT & SA
Attn: Mutual Funds 8615
P.O. Box 3577 Terminal Annex
Los Angeles, CA 90051
Transco & Company....................... 1,295,181.363 14.84%
c/o INTRUST Bank, N.A.
Attn: Pat Willis
P.O. Box 48698
Wichita, KS 67201
Garico.................................. 612,134.239 7.01%
c/o American National Bank of Chicago
Dept. 77-3272
Division 219, Attn: Wendy Kosek
Chicago, IL 60678-3272
ISTCO................................... 530,389.233 6.07%
c/o Magna Trust Company
P.O. Box 523
Belleville, IL 62222-0523
SEI Trust Company....................... 873,600.362 10.01%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19067
Smith & Co. ............................ 638,083.334 7.31%
c/o First Security Bank of Utah NA
Attn: Money Market/Mutual Fund Desk
P.O. Box 25297
Salt Lake City, UT 84125
</TABLE>
The Trust's Trustees and officers do not beneficially own any shares of the
Trust.
12
<PAGE>
Adjournment. In the event that sufficient votes in favor of a Proposal set
forth in the Notice of the Special Meeting are not received by the time
scheduled for the meeting, the persons named as proxies may propose one or more
adjournments of the meeting for a period or periods of not more than 60 days in
the aggregate to permit further solicitation of proxies with respect to any of
such Proposal. Any such adjournment will require the affirmative vote of a
majority of the votes cast on the question in person or by proxy at the session
of the meeting to be adjourned. The persons named as proxies will vote in favor
of such adjournment those proxies which they are entitled to vote in favor of
such Proposals. They will vote against any such adjournment those proxies
required to be voted against any such Proposals. The costs of any such
additional solicitation and of any adjourned session will be borne by the
Trust.
Required Vote. Approval of the Proposals requires the affirmative vote of a
majority of the outstanding shares of the Portfolio. As defined in the 1940
Act, "majority of the outstanding shares" means the vote of (i) 67% or more of
the Portfolio's outstanding shares present at a meeting, if the holders of more
than 50% of the outstanding shares of the Portfolio are present or represented
by proxy, or (ii) more than 50% of the Portfolio's outstanding shares,
whichever is less.
Abstentions and "broker non-votes" will not be counted for or against any
Proposal to which it relates, but will be counted for purposes of determining
whether a quorum is present. Abstentions will be counted as votes present for
purposes of determining a "majority of the outstanding voting securities"
present at the Meeting, and will therefore have the effect of counting against
the Proposal to which it relates.
Shareholder Proposals. The Trust does not hold annual Shareholder meetings.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent meeting should send their written proposals to the Secretary of
the Trust c/o SEI Corporation, Legal Department, 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658.
Reports to Shareholders. The Trust will furnish, without charge, a copy of
the most recent Annual Report to Shareholders of the Trust and the most recent
Semi-Annual Report succeeding such Annual Report, if any, on request. Requests
should be directed to the Trust at 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658, or by calling 1-800-342-5734.
Other Matters. The Trustees know of no other business to be brought before
the meeting. However, if any other matters properly come before the meeting, it
is their intention that proxies which do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
-----------------
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY.
13
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this day of , 1995, by and between SEI Tax
Exempt Trust, a Massachusetts business trust (the "Trust"), and SEI Financial
Management Corporation, (the "Adviser").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several portfolios of shares, each having its own investment
policies; and
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its Intermediate-Term Municipal Portfolio
and such other portfolios as the Trust and the Adviser may agree upon (the
"Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, to hire (subject to the approval of
the Trust's Board of Trustees and, except as otherwise permitted under the
terms of any exemptive relief obtained by the Adviser from the Securities and
Exchange Commission, or by rule or regulation, a majority of the outstanding
voting securities of any affected Portfolio(s)) and thereafter supervise the
investment activities of one or more sub-advisers deemed necessary to carry
out the investment program of any Portfolios of the Trust, and to continuously
review, supervise and (where appropriate) administer the investment program of
the Portfolios, to determine in its discretion (where appropriate) the
securities to be purchased or sold, to provide the Administrator and the Trust
with records concerning the Adviser's activities which the Trust is required
to maintain, and to render regular reports to the Administrator and to the
Trust's officers and Trustees concerning the Adviser's discharge of the
foregoing responsibilities. The retention of a sub-adviser by the Adviser
shall not relieve the Adviser of its responsibilities under this Agreement.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the Board of Trustees of the Trust and in compliance with such
policies as the Trustees may from time to time establish, and in compliance
with the objectives, policies, and limitations for each such Portfolio set
forth in the Trust's prospectus and statement of additional information, as
amended from time to time (referred to collectively as the "Prospectus"), and
applicable laws and regulations. The Trust will furnish the Adviser from time
to time with copies of all amendments or supplements to the Prospectus, if
any.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and equipment
and the personnel (including any sub-advisers) required by it to perform the
services on the terms and for the compensation provided herein. The Adviser
will not, however, pay for the cost of securities, commodities, and other
investments (including brokerage commissions and other transaction charges, if
any) purchased or sold for the Trust.
