<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
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TAX FREE PORTFOLIO
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This Prospectus sets forth concisely information about the above-referenced
Portfolio that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end investment management
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in one or more professionally managed diversified
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 Tax Free Portfolio (the "Portfolio"), a
money market portfolio.
AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
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<S> <C>
Management/Advisory Fees (after fee waiver)/1/ .34%
12b-1 Fees/2/ .07%
Other Expenses .04%
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Total Operating Expenses (after fee waiver)/3/ .45%
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</TABLE>
1 The Manager has waived, on a voluntary basis, a portion of its fee, 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, Management/Advisory Fees for the Portfolio
would be .40%.
2 The 12b-1 fees shown reflect the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fees payable by the Class A
shares of the Portfolio are .30%.
3 Absent the Manager's voluntary fee waiver, Total Operating Expenses for Class
A shares of the Portfolio would be .51%.
EXAMPLE
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An investor in Class A shares of the Portfolio 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:
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
[C] [C] [C] [C]
$5 $14 $25 $57
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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 Portfolio's Class A shares. A person that purchases
shares through an account with a financial institution may be charged separate
fees by that institution. The Portfolio also offers Class D shares, which are
subject to the same expenses except that Class D shares bear different
distribution costs and transfer agent costs. Additional information regarding
these differences 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 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders, which is available upon request and
without charge by calling 1-800-342-5734.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
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- -------------
TAX FREE PORTFOLIO
- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.034 $(0.034) -- $(0.034) -- $1.00 3.48% $ 377,152 0.45%
1994 1.00 0.022 (0.022) -- (0.022) -- 1.00 2.20% 358,299 0.45%
1993 1.00 0.022 (0.023) -- (0.023) -- 1.00 2.29% 414,975 0.45%
1992 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.32% 293,982 0.45%
1991 1.00 0.047 (0.047) -- (0.047) -- 1.00 4.81% 343,300 0.37%
1990(1) 1.00 0.032 (0.032) -- (0.032) -- 1.00 3.20%+ 356,814 0.45%*
FOR THE YEARS ENDED JANUARY 31,:
1990 1.00 0.059 (0.059) -- (0.059) -- 1.00 5.97% 464,389 0.54%
1989 1.00 0.049 (0.049) -- (0.049) -- 1.00 4.98% 790,629 0.46%
1988 1.00 0.042 (0.042) -- (0.042) -- 1.00 4.34% 938,484 0.53%
1987 1.00 0.041 (0.041) -- (0.041) -- 1.00 4.31% 1,143,083 0.56%
1986 1.00 0.051 (0.051) -- (0.051) -- 1.00 5.21% 503,891 0.57%
1985 1.00 0.058 (0.058) -- (0.058) -- 1.00 5.86% 263,325 0.58%
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<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
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<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.51% 3.43% 3.37% --
1994 0.53% 2.17% 2.09% --
1993 0.53% 2.24% 2.16% --
1992 0.55% 3.30% 3.20% --
1991 0.55% 4.70% 4.52% --
1990(1) 0.56%* 5.46%* 5.35%* --
FOR THE YEARS ENDED JANUARY 31,:
1990 0.59% 5.90% 5.85% --
1989 0.58% 4.90% 4.78% --
1988 0.54% 4.20% 4.19% --
1987 0.56% 4.10% 4.10% --
1986 0.57% 5.10% 5.10% --
1985 0.60% 5.80% 5.78% --
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</TABLE>
* Annualized
+ Return is for the period indicated and has not been annualized.
1 In August 1990, the Trustees changed the fiscal year end of the Trust from
January 31 to August 31.
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 diversified and
non-diversified investment portfolios. This Prospectus offers Class A shares of
the Trust's Tax Free Portfolio (the "Portfolio"). Shares in the Portfolio may
also be purchased through the Portfolio's Class D shares. 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 _______________________________________________________________________
The Portfolio's investment objective is to preserve
principal value and maintain a high degree of liquidity
while providing current income exempt from federal income
taxes. There can be no assurance this investment objective
will be met.
The Portfolio invests in U.S. dollar denominated
municipal securities of issuers located in all fifty states,
the District of Columbia, Puerto Rico and other U.S.
territories and possessions (collectively, "Municipal
Securities"). At least 80% of the Portfolio's net assets
will be invested in securities the interest on which is
exempt from federal income taxes, based on opinions from
bond counsel for the issuers. This investment policy is a
fundamental policy of the Portfolio. Under normal
conditions, the Portfolio will 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.
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 Weiss,
Peck & Greer, L.L.C., the Portfolio's investment adviser
(the "Adviser"): (i) municipal bonds rated AA or better by
Standard and Poor's Corporation ("S&P") or Aa 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.
The Adviser will not invest more than 25% of Portfolio
assets in municipal securities (a) whose issuers are located
in the same state or (b) 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.
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
4
<PAGE>
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 _______________________________________________________________________
In purchasing obligations, the Portfolio complies with the
requirements of Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), as that Rule may be amended from
time to time. These requirements currently provide that the
Portfolio must limit its investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, the Portfolio may only invest in securities (other
than U.S. Government Securities) rated in one of the two
highest categories for short-term securities by at least two
nationally recognized statistical rating organizations
("NRSROs") (or by one NRSRO if only one NRSRO has rated the
security), or, if unrated, determined by the Adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities in
which the Portfolio may invest.
Securities rated in the highest rating category (e.g., A-
1 by S&P) by at least two NRSROs (or, if unrated, determined
by the Adviser to be of comparable quality) are "first tier"
securities. Securities rated in the second highest rating
category (e.g., A-2 by S&P) by at least one NRSRO (or, if
unrated, determined by the Adviser to be of comparable
quality) are considered to be "second tier" securities.
Although the Portfolio is governed by Rule 2a-7, its
investment policies are more restrictive than those imposed
by that Rule.
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. The Portfolio may invest up
to 20% of its net assets in taxable money market instruments
(including repurchase agreements) and securities the
interest on which is a preference item for purposes of the
alternative minimum tax. However, the Portfolio generally
intends to be fully invested in federally tax-exempt
securities. The Portfolio will not invest more than 10% of
its net assets in illiquid securities.
Taxable money market instruments 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) that 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
5
<PAGE>
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 and notes rated MIG-1 or VMIG-1
by Moody's are considered to be of the best 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. 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.
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. It is a
fundamental policy of the Portfolio to use its best efforts
to maintain a constant net asset value of $1.00 per share.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than
5% of the total assets of the Portfolio (based on current
market value at the time of investment) would be invested
in the securities of such issuer; provided, however, that
the Portfolio may invest up to 25% of its total assets
without regard to this restriction as permitted by Rule
2a-7.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on 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 issued or guaranteed by the
U.S. Government or its agencies and instrumentalities.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of the Portfolio. 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.
6
<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 .36% of the average daily net assets of the Portfolio.
The Manager has voluntarily agreed to waive a portion of its
fee in order to limit the total operating expenses of the
Class A shares of the Portfolio to not more than .45% of the
Portfolio's average daily net assets attributable to Class A
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,
1995, the Portfolio paid management fees, after waivers, of
.30% of its average daily net assets.
THE ADVISER ____________________________________________________________________
Weiss, Peck & Greer, L.L.C. (the "Adviser" or "WPG") acts as
the Portfolio's investment adviser under an investment
advisory agreement with the Trust (the "Advisory
Agreement"). Under the Advisory Agreement, the Adviser
invests 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.
The Adviser is a limited liability company founded as a
limited partnership 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,
1995, total assets under management were approximately $12.5
billion. The principal business address of the Adviser is
One New York Plaza, New York, NY 10004.
For its services, the Adviser is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of
.05% of the combined average daily net assets of the money
market portfolios of the Trust that are advised by the
Adviser up to $500 million, .04% of such assets from $500
million to $1 billion, and .03% of such assets in excess of
$1 billion. Such fees are allocated daily among these
portfolios based on their relative net assets. For the
fiscal year ended August 31, 1995, the Portfolio paid
advisory fees, after waivers, of .04% of its relative daily
net assets.
7
<PAGE>
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan"
and "Class D Plan") pursuant to Rule 12b-1 under the 1940
Act.
The Class A Plan provides for reimbursement for expenses
incurred by the Distributor in an amount not to exceed .30%
of the average daily net assets of the Portfolio, on an
annualized basis, provided those expenses are permissible as
to both type and amount under a budget adopted by the Board
of Trustees, including those who are not interested persons
and have no financial interest in the Plan or any related
agreement ("Qualified Trustees"). Pursuant to state law, the
Distributor has voluntarily agreed to limit the
distribution-related expenses of the Class A shares of each
Portfolio to .25%. Currently, the budget (shown here as a
percentage of daily net assets) for each Portfolio is set at
an annual rate of .07%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the distribution
of the Trust's shares, advertising expenses and promotional
and sales expenses including expenses for travel,
communication and compensation and benefits for sales
personnel. Distribution expenses not attributable to a
specific Portfolio are allocated among each of the
Portfolios of the Trust on the basis of their average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
8
<PAGE>
PURCHASE AND
REDEMPTION
OF SHARES ______________________________________________________________________
Financial institutions may acquire shares of the 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 effectiveness on the
same day. Shares of the Portfolio are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of the Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days"). However, money market fund
shares cannot be purchased by Federal Reserve wire on
federal holidays restricting wire transfers.
Shareholders who desire to purchase shares for cash must
place their orders with the Transfer Agent prior to 2:00
p.m., Eastern time on any Business Day for the order to be
accepted on that Business Day. Cash investments must be
transmitted or delivered in federal funds to the wire agent
by the close of business on the same day the order is
placed. The Trust reserves the right to reject a purchase
order when the Distributor determines that it is not in the
best interest of the Trust or shareholders to accept such
purchase order.
The Trust will send shareholders a statement 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, which is
expected to remain constant at $1.00. The net asset value
per share of the Portfolio is determined by dividing the
total value of its investments and other assets, less any
liabilities, by the total outstanding shares of the
Portfolio. The 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 daily as of 2:00 p.m., Eastern time on each
Business Day.
Shareholders who desire to redeem shares of the Portfolio
must place their redemption orders with the Transfer Agent
prior to 12:30 p.m., Eastern time on any Business Day.
Otherwise, the redemption order will be effective on the
next Business Day. The redemption price is the net asset
value per share of the Portfolio next determined after
receipt by the Transfer Agent, and effectiveness, of the
redemption order. For redemption orders received before
12:30 p.m., Eastern time on any Business Day,
9
<PAGE>
payment will be made the same day by transfer of federal
funds. Otherwise, the redemption order will be effective on
the next Business Day.
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, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE ____________________________________________________________________
From time to time the Portfolio advertises its "current
yield", "tax equivalent yield" and "effective yield". These
figures are based on historical earnings and are not
intended to indicate future performance. The "current yield"
of the Portfolio refers to the income generated by an
investment over a seven-day period which is then
"annualized." That is, the amount of income generated by the
investment during the 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 is
assumed to be reinvested. The "effective yield" will be
slightly higher than the "current yield" because of the
compounding effect of this assumed reinvestment. The "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: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Portfolio may also quote
financial and business publications and periodicals as they
relate to fund management, investment philosophy and
investment techniques.
The performance on Class A shares will normally be higher
than that on the Class D shares of the Portfolio because of
the additional distribution and transfer agent expenses
charged to Class D shares.
10
<PAGE>
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal income tax treatment of the Portfolio or its
shareholders, and state and local tax consequences of an
investment in the Portfolio may differ from the federal
income tax consequences described below. Accordingly,
shareholders are urged to consult their tax advisers
regarding specific questions as to federal, state and local
income taxes. Additional information concerning taxes is set
forth in the Statement of Additional Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio 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 ("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 The Portfolio intends to distribute substantially all of its
Distributions 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. 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.
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 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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
11
<PAGE>
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.
Each sale, exchange or redemption of the Portfolio's
shares is a taxable transaction for the shareholder.
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 Portfolio, the Trust consists
of the following portfolios: Institutional Tax Free
Portfolio, California Tax Exempt Portfolio, Intermediate-
Term Municipal Portfolio, Pennsylvania Municipal Portfolio,
Kansas Tax Free Income Portfolio, Bainbridge Tax Exempt
Portfolio, California Intermediate-Term Municipal Portfolio,
New York Intermediate-Term Municipal Portfolio, and
Pennsylvania Tax Free 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
12
<PAGE>
outstanding shares of the Trust. In the event that such a
meeting is requested the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager. SEI
Inquiries Financial Management Corporation, 680 E. Swedesford Road,
Wayne, Pennsylvania, 19087.
Dividends The net investment income (exclusive of capital gains) of
the Portfolio is determined and declared on each Business
Day as a dividend for shareholders of record as of the close
of business on that day. Dividends are paid by the Portfolio
in federal funds or in additional shares at the discretion
of the shareholder on the first Business Day of each month.
Currently, capital gains, if any, are distributed at the end
of the calendar year.
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 Portfolio are
normally higher than those on Class D shares because of the
additional distribution and transfer agent expenses charged
to Class D shares.
Counsel and Morgan, Lewis & Bockius LLP 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 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS
AND RISK FACTORS _______________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
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 one to 270 days.
13
<PAGE>
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.
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 the Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
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.
14
<PAGE>
Variable and Certain of the obligations purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. 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 the
Adviser deems it appropriate to do so.
15
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses................................................ 2
Financial Highlights..................................................... 3
The Trust................................................................ 4
Investment Objective and Policies........................................ 4
General Investment Policies.............................................. 5
Investment Limitations................................................... 6
The Manager and Shareholder Servicing Agent.............................. 7
The Adviser.............................................................. 7
Distribution............................................................. 8
Purchase and Redemption of Shares........................................ 9
Performance.............................................................. 10
Taxes.................................................................... 11
General Information...................................................... 12
Description of Permitted Investments and Risk Factors.................... 13
</TABLE>
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced
Portfolio that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end management investment
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in one or more professionally managed diversified
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, Class B and Class C shares of the Institutional Tax Free
Portfolio (the "Portfolio"), a money market portfolio.
AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE 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. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Management/Advisory Fees (after fee waiver)/1/ .22% .22% .22%
12b-1 Fees/2/ .07% .37% .57%
Other Expenses .04% .04% .04%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver)/3/ .33% .63% .83%
- --------------------------------------------------------------------------------
</TABLE>
1 The Manager has waived, on a voluntary basis, a portion of its fee, 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, Management/Advisory Fees for the Portfolio
would be .40%.
2 The 12b-1 fees shown reflect the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fees payable by the Class A
shares of the Portfolio are .30%, by Class B Shares are .60% and by Class C
Shares are .80%.
3 Absent the Manager's voluntary fee waiver, Total Operating Expenses for Class
A shares of the Portfolio would be .51%, Class B shares would be .81%, and
Class C shares would be 1.01%.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Class A, Class B and
Class C shares of the Portfolio 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>
Class A $ 3 $11 $19 $ 42
Class B $ 6 $20 $35 $ 79
Class C $8 $26 $46 $103
- --------------------------------------------------------------------------------
</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 Portfolio's Class A, Class B and Class C shares. A
person that purchases shares through an account with a financial institution
may be charged separate fees by that institution. Additional information may be
found under "The Manager 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
<PAGE>
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 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders which is available upon request and
without charge by calling 1-800-342-5734. As of September 30, 1995, Class C
shares of the Portfolio had not yet commenced operations.
FOR CLASS A AND CLASS B SHARES OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- --------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.036 $(0.036) -- $(0.036) -- $1.00 3.70% $788,877 0.33%
1994 1.00 0.025 (0.025) -- (0.025) -- 1.00 2.51% 835,516 0.33%
1993 1.00 0.026 (0.026) -- (0.026) -- 1.00 2.59% 763,040 0.33%
1992 1.00 0.036 (0.036) -- (0.036) -- 1.00 3.66% 623,689 0.33%
1991 1.00 0.049 (0.049) -- (0.049) -- 1.00 5.20% 448,390 0.33%
1990(1) 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.32%+ 226,658 0.33%*
FOR THE YEARS ENDED JANUARY 31,:
1990 1.00 0.059 (0.059) -- (0.059) -- 1.00 6.11% 177,342 0.52%
1989 1.00 0.048 (0.048) -- (0.048) -- 1.00 5.05% 99,774 0.55%
1988 1.00 0.042 (0.042) -- (0.042) -- 1.00 4.28% 223,653 0.55%
1987 1.00 0.041 (0.041) -- (0.041) -- 1.00 4.23% 255,147 0.55%
1986 1.00 0.050 (0.050) -- (0.050) -- 1.00 5.11% 198,761 0.57%
1985 1.00 0.056 (0.056) -- (0.056) -- 1.00 5.71% 162,676 0.57%
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.033 $(0.033) -- $(0.033) -- $1.00 3.39% 15,084 0.63%
1994 1.00 0.022 (0.022) -- (0.022) -- 1.00 2.21% 21,725 0.63%
1993 1.00 0.023 (0.023) -- (0.023) -- 1.00 2.29% 3,040 0.63%
1992 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.35% 686 0.63%
1991(2) 1.00 0.038 (0.038) -- (0.038) -- 1.00 3.89%+ 1,515 0.63%*
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.52% 3.64% 3.45% --
1994 0.50% 2.48% 2.31% --
1993 0.49% 2.55% 2.39% --
1992 0.51% 3.54% 3.36% --
1991 0.53% 4.91% 4.71% --
1990(1) 0.56%* 5.64%* 5.41%* --
FOR THE YEARS ENDED JANUARY 31,:
1990 0.60% 5.90% 5.82% --
1989 0.57% 4.80% 4.78% --
1988 0.56% 4.20% 4.19% --
1987 0.56% 4.10% 4.09% --
1986 0.57% 5.00% 5.00% --
1985 0.59% 5.60% 5.58% --
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995 0.82% 3.32% 3.13% --
1994 0.81% 2.31% 2.13% --
1993 0.79% 2.22% 2.06% --
1992 0.81% 3.22% 3.04% --
1991(2) 0.84%* 4.34%* 4.13%* --
</TABLE>
* Annualized
+ Return is for the period indicated and has not been annualized.
1 In August 1990, the Trustees changed the fiscal year end of the Trust from
January 31 to August 31.
2 The Institutional Tax-Free Portfolio--Class B commenced operations on October
15, 1990.
3
<PAGE>
THE TRUST ______________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class A, Class B
and Class C shares of the Trust's Institutional Tax Free Portfolio (the
"Portfolio"). 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
OBJECTIVE AND
POLICIES _______________________________________________________________________
The Portfolio's investment objective is to preserve
principal value and maintain a high degree of liquidity
while providing current income exempt from federal income
taxes. There can be no assurance this investment objective
will be met.
The Portfolio invests in U.S. dollar denominated
municipal securities of issuers located in all fifty states,
the District of Columbia, Puerto Rico and other U.S.
territories and possessions (collectively, "Municipal
Securities"). It is a fundamental policy of the Portfolio to
invest at least 80% of its net assets in securities the
interest on which is exempt from federal income taxes, based
on opinions from bond counsel for the issuers, and the
Portfolio will invest, under normal conditions, 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.
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 Weiss,
Peck & Greer, L.L.C., the Portfolio's investment adviser
(the "Adviser"): (i) municipal bonds rated AA or better by
Standard and Poor's Corporation ("S&P") or Aa 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.
The Adviser will not invest more than 25% of Portfolio
assets in municipal securities (a) whose issuers are located
in the same state or (b) 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.
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
4
<PAGE>
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 _______________________________________________________________________
In purchasing obligations, the Portfolio complies with the
requirements of Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), as that Rule may be amended from
time to time. These requirements currently provide that the
Portfolio must limit its investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, the Portfolio may only invest in securities (other
than U.S. Government Securities) rated in one of the two
highest categories for short-term securities by at least two
nationally recognized statistical rating organizations
("NRSROs") (or by one NRSRO if only one NRSRO has rated the
security), or, if unrated, determined by the Adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities in
which the Portfolio may invest.
Securities rated in the highest rating category (e.g., A-
1 by S&P) by at least two NRSROs (or, if unrated, determined
by the Adviser to be of comparable quality) are "first tier"
securities. Securities rated in the second highest rating
category (e.g., A-2 by S&P) by at least one NRSRO (or, if
unrated, determined by the Adviser to be of comparable
quality) are considered to be "second tier" securities.
Although the Portfolio is governed by Rule 2a-7, its
investment policies are more restrictive than those imposed
by that Rule.
The Portfolio may purchase securities on a "when-issued"
basis, and reserves the right to engage in transactions
involving standby commitments. The Portfolio may invest up
to 20% of its net assets in taxable money market instruments
(including repurchase agreements) and securities the
interest on which is a preference item for purposes of the
alternative minimum tax. However, the Portfolio generally
intends to be fully invested in federally tax-exempt
securities. The Portfolio will not invest more than 10% of
its total assets in securities which are considered to be
illiquid.
Taxable money market instruments 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) that are members of the Federal Reserve
System, the Bank Insurance Fund and Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation
and that 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.
5
<PAGE>
Municipal notes rated SP-1 by S&P have strong capacity to
pay principal and interest and notes rated MIG-1 or VMIG-1
by Moody's are considered to be of the best 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. 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.
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. It is a
fundamental policy of the Portfolio to use its best efforts
to maintain a constant net asset value of $1.00 per share.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than
5% of the total assets of the Portfolio (based on current
market value at the time of investment) would be invested
in the securities of such issuer; provided, however, that
the Portfolio may invest up to 25% of its total assets
without regard to this restriction as permitted by Rule
2a-7.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on 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 issued or guaranteed by the
U.S. Government or its agencies and instrumentalities.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of the Portfolio. 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.
6
<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 .36% of the average daily net assets of the Portfolio.
The Manager has voluntarily agreed to waive a portion of its
fee in order to limit the total operating expenses to not
more than .33% of the average daily net assets of the Class
A shares of the Portfolio, not more than .63% of the average
daily net assets of Class B shares of the Portfolio and not
more than .83% of the average daily net assets of Class C
shares of the Portfolio, 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, 1995, the Portfolio paid management fees,
after waivers, of .18% of its average daily net assets.
THE ADVISER ____________________________________________________________________
Weiss, Peck & Greer, L.L.C. (the "Adviser" or "WPG") serves
as the Portfolio's investment adviser under an investment
advisory agreement with the Trust (the "Advisory
Agreement"). Under the Advisory Agreement, the Adviser
invests 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.
The Adviser is a limited liability company founded as a
limited partnership 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,
1995, total assets under management were approximately $12.5
billion. The principal business address of the Adviser is
One New York Plaza, New York, NY 10004.
For its services, the Adviser is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of
.05% of the combined average daily net assets of the money
market portfolios of the Trust that are advised by the
Adviser up to $500 million, .04% of such assets from $500
million to $1 billion and .03% of such assets in excess of
$1 billion. Such fees are allocated daily among these
portfolios based on their relative net assets. For the
fiscal year ended August 31, 1995 the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
7
<PAGE>
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan,"
"Class B Plan," "Class C Plan" and "Class D Plan," and,
collectively, the "Plans") pursuant to Rule 12b-1 under the
1940 Act.
Each Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio on an
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Pursuant to state law, the Distributor has voluntarily
agreed to limit the distribution-related expenses of the
Class A shares to .25%. Currently, the budget (shown here as
a percentage of daily net assets) for the Portfolio is set
at an annual rate of .07%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the Portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class B and C Plans, in addition to providing for the
reimbursement payments described above, provides for
payments to the Distributor at an annual rate of .30% and
.50%, respectively, of the Portfolio's average daily net
assets attributable to such Class shares. This additional
payment may be used to compensate financial institutions
that provide distribution-related services to their
customers. These payments are characterized as
"compensation," and are not directly tied to expenses
incurred by the Distributor, the payments the Distributor
receives during any year may therefore be higher or lower
than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class B or C Plan, the Trust will still pay the full fee and
the Distributor will realize a profit, but the Trust will
not be obligated to pay in excess of the full fee, even if
the Distributor's actual expenses ar higher.
8
<PAGE>
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
PURCHASE AND
REDEMPTION
OF SHARES ______________________________________________________________________
Financial institutions may acquire shares of the 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 effectiveness on the
same day. Shares of the Portfolio are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of the Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days"). However, money market fund
shares cannot be purchased by Federal Reserve wire on
federal holidays restricting wire transfers.
Shareholders who desire to purchase shares for cash must
place their orders with the Transfer Agent prior to 2:00
p.m., Eastern time on any Business Day for the order to be
accepted on that Business Day. Cash investments must be
transmitted or delivered in federal funds to the wire agent
by the close of business on the same day the order is
placed.