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<PAGE>
2. DELIVERY OF DOCUMENTS. The Trust has furnished Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as presently in effect and as it shall from time to
time be amended, is herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the "By-
Laws");
(c) Prospectus(es) of the Portfolio(s).
3. OTHER COVENANTS. The Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will place orders pursuant to its investment determinations for the
Portfolios either directly with the issuer or with any broker or dealer. In
executing Portfolio transactions and selecting brokers or dealers, the
Adviser will use its best efforts to seek on behalf of the Portfolio the
best overall terms available. In assessing the best overall terms available
for any transaction, the Adviser shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In evaluating the
best overall terms available, and in selecting the broker-dealer to execute
a particular transaction the Adviser may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Portfolio and/or other
accounts over which the Adviser or an affiliate of the Adviser may exercise
investment discretion. The Adviser is authorized, subject to the prior
approval of the Trust's Board of Trustees, to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for any of the Portfolios which is in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer--viewed
in terms of that particular transaction or terms of the overall
responsibilities of the Adviser to the Portfolio. In addition, the Adviser
if authorized to allocate purchase and sale orders for portfolio securities
to brokers or dealers (including brokers and dealers that are affiliated
with the Adviser or the Trust's principal underwriter) to take into account
the sale of shares of the Trust if the Adviser believes that the quality of
the transaction and the commission are comparable to what they would be
with other qualified firms. In no instance, however, will any Portfolio's
securities be purchased from or sold to the Adviser, any sub-adviser
engaged with respect to that Portfolio, the Trust's principal underwriter,
or any affiliated person of either the Trust, the Adviser, and sub-adviser
or the principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange Commission
and the 1940 Act.
4. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust shall pay
to the Adviser compensation at the rate(s) specified
A-2
<PAGE>
in the Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end of each
month, and calculated by applying a daily rate, based on the annual percentage
rates as specified in the attached Schedule(s), to the assets of the
Portfolio. The fee shall be based on the average daily net assets for the
month involved. The Adviser may, in its discretion and from time to time,
waive a portion of its fee.
All rights of compensation under this Agreement for services performed as of
the termination date shall survive the termination of this Agreement.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but excluding
interest, taxes, brokerage costs, litigation, and other extraordinary costs)
as calculated every business day would exceed the expense limitations imposed
on investment companies by any applicable statute or regulatory authority of
any jurisdiction in which Shares are qualified for offer and sale, the Adviser
shall bear such excess cost.
However, the Adviser will not bear expenses of the Trust or any Portfolio
which would result in the Trust's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code. Payment of
expenses by the Adviser pursuant to this Section 5 shall be settled on a
monthly basis (subject to fiscal year end reconciliation) by a waiver of the
Adviser's fees provided for hereunder, and such waiver shall be treated as a
reduction in the purchase price of the Adviser's services.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other information
with regard to their affairs as each may reasonably request. The Adviser
further agrees to furnish to the Trust, if applicable, the same such documents
and information pertaining to any sub-adviser as the Trust may reasonably
request.
7. STATUS OF THE ADVISER. The services of the Adviser to the Trust are not
to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not impaired
thereby. The Adviser shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Trust in any way or otherwise be deemed an agent of
the Trust. To the extent that the purchase or sale of securities or other
investments of any issuer may be deemed by the Adviser to be suitable for two
or more accounts managed by the Adviser, the available securities or
investments may be allocated in a manner believed by the Adviser to be
equitable to each account. It is recognized that in some cases this may
adversely affect the price paid or received by the Trust or the size or
position obtainable for or disposed by the Trust or any Portfolio.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the
1940 Act which are prepared or maintained by the Adviser (or any sub-adviser)
on behalf of the Trust are the property of the Trust and will be surrendered
promptly to the Trust on request. The Adviser further agrees to preserve for
the periods prescribed in Rule 31a-2 under the 1940 Act the records required
to be maintained under Rule 31a-1 under the 1940 Act.
9. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser shall
be confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Adviser hereunder. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
A-3
<PAGE>
arising out of any investment or for any act or omission in carrying out its
duties hereunder, except a loss resulting from willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law which cannot be waived or
modified hereby. (As used in this Section 9, the term "Adviser" shall include
directors, officers, employees and other corporate agents of the Adviser as
well as that corporation itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust
are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors,
partners, officers, agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees, officers, shareholders or otherwise; and
the Adviser (or any successor) is or may be interested in the Trust as a
shareholder or otherwise subject to the provisions of applicable law. All such
interests shall be fully disclosed between the parties on an ongoing basis and
in the Trust's Prospectus as required by law. In addition, brokerage
transactions for the Trust may be effected through affiliates of the Adviser
or any sub-adviser if approved by the Board of Trustees, subject to the rules
and regulations of the Securities and Exchange Commission.
11. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such continuance
thereafter is specifically approved at least annually (a) by the vote of a
majority of those Trustees of the Trust who are not parties to this Agreement
or interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (b) by the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of each
Portfolio; provided, however, that if the shareholders of any Portfolio fail
to approve the Agreement as provided herein, the Adviser may continue to serve
hereunder in the manner and to the extent permitted by the 1940 Act and rules
and regulations thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time, without
the payment of any penalty by vote of a majority of the Trustees of the Trust
or by vote of a majority of the outstanding voting securities of the Portfolio
on not less than 30 days nor more than 60 days written notice to the Adviser,
or by the Adviser at any time without the payment of any penalty, on 90 days
written notice to the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment.
As used in this Section 11, the terms "assignment", "interested persons",
and a "vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
12. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however that nothing herein shall be construed as being
inconsistent with the 1940 Act.
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<PAGE>
13. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Financial Management
Corporation
680 East Swedesford Road
Wayne, PA 19087
Attn: Legal Department
To the Trust at: SEI Financial Management
Corporation
680 East Swedesford Road
Wayne, PA 19087
Attn: Legal Department
14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This Agreement
may be executed in any number of counterparts, each of which shall be deemed
to be an original, but such counterparts shall, together, constitute only one
instrument.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Trust
as Trustees, and is not binding upon any of the Trustees, officers, or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
No Portfolio of the Trust shall be liable for the obligations of any other
Portfolio of the Trust. Without limiting the generality of the foregoing, the
Adviser shall look only to the assets of a particular Portfolio for payment of
fees for services rendered to that Portfolio.
Where the effect of a requirement of the 1940 Act reflected in any provision
of this Agreement is altered by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
SEI Tax Exempt Trust SEI Financial Management
Corporation
By: ___________________________________
By: _______________________________
Attest: _______________________________
Attest: ___________________________
A-5
<PAGE>
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SEI TAX EXEMPT TRUST
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Pursuant to Article 4, the Trust shall pay the Adviser compensation at an
annual rate as follows:
<TABLE>
<S> <C>
Intermediate-Term Municipal Portfolio .33%
</TABLE>
A-6
<PAGE>
EXHIBIT B
INVESTMENT SUB-ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this day of , 1995, between SEI Financial
Management Corporation, (the "Adviser") and Standish, Ayer & Wood, Inc. (the
"Sub-Adviser").
WHEREAS, SEI Tax Exempt Trust, a Massachusetts business trust (the "Trust")
is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated
(the "Advisory Agreement") with the Trust, pursuant to which the
Adviser will act as investment adviser to the Intermediate-Term Municipal
Portfolio (the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Portfolio, and the Sub-Adviser is
willing to render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the securities
and other assets of the Portfolio entrusted to it hereunder (the Assets),
including the purchase, retention and disposition of the Assets, in accordance
with the Portfolio's investment objectives, policies and restrictions as
stated in the Portfolio's prospectus and statement of additional information,
as currently in effect and as amended or supplemented from time to time
(referred to collectively as the "Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the
direction of the Adviser, determine from time to time what Assets will be
purchased, retained or sold by the Portfolio, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Trust's
Declaration of Trust (as defined herein) and the Prospectus and with the
instructions and directions of the Adviser and of the Board of Trustees of
the Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, and all other applicable federal
and state laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by
the Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In executing Portfolio transactions and selecting brokers or dealers,
the Sub-Adviser will use its best efforts to seek on behalf of the
Portfolio the best overall terms available. In assessing the best overall
terms available for any transaction, the Sub-Adviser shall consider all
factors that it deems relevant, including the breadth of the market in the
B-1
<PAGE>
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services provided (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934).
Consistent with any guidelines established by the Board of Trustees of the
Trust, the Sub-Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in good faith that
such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer--viewed in terms of
that particular transaction or terms of the overall responsibilities of the
Sub-Adviser to the Portfolio. In addition, the Sub-Adviser if authorized to
allocate purchase and sale orders for securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser, Sub-
Adviser or the Trust's principal underwriter) to take into account the sale
of shares of the Trust if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will the Portfolio's Assets
be purchased from or sold to the Adviser, Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust,
Adviser, the Sub-Adviser or the principal underwriter, acting as principal
in the transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records upon the Portfolio's request; provided, however, that the
Sub-Adviser may retain a copy of such records. In addition, for the
duration of this Agreement, the Sub-Adviser shall preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to this Agreement, and shall
transfer said records to any successor Sub-Adviser upon the termination of
this Agreement (or, if there is no successor Sub-Adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each
business day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
B-2
<PAGE>
(f) The investment management services provided by the Sub-Adviser under
this Agreement are not to be deemed exclusive and the Sub-Adviser shall be
free to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration of
Trust (as defined herein), the Prospectus, the instructions and directions of
the Board of Trustees of the Trust, the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state laws
and regulations, as each is amended from time to time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the "By-
Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser,
and the Sub-Adviser agrees to accept as full compensation therefor, a sub-
advisory fee at the rate specified in the Schedule(s) which is attached hereto
and made part of this Agreement. The fee will be calculated based on the
average monthly market value of the Assets under the Sub-Advisers management
and will be paid to the Sub-Adviser monthly. Except as may otherwise be
prohibited by law or regulation (including any then current SEC staff
interpretation), the Sub-Adviser may, in its discretion and from time to time,
waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Advisers
obligations under this Agreement; provided, however, that the Sub-Advisers
obligation under this Section 5
B-3
<PAGE>
shall be reduced to the extent that the claim against, or the loss, liability
or damage experienced by the Adviser, is caused by or is otherwise directly
related to the Adviser's own willful misfeasance, bad faith or negligence, or
to the reckless disregard of its duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of the
outstanding voting securities of the Portfolio. This Agreement shall continue
in effect for a period of more than two years from the date hereof only so
long as continuance is specifically approved at least annually in conformance
with the 1940 Act; provided, however, that this Agreement may be terminated
with respect to the Portfolio (a) by the Portfolio at any time, without the
payment of any penalty, by the vote of a majority of Trustees of the Trust or
by the vote of a majority of the outstanding voting securities of the
Portfolio, (b) by the Adviser at any time, without the payment of any penalty,
on not more than 60 days' nor less than 30 days' written notice to the Sub-
Adviser, or (c) by the Sub-Adviser at any time, without the payment of any
penalty, on 90 days' written notice to the Adviser. This Agreement shall
terminate automatically and immediately in the event of its assignment, or in
the event of a termination of the Adviser's agreement with the Trust. As used
in this Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth in
the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Financial Management
Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: Standish, Ayer & Wood, Inc.
One Financial Center, Suite 26
Boston, MA 02111
Attention: President
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This Agreement
may be executed in any number of counterparts, each of which shall be deemed
to be an original, but such counterparts shall, together, constitute only one
instrument.
B-4
<PAGE>
A copy of the Declaration of Trust is on file with the Secretary of State of
the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any provision
of this Agreement is altered by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first
written above.
SEI Financial Management Corporation Standish, Ayer & Wood, Inc.
By: ___________________________________ By: _______________________________
Name: _________________________________ Name: _____________________________
Title: ________________________________ Title: ____________________________
B-5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
STANDISH, AYER & WOOD, INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at
an annual rate as follows:
<TABLE>
<S> <C>
Intermediate-Term Municipal Portfolio .18% up to $125 million
.15% over $125 million
</TABLE>
B-6
<PAGE>
SEI TAX EXEMPT TRUST
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
SPECIAL MEETING OF THE SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, APRIL 16, 1996
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Robert B. Carroll as proxies and each
of them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the Intermediate-Term Municipal Portfolio (the "Portfolio") of
SEI Tax Exempt Trust (the "Trust") to be held in the offices of SEI Financial
Management Corporation ("SFM"), 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658, on Tuesday, April 16, 1996, at 3:30 p.m., and any adjournments or
postponements thereof (the "Meeting") all shares of beneficial interest of said
Portfolio that the undersigned would be entitled to vote if personally present
at the Meeting (the "Shares") on the proposals set forth below respecting the
Portfolio's new management structure, the new adviser and sub-adviser, and the
new advisory and sub-advisory agreements and, in accordance with their own
discretion, any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:
PROPOSAL 1. Authorize the Trust's Board of Trustees to appoint additional or
replacement investment sub-advisers recommended by SFM for the
Portfolio without seeking approval of the Portfolio's
Shareholders of the contracts pursuant to which such sub-advisers
serve.
____For ____Against ____Abstain
PROPOSAL 2. Approve the selection of SFM as the investment adviser for the
Portfolio, and to approve the Investment Advisory Agreement
between the Trust, on behalf of the Portfolio, and SFM.
____For ____Against ____Abstain
<PAGE>
PROPOSAL 3. Approve the selection of Standish, Ayer & Wood, Inc. ("Standish")
as an investment sub-adviser for the Portfolio, and to approve
the form of investment sub-advisory agreement between SFM and
Standish.
____For ____Against ____Abstain
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR EACH OF THE FOREGOING PROPOSALS
AND WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated:_________________, 1996 ________________________________
Signature of Shareholder
________________________________
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.