The Trust reserves the right to reject a purchase order
when the Transfer Agent determines that it is not in the
best interest of the Trust or shareholders to accept such
purchase order.
9
<PAGE>
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, which is
expected to remain constant at $1.00. The net asset value
per share of the Portfolio is determined by dividing the
total value of its investments and other assets, less any
liabilities, by the total outstanding shares of the
Portfolio. The 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 daily as of 2:00 p.m., Eastern time on each
Business Day.
Shareholders who desire to redeem shares of the Portfolio
must place their redemption orders with the Transfer Agent
prior to 12:30 p.m., Eastern time on any Business Day.
Otherwise, the redemption order will be effective on the
next Business Day. The redemption price is the net asset
value per share of the Portfolio next determined after
receipt by the Transfer Agent, and effectiveness, of the
redemption order. For redemption orders received before
12:30 p.m., Eastern time on any Business Day, payment will
be made the same day by transfer of federal funds.
Otherwise, the redemption will be effective on the next
Business Day.
If a shareholder's aggregate balance is less than $45
million as a result of redemption or transfer, for a period
of seven consecutive days, the Trust reserves the right to
redeem that shareholder's shares in the Portfolio for their
current net asset value. Before the Trust redeems such
shares, the shareholder will be given notice that the value
of its shares is less than the minimum amount and will be
allowed sixty days to make an additional investment in an
amount that will increase the value of the account to at
least $50 million.
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, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE ____________________________________________________________________
From time to time the Portfolio advertises its "current
yield", "tax equivalent yield" and "effective yield". These
figures are based on historical earnings and are not
intended to indicate future performance. The "current yield"
of the Portfolio refers to the income generated by an
investment over a seven-day period which is then
"annualized." That is, the amount of income generated by the
investment during the week is assumed to be
10
<PAGE>
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 is
assumed to be reinvested. The "effective yield" will be
slightly higher than the "current yield" because of the
compounding effect of this assumed reinvestment. The "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: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Portfolio may also quote
financial and business publications and periodicals as they
relate to fund management, investment philosophy and
investment techniques.
The performance on Class A shares will normally be higher
than that on Class B and Class C shares because of the
additional distribution expenses charged to Class B and
Class C shares.
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal income tax treatment of the Portfolio or its
shareholders, and state and local tax consequences of an
investment in the Portfolio may differ from the federal
income tax consequences described below. Accordingly,
shareholders are urged to consult their tax advisers
regarding specific questions as to federal, state and local
income taxes. Additional information concerning taxes is set
forth in the Statement of Additional Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio 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 ("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 The Portfolio intends to distribute substantially all of its
Distributions 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
11
<PAGE>
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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.
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 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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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.
Each sale, exchange, or redemption of any Portfolio's
shares is a taxable transaction to the shareholder.
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 Portfolio, the Trust consists
of the following portfolios: Tax Free Portfolio, California
Tax Exempt Portfolio, Intermediate-Term Municipal Portfolio,
Pennsylvania Municipal Portfolio, Kansas Tax Free Income
Portfolio, Bainbridge Tax Exempt Portfolio, California
Intermediate-Term
12
<PAGE>
Municipal Portfolio, New York Intermediate-Term Municipal
Portfolio, and Pennsylvania Tax Free 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 pay 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 statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager. SEI
Inquiries Financial Management Corporation, 680 E. Swedesford Road,
Wayne, Pennsylvania, 19087.
Dividends The net investment income (exclusive of capital gains) of
the Portfolio is determined and declared on each Business
Day as a dividend for shareholders of record as of the close
of business on that day. Dividends are paid by the Portfolio
in federal funds or in additional shares at the discretion
of the shareholder on the first Business Day of each month.
Currently, capital gains, if any, are distributed at the end
of the calendar year.
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.
13
<PAGE>
The dividends on Class A shares of the Portfolio are
normally higher than those on Class B and Class C shares
because of the additional distribution expenses charged to
Class B and Class C shares.
Counsel and Morgan, Lewis & Bockius LLP 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 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS
AND RISK FACTORS _______________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
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 one 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.
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.
14
<PAGE>
Repurchase Repurchase Agreements are agreements by which the Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
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 of the obligations purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. 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 the
Adviser deems it appropriate to do so.
15
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights...................................................... 3
The Trust................................................................. 4
Investment Objective and Policies......................................... 4
General Investment Policies............................................... 5
Investment Limitations.................................................... 6
The Manager and Shareholder Servicing Agent............................... 7
The Adviser............................................................... 7
Distribution.............................................................. 8
Purchase and Redemption of Shares......................................... 9
Performance............................................................... 10
Taxes..................................................................... 11
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 14
</TABLE>
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced
Portfolios that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end investment management
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in one or more professionally managed diversified
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 and Class B shares of the Trust's California Tax Exempt
Portfolio, a money market portfolio (the "Portfolio").
AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE CALIFORNIA MONEY MARKET
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE 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. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Management/Advisory Fees (after fee waivers)/1/ .18% .18%
12b-1 Fees/2/ .06% .36%
Other Expenses .04% .04%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)/3/ .28% .58%
- --------------------------------------------------------------------------------
</TABLE>
1 The Manager has waived, on a voluntary basis, a portion of its fees for the
Portfolio. The Management/Advisory fees shown reflect these voluntary
waivers. The Manager reserves the right to terminate its waiver at any time
in its sole discretion. Absent such fee waivers, Management/Advisory fees for
the Portfolio would be .27%.
2 The 12b-1 fees shown reflect the current 12b-1 budget for reimbursement of
expenses. The maximum 12b-1 fees payable by Class A shares of the Portfolio
are .30% and .60% by Class B shares of the Portfolio.
3 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class A and B shares of the Portfolio would be .37% and .67%,
respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in a Portfolio 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>
Class A $3 $ 9 $16 $36
Class B $6 $19 $32 $73
- --------------------------------------------------------------------------------
</TABLE>
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
The purpose of the expense table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors to a Portfolio. A person who purchases shares through a
financial institution may be charged separate fees by that institution. The
information in the foregoing table and example relates only to Class A and
Class B shares. The Portfolio also offers Class C shares which are subject to
the same expenses, except there are different distribution 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 by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD").
2
<PAGE>
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 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders which is available upon request and
without charge by calling 1-800-342-5734.
FOR A CLASS A AND CLASS B SHARE OUTSTANDING THROUGHOUT THE PERIOD**
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.033 $(0.033) -- $(0.033) -- $1.00 3.49% $30,921 0.28%
1994 1.00 0.023 (0.023) -- (0.023) -- 1.00 2.32% 32,015 0.27%
1993 1.00 0.024 (0.024) -- (0.024) -- 1.00 2.41% 540,285 0.28%
1992 1.00 0.034 (0.034) -- (0.034) -- 1.00 3.44% 445,936 0.28%
1991 1.00 0.047 (0.047) -- (0.047) -- 1.00 4.92% 376,653 0.28%
1990/1/ 1.00 0.016 (0.016) -- (0.016) -- 1.00 1.81%+ 275,095 0.28%*
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995/2/ $1.00 $0.027 $(0.027) -- $(0.027) -- $1.00 2.65%+ $ 0 0.58%*
1994/3/ 1.00 0.013 (0.013) -- (0.013) -- 1.00 2.07%* 3,257 0.51%*
===========================================================================================================================
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.42% 3.43% 3.29% --
1994 0.38% 2.28% 2.17% --
1993 0.37% 2.37% 2.28% --
1992 0.38% 3.34% 3.24% --
1991 0.40% 4.74% 4.62% --
1990/1/ 0.51%* 5.27%* 5.04%* --
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995/2/ 0.69%* 3.16%* 3.05%* --
1994/3/ 0.81%* 2.05%* 1.75%* --
===========================================================================================================================
</TABLE>
* Annualized
** The Trust has not previously offered shares of the California Intermediate-
Term Municipal Portfolio.
+ Return is for the period indicated and has not been annualized.
/1/ The California Tax Exempt Portfolio--Class A commenced operations on May
14, 1990.
/2/ TheCalifornia Tax Exempt Portfolio--Class B closed on July 12, 1995.
/3/ The California Tax Exempt Portfolio--Class B commenced operations on
January 5, 1994.
3
<PAGE>
THE TRUST ______________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class A and Class
B shares of the Trust's California Tax Exempt Portfolio (the "Portfolio").
Shares in the Portfolio may also be purchased through the Portfolio's Class C
shares. Each class provides for variation in distribution or transfer agent
costs, voting rights, and dividends. 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 _______________________________________________________________________
The Portfolio's investment objective is to preserve
principal value and maintain a high degree of liquidity
while providing current income exempt from federal and, to
the extent possible, California state personal income taxes.
There can be no assurance that the Portfolio will be able
to achieve its investment objective.
It is a fundamental policy of the Portfolio to invest,
under normal conditions, at least 80% of its net assets in
municipal securities that produce interest that, in the
opinion of bond counsel, is exempt from federal income tax
(collectively, "Municipal Securities"), and the Portfolio
will invest, under normal conditions, 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.
Under normal conditions, at least 65% of the Portfolio's
assets will be invested in municipal obligations the
interest on which is exempt from California state personal
income tax. These constitute municipal obligations of the
state of California and its political subdivisions or
municipal authorities and municipal obligations issued by
territories or possessions of the United States. The
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 the alternative
minimum tax (although the Portfolio has no present intention
of investing in such securities) and (2) taxable
investments. In addition, for temporary defensive purposes
when its investment adviser determines that market
conditions warrant, the Portfolio may invest up to 100% of
its assets in municipal obligations of states other than
California or taxable money market instruments (including
repurchase agreements, U.S. Treasury securities and
instruments of certain U.S. commercial banks or savings and
loan institutions).
The Adviser will not invest more than 25% of Portfolio
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.
4
<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 _______________________________________________________________________
In purchasing obligations, the Portfolio complies with the
requirements of Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), as that Rule may be amended from
time to time. These requirements currently provide that the
Portfolio must limit its investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, the Portfolio may only invest in securities (other
than U.S. Government Securities) rated in one of the two
highest categories for short-term securities by at least two
nationally recognized statistical rating organizations
("NRSROs") (or by one NRSRO if only one NRSRO has rated the
security), or, if unrated, determined by the Adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities in
which the Portfolio may invest.
Securities rated in the highest rating category (e.g., A-
1 by Standard & Poor's Corporation ("S&P")) by at least two
NRSROs (or, if unrated, determined by the Adviser to be of
comparable quality) are "first tier" securities. Securities
rated in the second highest rating category (e.g., A-2 by
S&P) by at least one NRSRO (or, if unrated, determined by
the Adviser to be of comparable quality) are considered to
be "second tier" securities.
Although the Portfolio is governed by Rule 2a-7, its
investment policies are more restrictive than those imposed
by that Rule.
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 the
Adviser: (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; and (iii) tax-
exempt commercial paper rated at least A-2 by S&P or Prime-2
by Moody's.
For a description of the Portfolio's permitted
investments and ratings, see the "Description of Permitted
Investments and Risk Factors" and the Statement of
Additional Information.
5
<PAGE>
RISK
FACTORS ________________________________________________________________________
California Risk Certain risks are inherent in the Portfolio's investments in
Factors California municipal securities. These risks result from (1)
amendments to the California Constitution and other statutes
that limit the taxing and spending authority of California
government entities, (2) the general financial condition of
the State of California, and (3) a variety of California
laws and regulations that may affect, directly or
indirectly, California municipal securities. The ability of
issuers of municipal securities to pay interest on, or repay
principal of, municipal securities may be impaired as a
result. A more complete description of these risks is
contained in the Statement of Additional Information.
The Portfolio's concentration in investments in
California municipal securities involves greater risks than
if their investments were more diversified. These risks
arise from provisions in the California Constitution and
other statutes that limit the taxing and spending authority
of California governmental entities, as well as from the
general financial condition of the State of California.
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 a Portfolio
without the consent of the holders of a majority of the
Trust's or the Portfolio's outstanding shares. It is a
fundamental policy of the Portfolio to use its best efforts
to maintain a constant net asset value of $1.00 per share.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than
5% of the total assets of the Portfolio (based on current
value at the time of investment) would be invested in the
securities of such issuer. This restriction applies to
75% of the Portfolio's assets.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on fair
market value at the time of such purchase, to be invested
in the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
United States 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.
6
<PAGE>
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT ________________________________________________________________
SEI Financial Management Corporation (the "Manager" and the
"Transfer Agent"), 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 .23% of the average daily net assets of the
Portfolio. The Manager has voluntarily agreed to waive a
portion of its fees in order to limit the total operating
expenses of Class A and Class B shares of the Portfolio to
not more than .28% and .58% as a percentage of the
Portfolio's average daily net assets attributable to Class A
and Class B shares, on an annualized basis, respectively.
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, 1995, the Portfolio paid
management fees, after waivers, of .14% of its average daily
net assets.
THE ADVISER ____________________________________________________________________
Weiss, Peck & Greer, L.L.C. (the "Adviser" or "WPG") serves
as the Portfolio's investment adviser under an advisory
agreement (the "Advisory Agreement") with the Trust. Under
the Advisory Agreement, the Adviser invests the assets of
the Portfolio, and continuously reviews, supervises and
administers the investment programs of the Portfolio. 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.
The Adviser is a limited liability company founded as a
limited partnership 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,
1995, total assets under management were approximately $12.5
billion. The principal business address of the Adviser is
One New York Plaza, New York, NY 10004.
Janet Fiorenza acts as the portfolio manager for the
Portfolio. Ms. Fiorenza, a Principal of WPG, has been
associated with WPG's Tax Exempt Fixed Income group since
1988 and its predecessor since 1980.
For its services to the Portfolio, the Adviser is
entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .05% of the combined average
daily net assets of the money market portfolios of the Trust
advised by the Adviser up to $500
7
<PAGE>
million, .04% of such assets from $500 million to 1 billion,
and .03% of such assets in excess of $1 billion. Such fees
are allocated daily among these portfolios on the basis of
their relative net assets. For the fiscal year ended August
31, 1995, the Portfolio paid advisory fees, after waivers,
of .04% of its relative 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") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan,"
"Class B Plan" and "Class C Plan," and, collectively, the
"Plans") pursuant to Rule 12b-1 under the 1940 Act.
Each Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of the Portfolio on an
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Currently, the budget (shown here as a percentage of daily
net assets) for each Portfolio is set at an annual rate of
.06%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class B 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 such
Class B shares. This additional payment may be used to
compensate financial institutions that provide distribution-
related services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class B Plan, the Trust will still pay
8
<PAGE>
the full fee and the Distributor will realize a profit, but
the Trust will not be obligated to pay in excess of the full
fee, even if the Distributor's actual expenses are higher.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolio. Such promotional incentives will be offered
uniformly to all shares of the Portfolio, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolio sold by such dealer.
PURCHASE AND
REDEMPTION
OF SHARES ______________________________________________________________________
Financial institutions may acquire shares of the 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 effectiveness on the
same day. Shares of the Portfolio are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of the Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days"). However, money market fund
shares cannot be purchased by Federal Reserve wire on
federal holidays restricting wire transfers. Shareholders
who desire to purchase shares for cash must place their
orders with the Distributor prior to the calculation of net
asset value on any Business Day for the order to be accepted
on that Business Day. Cash investments must be transmitted
or delivered in federal funds to the wire agent by the close
of business on the same day the order is placed. The Trust
reserves the right to reject a purchase order when the
Distributor determines that it is not in the best interest
of the Trust or shareholders to accept such purchase order.
9
<PAGE>
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. The purchase
price of shares is expected to remain constant at $1.00. The
net asset value per share of the 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 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.
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 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 the 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 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.
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, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE ____________________________________________________________________
From time to time the Portfolio may advertise its "current
yield" and "effective yield". The Portfolio may also
advertise a "tax equivalent yield". These figures are based
on historical earnings and are not intended to indicate
future performance.
10
<PAGE>
The "current yield" of the Portfolio refers to the income
generated by an investment in the Portfolio over a seven-day
period which 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 yield" will be slightly higher
than the "current yield" because of the compounding effect
of this assumed reinvestment.
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: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives.
The performance on Class A shares on the Portfolio will
normally be higher than that on Class B or Class C shares
because of the additional distribution expenses charged to
Class B and Class C shares.
TAXES __________________________________________________________________________
The following summary of federal and state 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. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
Tax Status of The Portfolio is treated as a separate entity for federal
each Portfolio 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 ("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 The Portfolio intends to distribute substantially all of its
Distributions 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
11
<PAGE>
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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.
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 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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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.
Each sale, exchange or redemption of the Portfolio's
shares is a taxable transaction to the shareholder.
The following is a general, abbreviated summary of
certain of the provisions of the California Revenue and
Taxation Code presently in effect as they directly govern
the taxation of shareholders subject to California personal
income tax. These provisions are subject to change by
legislative or administrative action, and any such change
may be retroactive.
California The Portfolio intends to qualify to pay dividends to
Taxes shareholders that are exempt from California personal income
tax ("California exempt-interest dividends"). The Portfolio
will qualify to pay California exempt-interest dividends if
(1) at the close of each quarter of the
12
<PAGE>
Portfolio's taxable year, at least 50 percent of the value
of the Portfolio's total assets consists of obligations the
interest on which would be exempt from California personal
income tax if the obligations were held by an individual
("California Tax Exempt Obligations") and (2) the Portfolio
continues to qualify as a regulated investment company. The
Portfolio will notify its shareholders of the amount of
exempt-interest dividends each year.
If the Portfolio qualifies to pay California exempt-
interest dividends, dividends distributed to shareholders
will be considered California exempt-interest dividends if
they meet certain requirements. See the Statement of
Additional Information.
Corporations subject to California franchise tax that
invest in the Portfolio may not be entitled to exclude
California exempt-interest dividends from income.
Distributions that do not qualify for treatment as
California exempt-interest dividends (including those
distributions to shareholders taxable as long-term capital
gains for federal income tax purposes) will be taxable to
shareholders at ordinary income tax rates for California
personal income tax purposes to the extent of the
Portfolio's earnings and profits.
Interest on indebtedness incurred or continued by a
shareholder in connection with the purchase of shares of the
Portfolio will not be deductible for California personal
income tax purposes if the Portfolio distributes California
exempt-interest dividends.
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, Intermediate-Term
Municipal Portfolio, Pennsylvania Municipal Portfolio,
Kansas Tax Free Income Portfolio. Bainbridge Tax Exempt
Portfolio, New York Intermediate-Term Municipal Portfolio,
and Pennsylvania Tax Free 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.
13
<PAGE>
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 statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager. SEI
Inquiries Financial Management Corporation, 680 E. Swedesford Road,
Wayne, Pennsylvania, 19087.
Dividends The net investment income (exclusive of capital gains) of
the Portfolio is distributed in the form of dividends. The
Portfolio declares dividends daily, and shareholders of
record at the close of each Business Day will be entitled to
receive that day's dividend. Dividends are paid on the first
Business Day of each month. If any net capital gains are
realized by the 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 Portfolio are
normally higher than those on Class B or Class C shares
because of the additional distribution expenses charged to
Class B and Class C shares.
Counsel and Morgan, Lewis & Bockius LLP 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 1940 Act.
14
<PAGE>
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:
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 one 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.
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 Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
15
<PAGE>
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 of the obligations purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. 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 the Adviser
deems it appropriate to do so.
16
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses.................................................. 2
Financial Highlights....................................................... 3
The Trust.................................................................. 4
Investment Objective and Policies.......................................... 4
General Investment Policies................................................ 5
Risk Factors............................................................... 6
Investment Limitations..................................................... 6
The Manager and Shareholder Servicing Agent................................ 7
The Adviser................................................................ 7
Distribution............................................................... 8
Purchase and Redemption of Shares.......................................... 9
Performance................................................................ 10
Taxes...................................................................... 11
General Information........................................................ 13
Description of Permitted Investments and Risk Factors...................... 15
</TABLE>
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
PENNSYLVANIA TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced
Portfolios that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end management investment
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in one or more professionally managed diversified
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, Class B and Class C shares of the
Trust's Pennsylvania Tax Free Portfolio (the "Money Market Portfolio") (each, a
"Portfolio" and together, the "Portfolios").
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.
- --------------------------------------------------------------------------------
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. THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (as a
percentage of average net assets)
- -------------------------------------------------------------------------------
MONEY MARKET FIXED INCOME
PORTFOLIO PORTFOLIO
----------------------- ------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C> <C>
Management/Advisory Fees (after fee waiv-
er)/1/ .24% .24% .24% .36%
12b-1 Fees/2/ .07% .32% .57% .08%
Other Expenses .04% .04% .04% .04%
- -------------------------------------------------------------------------------
Total Operating Expenses (after fee waiv-
er)/3/ .35% .60% .85% .48%
- -------------------------------------------------------------------------------
</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 .55%.
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, Class B and Class C shares of the Money Market
Portfolio would be .51%, .76%, and 1.01%, respectively, and for Class A
shares of the Fixed Income Portfolio would be .67%.
EXAMPLE
- --------------------------------------------------------------------------------
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
Class A $4 $11 $20 $44
Class B 6 19 33 75
Class C 9 27 47 105
Fixed Income Portfolio 5 15 27 60
- -------------------------------------------------------------------------------
</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 Money Market Portfolio also offers Class B and
Class C shares, which are subject to the same expenses, except that the Class B
and Class C shares bear different distribution 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
<PAGE>
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 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders which is available upon request and
without charge by calling 1-800-342-5734.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
- --------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $10.52 $0.55 $(0.55) -- $(0.55) $ 0.14 $10.66 6.81% $104,094 0.48%
1994 10.94 0.53 (0.53) -- (0.53) (0.42) 10.52 1.14% 125,081 0.47%
1993 10.59 0.55 (0.55) $ (0.01) (0.56) 0.36 10.94 8.91% 153,808 0.48%
1992 10.29 0.57 (0.57) (0.01) (0.58) 0.31 10.59 8.89% 114,461 0.48%
1991 9.95 0.60 (0.60) (0.003) (0.60) 0.34 10.29 9.80% 83,054 0.50%
1990/2/ 9.98 0.34 (0.34) -- (0.34) (0.03) 9.95 3.12%+ 64,531 0.60%*
FOR THE YEAR ENDED JANUARY 31,:
1990/1/ 10.00 0.28 (0.23) (0.001) (0.23) (0.07) 9.98 2.11%+ 53,042 0.60%*
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.72% 5.21% 4.97% 22.62%
1994 0.71% 4.90% 4.66% 25.13%
1993 0.70% 5.15% 4.93% 15.26%
1992 0.72% 5.52% 5.28% 10.54%
1991 0.73% 5.98% 5.75% 19.17%
1990/2/ 0.80%* 5.88%* 5.68%* 20.35%
FOR THE YEAR ENDED JANUARY 31,:
1990/1/ 0.86%* 6.05%* 5.79%* 10.00%
</TABLE>
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
- -------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.035 $(0.035) -- $(0.035) -- $1.00 3.60% $26,058 0.35%
1994/3/ 1.00 0.014 (0.014) -- (0.014) -- 1.00 2.37%* 18,712 0.35%*
CLASS A
</TABLE>
<TABLE>
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C>
1995 0.51% 3.54% 3.38% --
1994/3/ 0.65%* 2.37%* 2.07%* --
</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
<PAGE>
THE TRUST ______________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class A shares of
the Trust's Pennsylvania Municipal Portfolio (the "Fixed Income Portfolio") and
Class A, Class B and Class C 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.
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
Morgan Grenfell Capital Management, this Portfolio's
investment adviser ("Morgan Grenfell"): (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 judgment of Morgan Grenfell, 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 an average maturity of no
longer than 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.
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 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 the alternative minimum
tax (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 L.L.C., this Portfolio's investment
adviser: (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 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
5
<PAGE>
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 _______________________________________________________________________
In purchasing obligations, the Money Market Portfolio
complies with the requirements of Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"), as that
Rule may be amended from time to time. These requirements
currently provide that the Money Market Portfolio must limit
its investments to securities with remaining maturities of
397 days or less, and must maintain a dollar-weighted
average maturity of 90 days or less. In addition, the Money
Market Portfolio may only invest in securities (other than
U.S. Government Securities) rated in one of the two highest
categories for short-term securities by at least two
nationally recognized statistical rating organizations
("NRSROs") (or by one NRSRO if only one NRSRO has rated the
security), or, if unrated, determined by the Adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities in
which the Money Market Portfolio may invest.
Securities rated in the highest rating category (e.g., A-
1 by S&P) by at least two NRSROs (or, if unrated, determined
by the Adviser to be of comparable quality) are "first tier"
securities. Securities rated in the second highest rating
category (e.g., A-2 by S&P) by
6
<PAGE>
at least one NRSRO (or, if unrated, determined by the
Adviser to be of comparable quality) are considered to be
"second tier" securities.
Although the Money Market Portfolio is governed by Rule
2a-7, its investment policies are more restrictive than
those imposed by that Rule.
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. 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, 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
7
<PAGE>
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.
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
investments in obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities or
to
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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" 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, 1995, the Fixed Income and Money Market
Portfolios paid management fees, after waivers, of .12% and
.20%, respectively, of their average daily net assets.
THE ADVISERS ___________________________________________________________________
Under advisory agreements with the Trust (the "Advisory
Agreements"), Morgan Grenfell Capital Management
Incorporated and Weiss, Peck & Greer, L.L.C. (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
invest 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.
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Morgan Grenfell Morgan Grenfell Capital Management Incorporated ("Morgan
Capital Grenfell") acts as investment adviser for the Fixed Income
Management Portfolio. Morgan Grenfell is a wholly-owned U.S.-based
Incorporated subsidiary of Morgan Grenfell Asset Management and was
organized in 1985. As of September 30, 1995, total assets
under management by Morgan Grenfell were approximately $7
billion. The principal place of business address of Morgan
Grenfell is 885 Third Avenue, 32nd Floor, New York, New York
10022.
David W. Baldt, Director and Executive Vice President of
Morgan Grenfell, has served as the portfolio manager of the
Fixed Income Portfolio since July, 1995, and has been with
Morgan Grenfell since 1989.
For its services, Morgan Grenfell is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .20% of the average daily net assets. For the fiscal
year ended August 31, 1995, the Portfolio paid Morgan
Grenfell an advisory fee, after waivers, of .20% of its
average daily net assets.
Weiss, Peck & Weiss, Peck & Greer, L.L.C. ("WPG") acts as investment
Greer, L.L.C. adviser for the Money Market Portfolio. WPG is a limited
liability company founded as a limited partnership 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, 1995, total assets under
management were approximately $12.5 billion. The principal
business address of WPG is One New York Plaza, New York, NY
10004.
Janet Fiorenza acts as the portfolio manager for the
Portfolio. Ms. Fiorenza, a Principal of WPG, has been
associated with WPG's Tax Exempt Fixed Income group since
1988 and its predecessor since 1980.
For its services, WPG 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, 1995, the Portfolio paid WPG an advisory
fee, after waivers, 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 the
Trust has adopted a distribution plan (the "Class A Plan,"
"Class B Plan," "Class C Plan," and, collectively, the
"Plans") pursuant to Rule 12b-1 under the 1940 Act.
Each Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio on an
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<PAGE>
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Currently, the budget (shown here as a percentage of daily
net assets) for each Portfolio is set at an annual rate of
.08% for the Pennsylvania Municipal Portfolio and .07% for
the Pennsylvania Tax-Free Portfolio.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class B and C Plans for the Pennsylvania Tax Free
Portfolio, in addition to providing for the reimbursement
payments described above, provides for payments to the
Distributor at an annual rate of .30% and 50%, respectively
of the Portfolio's average daily net assets attributable to
Class B and C shares. This additional payment may be used to
compensate financial institutions that provide distribution-
related services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class B or C Plans, the Trust will still pay the full fee
and the Distributor will realize a profit, but the Trust
will not be obligated to pay in excess of the full fee, even
if the Distributor's actual expenses are higher. Currently,
the Distributor is taking this additional compensation
payment under the Class B Plan at a rate of .25% of the
Portfolio's average daily net assets, on an annualized
basis, attributable to such Class shares.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
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The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
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 effectiveness on 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"). However, money market fund
shares cannot be purchased by Federal Reserve wire on
federal holidays restricting wire transfers.
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. The
purchase price of shares of the Money Market Portfolio is
expected to remain constant at $1.00.
12
<PAGE>
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. 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 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
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<PAGE>
instructions communicated by telephone are genuine,
including requiring a form of personal identification prior
to acting upon instructions received by telephone and
recording telephone instructions.
If market conditions are extraordinarily active, or other
extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE ____________________________________________________________________
From time to time, the 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.
The "current yield" of the Money Market Portfolio refers
to the income generated by an investment over a seven-day
period which is then "annualized." That is, the amount of
income generated by 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" is calculated similarly but, when annualized, the
income earned by an investment is assumed to be reinvested.
The effective yield will be slightly higher than the
"current yield" because of the compounding effect of this
assumed reinvestment.
The yield of the Fixed Income Portfolio refers to the
annualized income generated by a hypothetical investment, 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 of the Money Market Portfolio.
A Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Fixed Income Portfolio
may quote Morningstar, Inc., a service that ranks mutual
funds on the basis of risk-adjusted performance. The Fund
may quote Ibbotson Associates of Chicago, Illinois, which
provides historical returns of the capital markets in
14
<PAGE>
the U.S. 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.
The performance on Class A shares will normally be higher
than that on Class B or Class C shares because of the
additional distribution and transfer agent expenses charged
to Class B or Class C shares.
TAXES __________________________________________________________________________
The following summary of federal and state 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. 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. 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
15
<PAGE>
Railroad Retirement benefits to be taxable on a portion of
such benefits. See the Statement of Additional Information.
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 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 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 intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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 sale, exchange or redemption of any Portfolio's
shares is a taxable transaction to the shareholders.
The following is a general, abbreviated summary of
certain of the provisions of the Pennsylvania tax code
presently in effect as they directly govern the taxation of
shareholders subject to Pennsylvania personal income tax.
These provisions are subject to change by legislative or
administrative action, and any such change may be
retroactive.
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
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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 of the 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 pay
interest that is not exempt for Pennsylvania purposes but is
exempt for federal purposes, a portion of the Portfolio's
distributions will be subject to Pennsylvania personal
income tax.
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, 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
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<PAGE>
outstanding shares of the Trust. In the event that such a
meeting is requested the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager, SEI
Inquiries Financial Management Corporation, 680 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. The Money
Market Portfolio pays dividends on the first Business Day of
each month. The Fixed Income Portfolio declares dividends
daily, 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.
Counsel and Morgan, Lewis & Bockius LLP 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 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS
AND RISK FACTORS _______________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolios, and the associated risk
factors:
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.
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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 one 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.
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 Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. A Portfolio bears a
risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. A
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
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
19
<PAGE>
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 of the obligations purchased by a Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. 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 the Adviser
deems it appropriate to do so.
20
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses.................................................. 2
Financial Highlights....................................................... 3
The Trust.................................................................. 4
Investment Objectives and Policies......................................... 4
General Investment Policies................................................ 6
Risk Factors............................................................... 7
Investment Limitations..................................................... 8
The Manager and Shareholder Servicing Agent................................ 9
The Advisers............................................................... 9
Distribution............................................................... 10
Purchase and Redemption of Shares.......................................... 12
Performance................................................................ 14
Taxes...................................................................... 15
General Information........................................................ 17
Description of Permitted Investments and Risk Factors...................... 19
</TABLE>
<PAGE>
SEI TAX EXEMPT TRUST
Intermediate-Term Municipal Portfolio
Class A Shares
Supplement dated December 31, 1995 to Prospectus dated December 31, 1995
This Supplement to the Prospectus provides new and additional information
beyond that contained in the Prospectus and should be read in conjunction with
the Prospectus.
Annual Operating Expenses (as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management/Advisory Fees (after fee waivers)/1/ .45%
12b-1 Fees/2/ .08%
Other Expenses .07%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)/3/ .60%
- --------------------------------------------------------------------------------
1 SFM has waived, on a voluntary basis, a portion of its fees and the
Management/Adivsory fees shown reflect these voluntary waivers. SFM reserves
the right to terminate this waiver at any time in its sole discretion. Absent
such waiver, the Management/Advisory fes for the Portfolio would be .57%.
2 The 12b-1 fees shown affect the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fees payable by Class A shares
of the Portfolio are .30%.
3 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class A shares of the Portfolio would be .72%.
On December 4, 1995, the Board of Trustees of the SEI Tax Exempt Trust
(the "Trust") approved a series of changes relating to the investment advisory
arrangements for the Intermediate-Term Municipal Portfolio (the "Portfolio"). At
the meeting, the Board voted to terminate the investment advisory agreement
between the Trust, on behalf of the Portfolio, and Weiss, Peck & Greer Advisers,
Inc., such termination to take effect on January 1, 1996. The Board approved a
new investment advisory agreement between the Trust, on behalf of the Portfolio,
and Standish Ayer & Wood, Inc. ("Standish"), effective as of January 1, 1996. At
the same meeting, the Board approved an alternative advisory arrangement for the
Portfolio, which arrangement will take effect upon shareholder approval and
supplant the advisory agreement with Standish. Under this proposed alternate
arrangement, SEI Financial Management ("SFM") will act as the investment adviser
to the Portfolio and Standish would serve as investment sub-adviser to the
Portfolio.
At a shareholder meeting expected to be held on April 16, 1996,
shareholders of the Portfolio accordingly will be asked to approve: (a) an
advisory agreement between the Trust, on behalf of the Portfolio, and SFM; (b) a
sub-advisory agreement between SFM and Standish, pursuant to which Standish will
act as the Portfolio's sub-adviser and will be compensated by SFM from its
advisory fee, such agreement to take effect only upon the approval of SFM as
investment adviser; and (c) an advisory agreement between the Trust and Standish
to take effect on January 1, 1996 and to continue after the date of the
shareholders meeting only if the advisory and sub-advisory agreements referenced
in (a) and (b) are not approved by shareholders.
Prior to shareholder approval, Standish will serve as interim investment
adviser, and will be compensated at the rate of .18% of the Portfolio's average
daily net assets up to $125 million and .15% of the Portfolio's average daily
net assets over $125 million. The rate of compensation paid to Weiss, Peck &
Greer Advisers, Inc., the Portfolio's former investment adviser, was .18% of the
Portfolio's average daily net assets up to $150 million and .16% of the
Portfolio's average daily net assets over $150 million.
----------------------------------------------------------------
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced
Portfolio that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end investment management
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in 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 Intermediate-Term Municipal Portfolio (the
"Portfolio"), a fixed income portfolio.
- --------------------------------------------------------------------------------
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. THE TRUST'S SHARES ARE NOT FEDERALLY IN-
SURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RE-
SERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES
INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT IN-
VESTED.
- --------------------------------------------------------------------------------
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Management/Advisory Fees (after fee waivers) /1/ .45%
12b-1 Fees /2/ .08%
Other Expenses .07%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) /3/ .60%
- --------------------------------------------------------------------------------
</TABLE>
1 SFM has waived, on a voluntary basis, a portion of its fees, and the
Management/Advisory fees shown reflect these voluntary waivers. SFM reserves
the right to terminate this waiver at any time in its sole discretion. Absent
such waiver, the Management/Advisory fees for the Portfolio would be .75%.
2 The 12b-1 fees shown effect the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fees payable by Class A shares
of the Portfolio are .30%.
3 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class A shares of the Portfolio would be .90%.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Class A shares of the Portfolio 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>
$6 $19 $33 $75
- --------------------------------------------------------------------------------
</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 table and this example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in the Portfolio's Class A shares. A person who purchases
shares through a financial institution may be charged separate fees by that
institution. The Portfolio also offers Class D shares, which are subject to the
same expenses except that Class D shares bear different distribution and
transfer agent costs and are subject to a sales load. 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 by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD").
2
<PAGE>
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 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders which is available upon request and
without charge by calling 1-800-342-5734.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net Ratio of
Value, Net Net Net Investments Asset Value, Assets, End Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- ------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $10.36 $0.52 $(0.52) -- $(0.52) $0.23 $10.59 7.53% $ 95,675 0.55%
1994 10.84 0.49 (0.49) $ (0.06) (0.55) (0.42) 10.36 0.65% 127,509 0.53%
1993 10.49 0.49 (0.50) (0.02) (0.52) 0.38 10.84 8.62% 122,649 0.55%
1992 10.20 0.56 (0.54) (0.01) (0.55) 0.28 10.49 8.56% 63,210 0.55%
1991 9.98 0.61 (0.63) -- (0.63) 0.24 10.20 8.82% 36,699 0.55%
1990(2) 10.01 0.38 (0.37) -- (0.37) (0.04) 9.98 3.44%+ 12,781 0.55%*
FOR THE YEAR ENDED JANUARY 31,:
1990(1) 10.00 0.21 (0.16) (0.002) (0.16) (0.04) 10.01 1.72%+ 9,106 0.56%*
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------
1993 0.69% 4.79% 4.65% 63.04%
1992 0.71% 5.56% 5.40% 61.56%
1991 0.78% 6.18% 5.95% 111.82%
1990(2) 0.90%* 6.63%* 6.28%* 63.45%
FOR THE YEAR ENDED JANUARY 31,:
1990(1) 1.36%* 5.80%* 5.00%* 352.00%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Return is for period indicated and has not been annualized.
1 The Intermediate-Term Municipal Portfolio commenced operations on September
5, 1989.
2 In August 1990, the Trustees changed the fiscal year end of the Trust from
January 31 to August 31.
3
<PAGE>
THE TRUST _____________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment
company that offers units of beneficial interest ("shares") in separate
diversified and non-diversified investment portfolios. The Trust offers units
of beneficial interest ("shares") in separate investment portfolios. This
prospectus offers Class A shares of the Trust's Intermediate-Term Municipal
Portfolio (the "Portfolio"). Shares in the Portfolio may also be purchased
through the Portfolio's Class D shares. The investment adviser and investment
sub-adviser to the Portfolio are referred to collectively as the "advisers."
Additional information pertaining to the Trust may be obtained by writing to
SEI Financial Services Company, 680 East Swedesford Road, Wayne, PA 19087 or
by calling 1-800-342-5734.
INVESTMENT
OBJECTIVE AND
POLICIES ______________________________________________________________________
The Portfolio's investment objective is to seek the highest
level of income exempt from federal income taxes that can
be obtained, consistent with the preservation of capital,
from a diversified portfolio of investment grade municipal
securities. However, the Portfolio's income might not be as
high as it would be if the Portfolio had minimum investment
rating requirements lower than those discussed below. There
can be no assurance that the Portfolio will be able to
achieve its investment objective.
The Portfolio invests at least 80% of its net assets in
municipal securities the interest of which is exempt from
federal income taxes (collectively "Municipal Securities"),
based on opinions from bond counsel for the issuers. This
investment policy is a fundamental policy of the Portfolio.
The issuers of these securities can be located in all fifty
states, the District of Columbia, Puerto Rico, and other
U.S. territories and possessions. Under normal conditions,
the Portfolio will 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. Although the
advisers have no present intention of doing so, the up to
20% of all assets in the Portfolio can be invested in
taxable debt securities for defensive purposes or when
sufficient tax exempt securities considered appropriate by
the advisers are not available for purchase.
The market value of the Portfolio's fixed income
investments 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. 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 portfolio securities will not necessarily affect
cash income derived from these securities, but will affect
the Portfolio's net asset value.
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 the
advisers: (i) municipal bonds rated A or
4
<PAGE>
better by Standard and Poor's Corporation ("S&P") or by
Moody's Investors Service, Inc. ("Moody's"), and the
Portfolio may invest up to 10% of its total assets in
municipal bonds rated BBB by S&P or Baa by 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 advisers, it does not substantially impact the market
value of the Portfolio.
Not more than 25% of Portfolio assets will be invested
in (a) municipal securities whose issuers are located in
the same state, (b) municipal securities the interest on
which is derived from revenues of similar type projects, or
(c) municipal securities subject to the alternative minimum
tax. 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.
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.
The Portfolio will maintain a dollar-weighted average
portfolio maturity of three to ten years. However, when the
advisers determine that market conditions so warrant, the
Portfolio can maintain an average weighted maturity of less
than three years.
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. 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 or purchase securities subject to
the alternative minimum tax. The Portfolio will not invest
more than 15% 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; instruments 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 or the Federal Deposit Insurance Corporation and
5
<PAGE>
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 such
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.
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 and any security
guaranteed thereby) if, as a result, more than 5% of the
total assets of the Portfolio (based on fair market
value at time of investment) would be invested in the
securities of such issuer; provided, however, that the
Portfolio may invest up to 25% of its total assets
without regard to this restriction.
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 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.
6
<PAGE>
THE MANAGER AND
SHAREHOLDER
SERVICING AGENT_________________________________________________________________
SEI Financial Management Corporation ("SFM" 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, SFM is entitled to a fee which is
calculated daily and paid monthly at an annual rate of .24%
of the average daily net assets of the Portfolio. In
addition, SFM has voluntarily agreed to waive a portion of
its fees proportionately in order to limit total operating
expenses of the Class A shares of the Portfolio to not more
than .55% of the Portfolio's average daily net assets
attributable to Class A shares, on an annualized basis. SFM
reserves the right, in its sole discretion, to terminate
its waiver at any time. For the fiscal year ended August
31, 1995, the Portfolio paid management fees, after
waivers, of .27% of its average daily net assets.
MULTI-MANAGER
DIVERSIFICATION_________________________________________________________________
SFM serves as investment adviser (the "Adviser") to the
Portfolio. Within the Portfolio one or more investment sub-
advisers (each, a "Sub-Adviser," and together, the "Sub-
Advisers") who specialize in the distinct investment style
or styles that the Portfolio is designed to capture may be
utilized to select that Portfolio's investments.
The Adviser has 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. In
addition, SFM is responsible for (i) managing the
allocation of assets among the Portfolio's Sub-Advisers, if
applicable, (ii) directing and evaluating the investment
services provided by a Sub-Adviser, including their
adherence to the Portfolio's respective investment
objective and policies and the Portfolio's investment
performance, and (iii) managing the cash portion of the
Portfolio's assets. In accordance with the Portfolio's
investment objective and policies, and under the
supervision of the Adviser and the Trust's Board of
Trustees, a Sub-Adviser is responsible for the day-to-day
investment management of all or a discrete portion of the
assets of a Portfolio. The Adviser and the Sub-Adviser are
authorized to make investment decisions for the Portfolio
and place orders on behalf of the Portfolios to effect the
investment decisions made.
SFM monitors the compliance of the Sub-Adviser of the
Portfolio with regulatory and tax regulations, such as
portfolio concentration and diversification. For the most
part compliance with these requirements by a Sub-Adviser
with respect to its portion of the Portfolio will assure
compliance by that Portfolio as a whole. In addition, SFM
monitors positions taken by each of the Portfolio's Sub-
Advisers and will notify the Sub-Advisers of
7
<PAGE>
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 the
Portfolio's assets creates the need for coordination among
such 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 of the
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 the Portfolio and
shortly thereafter another Sub-Adviser could sell the same
security from the portion of the Portfolio allocated to it.
If in these circumstances the securities could be
transferred from one Sub-Adviser's portion of the Portfolio
to another, the Portfolio could avoid transaction costs and
could avoid creating possible wash sales and short-short
gains under the Internal Revenue Code of 1986, as amended
(the "Code"). Such transfers are not practicable but the
Sub-Advisers do not believe that there will be material
adverse effects on the Portfolio as a result. First, it
does not appear likely that there will be substantial
overlap in the securities acquired for the Portfolio by the
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 has established procedures with respect to the short-
short test which are designed to prevent realization of
short-short gains in excess of Code limits. It is true that
wash sales could occur in spite of the efforts of SFM, but
the Board of Trustees believes that the benefit of using
multiple advisers outweighs the consequences of any wash
sales.
SFM is currently seeking an exemptive order from the
Securities and Exchange Commission (the "SEC") that would
permit SFM, with the approval of the Trust's Board of
Trustees, to retain sub-advisers for the Portfolio without
submitting the 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 for the Portfolio. Until or unless this
exemptive order is granted, if one of the Sub-Advisers is
terminated or departs from ways. First, the Portfolio may
propose that a Sub-Adviser be appointed to manage that
portion of the Portfolio's assets managed by the departing
adviser. In this case, the Portfolio would be required to
submit to the vote of the Portfolio's shareholders the
approval of an investment 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 advisers. This allocation would not require new
investment advisory contracts with the remaining Sub-
Advisers, and consequently no shareholder approval would be
necessary.
8
<PAGE>
THE ADVISER____________________________________________________________________
SEI Financial SEI Financial Management Corporation ("SFM") serves as
Management investment adviser to the Portfolio. SFM is a wholly-owned
Corporation subsidiary of SEI Corporation ("SEI"), a financial services
company located in Wayne, PA. The principal business
address of SFM is 680 East Swedesford Road, Wayne, PA
19087-1658. 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 the selection and evaluation of investment
advisers. SFM currently serves as manager or administrator
to more than 26 investment companies, including more than
220 portfolios, which investment companies have more than
$51 billion in assets as of September 30, 1995.
For these advisory services, SFM is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .33% of the Portfolio's average daily net assets.
THE SUB-ADVISER________________________________________________________________
Standish, Ayer & Standish Ayer & Wood, Inc. ("SAW") serves as Sub-Adviser
Wood, Inc. for the Portfolio. SAW's principal offices are located at
One Financial Center, Boston, MA 02111. SAW was founded in
1933 and is a Subchapter S Corporation organized under the
laws of the Commonwealth of Massachusetts and is completely
owned by its 23 directors, all of whom are actively engaged
in the management of the corporation. SAW has been
providing investment management services to institutions
and managing municipal securities since 1934. SAW manages
assets for pensions, funds, corporate and public, insurance
companies; banks; and individuals. Total assets under
management as of September 30, 1995 were $29 billion.
Raymond J. Kubiak, CFA serves as portfolio manager to
the Portfolio. Mr. Kubiak has 15 years experience in public
finance and is a Vice President and Director of the Sub-
Adviser. He has been with SAW since March, 1988.
SFM pays SAW a fee which is calculated and paid monthly,
based on an annual rate of .18% for assets of up to $125
million and .15% for assets over $125 million.
DISTRIBUTION___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan"
and "Class D Plan") pursuant to Rule 12b-1 under the 1940
Act.
The Class A Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed
.30% of the average daily net assets of the Portfolio, on
an annualized basis, provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in
the Plan or any related agreement
9
<PAGE>
("Qualified Trustees"). Currently, the budget (shown here
as a percentage of daily net assets) for the Portfolio is
set at an annual rate of .08%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the
distribution of the Trust's shares, advertising expenses
and promotional and sales expenses including expenses for
travel, communication and compensation and benefits for
sales personnel. Distribution expenses not attributable to
a specific Portfolio are allocated among each of the
Portfolios of the Trust on the basis of their average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from
the sales charge it receives or from any other source
available to it. Under any such program, the Distributor
will provide promotional incentives, in the form of cash or
other compensation, including merchandise, airline
vouchers, trips and vacation packages, to all dealers
selling shares of the Portfolios. Such promotional
incentives will be offered uniformly to all shares of the
Portfolios, and also will be offered uniformly to all
dealers, predicated upon the amount of shares of the
Portfolios sold by such dealer.
PURCHASE AND
REDEMPTION
OF SHARES_______________________________________________________________________
Financial institutions may acquire shares of the 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 effectiveness on the same day. Shares of the
Portfolio are offered only to residents of states in which
the shares are eligible for purchase.
Shares of the Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days").
10
<PAGE>
Shareholders who desire to purchase shares for cash must
place their orders with the Distributor prior to the close
of trading on the New York Stock Exchange (presently 4:00
p.m. Eastern time) on any Business Day for the order to be
accepted on that Business Day. Cash investments must be
transmitted or delivered in federal funds to the wire agent
on the next Business Day following the date the order is
placed. The Trust reserves the right to reject a purchase
order when the Distributor determines that it is not in the
best interest of the Trust and/or shareholders to accept
such purchase order.
Purchases will be made in full and fractional shares of
the 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
Class D Shares of the Portfolio, the applicable sales load.
The net asset value per share of the 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. 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. Although the methodology and
procedures for determining net asset value per share are
identical for all classes of the Portfolio, the net asset
value of one class may differ from that of another class
because of the different distribution fees charged to each
class and the incremental transfer agent fees charged to
Class D Shares.
The market value of each 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 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 service and its valuation 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 the
Portfolio must place their redemption orders with the
Transfer Agent prior to the close of trading on the New
York Stock Exchange (presently 4:00 p.m. Eastern time) on
any Business Day. The redemption price is the net asset
value per share of the Portfolio next determined after
receipt by the Transfer Agent of the redemption order.
Payment on redemption will be made as promptly as possible
and, in any event, within five Business Days after the
redemption order is received.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Transfer Agent will be
responsible for any loss, liability, cost or expense for
acting
11
<PAGE>
upon wire instructions or upon telephone instructions that
it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received
by telephone and recording telephone instructions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE____________________________________________________________________
From time to time, the Portfolio may advertise yield, tax
equivalent yield and total return. These figures will be
based on historical earnings and are not intended to
indicate future performance.
The yield of the Portfolio refers to the annualized
income generated by a hypothetical investment 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 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.
The Portfolio may periodically compare its performance
to that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. The Portfolio may quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. 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
12
<PAGE>
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.
The performance on Class A shares will normally be
higher than that on the Class D Shares of the Portfolio
because of the imposition of a sales charge and additional
distribution and transfer agent expenses charged to Class D
Shares.
TAXES__________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state and local tax consequences of an
investment in the Portfolio may differ from the federal
income tax consequences described below or local income tax
treatment of the Portfolio or its shareholders and,
accordingly, shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state
and local income taxes. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio 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 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 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. 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.
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 will be taxable to shareholders as long-term
capital gain,
13
<PAGE>
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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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.
Each sale, exchange, or redemption of any Portfolio's
shares is a taxable transaction to the shareholder.
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 Portfolio, the Trust consists
of the following portfolios: Tax Free Portfolio,
Institutional Tax Free Portfolio, California Tax Exempt
Portfolio, Pennsylvania Municipal Portfolio, Kansas Tax
Free Income Portfolio, Bainbridge Tax Exempt Portfolio,
California Intermediate-Term Municipal Portfolio, New York
Intermediate-Term Municipal Portfolio, and Pennsylvania Tax
Free 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 management services to the Trust.
14
<PAGE>
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 statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager,
Inquiries SEI Financial Management Corporation, 680 E. Swedesford
Road, Wayne, Pennsylvania, 19087.
Dividends Substantially all of the net investment income (exclusive
of capital gains) of the Portfolio is declared daily and
paid monthly as a dividend. Shareholders of record on the
last record date of each period will be entitled to receive
the dividend distribution, which is generally paid on the
10th Business Day of the following month. If any net
capital gains are realized, they will be distributed by the
Portfolio annually.
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 Class A shares of the Portfolio are
normally higher than those on Class D shares because of the
additional distribution and transfer agent expenses charged
to Class D shares.
Counsel and Morgan, Lewis & Bockius LLP 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 1940 Act.
15
<PAGE>
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:
Commercial Paper Commercial Paper is a term used to describe unsecured
short-term promissory notes issued by banks,
municipalities, corporations and other entities. Maturities
on these issues vary from one 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.
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 the Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an
agreed-upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio
bears a risk of loss in the event the other party defaults
on its obligations and the Portfolio is delayed or
prevented from exercising its right to dispose of the
collateral or if the Portfolio realizes a loss on the sale
of the collateral. The Portfolio will enter into repurchase
agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the
agreement based on established guidelines. Repurchase
agreements are considered loans under the 1940 Act.
16
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights...................................................... 3
The Trust................................................................. 4
Investment Objective and Policies......................................... 4
General Investment Policies............................................... 5
Investment Limitations.................................................... 6
The Manager and Shareholder Servicing Agent............................... 7
Multi-Manager Diversification............................................. 7
The Adviser............................................................... 9
The Sub-Adviser........................................................... 9
Distribution.............................................................. 9
Purchase and Redemption of Shares......................................... 10
Performance............................................................... 12
Taxes..................................................................... 13
General Information....................................................... 14
Description of Permitted Investments and Risk Factors..................... 16
</TABLE>
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about above-referenced
Portfolio that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end management investment
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in 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 and Class B shares of the Trust's Kansas Tax Free Income Portfolio (the
"Portfolio"), a fixed income portfolio.
- --------------------------------------------------------------------------------
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. 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, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
CLASS A CLASS B
- -------------------------------------------------------------------------------
<S> <C> <C>
Management/Advisory Fees (after fee waiver) /1/ .15% .15%
12b-1 Fees .00% .30%
Other Expenses .06% .06%
- -------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver) /2/ .21% .51%
- -------------------------------------------------------------------------------
</TABLE>
1 The Adviser has waived, on a voluntary basis, a portion of its fee, and the
Management/Advisory fee shown reflect these voluntary waivers. The Adviser
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, the Management/Advisory fee would be .45% for
both Class A and Class B shares of the Portfolio.
2 Absent the Adviser's voluntary fee waiver. Total Operating Expenses would be
.51% and .81%, respectively, for Class A and Class B shares of the Portfolio.
EXAMPLE
- -------------------------------------------------------------------------------
An investor 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>
Class A $ 2 $ 7 $12 $27
Class B $5 $16 $29 $64
- -------------------------------------------------------------------------------
</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 Portfolio's Class A and Class B shares. A person who
purchases shares through a financial institution may be charged separate fees
by that institution. 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 by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD").
2
<PAGE>
FINANCIAL HIGHLIGHTS ___________________________________________________________
The following financial highlights, for a share outstanding throughout each
period, have been audited by Arthur Andersen, L.L.P., 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, L.L.P., in the Trust's 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders, which is available upon request and
without charge by calling 1-800-342-5734.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD**
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- --------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $10.47 $0.57 $(0.57) -- $(0.57) $0.16 $10.63 7.23% $65,834 0.21%
1994 10.91 0.57 (0.57) $(0.02) (0.59) (0.42) 10.47 1.41% 62,346 0.21%
1993 10.50 0.58 (0.58) (0.05) (0.63) 0.46 10.91 10.38% 58,197 0.21%
1992 10.13 0.60 (0.59) (0.01) (0.60) 0.37 10.50 9.78% 45,609 0.22%
1991(1) 10.00 0.42 (0.37) -- (0.37) 0.08 10.13 5.12%+ 29,242 0.31%*
===========================================================================================================================
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ------------------------------------------------------
- --------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- --------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.51% 5.47% 5.17% 17.60%
1994 0.54% 5.36% 5.03% 10.57%
1993 0.51% 5.56% 5.26% 23.04%
1992 0.52% 5.87% 5.57% 12.69%
1991(1) 0.61%* 5.85%* 5.55%* 21.82%
======================================================
</TABLE>
* Annualized.
** The Trust has not previously offered Class B shares of the Portfolio.
+ Return is for period indicated and has not been annualized.
1 The Kansas Tax Free Income Portfolio commenced operations on December 10,
1990.
3
<PAGE>
THE TRUST ______________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This prospectus offers Class A and Class
B shares of the Trust's Kansas Tax Free Income Portfolio (the "Portfolio").
Additional information pertaining to the Trust may be obtained by writing to
SEI Financial Services Company, 680 East Swedesford Road, Wayne, PA 19087 or by
calling 1-800-342-5734.
INVESTMENT
OBJECTIVE AND
POLICIES _______________________________________________________________________
The Portfolio's investment objective is to preserve capital
while producing current income for the investor that is
exempt from both federal and Kansas state income taxes.
There can be no assurance that this investment objective
will be met.
Under normal conditions the Portfolio will invest at
least 80% of its net assets in municipal obligations which
produce interest that is, in the opinion of bond counsel,
exempt from federal income tax (collectively "Municipal
Securities"). This investment policy is a fundamental policy
of the Portfolio. At least 65% of the Portfolio's total
assets will be invested in Municipal Securities which are
exempt from Kansas state income taxes. The remainder of the
Portfolio may be invested in Municipal Securities of other
states. Under normal conditions, the Portfolio will also
invest at least 80% of its net assets in securities the
income from which is not subject to the alternative minimum
tax. Although it has no present intention of doing so, the
Portfolio may invest up to 20% of its assets in taxable
securities for defensive purposes or when sufficient tax
exempt securities considered appropriate by INTRUST, N.A.,
the Portfolio's investment adviser (the "Adviser") are not
available for purchase.
The market value of the Portfolio's fixed income
investments 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. 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 portfolio securities
will not necessarily affect cash income derived from these
securities, but will affect the Portfolio's net asset value.
The Portfolio will maintain a dollar-weighted average
portfolio maturity of seven years to twelve years. However,
when the Adviser determines that the market conditions so
warrant, the Portfolio can maintain an average weighted
maturity of less than seven years.
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 the
Adviser: (i) municipal bonds rated A or better by Standard
and Poor's Corporation ("S&P") or Moody's Investors Service,
Inc. ("Moody's"),
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and a maximum of 10% of the Portfolio's total assets in
municipal bonds rated BBB by S&P or Baa by Moody's; (ii)
municipal notes rated at least SP-2 by S&P or MIG-2 or V-
MIG-2 by Moody's; and (iii) tax-exempt commercial paper
rated at least A-1 by S&P or Prime-1 by Moody's. Municipal
notes rated SP-2 by S&P have satisfactory capacity to pay
principal and interest; notes rated MIG-2 or VMIG-2 by
Moody's are considered to be of high 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) and have speculative
characteristics. Capacity for timely payment on commercial
paper with the S&P designation of A-2 is satisfactory and
commercial paper issuers rated Prime-2 by Moody's have a
strong ability for repayment of senior short-term debt
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.
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 standby
commitments. 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 total assets
in securities which are considered to be illiquid.
The taxable instruments 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; certificates of deposit,
bankers acceptances and time deposits 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
Federal Deposit Insurance Corporation or the Federal Savings
and Loan 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.
Kansas Risk Under normal conditions, the Portfolio will be primarily
Factors invested in municipal obligations which produce income which
is exempt from federal and Kansas state income taxes.
Accordingly, the Portfolio will have considerable
investments in Kansas municipal obligations, and will be
more susceptible to factors which adversely affect issuers
of Kansas obligations than a mutual fund which does not have
as great a concentration in the municipal obligations of one
particular state.
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The Portfolio will be affected by factors that affect the
financial condition of the State of Kansas; for example,
financial difficulties of Kansas, its counties,
municipalities and school districts. See "Additional
Considerations Relating to Kansas 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 the 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 restriction
applies to 75% of the Portfolio's assets.
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 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" 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.
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For these services, the Manager is entitled to a fee
which is calculated daily and paid monthly at an annual rate
of .15% of the average daily net assets of the Portfolio.
For the fiscal year ended August 31, 1995, the Portfolio
paid management fees, after waivers, of .15% of its average
daily net assets.
THE ADVISER_____________________________________________________________________
INTRUST Bank, N.A. in Wichita, formerly First National Bank
in Wichita (the "Adviser"), serves as the Portfolio's
investment adviser under an advisory agreement with the
Trust (the "Advisory Agreement"). Under the Advisory
Agreement, the Adviser invests 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.
The Adviser is a majority-owned subsidiary of INTRUST
Financial Corporation (formerly First Bancorp of Kansas), a
bank holding company. The Adviser is a national banking
association which provides a full range of banking and trust
services to clients. As of September 30, 1995 total assets
under management were approximately $1.17 billion. The
principal place of business address of the Adviser is 105
North Main Street, Box One, Wichita, Kansas 67201.
Michael Colgan, Vice President and Trust Investment
Officer for the Adviser since 1985, has managed the
portfolio of the Kansas Tax Free Income Portfolio since
December 1991.
The Adviser is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .30% of the
average daily net assets of the Portfolio. The Adviser may
waive its fee, in its discretion, for competitive purposes.
In addition, the Adviser has voluntarily agreed to waive a
portion of its fee to limit the total operating expenses to
not more than .21% of the average daily net assets for Class
A and no more than .51% of the average daily net assets for
Class B on an annualized basis. The Adviser reserves the
right, in its sole discretion, to terminate this voluntary
fee waiver at any time. For the fiscal year ended August 31,
1995, the Portfolio paid advisory fees, after waivers, of
.00% of its relative net assets.
The Glass-Steagall Act restricts the securities
activities of national banks such as INTRUST Bank, N.A. but
the Comptroller of the Currency permits national banks to
provide investment advisory and other services to mutual
funds. Should the Comptroller's position be challenged
successfully in court or reversed by legislation, the Trust
might have to make other investment advisory arrangements.
DISTRIBUTION____________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a
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distribution plan (the "Class A Plan" and "Class B Plan")
pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act").
Each Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio on an
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Currently, the budget (shown here as a percentage of daily
net assets) for the Portfolio is set at an annual rate of
.00%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class B 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 Class D
shares. This additional payment may be used to compensate
financial institutions that provide distribution-related
services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class D Plan, the Trust will still pay the full fee and the
Distributor will realize a profit, but the Trust will not be
obligated to pay in excess of the full fee, even if the
Distributor's actual expenses are higher.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales
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charge it receives or from any other source available to it.
Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
PURCHASE AND
REDEMPTION
OF SHARES_______________________________________________________________________
Financial institutions may acquire shares of the 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 effectiveness on the
same day. Shares of the Portfolio are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of the Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Day"). However, money market fund shares
cannot be purchased by Federal Reserve wire on federal
holidays restricting wire transfers.
Shareholders who desire to purchase shares for cash must
place their orders with the Transfer Agent prior to the
close of trading on the New York Stock Exchange (presently
4:00 p.m. Eastern time) on any Business Day for the order to
be accepted on that Business Day. Cash investments must be
transmitted or delivered in federal funds to the wire agent
on the next Business Day following the date the order is
placed. The Trust reserves the right to reject a purchase
order when the Distributor determines that it is not in the
best interest of the Trust and/or shareholders to accept
such purchase order.
Purchases will be made in full and fractional shares of
the 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. The net asset value per
share of the 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.
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.
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The market value of each 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 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 service and its
valuation 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 the Portfolio
must place their redemption orders with the Transfer Agent
prior to the close of trading on the New York Stock Exchange
(presently 4:00 p.m. Eastern time) on any Business Day. The
redemption price is the net asset value per share of the
Portfolio next determined after receipt by the Transfer
Agent of the redemption order. Payment on redemption will be
made as promptly as possible and, in any event, within five
Business Days after the redemption order is received.
Purchase and redemption orders may be placed by telephone.
Neither the Trust nor the Transfer Agent will be responsible
for any loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the Transfer
Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including
requiring a form of personal identification prior to acting
upon instructions received by telephone and recording
telephone instructions.
If market conditions are extraordinarily active, or other
extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE_____________________________________________________________________
From time to time, the Portfolio may advertise yield, total
return and tax equivalent yield. These figures will be based
on historical earnings and are not intended to indicate
future performance.
The yield of the Portfolio refers to the annualized
income generated by an investment 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 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.
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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.
The Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. The Portfolio may quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. 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.
The performance on Class A shares will normally be higher
than that on Class B shares because of the additional
distribution expenses charged to Class B shares.
TAXES___________________________________________________________________________
The following summary of federal and state 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. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio 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
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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 distribute substantially all of its
Distributions 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. 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.
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 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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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.
Each sale, exchange or redemption of any Portfolio's
shares is a taxable transaction to the shareholder.
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State Taxes The following is a general, abbreviated summary of certain
of the provisions of the Kansas tax code presently in effect
as they directly govern the taxation of shareholders subject
to Kansas personal income tax. These provisions are subject
to change by legislative or administrative action, and any
such change may be retroactive.
Under Kansas law, interest on all obligations issued by
the State of Kansas or its political subdivisions after
December 31, 1987 is excluded from Kansas adjusted gross
income in determining Kansas tax liability, and interest
from obligations issued prior to January 1, 1988, is exempt
from Kansas income tax only if there is statutory authority
exempting the interest from the particular obligations in
question. For Kansas income tax purposes, interest on the
above-described obligations is exempt for both the Portfolio
and its shareholders who are Kansas residents.
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 Portfolio, the Trust consists
of the following portfolios: Intermediate-Term Municipal
Portfolio, Tax Free Portfolio, Institutional Tax Free
Portfolio, California Tax Exempt Portfolio, Pennsylvania
Municipal Portfolio, Bainbridge Tax Exempt Portfolio,
California Intermediate-Term Municipal Portfolio, New York
Intermediate-Term Municipal Portfolio, and Pennsylvania Tax
Free 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 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.
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Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager, SEI
Inquiries Financial Management Corporation, 680 E. Swedesford Road,
Wayne, Pennsylvania, 19087.
Dividends Substantially all of the net investment income (exclusive of
capital gains) of the Portfolio is periodically declared and
paid as a dividend. 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, they will be distributed by the
Portfolio annually.
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 Class A shares are normally higher than
on Class B shares of the Portfolio because of the additional
distribution expenses charged to Class B shares.
Counsel and Morgan, Lewis & Bockius, LLP serves as counsel to the Trust.
Independent Arthur Andersen, L.L.P. 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 1940 Act.
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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:
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 one 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.
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 the Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
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
15
<PAGE>
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 of the obligations purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. 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 the
Adviser deems it appropriate to do so.
16
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses............................................ 2
Financial Highlights................................................. 3
The Trust............................................................ 4
Investment Objective and Policies.................................... 4
General Investment Policies.......................................... 5
Investment Limitations............................................... 6
The Manager and Shareholder Servicing Agent.......................... 6
The Adviser.......................................................... 7
Distribution......................................................... 7
Purchase and Redemption of Shares.................................... 9
Performance.......................................................... 10
Taxes................................................................ 11
General Information.................................................. 13
Description of Permitted Investments and Risk Factors................ 15
</TABLE>
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
NEW YORK INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced
Portfolio that an investor needs to know before investing. Please read this
Prospectus carefully before investing, and keep it on file for future
reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end investment management
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in 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 New York Intermediate-Term Municipal Portfolio
(the "Portfolio"), a fixed income portfolio.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE 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, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Management/Advisory Fees (after fee waivers) /1/ .12%
12b-1 Fees /2/ .08%
Other Expenses .35%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) /3/ .55%
- --------------------------------------------------------------------------------
</TABLE>
1 The Manager and Adviser have waived, on a voluntary basis, a portion of their
fees, and the Management/Advisory fees shown reflect these voluntary waivers.
The Manager and Adviser reserve the right to terminate their waivers at any
time in their sole discretion. Absent such waiver, the Management/Advisory
fees for the Portfolio would be .57%.
2 The 12b-1 fees shown effect the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fees payable by Class A shares
of the Portfolio are .30%.
3 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class A shares of the Portfolio would be 1.00%.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Class A shares of the Portfolio 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>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C>
$6 $18 $31 $69
- --------------------------------------------------------------------------------
</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.
The purpose of the table and this example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in the Portfolio's Class A shares. A person who purchases
shares through a financial institution may be charged separate fees by that
institution. 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 by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD").
2
<PAGE>
THE TRUST ______________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This prospectus offers Class A shares of
the Trust's New York Intermediate-Term Municipal Portfolio (the "Portfolio").
Additional information pertaining to the Trust may be obtained by writing to
SEI Financial Services Company, 680 East Swedesford Road, Wayne, PA 19087 or by
calling 1-800-342-5734.
INVESTMENT
OBJECTIVE AND
POLICIES _______________________________________________________________________
The investment objective of the Portfolio is a high level of
current income, exempt from both federal and New York state
personal income taxes, consistent with the preservation of
principal. There can be no assurance that the Portfolio will
be able to achieve its investment objective.
It is a fundamental policy of the Portfolio to invest,
under normal conditions, at least 80% of its net assets in
municipal securities that produce interest that, in the
opinion of bond counsel to the issuers, is exempt from federal
income tax (collectively, "Municipal Securities") and is not a
preference item for purposes of the alternative minimum tax.
Under normal conditions, at least 65% of the Portfolio's
assets will be invested in municipal obligations the interest
on which is exempt from New York state personal income tax.
These include municipal obligations issued by the State of New
York and its political subdivisions or any agency or
instrumentality of either of the foregoing, and municipal
obligations issued by territories or possessions of the United
States. The 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 the
alternative minimum tax (although the Portfolio has no present
intention of investing in such securities) and (2) taxable
investments. In addition, for temporary defensive purposes
when its investment adviser determines that market conditions
warrant, the Portfolio may invest up to 100% of its assets in
municipal obligations of states other than New York or taxable
money market instruments (including repurchase agreements,
U.S. Treasury securities and instruments of certain U.S.
commercial banks or savings and loan institutions).
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 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 and
certificates of participation which are rated at least SP-2 by
S&P or MIG-2 or VMIG-2 by Moody's; and (iii) tax-exempt
commercial paper rated at least A-2 by S&P or Prime-2 by
Moody's.
3
<PAGE>
The Portfolio currently contemplates that it will not
invest more than 25% of its total assets (at market value at
the time of purchase) in municipal securities, the interest
on which is paid from revenues of projects with similar
characteristics. 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.
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.
Normally, the Portfolio will maintain a dollar-weighted
average portfolio maturity of five to ten years; however,
under certain circumstances this average weighted maturity
may fall below five years. There are no restrictions on the
maturity of any single instrument in which this Portfolio
may invest. The Portfolio's annual portfolio turnover rate
is expected to be less than 100% under normal circumstances.
See also "Risk Factors."
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. 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. The Portfolio will
not invest more than 15% of its net assets in illiquid
securities.
The taxable money market instruments 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-2 by S&P have satisfactory capacity to pay
principal and interest; notes rated MIG-2 or VMIG-2 by
Moody's are considered to be of high 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). Capacity for timely payment
on commercial paper with the S&P designation of A-2 is
satisfactory and commercial paper issuers rated Prime-2 by
Moody's have a strong ability for repayment of senior short-
term debt obligations.
4
<PAGE>
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 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.
The Portfolio may invest in securities rated in the fourth
highest category by S&P or Moody's; such securities, while
still investment grade, are considered to have speculative
characteristics.
New York Risk Certain risks are inherent in the Portfolio's investments in
Factors New York municipal securities. These risks result from (1)
amendments to the New York Constitution and other statutes
that limit the taxing and spending authority of New York
government entities, (2) the general financial condition of
the State of New York, and (3) a variety of New York laws
and regulations that may affect, directly or indirectly, New
York municipal securities. The ability of issuers of
municipal securities to pay interest on, or repay principal
of, municipal securities may be impaired as a result.
The Portfolio's concentration in investments in New York
municipal securities involves greater risks than if their
investments were more diversified. Because the Portfolio
invests primarily in New York municipal securities,
investors should consider that the Portfolio's yield and
share price are sensitive to political and economic
developments within the State of New York, and to the
financial condition of the State, its public authorities,
and political subdivisions, particularly the City of New
York. Both the State and the City are experiencing
significant financial difficulties related to poor economic
performance and recurring deficits. The State's credit
standing has been, and could be further, reduced, and its
ability to provide assistance to its public authorities and
political subdivisions has been, and could be, further
impaired. These may have the effect of impairing the ability
of the issuers of New York municipal securities to pay
interest on, or repay the principal of, such securities. A
more complete description of these risks is contained in the
Statement of Additional Information.
5
<PAGE>
Non- In addition to the risks, described above, arising from
Diversification concentration, investment in the Portfolio, a non-
diversified 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
the Portfolio's holdings. Any economic, political, or
regulatory developments affecting the value of the
securities the 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 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 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 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 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.
2. 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 in
excess of 5% of the Portfolio's total assets, 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" and the
"Transfer Agent"), a wholly-owned subsidiary of SEI
Corporation ("SEI"), provides the Trust with overall
6
<PAGE>
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 .39% of the average daily net assets of the Portfolio. In
addition, the Manager and Adviser have voluntarily agreed to
waive a portion of their fees proportionately in order to
limit total operating expenses of the Class A shares of the
Portfolio to not more than .55% of the Portfolio's average
daily net assets attributable to Class A shares, on an
annualized basis. Each of the Manager and the Adviser
reserves the right, in its sole discretion, to terminate its
waiver at any time. As of August 31, 1995, the Portfolio had
not commenced operations.
THE ADVISER ____________________________________________________________________
Weiss, Peck & Greer, L.L.C. (the "Adviser" or "WPG") serves
as the Portfolio's investment adviser under an advisory
agreement with the Trust (the "Advisory Agreement"). Under
the Advisory Agreement, the Adviser invests 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.
The Adviser is a limited liability company founded as a
limited partnership 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. At September 30, 1995,
total assets under management were approximately $12.5
billion. The principal business address of the Adviser is
One New York Plaza, New York, NY 10004.
S. Blake Miller, CFA, and Nancy J. Neiman act as the
portfolio managers for the Portfolio. Mr. Miller, an
Associate Principal of WPG, has been associated with WPG's
Tax Exempt Fixed Income group since 1988 and its predecessor
since 1986. Ms. Neiman, an Associate Principal of WPG, has
been associated with WPG's Tax Exempt Fixed Income group
since 1988 and its predecessor since 1985.
For its services to the New York Intermediate-Term
Municipal Portfolio, the Adviser is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of
.18% of the combined average daily net assets of the non-
money market portfolios of the Trust advised by the Adviser
up to $150 million, and .16% of such assets in excess of
$150 million. Such fees are allocated daily among these
portfolios on the basis of their relative net assets. The
Adviser has voluntarily agreed to waive a portion of its
fee, as described under "The Manager and Shareholder
Servicing Agent." As of August 31, 1995, the Portfolio had
not commenced operations.
7
<PAGE>
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan")
pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act").
The Class A Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of the Portfolio, on an
annualized basis, provided those expenses are permissible as
to both type and amount under a budget adopted by the Board
of Trustees, including those who are not interested persons
and have no financial interest in the Plan or any related
agreement ("Qualified Trustees"). Currently, the budget
(shown here as a percentage of daily net assets) for each
Portfolio is set at an annual rate of .08%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the distribution
of the Trust's shares, advertising expenses and promotional
and sales expenses including expenses for travel,
communication and compensation and benefits for sales
personnel. Distribution expenses not attributable to a
specific Portfolio are allocated among each of the
Portfolios of the Trust on the basis of their average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
8
<PAGE>
PURCHASE AND
REDEMPTION
OF SHARES ______________________________________________________________________
Financial institutions may acquire shares of the 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 effectiveness on the
same day. Shares of the Portfolio are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of the 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 the
close of trading on the New York Stock Exchange (presently
4:00 p.m. Eastern time) on any Business Day for the order to
be accepted on that Business Day. Cash investments must be
transmitted or delivered in federal funds to the wire agent
on the next Business Day following the date the order is
placed. The Trust reserves the right to reject a purchase
order when the Transfer Agent determines that it is not in
the best interest of the Trust and/or shareholders to accept
such purchase order.
Purchases will be made in full and fractional shares of
the 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. The net asset value per
share of the 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.
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.
The market value of each 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 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 service and its
valuation are reviewed by the officers of the Trust under
the general supervision of the Trustees. Portfolio
securities
9
<PAGE>
for which market quotations are available are valued at the
most recent quoted bid price on each Business Day.
Shareholders who desire to redeem shares of the Portfolio
must place their redemption orders with the Transfer Agent
prior to the close of trading on the New York Stock Exchange
(presently 4:00 p.m. Eastern time) on any Business Day. The
redemption price is the net asset value per share of the
Portfolio next determined after receipt by the Transfer
Agent of the redemption order. Payment on redemption will be
made as promptly as possible and, in any event, within five
Business Days after the redemption order is received.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Transfer Agent will be
responsible for any loss, liability, cost or expense for
acting upon wire instructions or upon telephone instructions
that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received by
telephone and recording telephone instructions.
If market conditions are extraordinarily active, or other
extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE ____________________________________________________________________
From time to time, the Portfolio may advertise yield, total
return and tax equivalent yield. These figures will be based
on historical earnings and are not intended to indicate
future performance.
The yield of the Portfolio refers to the annualized
income generated by a hypothetical investment in the
Portfolio over a specified 30-day period. The yield is
calculated by assuming that the same amount of income
generated by the investment during that period is generated
in each 30-day period over one year and is shown as a
percentage of the investment.
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.
The total return of the Portfolio may also be quoted as a
dollar amount or on an aggregate basis, an actual basis.
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
the Portfolio's yield, assuming certain tax brackets for a
shareholder.
The Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
10
<PAGE>
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. The Portfolio may quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. 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.
TAXES __________________________________________________________________________
The following summary of federal and state 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. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio 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 distribute substantially all of its
Distributions 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. Exempt-interest dividends are excludable from
a
11
<PAGE>
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.
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 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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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.
Each sale, exchange, or redemption of any Portfolio's
shares is a taxable transaction to the shareholder.
State and Local The following is a general, abbreviated summary of certain
Taxes of the provisions of the New York tax code presently in
effect as they directly govern the taxation of shareholders
subject to New York personal income tax. These provisions
are subject to change by legislative or administrative
action, and any such change may be retro active.
Exempt-interest dividends paid by the Portfolio that are
derived from interest on Municipal Securities issued by New
York State and the political subdivisions or any agency or
instrumentality thereof or any territory or possession of
the United States will be exempt from New York State and New
York City personal income taxes, but not corporate franchise
taxes. Other dividends and distributions from other
Municipal Securities, U.S. Government obligations, taxable
income and capital gains will not be exempt from New York
State and New York City taxes.
12
<PAGE>
Shareholders should consult their tax advisers concerning
the state and local tax consequences of investment in the
Portfolio, which may differ from the federal income tax
consequences described above.
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 Portfolio, the Trust consists
of the following portfolios: Tax Free Portfolio,
Institutional Tax Free Portfolio, California Tax Exempt
Portfolio, Pennsylvania Municipal Portfolio, Kansas Tax Free
Income Portfolio, Massachusetts Intermediate-Term Municipal
Portfolio, Bainbridge Tax Exempt Portfolio, California
Intermediate-Term Municipal Portfolio Intermediate-Term
Municipal Portfolio, and Pennsylvania Tax Free 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 material and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class 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 statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
13
<PAGE>
Shareholder Shareholder inquiries should be directed to the Manager, SEI
Inquiries Financial Management Corporation, 680 E. Swedesford Road,
Wayne, Pennsylvania, 19087.
Dividends Substantially all of the net investment income (exclusive of
capital gains) of the Portfolio is periodically declared and
paid as a dividend. 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, they will be distributed by the
Portfolio 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.
Counsel and Morgan, Lewis & Bockius LLP 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 (the "1940 Act").
DESCRIPTION OF
PERMITTED
INVESTMENTS
AND RISK FACTORS _______________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
Commercial Paper Commercial Paper is a term used to describe unsecured short-
term promissory notes issued by banks, municipalities,
corporations and other entities. Maturities on these issues
vary from one 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.
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
14
<PAGE>
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 the Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
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 of the obligations purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
15
<PAGE>
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. The Portfolio will maintain with the
custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date, and no interest accrues to
the Portfolio before settlement. These securities are
subject to market fluctuation due to changes in market
interest rates, and it is possible that the market value at
the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has
changed. Although the Portfolio generally purchases
securities on a when-issued or forward commitment basis with
the intention of actually acquiring securities for its
portfolio, the Portfolio may dispose of a when-issued
security or forward commitment prior to settlement if the
Adviser deems it appropriate to do so.
16
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses............ 2
The Trust............................ 3
Investment Objective and Policies.... 3
General Investment Policies.......... 4
Risk Factors......................... 5
Investment Limitations............... 6
The Manager and Shareholder Servicing
Agent................................ 6
</TABLE>
<TABLE>
<S> <C>
The Adviser.......................... 7
Distribution......................... 8
Purchase and Redemption of Shares.... 9
Performance.......................... 10
Taxes................................ 11
General Information.................. 13
Description of Permitted Investments
and Risk Factors..................... 14
</TABLE>
<PAGE>
PROSPECTUS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
Please read this Prospectus carefully before investing, and keep it on file for
future reference. It concisely sets forth information that can help you decide
if the Portfolio's investment goals match your own.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end investment management
company, certain classes of which offer shareholders a convenient means of
investing their funds in one or more professionally managed diversified and
non-diversified portfolios of securities. The Tax Free Portfolio offers two
classes of shares, Class A and Class D shares. Class D shares differ from Class
A shares primarily in the allocation of certain distribution expenses and
transfer agent fees. Class D shares are available through SEI Financial
Services Company (the Trust's distributor), and through participating broker-
dealers, financial institutions and other organizations. This Prospectus offers
Class D shares of the Trust's Tax Free Portfolio (the "Portfolio"), a money
market portfolio.
AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
........................................
TABLE OF
CONTENTS
<TABLE>
<S> <C>
Fund Highlights.............. 2
Portfolio Expenses........... 4
Financial Highlights......... 5
Your Account and Doing
Business with Us............ 6
Investment Objective and
Policies.................... 9
General Investment Policies.. 10
Investment Limitations....... 11
The Manager and Shareholder
Servicing Agent............. 12
The Adviser.................. 12
Distribution................. 13
Performance.................. 14
Taxes........................ 15
Additional Information About
Doing Business with Us...... 17
General Information.......... 19
Description of Permitted
Investments and Risk
Factors..................... 21
........................................
</TABLE>
HOW TO READ THIS PROSPECTUS ____________________________________________________
This Prospectus gives you information that you should know about the Portfolio
before investing. Brief descriptions are also provided throughout the
Prospectus to better explain certain key points. To find these helpful guides,
look for this symbol. [SYMBOL APPEARS HERE]
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the Class D shares of
the 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 Tax Free Portfolio seeks to preserve principal value and
OBJECTIVE AND maintain a high degree of liquidity while providing current
POLICIES income exempt from federal income taxes. See "Investment Ob-
jective and Policies" and "Description of Permitted Investments
and Risk Factors."
UNDERSTANDING The Portfolio invests in U.S. dollar denominated municipal
RISK securities, the interest on which is exempt from federal
income taxes. The investment policies of the Portfolio entail
certain risks and considerations of which an investor should
be aware. There can be no assurance that the Portfolio will
achieve its investment objective. See "Investment Objective
and Policies" and "Description of Permitted Investments and
Risk Factors."
MANAGEMENT Weiss, Peck & Greer, L.L.C. (the "Adviser") serves as the
PROFILE investment adviser of the Portfolio. SEI Financial Management
Corporation serves as the manager and shareholder servicing
agent of the Trust (the "Manager"). DST Systems, Inc. ("DST")
serves as transfer agent (the "Transfer Agent") and dividend
disbursing agent for the Class D shares of the Trust. SEI
Financial Services Company acts as distributor ("Distributor")
of the Trust's shares. See "The Manager and Shareholder
Servicing Agent," "The Adviser" and "Distribution."
2
<PAGE>
................................................................................
[SYMBOL
APPEARS INVESTMENT
HERE] PHILOSOPHY
Believing that no single investment adviser can deliver outstanding per-
formance in every investment category, only those advisers who have distin-
guished themselves within their areas of specialization are selected to ad-
vise our mutual funds.
................................................................................
YOUR ACCOUNT You may open an account with just $1,000 and make additional
AND DOING investments with as little as $100. Redemptions of the
BUSINESS WITH Portfolio's shares are made at net asset value per share. See
US "Your Account and Doing Business With Us."
DIVIDENDS Substantially all of the net investment income (exclusive of
capital gains) of the Portfolio is distributed in the form of
dividends that will be declared daily and paid monthly on the
first Business Day of each month. Any realized net capital
gain is distributed at least annually. Distributions are paid
in additional shares unless the shareholder elects to take the
payment in cash. See "General Information--Dividends."
INFORMATION/ For more information about Class D Shares, call 1-800-437-6016.
SERVICE
CONTACTS
3
<PAGE>
PORTFOLIO EXPENSES _____________________________________________________________
The purpose of the following table is to help you understand the various cost
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in Class D shares.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)
- ------------------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price) None
Redemption Fees/1/ None
- ------------------------------------------------------------------------------------------------------
<CAPTION>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- ------------------------------------------------------------------------------------------------------
<S> <C>
Management/Advisory Fees (after fee waiver)/2/ .34%
12b-1 Fees (after fee waiver)/3/ .27%
Other Expenses .19%
- ------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver)/4/ .80%
- ------------------------------------------------------------------------------------------------------
</TABLE>
1 A charge, currently $10.00, is imposed on wires of redemption proceeds.
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 fee for the Class D
shares of the Portfolio would be .40%.
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
Class D shares of the Portfolio are .55%.
4 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class D shares of the Portfolio would be .86%.
EXAMPLE
- --------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment in the Class D
shares 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>
$8 $26 $44 $99
- ---------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSE
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
A person that purchases shares through an account with a financial institution
may be charged separate fees by the financial institution. The information set
forth in the foregoing table and example relates only to the Class D shares (a
class of shares of the Portfolio). The Portfolio also offers Class A shares,
which are subject to the same expenses as the Portfolio's Class D shares except
that Class A shares bear different distribution 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 permitted by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. ("NASD").
4
<PAGE>
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 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders which is available upon request and
without charge by calling 1-800-342-5734.
FOR A CLASS D SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- ------------------
TAX FREE PORTFOLIO
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS D
FOR THE YEAR ENDED AUGUST 31,:
1995(1) $1.00 $0.026 $(0.026) -- $(0.026) -- $1.00 2.68%+ $272 0.80%*
===========================================================================================================================
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ------------------------------------------------------
- ------------------
TAX FREE PORTFOLIO
- ------------------
<S> <C> <C> <C> <C>
CLASS D
FOR THE YEAR ENDED AUGUST 31,:
1995(1) 0.86%* 3.13%* 3.07%* --
======================================================
</TABLE>
* Annualized
+ Return is for the period indicated and has not been annualized.
/1/ The Tax Free Portfolio--Class D commenced operations on November 1, 1994.
5
<PAGE>
................................................................................
[SYMBOL
APPEARS WHAT IS AN
HERE] INTERMEDIARY?
Any entity, such as a bank, broker-dealer, other financial institution, as-
sociation or organization which has entered into an arrangement with the Dis-
tributor to sell Class D shares to its customers.
................................................................................
YOUR ACCOUNT AND DOING BUSINESS
WITH US
Class D shares of the Portfolio are sold on a continuous basis and may be
purchased directly from the Trust's Distributor, SEI Financial Services
Company. Shares may also be purchased through financial institutions, broker-
dealers, or other organizations which have established a dealer agreement or
other arrangement with SEI Financial Services Company ("Intermediaries"). For
more information about the following topics, see "Additional Information About
Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY, Class D shares of the Portfolio may be purchased through
SELL AND Intermediaries which provide various levels of shareholder
EXCHANGE services to their customers. Contact your Intermediary for
SHARES THROUGH information about the services available to you and for
INTERMEDIARIES specific instructions on how to buy, sell and exchange shares.
To allow for processing and transmittal of orders to the
Transfer Agent on the same day, Intermediaries may impose
earlier cut-off times for receipt of purchase orders. Certain
Intermediaries may charge customer account fees. Information
concerning shareholder services and any charges will be
provided to the customer by the Intermediary. Certain of these
Intermediaries may be required to register as broker-dealers
under state law.
The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should call
the Intermediary to request this change.
HOW TO BUY Application forms may be obtained by calling 1-800-437-6016.
SHARES FROM Class D shares of the Portfolio are offered only to residents
THE DISTRIBUTOR of states in which the shares are eligible for purchase.
Opening an You may buy Class D shares by mailing a completed application
Account and a check (or other negotiable bank instrument or money
By Check order) payable to "Class D Shares (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 You may buy shares by Fed Wire by calling 1-800-437-6016.
Automatic You may systematically buy Class D shares through deductions
Investment from your checking or savings accounts, provided these
Plan ("AIP") accounts are maintained through banks which are part of the
Automated Clearing House ("ACH") system. You may purchase
shares on a fixed schedule (semi-monthly or monthly) with
amounts as low as $25, or as high as $100,000. Upon notice,
the amount you commit to the AIP may be changed or canceled
at any time. The AIP is subject to account minimum initial
purchase amounts and minimum balance maintenance
requirements.
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 purchase the shares of another Portfolio. In other
words, you are executing a sell order and then a buy order. This sale of your
shares is a taxable event which could result in a taxable gain or loss.
................................................................................
EXCHANGING SHARES
When Can You Once payment for your shares has been received and accepted
Exchange (i.e., an account has been established), you may exchange
Shares? some or all of your shares for Class D shares of the Trust or
of SEI Liquid Asset Trust, SEI Daily Income Trust, SEI
International Trust and SEI Institutional Managed Trust ("SEI
Funds"). Exchanges are made at net asset value plus any
applicable sales charge.
When Do Sales SEI Funds' portfolios that are not money market portfolios
Charges Apply currently impose a sales charge on Class D shares. If you
to an exchange into one of these "non-money market" portfolios, you
Exchange? will have to pay a sales charge on any portion of your
exchanged Class D shares for which you have not previously
paid a sales charge.
If you previously paid a sales charge on your Class D
shares, no additional sales charge will be assessed when you
exchange those Class D shares for other Class D shares.
If you buy Class D shares of a "non-money market" fund and
you receive a sales charge waiver, you will be deemed to have
paid the sales charge for purposes of this exchange privilege.
In calculating any sales charge payable on your exchange, the
Trust will assume that the first shares you exchange are those
on which you have already paid a sales charge. Sales charge
waivers may also be available under certain circumstances
described in the SEI Funds' prospectuses.
The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice. The
Trust also reserves the right to deny an exchange request made
within 60 days of the purchase of a "non-money market"
portfolio.
Requesting an To request an exchange, you must provide proper instructions
Exchange of in writing to the Transfer Agent. Telephone exchanges will
Shares also be accepted if you previously elected this option on
your account application.
In the case of shares held "of record" by an Intermediary
but beneficially owned by you, you should contact the
Intermediary who will contact the Transfer Agent and effect
the exchange on your behalf.
7
<PAGE>
................................................................................
[SYMBOL WHAT IS A
APPEARS SIGNATURE
HERE] GUARANTEE?
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee.
................................................................................
HOW TO SELL To sell your shares, a written request for redemption in good
SHARES THROUGH order must be received by the Transfer Agent. Valid written
THE redemption requests will be effective on receipt. All
DISTRIBUTOR shareholders of record must sign the redemption request. The
Transfer Agent may require that the signatures on written
By Mail requests be guaranteed.
For information about the proper form of redemption
requests, call 1-800-437-6016. You may also have the proceeds
mailed to an address of record or mailed (or sent by ACH) to
a commercial bank account previously designated on the
Account Application or specified by written instruction to
the Transfer Agent. There is no charge for having redemption
requests mailed to a designated bank account.
By Telephone You may sell your shares by telephone if you previously
elected that option on the Account Application. You may have
the proceeds mailed to the address of record, wired or sent by
ACH to a commercial bank account previously designated on the
Account Application. Under most circumstances, payments will
be transmitted on the next Business Day following receipt of a
valid telephone request for redemption. Wire redemption
requests may be made by calling 1-800-437-6016. A wire
redemption charge (presently $10.00) will be deducted from the
amount of the redemption.
Systematic You may establish a systematic withdrawal plan for an account
Withdrawal with a $10,000 minimum balance. Under the plan, redemptions
Plan ("SWP") can be automatically processed from accounts (monthly,
quarterly, semi-annually or annually) by check or by ACH with
a minimum redemption amount of $50.
Check-Writing Check-Writing Service is offered free of charge to Class D
shareholders in the Portfolio. You may redeem shares by
writing checks on your account for $500 or more. Once you
have signed and returned a signature card, you will receive a
supply of checks. A check may be made payable to any person,
and your account will continue to earn dividends until the
check clears.
Because of the difficulty of determining in advance the
exact value of your account, you may not use a check to close
your account. The checks are free, but your account will be
charged a fee for stopping payment of a check upon your
request or if the check cannot be honored because of
insufficient funds or other valid reasons.
8
<PAGE>
................................................................................
[SYMBOL WHAT ARE
APPEARS INVESTMENT
HERE] OBJECTIVES AND
POLICIES?
Each Portfolio's investment objective is a statement of what it seeks to
achieve. It is important to make sure that the investment objective matches
your own financial needs and circumstances. The investment policies section
spells out the types of securities in which each Portfolio invests.
................................................................................
INVESTMENT OBJECTIVE AND POLICIES ______________________________________________
The investment objective of the Tax Free Portfolio is to
preserve principal value and maintain a high degree of
liquidity while providing current income exempt from federal
income taxes. There can be no assurance that the Portfolio
will achieve its investment objective.
The Portfolio invests in U.S. dollar denominated municipal
securities of issuers located in all fifty states, the
District of Columbia, Puerto Rico and other U.S. territories
and possessions (collectively, "Municipal Securities"). At
least 80% of the Portfolio's net assets will be invested in
securities the interest on which is exempt from federal income
taxes, based on opinions from bond counsel for the issuers.
This investment policy is a fundamental policy of the
Portfolio. Under normal conditions, the Portfolio will 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.
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 is determined by Weiss, Peck &
Greer, L.L.C., the Portfolio's investment adviser (the
"Adviser"): (i) municipal bonds rated AA or better by Standard
and Poor's Corporation ("S&P") or Aa 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.
The Adviser will not invest more than 25% of Portfolio
assets in municipal securities (a) whose issuers are located
in the same state or (b) 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 ____________________________________________________
In purchasing obligations, the Portfolio complies with the
requirements of Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), as that Rule may be amended from
time to time. These requirements currently provide that the
Portfolio must limit its investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, the Portfolio may only invest in securities (other
than U.S. Government Securities) rated in one of the two
highest categories for short-term securities by at least two
nationally recognized statistical rating organizations
("NRSROs") (or by one NRSRO if only one NRSRO has rated the
security), or, if unrated, determined by the Adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities in
which the Portfolio may invest.
Securities rated in the highest rating category (e.g., A-
1 by S&P) by at least two NRSROs (or, if unrated, determined
by the Adviser to be of comparable quality) are "first tier"
securities. Securities rated in the second highest rating
category (e.g., A-2 by S&P) by at least one NRSRO (or, if
unrated, determined by the Adviser to be of comparable
quality) are considered to be "second tier" securities.
Although the Portfolio is governed by Rule 2a-7, its
investment policies are more restrictive than those imposed
by that Rule.
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. The Portfolio will not invest
more than 10% of its net assets in illiquid securities.
The Adviser has discretion to invest up to 20% of the
Portfolio's assets in taxable money market instruments
(including repurchase agreements) and securities the
interest on which is a preference item for purposes of the
alternative minimum tax. However, the Portfolio generally
intends to be fully invested in federally tax-exempt
securities.
The taxable money market instruments 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
10
<PAGE>
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 and notes rated MIG-1 or VMIG-1
by Moody's are considered to be of the best 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. 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.
For a description of the Portfolio's permitted
investments and ratings, see the "Description of Permitted
Investments and Risk Factors" and the Statement of
Additional Information.
INVESTMENT LIMITATIONS _________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolio. Fundamental policies
cannot be changed with respect to the Trust or the Portfolio
without the consent of the holders of a majority of the
Trust's or the Portfolio's outstanding shares. It is a
fundamental policy of the Portfolio to use its best efforts
to maintain a constant net asset value of $1.00 per share.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than
5% of the total assets of the Portfolio (based on current
value at the time of investment) would be invested in the
securities of such issuer, provided, however, that the
Portfolio may invest up to 25% of its total assets
without regard to this restriction as permitted by Rule
2a-7.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on 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 issued or guaranteed by the
U.S. Government or its agencies and instrumentalities.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of the Portfolio. 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.
11
<PAGE>
................................................................................
[SYMBOL
APPEARS INVESTMENT
HERE] ADVISER
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 MANAGER
AND SHAREHOLDER
SERVICING AGENT ________________________________________________________________
SEI Financial Management Corporation (the "Manager"), 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 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 .36% of the average daily net assets of the Portfolio. The
Manager has voluntarily waived a portion of its fees in order
to limit the total operating expenses of the Class D shares
of the Portfolio to not more than .80% of the Portfolio's
average daily net assets attributable to Class D 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, 1995, the Portfolio
paid management fees, after waivers, of .30% of its average
daily net assets.
The Trust and DST Systems, Inc., 210 W. 10th Street,
Kansas City, Missouri, 64105 ("DST"), have entered into a
separate transfer agent agreement, with respect to the Class
D shares of the Portfolio. Under this agreement, DST acts as
the transfer agent and dividend disbursing agent (the
"Transfer Agent") for the Class D shares of the Trust.
THE ADVISER ____________________________________________________________________
Weiss, Peck & Greer, L.L.C. (the "Adviser" or "WPG") acts as
the Portfolio's investment adviser under an advisory agreement
with the Trust (the "Advisory Agreement"). Under the Advisory
Agreement, the Adviser invests 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.
The Adviser is a limited liability company founded as a
limited partnership 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,
1995, total assets under management were approximately $12.5
billion. The principal business address of the Adviser is One
New York Plaza, New York, NY 10004.
12
<PAGE>
For its services, the Adviser is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of
.05% of the combined average daily net assets of the money
market portfolios of the Trust that are advised by the
Adviser up to $500 million, .04% of such assets from $500
million to $1 billion, and .03% of such assets in excess of
$1 billion. Such fees are allocated daily among these
portfolios based on their relative net assets. For the
fiscal year ended August 31, 1995 the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each class of the
Trust has adopted a distribution plan (the "Class A Plan"
and "Class D Plan,"), pursuant to Rule 12b-1 under the 1940
Act.
The Class D Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio on an
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Currently, the budget (shown here as a percentage of daily
net assets) for the Portfolio is set at an annual rate of
.07%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class D Plan, in addition to providing for the
reimbursement payments described above, provides for
payments to the Distributor at an annual rate of .25% of the
Portfolio's average daily net assets attributable to Class D
shares. This additional payment may be used to compensate
financial institutions that provide distribution-related
services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the
13
<PAGE>
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 Class D Plan, the Trust will still pay the
full fee and the Distributor will realize a profit, but the
Trust will not be obligated to pay in excess of the full
fee, even if the Distributor's actual expenses are higher.
Currently, the Distributor is taking this additional
compensation payment under the Class D Plan at a rate of
.20% of the Portfolio's average daily net assets, on an
annualized basis, attributable to Class D shares.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolio. Such promotional incentives will be offered
uniformly to all shares of the Portfolio and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolio sold by such dealer.
PERFORMANCE ____________________________________________________________________
From time to time the Portfolio may advertise its "current
yields," "effective yield," and "tax equivalent yield."
These figures are based on historical earnings and are not
intended to indicate future performance.
The "current yield" of the Portfolio refers to the income
generated by an investment in the Portfolio over a seven-day
period which 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 is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield"
because of the compounding effect of this assumed
reinvestment.
A "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: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds;
14
<PAGE>
(iii) unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for
administrative and management costs; or (iv) other investment
alternatives. The Portfolio may also quote financial and
business publications and periodicals as they relate to fund
management, investment philosophy and investment techniques.
The performance on Class D shares will normally be lower
than that on Class A shares of the Portfolio because of the
additional distribution and transfer agent expenses charged
to Class D shares.
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action. No
attempt has been made to present a detailed explanation of
the federal income tax treatment of the Portfolio or its
shareholders, and state and local tax consequences of an
investment in the Portfolio may differ from the federal
income tax consequences described below. Accordingly,
shareholders are urged to consult their tax advisers
regarding specific questions as to federal, state and local
income taxes. Additional information concerning taxes is set
forth in the Statement of Additional Information.
................................................................................
[SYMBOL
APPEARS TAXES
HERE]
You must pay taxes on your Portfolio's earnings, whether you take your
payments in cash or additional shares.
................................................................................
Tax Status of The Portfolio is treated as a separate entity for federal
each Portfolio: 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 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.
................................................................................
[SYMBOL
APPEARS DISTRIBUTIONS
HERE]
The Portfolio distributes income dividends and capital gains. Income
dividends represent the earnings from the Portfolio's investments; capital
gains distributions occur when investments in the Portfolio are sold for more
than the original purchase price.
................................................................................
Tax Status of The Portfolio distributes substantially all of its net
Distributions: 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. 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
15
<PAGE>
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.
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
of net capital gains of the Portfolio will be taxable to
shareholders as long-term capital gains 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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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.
Each sale, exchange, or redemption of the Portfolio's
shares is a taxable transaction to the shareholder.
16
<PAGE>
................................................................................
[SYMBOL BUY, EXCHANGE AND
APPEARS SELL REQUESTS ARE IN
HERE] "GOOD ORDER" WHEN:
. The account number and portfolio name are shown
. The amount of the transaction is specified in dollars or shares
. Signatures of all owners appear exactly as they are registered on the
account
. Any required signature guarantees (if applicable) are included
. Other supporting legal documents (as necessary) are present
................................................................................
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").
However, shares of the Portfolio cannot be purchased by
Federal Reserve wire on federal holidays restricting wire
transfers. All purchase, exchange and redemption requests
received in "good order" will be effective as of the Business
Day received by the Transfer Agent as long as the Transfer
Agent receives the order and, in the case of a purchase
request, payment before 2:00 p.m., Eastern time. Otherwise
the purchase will be effective when payment is received.
Broker-dealers may have separate arrangements with the Trust
regarding the sale of Class D shares.
If an exchange request is for shares of a portfolio whose
net asset value is calculated as of a time earlier than 2:00
p.m., Eastern time, the exchange request will not be effective
until the next Business Day. Anyone who wishes to make an
exchange must have received a current prospectus of the
portfolio into which the exchange is being made before the
exchange will be effected.
Minimum The minimum initial investment in the Portfolio's Class D
Investments shares is $1,000; however, the minimum investment may be
waived at the Distributor's discretion. All subsequent
purchases must be at least $100 ($25 for payroll deductions
authorized pursuant to pre-approved payroll deduction plans).
The Trust reserves the right to reject a purchase order when
the Distributor determines that it is not in the best interest
of the Trust or its shareholders to accept such order.
Maintaining a Due to the relatively high cost of handling small investments,
Minimum Account the Portfolio reserves the right to redeem, at net asset
Balance value, the shares of any shareholder if, because of
redemptions of shares by or on behalf of the shareholder, the
account of such shareholder in the 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
17
<PAGE>
increase the value of the account to at least $1,000. See
"Purchase and Redemption of Shares" in the Statement of
Additional Information for examples of when the right of
redemption may be suspended.
At various times, the Portfolio may receive a request to
redeem shares for which it has not yet received good
payment. In such circumstances, redemption proceeds will be
forwarded upon collection of payment for the shares;
collection of payment may take 10 or more days. The
Portfolio intends to pay cash for all shares redeemed, but
under abnormal conditions that make payment in cash unwise,
payment may be made wholly or partly in portfolio securities
with a market value equal to the redemption price. In such
cases, an investor may incur brokerage costs in converting
such securities to cash.
Net Asset Value An order to buy shares will be executed at a per share price
equal to the net asset value next determined after the
receipt of the purchase order by the Transfer Agent (the
"offering price"). The purchase price of shares is expected
to remain constant at $1.00. No certificates representing
shares will be issued. An order to sell shares will be
executed at the net asset value per share next determined
after receipt and effectiveness of a request for redemption
in good order. Net asset value per share is determined daily
as of 2:00 p.m., Eastern time on any Business Day. Payment
to shareholders for shares redeemed will be made within 7
days after receipt by the Transfer Agent of the redemption
order.
How the Net The net asset value per share of the Portfolio is determined
Asset Value is by dividing the total market value of its investments and
Determined other assets, less any liabilities, by the total number of
outstanding shares of the Portfolio. The Portfolio's
investments will be valued by the amortized cost method
described in the Statement of Additional Information.
Although the methodology and procedures for determining net
asset value per share are identical for each class 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 and incremental transfer agent fees
charged to Class D shares.
Signature The Transfer Agent may require that the signatures on the
Guarantees written request be guaranteed. You should be able to obtain
a signature guarantee from a bank, broker, dealer, certain
credit unions, securities exchange or association, clearing
agency or savings association. Notaries public cannot
guarantee signatures. The signature guarantee requirement
will be waived if all of the following conditions apply: (1)
the redemption is for not more than $5,000 worth of shares,
(2) the redemption check is payable to the shareholder(s) of
record, and (3) the redemption check is mailed to the
shareholder(s) at his or her address of record. The Trust
and the Transfer Agent reserve the right to amend these
requirements without notice.
Telephone/Wire Redemption orders may be placed by telephone. Neither the
Instructions Trust nor the Transfer Agent will be responsible for any
loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the
18
<PAGE>
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
Class D, which provide for variation in distribution and
transfer agent costs, voting rights, and dividends. This
Prospectus offers Class D shares of the Trust's Tax Free
Portfolio. In addition to the Portfolio, the Trust consists
of the following portfolios: Institutional Tax Free
Portfolio, California Tax Exempt Portfolio, Intermediate-
Term Municipal Portfolio, Pennsylvania 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 material and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
19
<PAGE>
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 entities the shareholder of record to one
vote. The shareholders of each portfolio or class of the
Trust will vote separately on matters relating solely to
that portfolio or class, such as any distribution plan. As a
Massachusetts business trust, the Trust is not required to
hold annual meetings of shareholders but shareholders'
approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by the
remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least
10% of the outstanding shares of the Trust. In the event
that such a meeting is requested the Trust will provide
appropriate assistance and information to the shareholders
requesting the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Transfer
Inquiries Agent, DST Systems, Inc., P.O. Box 419240, Kansas City,
Missouri, 64141-6240.
Dividends The net investment income (exclusive of capital gains) of
the Portfolio is determined and declared on each Business
Day 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 first Business Day of each month.
Currently, capital gains, if any, are distributed at the end
of the calendar year.
The dividends on Class D shares of the Portfolio will
normally be lower than those on Class A shares because of
the additional distribution and transfer agent expenses
charged to Class D shares.
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.
Counsel and Morgan, Lewis & Bockius LLP 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 1940 Act.
20
<PAGE>
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:
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 one to 270 days.
Municipal Municipal Securities consist of (i) debt obligation 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.
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 the Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date 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 in the sale of the collateral. The Portfolio
will enter into repurchase agreements only with financial
institutions deemed to present minimal risk of bankruptcy
during the term of the agreement based on established
guidelines. Repurchase agreements are considered loans under
the 1940 Act.
21
<PAGE>
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 of the obligations purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding seven
days may be considered illiquid if there is no secondary
market for such security.
When-issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. 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 the Adviser deems it
appropriate to do so.
22
<PAGE>
SEI TAX EXEMPT TRUST
Intermediate-Term Municipal Portfolio
Class D Shares
Supplement dated December 31, 1995 to Prospectus dated December 31, 1995
This Supplement to the Prospectus provides new and additional information
beyond that contained in the Prospectus and should be read in conjunction with
the Prospectus.
Shareholder Transaction Expenses (as a percentage of offering price)
- --------------------------------------------------------------------------------
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 waivers)/2/ .45%
12b-1 Fees/3/ .33%
Other Expenses .22%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)/4/ 1.00%
- --------------------------------------------------------------------------------
1 A charge, currently $10.00, is imposed on wires of redemption proceeds of the
Portfolio's Class D shares.
2 SFM has waived, on a voluntary basis, a portion of its fees, and the
Management/Advisory fees shown reflect these voluntary waivers. SFM reserves
the right to terminate this waiver at any time in its sole discretion. Absent
such waiver, the Management/Advisory fees for the Portfolio would be .57%.
3 The 12b-1 fees shown affect the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fees payable by Class A shares
of the Portfolio are .60%.
4 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class A shares of the Portfolio would be 1.12%.
On December 4, 1995, the Board of Trustees of the SEI Tax Exempt Trust
(the "Trust") approved a series of changes relating to the investment advisory
arrangements for the Intermediate-Term Municipal Portfolio (the "Portfolio"). At
the meeting, the Board voted to terminate the investment advisory agreement
between the Trust, on behalf of the Portfolio, and Weiss, Peck & Greer Advisers,
Inc., such termination to take effect on January 1, 1996. The Board approved a
new investment advisory agreement between the Trust, on behalf of the Portfolio,
and Standish Ayer & Wood, Inc. ("Standish"), effective as of January 1, 1996. At
the same meeting, the Board approved an alternative advisory arrangement for the
Portfolio, which arrangement will take effect upon shareholder approval and
supplant the advisory agreement with Standish. Under this proposed alternate
arrangement, SEI Financial Management ("SFM") will act as the investment adviser
to the Portfolio and Standish would serve as investment sub-adviser to the
Portfolio.
At a shareholder meeting expected to be held on April 16, 1996,
shareholders of the Portfolio accordingly will be asked to approve: (a) an
advisory agreement between the Trust, on behalf of the Portfolio, and SFM; (b) a
sub-advisory agreement between SFM and Standish, pursuant to which Standish will
act as the Portfolio's sub-adviser and will be compensated by SFM from its
advisory fee, such agreement to take effect only upon the approval of SFM as
investment adviser; and (c) an advisory agreement between the Trust and Standish
to take effect on January 1, 1996 and to continue after the date of the
shareholders meeting only if the advisory and sub-advisory agreements referenced
in (a) and (b) are not approved by shareholders.
Prior to shareholder approval, Standish will serve as interim investment
adviser, and will be compensated at the rate of .18% of the Portfolio's average
daily net assets up to $125 million and .15% of the Portfolio's average daily
net assets over $125 million. The rate of compensation paid to Weiss, Peck &
Greer Advisers, Inc., the Portfolio's former investment adviser, was .18% of the
Portfolio's average daily net assets up to $150 million and .16% of the
Portfolio's average daily net assets over $150 million.
----------------------------------------------------------------
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
PROSPECTUS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- --------------------------------------------------------------------------------
Please read this Prospectus carefully before investing, and keep it on file for
future reference. It concisely sets forth information that can help you decide
if the Portfolio's investment goals match your own.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end investment management compa-
ny, certain classes of which offer shareholders a convenient means of investing
their funds in one or more professionally managed diversified and non-diversi-
fied portfolios of securities. The Intermediate-Term Municipal Portfolio, an
investment portfolio of the Trust, offers two classes of shares, Class A shares
and Class D shares. Class D shares differ from Class A shares primarily in the
imposition of sales charges and the allocation of certain distribution expenses
and transfer agent fees. Class D shares are available through SEI Financial
Services Company (the Trust's distributor) and through participating broker-
dealers, financial institutions and other organizations. This Prospectus offers
the Class D shares of the Trust's Intermediate-Term Municipal 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. THE TRUST'S SHARES ARE NOT FEDERALLY IN-
SURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RE-
SERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES
INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT IN-
VESTED.
- --------------------------------------------------------------------------------
<PAGE>
............................................
TABLE OF
CONTENTS
<TABLE>
<S> <C>
Fund Highlights................ 2
Portfolio Expenses............. 4
Financial Highlights........... 5
Your Account and Doing Business
with Us....................... 6
Investment Objective and
Policies...................... 10
General Investment Policies.... 11
Investment Limitations......... 12
The Manager and Shareholder
Servicing Agent............... 13
Multi-Manager Diversification.. 13
The Adviser.................... 15
The Sub-Adviser................ 15
Distribution................... 16
Performance.................... 17
Taxes.......................... 18
Additional Information About
Doing Business with Us........ 20
General Information............ 24
Description of Permitted
Investments and Risk Factors.. 26
</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.
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the Class D shares of
the 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 Intermediate-Term Municipal Portfolio seeks the highest
OBJECTIVE AND level of income exempt from federal income taxes that can be
POLICIES obtained, consistent with preservation of capital, from a
diversified portfolio of investment grade municipal
securities. See "Investment Objective and Policies," "General
Investment Policies" and "Description of Permitted Investments
and Risk Factors."
UNDERSTANDING Shares of the Portfolio, like shares of any mutual fund, will
RISK 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 at least 80% of its assets in municipal securities the
interest on which is exempt from federal income taxes, and
that is not a preference item for purposes of the alternative
minimum tax. The investment policies of the Portfolio entail
certain risks and considerations of which an investor should
be aware. The value of fixed income funds and the fixed income
securities in which they invest tend to vary inversely with
interest rates and may be affected by other market and
economic factors as well. In addition, there can be no
assurance that the Portfolio will achieve its investment
objective. See "Investment Objective and Policies" and
"Description of Permitted Investments and Risk Factors."
MANAGEMENT SEI Financial Management Corporation ("SFM") serves as the
PROFILE investment adviser of the Portfolio. Standish, Ayer & Wood,
Inc. serves as investment sub-adviser to the Portfolio. The
investment adviser and investment sub-adviser to the Portfolio
are referred to collectively as the "advisers." SFM serves as
the manager and shareholder servicing agent of the Trust. DST
Systems, Inc. ("DST") serves as transfer agent (the "Transfer
Agent") and dividend disbursing agent for the Class D shares
of the Trust. SEI Financial Services Company acts as
distributor ("Distributor") of the Trust's shares. See "The
Manager and Shareholder Servicing Agent," "The Adviser" and
"Distribution."
2
<PAGE>
................................................................................
[SYMBOL INVESTMENT
APPEARS PHILOSOPHY
HERE]
Believing that no single investment adviser can deliver outstanding
performance in every investment category, only those advisers who have
distinguished themselves within their areas of specialization are selected to
advise our mutual funds.
................................................................................
YOUR ACCOUNT You may open an account with just $1,000 and make additional
AND DOING investments with as little as $100. Class D shares of the
BUSINESS WITH Portfolio are offered at net asset value per share plus a
US maximum sales charge at the time of purchase of 3.50%.
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 Us."
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 Class D shares, call 1-800-437-
SERVICE 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 Class D shares.
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)
- --------------------------------------------------------------------------------
<TABLE>
<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 waivers) /2/ .45%
12b-1 Fees (after fee waiver) /3/ .33%
Other Expenses .22%
- -----------------------------------------------------------------
Total Operating Expenses (after fee waivers) /4/ 1.00%
- -----------------------------------------------------------------
</TABLE>
1 A charge, currently $10.00, is imposed on wires of redemption proceeds of the
Portfolio's Class D shares.
2 SFM has waived, on a voluntary basis, a portion of its fees, and the
Management/Advisory fees shown reflect these voluntary waivers. SFM reserves
the right to terminate its waiver at any time in its sole discretion. Absent
such waivers, the Management/Advisory Fees for the Portfolio would be .75%.
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
Class D shares of the Portfolio are .60%.
4 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class D shares of the Portfolio would be 1.30%.
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: $45 $66 $88 $153
- ------------------------------------------------------------------------------
</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.
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 Class D 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 "Your Account and Doing Business with
Us."
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>
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 Anderson LLP, in the Trust's 1995
Annual Report to Shareholders. Additional performance information is set forth
in the 1995 Annual Report to Shareholders, which is available upon request and
without charge by calling 1-800-437-6016.
FOR A CLASS D SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
- -----------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS D
FOR THE YEARS ENDED AUGUST 31,:
1995** $10.36 $0.48 $(0.48) -- $(0.48) $0.23 $10.59 7.11% $ 548 0.95%
1994(1),(**) 10.90 0.45 (0.42) $(0.06) (0.48) (0.51) 10.36 (0.93%)* 1,105 0.93%*
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS D
FOR THE YEARS ENDED AUGUST 31,:
1995** 1.12% 4.57% 4.40% 36.05%
1994(1),(**) 1.07%* 4.34%* 4.20%* 58.39%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total Return does not reflect the sales charge.
1 The Intermediate-Term Municipal Portfolio--Class D commenced operations on
September 28, 1993.
5
<PAGE>
................................................................................
[SYMBOL WHAT IS AN
APPEARS INTERMEDIARY?
HERE]
Any entity, such as a bank, broker-dealer, other financial institution,
association or organization which has entered into an arrangement with the
Distributor to sell Class D shares to its customers.
................................................................................
YOUR ACCOUNT AND DOING BUSINESS WITH US ________________________________________
Class D shares of the Portfolio are sold on a continuous basis and may be
purchased directly from the Trust's Distributor, SEI Financial Services
Company. Shares may also be purchased through financial institutions, broker-
dealers, or other organizations which have established a dealer agreement or
other arrangement with SEI Financial Services Company ("Intermediaries"). For
more information about the following topics, see "Additional Information About
Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY, Class D shares of the Portfolio may be purchased through
SELL AND Intermediaries which provide various levels of shareholder
EXCHANGE services to their customers. Contact your Intermediary for
SHARES THROUGH information about the services available to you and for
INTERMEDIARIES specific instructions on how to buy, sell and exchange shares.
To allow for processing and transmittal of orders to the
Transfer Agent on the same day, Intermediaries may impose
earlier cut-off times for receipt of purchase orders. Certain
Intermediaries may charge customer account fees. Information
concerning shareholder services and any charges will be
provided to the customer by the Intermediary. Certain of these
Intermediaries may be required to register as broker-dealers
under state law.
The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should call
the Intermediary to request this change.
HOW TO BUY Application forms can be obtained by calling 1-800-437-6016.
SHARES FROM Class D shares of the Portfolio are offered only to residents
THE of states in which the shares are eligible for purchase.
DISTRIBUTOR
Opening an You may buy Class D shares by mailing a completed application
Account and a check (or other negotiable bank instrument or money
By Check order) payable to "Class D Shares (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 You may buy shares by Fed Wire by calling 1-800-
437-6016.
Automatic You may systematically buy Class D shares through deductions
Investment from your checking or savings accounts, provided these
Plan ("AIP") accounts are maintained through banks which are part of the
Automated Clearing House ("ACH") system. You may purchase
shares on a fixed schedule (semi-monthly or monthly) with
amounts as low as $25, or as high as $100,000. Upon notice,
the amount you commit to the AIP may be changed or canceled
at any time. The AIP is subject to account minimum initial
purchase amounts and minimum maintained balance requirements.
6
<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 Class D shares of the
SHARES 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 Class D 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.
7
<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 purchase the shares of another Portfolio. In other
words, you are executing a sell order and then a buy order. This sale of your
shares is a taxable event which could result in a taxable gain or loss.
................................................................................
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 Class D shares of the
Exchange Trust or of SEI Liquid Asset Trust, SEI Daily Income Trust,
Shares? SEI International Trust, and SEI Institutional Managed Trust
("SEI Funds"). Exchanges are made at net asset value plus any
applicable sales charge.
When Do Sales SEI Funds' portfolios that are not money market
Charges Apply portfolios currently impose a sales charge on Class D
to an shares. If you exchange into one of these "non-money
Exchange? market" portfolios, you will have to pay a sales charge on any
portion of your exchanged Class D shares for which you have
not previously paid a sales charge.
If you previously paid a sales charge on your Class D
shares, no additional sales chargewill be assessed when you
exchange those Class D shares for other Class D shares.
If you buy Class D shares of a "non-money market" fund and
you receive a sales charge waiver, you will be deemed to have
paid the sales charge for purposes of this exchange
privilege. In calculating any sales charge payable on your
exchange, the Trust will assume that the first shares you
exchange are those on which you have already paid a sales
charge. Sales charge waivers may also be available under
certain circumstances described in the SEI Funds'
prospectuses.
The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice. The
Trust also reserves the right to deny an exchange request
made within 60 days of the purchase of a non-money market
portfolio.
Requesting an To request an exchange, you must provide proper instructions
Exchange of in writing to the Transfer Agent. Telephone exchanges will
Shares also be accepted if you previously elected this option on
your account application.
In the case of shares held "of record" by an Intermediary
but beneficially owned by you, you should contact the
Intermediary who will contact the Transfer Agent and effect
the exchange on your behalf.
8
<PAGE>
................................................................................
[SYMBOL WHAT IS A
APPEARS SIGNATURE
HERE] GUARANTEE?
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee.
................................................................................
HOW TO SELL To sell your shares, a written request for redemption in good
SHARES THROUGH order must be received by the Transfer Agent. Valid written
THE redemption requests will be effective on receipt. All
DISTRIBUTOR shareholders of record must sign the redemption request.
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 the
Transfer Agent. There is no charge for having redemption
requests mailed to a designated bank account.
By Telephone You may sell your shares by telephone if you previously
elected that option on the Account Application. You may have
the proceeds mailed to the address of record, 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 1-800-437-6016, a wire
redemption charge (presently $10.00) will be deducted from the
amount of the redemption.
Systematic You may establish a systematic withdrawal plan for an account
Withdrawal with a $10,000 minimum balance. Under the plan, redemptions
Plan ("SWP") can be automatically processed from accounts (monthly,
quarterly, semi-annually or annually) by check or by ACH with
a minimum redemption amount of $50.
9
<PAGE>
................................................................................
[SYMBOL WHAT ARE
APPEARS INVESTMENT
HERE] OBJECTIVES AND
POLICIES?
The Portfolio's investment objective is a statement of what it seeks to
achieve. It is important to make sure that the investment objective matches
your own financial needs and circumstances. The investment policies section
spells out the types of securities in which the Portfolio invests.
................................................................................
INVESTMENT
OBJECTIVE AND
POLICIES _______________________________________________________________________
The investment objective of the Intermediate-Term Municipal
Portfolio (the "Portfolio") is to seek the highest level of
income exempt from federal income taxes that can be obtained,
consistent with the preservation of capital, from a
diversified portfolio of investment grade municipal
securities. However, the Portfolio's income might not be as
high as it would be if the Portfolio had minimum investment
rating requirements lower than those discussed below. There
can be no assurance that the Portfolio will achieve its
investment objective.
The Portfolio invests at least 80% of its assets in
municipal securities the interest on which is exempt from
federal income taxes (collectively "Municipal Securities"),
based on opinions from bond counsel for the issuers. This
investment policy is a fundamental policy of the Portfolio.
The issuers of these securities can be located in all fifty
states, the District of Columbia, Puerto Rico, and other U.S.
territories and possessions. Under normal conditions, the
Portfolio will 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. Although the
advisers have no present intention of doing so, up to 20% of
all assets in the Portfolio can be invested in taxable debt
securities for defensive purposes or when sufficient tax
exempt securities considered appropriate by the advisers are
not available for purchase.
The market value of the Portfolio's fixed income
investments 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. 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 portfolio securities
will not necessarily affect cash income derived from these
securities, but will affect the Portfolio's net asset value.
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 the
advisers: (i) municipal bonds rated A or better by Standard
and Poor's Corporation ("S&P") or by Moody's Investors
Service, Inc. ("Moody's"), and the Portfolio may invest up to
10% of its total assets in municipal bonds rated BBB by S&P
or Baa by 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
10
<PAGE>
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 advisers,
it does not substantially impact the market value of the
Portfolio.
Not more than 25% of Portfolio assets will be invested in
(a) municipal securities whose issuers are located in the
same state, (b) municipal securities the interest on which is
derived from revenues of similar type projects, or (c)
municipal securities subject to the alternative minimum tax.
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.
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.
The Portfolio will maintain a dollar-weighted average
portfolio maturity of three to ten years. However, when the
advisers determine that market conditions so warrant, the
Portfolio can maintain an average weighted maturity of less
than three years.
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. 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 or purchase securities subject to the
alternative minimum tax. The Portfolio will not invest more
than 15% 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 or 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 such obligations.
11
<PAGE>
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.
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 and any security guaranteed
thereby) if, as a result, more than 5% of the total
assets of the Portfolio (based on fair market value at
the time of investment) would be invested in the
securities of such issuer; provided, however, that the
Portfolio may invest up to 25% of its total assets
without regard to this restriction.
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 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.
12
<PAGE>
................................................................................
[SYMBOL INVESTMENT
APPEARS ADVISER
HERE]
A Portfolio's investment adviser manages the investment activities and is
responsible for the performance of the Portfolio. The adviser conducts
investment research, executes investment strategies based on an assessment of
economic and market conditions, and determines which securities to buy, hold
or sell.
................................................................................
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT ______________________________________________________________
SEI Financial Management Corporation ("SFM"), 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 shareholder servicing agent.
For these services, SFM is entitled to a fee, which is
calculated daily and paid monthly, at an annual rate of .24%
of the average daily net assets of the Portfolio. SFM has
voluntarily agreed to waive a portion of its fees
proportionately in order to limit the total operating
expenses of the Class D shares of the Portfolio to not more
than .95% of the Portfolio's average daily net assets
attributable to the Class D shares on an annualized basis.
SFM reserves the right, in its sole discretion, to terminate
this voluntary fee waiver at any time. For the fiscal year
ended August 31, 1995, the Portfolio paid management fees,
after waivers, of .27% of its average daily net assets.
The Trust and DST Systems, Inc., 210 W. 10th Street,
Kansas City, Missouri 64105 ("DST"), have entered into a
separate transfer agent agreement with respect to the Class D
shares of the Portfolio. Under this agreement, DST acts as
the transfer agent and dividend disbursing agent for the
Class D shares of the Trust.
MULTI-MANAGER
DIVERSIFICATION _______________________________________________________________
SFM serves as investment adviser (the "Adviser") to the
Portfolio. Within the Portfolio one or more investment sub-
advisers (each, a "Sub-Adviser," and together, the "Sub-
Advisers") who specialize in the distinct investment style or
styles that the Portfolio is designed to capture may be
utilized to select that Portfolio's investments.
The Adviser has 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. In
addition, SFM is responsible for (i) managing the allocation
of assets among the Portfolio's Sub-Advisers, if applicable,
(ii) directing and evaluating the investment services provided
by a Sub-Adviser, including their adherence to the Portfolio's
respective investment objective and policies and the
Portfolio's investment performance, and (iii) managing the
cash portion of the Portfolio's assets. In accordance with the
Portfolio's investment objective and policies, and under the
supervision of the Adviser and the Trust's Board of Trustees,
a Sub-Adviser is responsible for the day-to-day investment
management
13
<PAGE>
of all or a discrete portion of the assets of a Portfolio.
The Adviser and the Sub-Adviser are authorized to make
investment decisions for the Portfolio and place orders on
behalf of the Portfolios to effect the investment decisions
made.
SFM monitors the compliance of the Sub-Adviser of the
Portfolio with regulatory and tax regulations, such as
portfolio concentration and diversification. For the most
part compliance with these requirements by a Sub-Adviser
with respect to its portion of the Portfolio will assure
compliance by that Portfolio as a whole. In addition, SFM
monitors positions taken by each of the Portfolio's Sub-
Advisers and will notify the Sub-Advisers of 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 the Portfolio's assets
creates the need for coordination among such 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 of the
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 the Portfolio and
shortly thereafter another Sub-Adviser could sell the same
security from the portion of the Portfolio allocated to it.
If in these circumstances the securities could be
transferred from one Sub-Adviser's portion of the Portfolio
to another, the Portfolio could avoid transaction costs and
could avoid creating possible wash sales and short-short
gains under the Internal Revenue Code of 1986, as amended
(the "Code"). Such transfers are not practicable but the
Sub-Advisers do not believe that there will be material
adverse effects on the Portfolio as a result. First, it does
not appear likely that there will be substantial overlap in
the securities acquired for the Portfolio by the 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 has established procedures with
respect to the short-short test which are designed to
prevent realization of short-short gains in excess of Code
limits. It is true that wash sales could occur in spite of
the efforts of SFM, but the Board of Trustees believes that
the benefit of using multiple advisers outweighs the
consequences of any wash sales.
SFM is currently seeking an exemptive order from the
Securities and Exchange Commission (the "SEC") that would
permit SFM, with the approval of the Trust's Board of
Trustees, to retain sub-advisers for the Portfolio without
submitting the 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 for the Portfolio. Until or unless this
exemptive order is granted, if one of the Sub-Advisers is
terminated or departs from a Portfolio, the Portfolio will
handle such
14
<PAGE>
termination or departure in one of two ways. First, the
Portfolio may propose that a Sub-Adviser be appointed to
manage that portion of the Portfolio's assets managed by the
departing adviser. In this case, the Portfolio would be
required to submit to the vote of the Portfolio's
shareholders the approval of an investment 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 advisers. This allocation would not
require new investment advisory contracts with the remaining
Sub-Advisers, and consequently no shareholder approval would
be necessary.
THE ADVISER ____________________________________________________________________
SEI Financial SEI Financial Management Corporation ("SFM") serves as
Management investment adviser to the Portfolio. SFM is a wholly-owned
Corporation subsidiary of SEI Corporation ("SEI"), a financial services
company located in Wayne, PA. The principal business address
of SFM is 680 East Swedesford Road, Wayne, PA 19087-1658.
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
the selection and evaluation of investment advisers. SFM
currently serves as manager or administrator to more than 26
investment companies, including more than 220 portfolios,
which investment companies have more than $51 billion in
assets as of September 30, 1995.
For these advisory services, SFM is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .33% of the Portfolio's average daily net assets.
THE SUB-ADVISER ________________________________________________________________
Standish, Ayer Standish Ayer & Wood, Inc. ("SAW") serves as Sub-Adviser for
& Wood, Inc. the Portfolio. SAW's principal offices are located at One
Financial Center, Boston, MA 02111. SAW was founded in 1933
and is a Subchapter S Corporation organized under the laws
of the Commonwealth of Massachusetts and is completely owned
by its 23 directors, all of whom are actively engaged in the
management of the corporation. SAW has been providing
investment management services to institutions and managing
municipal securities since 1934. SAW manages assets for
pensions, funds, corporate and public, insurance companies;
banks; and individuals. Total assets under management as of
September 30, 1995 were $29 billion.
Raymond J. Kubiak, CFA serves as portfolio manager to the
Portfolio. Mr. Kubiak has 15 years experience in public
finance and is a Vice President and Director of the Sub-
Adviser. He has been with SAW since March, 1988.
SFM pays SAW a fee which is calculated and paid monthly,
based on an annual note of .18% for assets of up to $125
million and .15% for assets over $125 million.
15
<PAGE>
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A" and
"Class D Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act").
The Class D Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio on an
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Currently, the budget (shown here as a percentage of daily
net assets) for the Portfolio is set at an annual rate of
.08%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class D Plan, in addition to providing for the
reimbursement payments described above, provides for
payments to the Distributor at an annual rate of .30% of the
Portfolio's average daily net assets attributable to Class D
shares. This additional payment may be used to compensate
financial institutions that provide distribution-related
services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor, the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class D Plan, the Trust will still pay the full fee and the
Distributor will realize a profit, but the Trust will not be
obligated to pay in excess of the full fee, even if the
Distributor's actual expenses are higher. Currently, the
Distributor is taking this additional compensation payment
under the Class D Plan at a rate of .25% of the Portfolio's
average daily net assets, on an annualized basis,
attributable to Class D shares.
16
<PAGE>
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolio. Such promotional incentives will be offered
uniformly to all shares of the Portfolio, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolio sold by such dealer.
PERFORMANCE ____________________________________________________________________
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.
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
Class D 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 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.
The Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
to 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 quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. The
Portfolio may use long-term performance of these capital
markets to demonstrate general
17
<PAGE>
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.
The performance on the Class D 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 Class D shares.
................................................................................
[SYMBOL
APPEARS TAXES
HERE]
You must pay taxes on your Portfolio's earnings, whether you take your
payments in cash or additional shares.
................................................................................
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial, or administrative action.
No attempt has been made to present a detailed explanation of
the federal income tax treatment of the Portfolio or its
shareholders and, state and local tax consequences of an
investment in the Portfolio may differ from the federal
income tax consequences described below. Accordingly,
shareholders are urged to consult their tax advisers
regarding specific questions as to federal, state and local
income taxes. Additional information concerning taxes is set
forth in the Statement of Additional Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio: 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 distribute substantially all of its
Distributions: 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
18
<PAGE>
................................................................................
[SYMBOL
APPEARS DISTRIBUTIONS
HERE]
The Portfolio distributes income dividends and capital gains. Income dividends
represent the earnings from the Portfolio's investments; capital gains
distributions occur when investments in the Portfolio are sold for more than
the original purchase price.
................................................................................
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
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 intends to make sufficient
distributions prior to the end of each calendar year to avoid
liability for federal excise tax applicable to regulated
investment companies.
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.
Each sale, exchange, or redemption of the Portfolio's
shares is a taxable transaction to the shareholder.
19
<PAGE>
................................................................................
[SYMBOL BUY, EXCHANGE AND
APPEARS SELL REQUESTS ARE IN
HERE] "GOOD ORDER" WHEN:
. The account number and portfolio name are shown
. The amount of the transaction is specified in dollars or shares
. Signatures of all owners appear exactly as they are registered on the account
. Any required signature guarantees (if applicable) are included
. Other supporting legal documents (as necessary) are present
................................................................................
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").
However, shares cannot be purchased by Federal Reserve wire on
federal holidays restricting wire transfers. All purchase,
exchange, and redemption requests received in "good order" will
be effective as of the Business Day received by the Transfer
Agent as long as the Transfer Agent receives the 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 the Trust regarding the sale of Class D
shares.
If an exchange request is for shares of a portfolio whose
net asset value is calculated as of a time earlier than 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 Class D
Investments shares is $1,000; however, the minimum investment may be
waived at the Distributor's discretion. All subsequent
purchases must be at least $100 ($25 for payroll deductions
authorized pursuant to pre-approved payroll deduction plans).
The Trust reserves the right to reject a purchase order when
the Distributor determines that it is not in the best
interest of the Trust or its shareholders to accept such
order.
Maintaining a Due to the relatively high cost of handling small
Minimum investments, the Portfolio reserves the right to redeem, at
Account net asset value, the shares of any shareholder if, because of
Balance redemptions of shares by or on behalf of the shareholder, the
account of such shareholder in the Portfolio has a value of
less than $1,000, the minimum initial purchase amount.
Accordingly, an investor purchasing shares of the Portfolio
in only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any of
these shares. Before the Portfolio exercises its right to
redeem such shares and to send the proceeds to the
shareholder, the shareholder will be given notice that the
value of the shares in his or her account is less than the
minimum amount and will be allowed 60 days to make an
additional investment in the Portfolio in an amount that will
20
<PAGE>
increase the value of the account to at least $1,000. See
"Purchase and Redemption of Shares" in the Statement of
Additional Information for examples of when the right of
redemption may be suspended.
At various times, the Portfolio may receive a request to
redeem shares for which it has not yet received good
payment. In such circumstances, redemption proceeds will be
forwarded upon collection of payment for the shares;
collection of payment may take 10 or more days. The
Portfolio intends to pay cash for all shares redeemed, but
under abnormal conditions that make payment in cash unwise,
payment may be made wholly or partly in portfolio securities
with a market value equal to the redemption price. In such
cases, an investor may incur brokerage costs in converting
such securities to cash.
Net Asset Value An order to buy shares will be executed at a per share price
equal to the net asset value next determined after the
receipt of the purchase order by the Transfer Agent 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
Transfer Agent of the redemption order.
How the Net The net asset value per share of the Portfolio is determined
Asset Value is by dividing the total market value of its investments and
Determined other assets, less any liabilities, by the total number of
outstanding shares of the Portfolio. The Portfolio may use a
pricing service to obtain the most recently quoted bid price
of each equity or 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 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 Class D shares.
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 Class D 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,
21
<PAGE>
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 Transfer
Agent 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 Transfer Agent, 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 Transfer Agent 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 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
22
<PAGE>
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 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 Class D
shares) 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 call 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 Class D shares. Currently, the only percentage-
based discount equals 50%. Please call 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 Transfer Agent 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 Transfer Agent 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 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 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
23
<PAGE>
record, and (3) the redemption check is mailed to the
shareholder(s) at his or her address of record. The Trust
and the Transfer Agent reserve the right to amend these
requirements without notice.
Telephone/Wire Redemption orders may be placed by telephone. Neither the
Instructions Trust nor the Transfer Agent will be responsible for any
loss, liability, cost, or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received by
telephone and recording telephone instructions. If market
conditions are extraordinarily active, or other
extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone, 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
Class D, which provide for variation in distribution and
transfer agent costs, voting rights, dividends, and the
imposition of a sales load on the Class D Shares. This
Prospectus relates to the Class D Shares of the Trust's
Intermediate-Term 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, Pennsylvania Municipal
Portfolio, Kansas Tax Free Income 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.
24
<PAGE>
The Trust pays its expenses, including fees of its
service providers, audit, and legal expenses, expenses of
preparing prospectuses, proxy solicitation material and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation, and other
extraordinary expenses, brokerage costs, interest charges,
taxes, and organization expenses.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class 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 statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Transfer
Inquiries Agent, DST Systems, Inc., P.O. Box 419240, Kansas City,
Missouri, 64141-6240.
Dividends The net investment income (exclusive of capital gains) of
the Portfolio is determined and declared daily 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.
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 Class D Shares will normally be lower
than on Class A shares of the Portfolio because of the
additional distribution and transfer agent expenses charged
to Class D Shares.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Arthur Andersen, L.L.P. 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
25
<PAGE>
the Trust. The Custodian holds cash, securities, and other
assets of the Trust as required by the Investment Company
Act of 1940, as amended (the "1940 Act").
DESCRIPTION
OF PERMITTED
INVESTMENTS AND
RISK FACTORS ___________________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors.
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 one 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.
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 the Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
26
<PAGE>
Standby Securities subject to standby commitments or puts permit the
Commitmentsand 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 purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly, or at some other interval, and may
have a floor or ceiling on interest rate 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 period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued When-issued or delayed delivery transactions involve the
and Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. The Portfolio will maintain with the
custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date, and no interest accrues to
the Portfolio before settlement. These securities are
subject to market fluctuation due to changes in market
interest rates, and it is possible that the market value at
the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has
changed. Although the Portfolio generally purchases
securities on a when-issued or forward commitment basis with
the intention of actually acquiring securities for its
portfolio, the Portfolio may dispose of a when-issued
security or forward commitment prior to settlement if the
advisers deem it appropriate to do so.
27
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely information about the above-referenced
Portfolios that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated December 31, 1995 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, 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 an open-end investment management
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in one or more professionally managed diversified
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 C shares of the Trust's California Tax Exempt Portfolio, a money
market portfolio (the "Portfolio").
AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE CALIFORNIA MONEY MARKET
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE 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. THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES
RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Management/Advisory Fees (after fee waivers)/1/ .18%
and Portfolio Manager12b-1 Fees/2/ .56%
Other Expenses .04%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)/3/ .78%
- --------------------------------------------------------------------------------
</TABLE>
1 The Manager has waived, on a voluntary basis, a portion of its fees for the
Portfolio. The Management/Advisory fees shown reflect these voluntary
waivers. The Manager reserves the right to terminate its waiver at any time
in its sole discretion. Absent such fee waivers, Management/Advisory fees for
the Portfolio would be .27%.
2 The 12b-1 fees shown reflect the current 12b-1 budget for reimbursement of
expenses. The maximum 12b-1 fees payable by Class C of the Portfolio are
.80%.
3 Absent the voluntary fee waivers described above, Total Operating Expenses
for Class C shares of the Portfolio would be .87%.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in a Portfolio 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>
Class C $8 $25 $43 $97
- ------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of the expense table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors to a Portfolio. A person who purchases shares through a
financial institution may be charged separate fees by that institution. The
information in the foregoing table and example relates only to Class C shares
of the Portfolio. The Portfolio also offers Class A and Class B shares which
are subject to the same expenses, except there are different distribution 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 by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD").
2
<PAGE>
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 1995
Annual Report to Shareholders. As of August 31, 1995, the California
Intermediate-Term Municipal Portfolio had not commenced operations. Additional
performance information is set forth in the 1995 Annual Report to Shareholders
which is available upon request and without charge by calling 1-800-342-5734.
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- ------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS C
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.029 $(0.029) -- $(0.029) -- $1.00 2.97% $328,035 0.78%
1994/1/ 1.00 0.006 (0.006) -- (0.006) -- 1.00 2.14%* 318,122 0.67%*
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C
FOR THE YEARS ENDED AUGUST 31,:
1995 0.93% 2.93% 2.78% --
1994/1/ 0.87%* 2.06%* 1.86%* --
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
/1/ The California Tax Exempt Portfolio--Class C commenced operations on May
11, 1994.
3
<PAGE>
THE TRUST ______________________________________________________________________
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class C shares of
the Trust's California Tax Exempt Portfolio (the "Portfolio"). Shares of the
Portfolio may also be purchased through Class A and Class B shares. Each class
provides for variation in distribution or transfer agent costs, voting rights,
and dividends. 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 _______________________________________________________________________
The Portfolio's investment objective is to preserve
principal value and maintain a high degree of liquidity
while providing current income exempt from federal and, to
the extent possible, California state personal income taxes.
There can be no assurance that the Portfolio will be able
to achieve its investment objective.
It is a fundamental policy of the Portfolio to invest,
under normal conditions, at least 80% of its net assets in
municipal securities that produce interest that, in the
opinion of bond counsel, is exempt from federal income tax
(collectively, "Municipal Securities"), and the Portfolio
will invest, under normal conditions, 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.
Under normal conditions, at least 65% of the Portfolio's
assets will be invested in municipal obligations the
interest on which is exempt from California state personal
income tax. These constitute municipal obligations of the
state of California and its political subdivisions or
municipal authorities and municipal obligations issued by
territories or possessions of the United States. The
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 the alternative
minimum tax (although the Portfolio has no present intention
of investing in such securities) and (2) taxable
investments. In addition, for temporary defensive purposes
when its investment adviser determines that market
conditions warrant, the Portfolio may invest up to 100% of
its assets in municipal obligations of states other than
California or taxable money market instruments (including
repurchase agreements, U.S. Treasury securities and
instruments of certain U.S. commercial banks or savings and
loan institutions).
The Adviser will not invest more than 25% of Portfolio
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.
4
<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 _______________________________________________________________________
In purchasing obligations, the Portfolio complies with the
requirements of Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), as that Rule may be amended from
time to time. These requirements currently provide that the
Portfolio must limit its investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, the Portfolio may only invest in securities (other
than U.S. Government Securities) rated in one of the two
highest categories for short-term securities by at least two
nationally recognized statistical rating organizations
("NRSROs") (or by one NRSRO if only one NRSRO has rated the
security), or, if unrated, determined by the Adviser (in
accordance with procedures adopted by the Trust's Board of
Trustees) to be of equivalent quality to rated securities in
which the Portfolio may invest.
Securities rated in the highest rating category (e.g., A-
1 by Standard & Poor's Corporation ("S&P")) by at least two
NRSROs (or, if unrated, determined by the Adviser to be of
comparable quality) are "first tier" securities. Securities
rated in the second highest rating category (e.g., A-2 by
S&P) by at least one NRSRO (or, if unrated, determined by
the Adviser to be of comparable quality) are considered to
be "second tier" securities.
Although the Portfolio is governed by Rule 2a-7, its
investment policies are more restrictive than those imposed
by that Rule.
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 the
Adviser: (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; and (iii) tax-
exempt commercial paper rated at least A-2 by S&P or Prime-2
by Moody's.
For a description of the Portfolio's permitted
investments and ratings, see the "Description of Permitted
Investments and Risk Factors" and the Statement of
Additional Information.
5
<PAGE>
RISK
FACTORS ________________________________________________________________________
California Risk Certain risks are inherent in the Portfolio's investments in
Factors California municipal securities. These risks result from (1)
amendments to the California Constitution and other statutes
that limit the taxing and spending authority of California
government entities, (2) the general financial condition of
the State of California, and (3) a variety of California
laws and regulations that may affect, directly or
indirectly, California municipal securities. The ability of
issuers of municipal securities to pay interest on, or repay
principal of, municipal securities may be impaired as a
result. A more complete description of these risks is
contained in the Statement of Additional Information.
The Portfolio's concentration in investments in
California municipal securities involves greater risks than
if their investments were more diversified. These risks
arise from provisions in the California Constitution and
other statutes that limit the taxing and spending authority
of California governmental entities, as well as from the
general financial condition of the State of California.
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 a Portfolio
without the consent of the holders of a majority of the
Trust's or the Portfolio's outstanding shares. It is a
fundamental policy of the Portfolio to use its best efforts
to maintain a constant net asset value of $1.00 per share.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities) if, as a result, more than
5% of the total assets of the Portfolio (based on current
value at the time of investment) would be invested in the
securities of such issuer. This restriction applies to
75% of the Portfolio's assets.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on fair
market value at the time of such purchase, to be invested
in the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
United States 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.
6
<PAGE>
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT ________________________________________________________________
SEI Financial Management Corporation (the "Manager" and the
"Transfer Agent"), 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 .23% of the average daily net assets of the
Portfolio.The Manager has voluntarily agreed to waive a
portion of its fees in order to limit the total operating
expenses of Class C shares of the Portfolio to not more than
.78%, as a percentage of the Portfolio's average daily net
assets attributable to Class C shares, on an annualized
basis.The Manager reserves the right, in its sole
discretion, to terminate its voluntary fee waivers at any
time. For the fiscal year ended August 31, 1995, the
Portfolio paid management fees, after waivers, of .14% of
its average daily net assets.
THE ADVISER ____________________________________________________________________
Weiss, Peck & Greer, L.L.C. (the "Adviser") serves as the
Portfolio's investment adviser under an advisory agreement
(the "Advisory Agreement") with the Trust. Under the
Advisory Agreement, the Adviser invests the assets of the
Portfolio, and continuously reviews, supervises and
administers the investment programs of the Portfolio. 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.
The Adviser is a limited liability company founded as a
limited partnership in 1970, and engages in investment
management, venture capital management and management
buyouts. The Adviser has been active since its founding in
managing portfolios of tax exempt securities. As of
September 30, 1995, total assets under management were
approximately $12.5 billion. The principal business address
of the Adviser is One New York Plaza, New York, NY 10004.
Janet Fiorenza acts as portfolio manager for the
Portfolio. Ms. Fiorenza, a Principal of WPG, has been
associated with WPG's Tax Exempt Fixed Income group since
1988 and its predecessor since 1980.
For its services to the Portfolio, the Adviser is
entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .05% of the combined average
daily net assets of the money market portfolios of the Trust
advised by the Adviser up to $500
7
<PAGE>
million, .04% of such assets from $500 million to 1 billion,
and .03% of such assets in excess of $1 billion. Such fees
are allocated daily among these portfolios on the basis of
their relative net assets. For the fiscal year ended August
31, 1995, the Portfolio paid advisory fees, after waivers,
of .04% of its relative net assets.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan,"
"Class B Plan," "Class C Plan" and "Class D Plan," and,
collectively, the "Plans") pursuant to Rule 12b-1 under the
1940 Act.
Each Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio on an
annualized basis, and provided those expenses are
permissible as to both type and amount under a budget
adopted by the Board of Trustees, including those who are
not interested persons and have no financial interest in the
Plan or any related agreement ("Qualified Trustees").
Currently, the budget (shown here as a percentage of daily
net assets) for each Portfolio is set at an annual rate of
.06% for the California Tax Exempt Portfolio.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, advertising expenses and promotional and sales
expenses including expenses for travel, communication and
compensation and benefits for sales personnel. Distribution
expenses not attributable to a specific portfolio of the
Trust are allocated among each of the portfolios of the
Trust based on the basis of their relative average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class C Plan for the Portfolio, in addition to
providing for the reimbursement payments described above,
provides for payments to the Distributor at an annual rate
of .50%, of the Portfolio's average daily net assets
attributable to such Class C shares. This additional payment
may be used to compensate financial institutions that
provide distribution-related services to their customers.
These payments are characterized as "compensation," and are
not directly tied to expenses incurred by the Distributor;
the payments the Distributor receives during any year may
therefore be higher or lower than its actual expenses. These
additional payments compensate the Distributor for its
services in connection with distribution assistance or the
provision of shareholder services, and some or all of it may
be used to pay financial institutions and intermediaries
such as banks, savings and loan associations, insurance
companies, and investment counselors, broker-dealers
(including the Distributor's affiliates and subsidiaries)
for services or reimbursement of expenses incurred in
connection with distribution assistance or the provision of
shareholder services. If the Distributor's expenses are less
than its fees under
8
<PAGE>
the Class C Plan, the Trust will still pay the full fee and
the Distributor will realize a profit, but the Trust will
not be obligated to pay in excess of the full fee, even if
the Distributor's actual expenses are higher.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolio. Such promotional incentives will be offered
uniformly to all shares of the Portfolio, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolio sold by such dealer.
PURCHASE AND
REDEMPTION
OF SHARES ______________________________________________________________________
Financial institutions may acquire shares of the 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 effectiveness on the
same day. Shares of the Portfolio are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of the Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days"). However, money market fund
shares cannot be purchased by Federal Reserve wire on
federal holidays restricting wire transfers. Shareholders
who desire to purchase shares for cash must place their
orders with the Distributor prior to the calculation of net
asset value on any Business Day for the order to be accepted
on that Business Day. Cash investments must be transmitted
or delivered in federal funds to the wire agent by the close
of business on the same day the order is placed for the
Portfolio. 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.
9
<PAGE>
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. The purchase
price of shares of the Portfolio is expected to remain
constant at $1.00. The net asset value per share of the
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 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.
The market value of the 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 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 the 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 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.
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, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
10
<PAGE>
PERFORMANCE ____________________________________________________________________
From time to time the Portfolio may advertise its "current
yield" and "effective yield." The Portfolio may also
advertise a "tax equivalent yield". These figures are based
on historical earnings and are not intended to indicate
future performance.
The "current yield" refers to the income generated by an
investment in the Portfolio over a seven-day period which 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
yield" will be slightly higher than the "current yield"
because of the compounding effect of this assumed
reinvestment.
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: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives.
The performance on Class A shares of the Portfolio will
normally be higher than that on Class B or Class C shares
because of the additional distribution expenses charged to
Class B and Class C shares.
TAXES __________________________________________________________________________
The following summary of federal and state 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. Additional information concerning
taxes is set forth in the Statement of Additional
Information.
Tax Status of The Portfolio is treated as a separate entity for federal
the Portfolio 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 ("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.
11
<PAGE>
Tax Status of The Portfolio intends to distribute substantially all of its
Distributions 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. 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.
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 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 at any
time during the following January. The Portfolio intends to
make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax
applicable to regulated investment companies.
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. 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 sale, exchange or redemption of the Portfolio's
shares is a taxable transaction to the shareholder.
California The following is a general, abbreviated summary of
Taxes certain of the provisions of the California Revenue and
Taxation Code presently in effect as they directly govern
the taxation of shareholders subject to California personal
income tax. These provisions are subject to change by
legislative or administrative action, and any such change
may be retroactive.
12
<PAGE>
The Portfolio intends to qualify to pay dividends to
shareholders that are exempt from California personal income
tax ("California exempt-interest dividends"). The Portfolio
will qualify to pay California exempt-interest dividends if
(1) at the close of each quarter of the Portfolio's taxable
year, at least 50 percent of the value of the Portfolio's
total assets consists of obligations the interest on which
would be exempt from California personal income tax if the
obligations were held by an individual ("California Tax
Exempt Obligations") and (2) the Portfolio continues to
qualify as a regulated investment company. The Portfolio
will notify its shareholders of the amount of exempt-
interest dividends each year.
If the Portfolio qualifies to pay California exempt-
interest dividends, dividends distributed to shareholders
will be considered California exempt-interest dividends if
they meet certain requirements. See the Statement of
Additional Information.
Corporations subject to California franchise tax that
invest in the Portfolio may not be entitled to exclude
California exempt-interest dividends from income.
Distributions that do not qualify for treatment as
California exempt-interest dividends (including those
distributions to shareholders taxable as long-term capital
gains for federal income tax purposes) will be taxable to
shareholders at ordinary income tax rates for California
personal income tax purposes to the extent of the
Portfolio's earnings and profits.
Interest on indebtedness incurred or continued by a
shareholder in connection with the purchase of shares of the
Portfolio will not be deductible for California personal
income tax purposes if the Portfolio distributes California
exempt-interest dividends.
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, Intermediate-Term
Municipal Portfolio, Pennsylvania Municipal Portfolio,
Kansas Tax Free Income Portfolio. Bainbridge Tax Exempt
Portfolio, California Intermediate-Term Municipal Portfolio,
New York Intermediate-Term Municipal Portfolio, and
Pennsylvania Tax Free 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.
13
<PAGE>
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 statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager. SEI
Inquiries Financial Management Corporation, 680 E. Swedesford Road,
Wayne, Pennsylvania, 19087.
Dividends The net investment income (exclusive of capital gains) of
the Portfolio is distributed in the form of dividends. The
Portfolio declares dividends daily, and shareholders of
record at the
close of each Business Day will be entitled to receive that
day's dividend. Dividends are paid by the Portfolio on the
first Business Day of each month. If any net capital gains
are realized by the 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 Portfolio are
normally higher than those on Class B or Class C shares
because of the additional distribution expenses charged to
Class B and Class C shares.
Counsel and Morgan, Lewis & Bockius LLP 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 1940 Act.
14
<PAGE>
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:
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 one 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.
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 Portfolio
Agreements obtains a security and simultaneously commits to return the
security to the seller at an agreed-upon price on an agreed-
upon date. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears
a risk of loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral or if the
Portfolio realizes a loss on the sale of the collateral. The
Portfolio will enter into repurchase agreements only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
15
<PAGE>
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 of the obligations purchased by the Portfolio may
Floating Rate carry variable or floating rates of interest and may involve
Instruments a conditional or unconditional demand feature. Such
obligations may include variable amount master demand notes.
Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or
indices. The interest rates on these securities may be reset
daily, weekly, quarterly or at some other interval, and may
have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A
demand instrument with a demand notice period exceeding
seven days may be considered illiquid if there is no
secondary market for such security.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. 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 the Adviser deems it appropriate to do so.
16
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
Annual Operating Expenses................................................ 2
Financial Highlights..................................................... 3
The Trust................................................................ 4
Investment Objective and Policies........................................ 4
General Investment Policies.............................................. 5
Risk Factors............................................................. 6
Investment Limitations................................................... 6
The Manager and Shareholder Servicing Agent.............................. 7
The Adviser.............................................................. 7
Distribution............................................................. 8
Purchase and Redemption of Shares........................................ 9
Performance.............................................................. 11
Taxes.................................................................... 11
General Information...................................................... 13
Description of Permitted Investments
and Risk Factors......................................................... 15
</TABLE>
<PAGE>
SEI TAX EXEMPT TRUST
MANAGER AND SHAREHOLDER SERVICING AGENT:
SEI FINANCIAL MANAGEMENT CORPORATION
DISTRIBUTOR:
SEI FINANCIAL SERVICES COMPANY
INVESTMENT ADVISERS AND SUB-ADVISERS:
MORGAN GRENFELL CAPITAL MANAGEMENT INCORPORATED
INTRUST BANK, N.A.
SEI FINANCIAL MANAGEMENT CORPORATION
WEISS, PECK & GREER ADVISERS, INC.
STANDISH, AYER & WOOD, INC.
This Statement of Additional Information is not a Prospectus. It is intended to
provide additional information regarding the activities and operations of SEI
Tax Exempt Trust (the "Trust") and should be read in conjunction with the
Trust's Prospectuses dated December 31, 1995. Prospectuses may be obtained by
writing the Trust's distributor, SEI Financial Services Company, 680 East
Swedesford Road, Wayne, PA 19087-1658, or by calling 1-800-342-5734.
TABLE OF CONTENTS
THE TRUST................................................................. S-2
DESCRIPTION OF PERMITTED INVESTMENTS...................................... S-2
DESCRIPTION OF RATINGS.................................................... S-5
INVESTMENT LIMITATIONS.................................................... S-7
STATE SPECIFIC DISCLOSURE................................................. S-9
THE MANAGER AND SHAREHOLDER SERVICING AGENT............................... S-17
THE ADVISERS.............................................................. S-19
DISTRIBUTION.............................................................. S-20
TRUSTEES AND OFFICERS OF THE TRUST........................................ S-24
PERFORMANCE............................................................... S-25
DETERMINATION OF NET ASSET VALUE.......................................... S-29
PURCHASE AND REDEMPTION OF SHARES......................................... S-30
SHAREHOLDER SERVICES...................................................... S-31
TAXES..................................................................... S-32
PORTFOLIO TRANSACTIONS.................................................... S-36
DESCRIPTION OF SHARES..................................................... S-38
LIMITATION OF TRUSTEES' LIABILITY......................................... S-39
SHAREHOLDER LIABILITY..................................................... S-39
5% SHAREHOLDERS........................................................... S-39
EXPERTS................................................................... S-44
FINANCIAL INFORMATION..................................................... FS-1
December 31, 1995
SEI-F-043-08
<PAGE>
THE TRUST
SEI Tax Exempt Trust (the "Trust") is an open-end management investment company
established as a Massachusetts business trust pursuant to a Declaration of Trust
dated March 15, 1982. The Declaration of Trust permits the Trust to offer
separate series ("portfolios") of units of beneficial interest ("shares") and
separate classes of portfolios. This Statement of Additional Information relates
to the following portfolios: Tax Free, Institutional Tax Free, California Tax
Exempt, Intermediate-Term Municipal, Pennsylvania Municipal, Pennsylvania
Tax Free, Kansas Tax Free Income, and New York Intermediate-Term Municipal
Portfolios (each a "Portfolio," and collectively, the "Portfolios"), and any
different classes of the Portfolios. Except for differences between the Class A,
Class B, Class C and Class D shares of any Portfolio pertaining to sales loads,
distribution plans, transfer agency costs, voting rights and dividends, each
share of each Portfolio represents an equal proportionate interest in that
Portfolio with each other share of that Portfolio.
DESCRIPTION OF PERMITTED INVESTMENTS
ALL PORTFOLIOS
BANKERS' ACCEPTANCES - a bill of exchange or time draft drawn on and accepted by
a commercial bank. It is used by corporations to finance the shipment and
storage of goods and to furnish dollar exchange. Maturities are generally six
months or less.
CERTIFICATES OF DEPOSIT - a negotiable interest bearing instrument with a
specific maturity. Certificates of deposit are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit have
penalties for early withdrawal.
INVESTMENT COMPANY SHARES - Each Portfolio may invest in shares of other
investment companies, to the extent permitted by applicable law and subject to
certain restrictions. These investment companies typically incur fees that are
separate from those fees incurred directly by the Portfolio. A Portfolio's
purchase of such investment company securities results in the layering of
expenses, such that shareholders would indirectly bear a proportionate share of
the operating expenses of such investment companies, including advisory fees, in
addition to paying Portfolio expenses. Under applicable regulations, a
Portfolio is prohibited from acquiring the securities of another investment
company if, as a result of such acquisition: (1) the Portfolio owns more than 3%
of the total voting stock of the other company; (2) securities issued by any one
investment company represent more than 5% of the Portfolio's total assets; or
(3) securities (other than treasury stock) issued by all investment companies
represent more than 10% of the total assets of the Portfolio. See also
"Investment Limitations."
It is the position of the staff of the Securities and Exchange Commission
("SEC") that certain nongovernmental issuers of collateralized mortgage
obligations constitute investment companies pursuant to the Investment Company
Act of 1940 (the "1940 Act"), and either (a) investments in such instruments are
subject to the limitations set forth above or (b) the issuers of such
instruments have received orders from the SEC exempting such instruments from
the definition of investment company.
MUNICIPAL LEASES -- Each Portfolio may invest in instruments, or participations
in instruments, issued in connection with lease obligations or installment
purchase contract obligations of municipalities ("municipal lease obligations").
Although municipal lease obligations do not constitute general obligations of
the issuing municipality, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate funds for, and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses, which provide that the municipality has no
obligation to make lease or installment
S-2
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purchase payments in future years unless money is appropriated for such purpose
in the relevant years. Municipal lease obligations are a relatively new form of
financing, and the market for such obligations is still developing. Municipal
leases will be treated as liquid only if they satisfy criteria set forth in
guidelines established by the Board of Trustees, and there can be no assurance
that a market will exist or continue to exist for any municipal lease
obligation.
MUNICIPAL NOTES consist of general obligation notes, tax anticipation notes
(notes sold to finance working capital needs of the issuer in anticipation of
receiving taxes on a future date), revenue anticipation notes (notes sold to
provide needed cash prior receipt of expected non-tax revenues from a specific
source), bond anticipation notes, tax and revenue anticipation notes,
certificates of indebtedness, demand notes, and construction loan notes. The
maturities of the instruments at the time of issue will generally range from
three months to one year.
MUNICIPAL BONDS are debt obligations issued to obtain funds for various public
purposes. A Portfolio may purchase private activity or industrial development
bonds if the interest paid is exempt from federal income tax. These bonds are
issued by or on behalf of public authorities to raise money to finance various
privately-owned or -operated facilities for business and manufacturing, housing,
sports, and pollution control. These bonds are also used to finance public
facilities such as airports, mass transit systems, ports, parking or sewage or
solid waste disposal facilities, as well as certain other categories. The
payment of the principal and interest on such bonds 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.
RECEIPTS - interests in separately traded interest and principal component parts
of U.S. Government obligations that are issued by banks or brokerage firms and
are created by depositing U.S. Government obligations into a special account at
a custodian bank. The custodian holds the interest and principal payments for
the benefit of the registered owners of the certificates or receipts. The
custodian arranges for the issuance of the certificates or receipts evidencing
ownership and maintains the register. Receipts include "Treasury Receipts"
("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). TIGRs and CATS are interests in
private proprietary accounts while TRs and STRIPS (see "U.S. Treasury
Obligations") are interests in accounts sponsored by the U.S. Treasury.
Receipts are sold as zero coupon securities; for more information, see "Zero
Coupon Securities."
REPURCHASE AGREEMENTS - agreements under which securities are acquired from a
securities dealer or bank subject to resale on an agreed upon date and at an
agreed upon price which includes principal and interest. The Portfolio involved
bears a risk of loss in the event that the other party to a repurchase agreement
defaults on its obligations and the Portfolio is delayed or prevented from
exercising its rights to dispose of the collateral securities. The Advisers
enter into repurchase agreements only with financial institutions which they
deem to present minimal risk of bankruptcy during the term of the agreement
based on guidelines which are periodically reviewed by the Board of Trustees.
These guidelines currently permit the Portfolios to enter into repurchase
agreements only with approved banks and primary securities dealers, as
recognized by the Federal Reserve Bank of New York, which have minimum net
capital of $100 million, or with a member bank of the Federal Reserve System.
Repurchase agreements are considered to be loans collateralized by the
underlying security. Repurchase agreements entered into by the Portfolios will
provide that the underlying security at all times shall have a value at least
equal to 102% of the price stated in the agreement. This underlying security
will be marked to market daily. The Advisers monitor compliance with this
requirement. Under all repurchase agreements entered into by the Portfolios,
the Custodian or its agent must take possession of the underlying collateral.
However, if the seller defaults, the Portfolios could realize a loss on the sale
of the underlying security to the extent the proceeds of the sale are less than
the resale price. In addition, even though the Bankruptcy Code provides
protection for most repurchase agreements, if the seller should be involved in
bankruptcy or insolvency proceedings, the Portfolios may incur delays and costs
in selling the security and may suffer a loss of principal and interest if the
Portfolios are treated as unsecured creditors.
S-3
<PAGE>
STANDBY COMMITMENTS-PUT TRANSACTIONS - The Portfolios reserve the right to
engage in put transactions. The Advisers have the authority to purchase
securities at a price which would result in a yield to maturity lower than that
generally offered by the seller at the time of purchase when the Portfolios can
simultaneously acquire the right to sell the securities back to the seller, the
issuer, or a third party (the "writer") at an agreed-upon price at any time
during a stated period or on a certain date. Such a right is generally denoted
as a "standby commitment" or a "put". The purpose of engaging in transactions
involving puts is to maintain flexibility and liquidity to permit the Portfolios
to meet redemptions and remain as fully invested as possible in municipal
securities. The right to put the securities depends on the writer's ability to
pay for the securities at the time the put is exercised. The Portfolios would
limit their put transactions to institutions which the Adviser believes present
minimum credit risks, and the Adviser would use its best efforts to initially
determine and continue to monitor the financial strength of the sellers of the
options by evaluating their financial statements and such other information as
is available in the marketplace. It may, however, be difficult to monitor the
financial strength of the writers because adequate current financial information
may not be available. In the event that any writer is unable to honor a put for
financial reasons, a Portfolio would be a general creditor (i.e., on a parity
with all other unsecured creditors) of the writer. Furthermore, particular
provisions of the contract between a Portfolio and the writer may excuse the
writer from repurchasing the securities; for example, a change in the published
rating of the underlying securities or any similar event that has an adverse
effect on the issuer's credit or a provision in the contract that the put will
not be exercised except in certain special cases, for example, to maintain
portfolio liquidity. A Portfolio could, however, at any time sell the
underlying portfolio security in the open market or wait until the portfolio
security matures, at which time it should realize the full par value of the
security.
The securities purchased subject to a put, may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the
Portfolio. Sale of the securities to third parties or lapse of time with the
put unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, a Portfolio could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Portfolio, the Portfolio could, of course, sell the
security. The maturity of the underlying security will generally be different
from that of the put. The Intermediate-Term Municipal, Pennsylvania Municipal
and Kansas Tax Free Income Portfolios will consider the "maturity" of a security
subject to a put to be the first date on which it has the right to demand
payment from the writer of the put although the final maturity of the security
is later than such date.
The Trust has received a private letter ruling from the Internal Revenue Service
that, to the extent it purchases securities subject to the right to put them
back to the seller in order to maintain liquidity to meet redemption
requirements, it will be treated as the owner of those securities for federal
income tax purposes. No assurance can be given that legislative, judicial or
administrative changes may not be forthcoming which could modify the Trust's
private letter ruling.
TIME DEPOSITS - a non-negotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market. Time deposits with a withdrawal penalty are considered to be
illiquid securities.
U.S. GOVERNMENT AGENCY OBLIGATIONS - agencies of the United States Government
which issue obligations consist of, among others, Farmers Home Administration,
Federal Farm Credit System, Federal Housing
S-4
<PAGE>
Administration, Government National Mortgage Association, Maritime
Administration, Small Business Administration, and The Tennessee Valley
Authority. The Portfolios may purchase securities issued or guaranteed by the
Government National Mortgage Association which represent participations in
Veterans Administration and Federal Housing Administration backed mortgage
pools. Obligations of instrumentalities of the United States Government include
securities issued by, among others, Federal Home Loan Banks, Federal Home Loan
Mortgage Corporation, Federal Land Banks, Federal National Mortgage Association
and the United States Postal Service. Some of these securities are supported by
the full faith and credit of the United States Treasury (e.g., Government
National Mortgage Association), others are supported by the right of the issuer
to borrow from the Treasury and still others are supported only by the credit of
the instrumentality (e.g., Federal National Mortgage Association). Guarantees
of principal by agencies or instrumentalities of the U.S. Government may be a
guarantee of payment at the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and thus no means of
realizing the value of the obligation prior to maturity.
U.S. TREASURY OBLIGATIONS - bills, notes and bonds issued by the U.S. Treasury
and separately traded interest and principal component parts of such obligations
that are transferable through the Federal book-entry system known as Separately
Traded Registered Interest and Principal Securities ("STRIPS"). No Portfolio
may actively trade STRIPS. STRIPS are sold as zero coupon securities; for more
information, see "Zero Coupon Securities."
WHEN-ISSUED SECURITIES - These securities involve the purchase of debt
obligations on a when-issued basis, in which case delivery and payment normally
take place within 45 days after the date of commitment to purchase. The
Portfolios will only make commitments to purchase obligations on a when-issued
basis with the intention of actually acquiring the securities, but may sell them
before the settlement date. The when-issued securities are subject to market
fluctuation, and no interest accrues to the purchaser during this period. The
payment obligation and the interest rate that will be received on the securities
are each fixed at the time the purchaser enters into the commitment. Purchasing
obligations on a when-issued basis is a form of leveraging and can involve a
risk that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself. In that case
there could be an unrealized loss at the time of delivery.
Segregated accounts will be established with the Custodian and will maintain
liquid assets in an amount at least equal in value to the Portfolios'
commitments to purchase when-issued securities. If the value of these assets
declines, the Portfolios will place additional liquid assets in the account on a
daily basis so that the value of the assets in the account is equal to the
amount of such commitments.
ZERO COUPON SECURITIES - STRIPS and Receipts (TRs, TIGRs and CATS) are sold as
zero coupon securities, that is, fixed income securities that have been stripped
of their unmatured interest coupons. Zero coupon securities are sold at a
(usually substantial) discount and redeemed at face value at their maturity date
without interim cash payments of interest or principal. The amount of this
discount is accredited over the life of the security, and the accretion
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, the market prices of zero coupon
securities are generally more volatile than the market prices of securities that
have similar maturity but that pay interest periodically. Zero coupon
securities are likely to respond to a greater degree to interest rate changes
than are non-zero coupon securities with similar maturity and credit qualities.
See also "Taxes."
DESCRIPTION OF RATINGS
MUNICIPAL NOTE RATINGS. A Standard & Poor's Corporation ("S&P") note rating
reflects the liquidity concerns and market access risks unique to notes. Notes
due in 3 years or less will likely receive a note rating. Notes maturing beyond
3 years will most likely receive a long-term debt rating. The following
criteria will be used in making that assessment:
S-5
<PAGE>
Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. ("Moody's") highest rating for state and
municipal and other short-term notes is MIG-1 and VMIG-1. Short-term municipal
securities rated MIG-1 or VMIG-1 are of the best quality. They have strong
protection from established cash flows of funds for their servicing or from
established and broad-based access to the market for refinancing or both.
Municipal obligations rated MIG-2 and VMIG-2 are high quality. Margins of
protection are ample although not so large as in the preceding group.
MUNICIPAL AND CORPORATE BOND RATINGS. Bonds rated AAA have the highest rating
S&P assigns to a debt obligation. Such a rating indicates an extremely strong
capacity to pay principal and interest. Bonds rated AA also qualify as high-
quality debt obligations. Capacity to pay principal and interest is very
strong, and in the majority of instances they differ from AAA issues only in
small degrees.
Bonds rated A by S&P have a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins or protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A by Moody's possess many favorable investment attributes
and are to be considered as upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa by Moody's are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
S-6
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COMMERCIAL PAPER RATINGS. Commercial paper rated A by S&P is regarded by S&P as
having the greatest capacity for timely payment. Issues rated A are further
refined by use of the numbers 1+, 1, 2 and 3 to indicate the relative degree of
safety, issues rated A-1+ are those with an "overwhelming degree" of credit
protection. Those rated A-1 reflect a "very strong" degree of safety regarding
timely payment. Those rated A-2 reflect a "satisfactory" degree of safety
regarding timely payment.
Commercial paper issuers rated Prime-1 or Prime-2 by Moody's are judged by
Moody's to be of "superior" quality and "strong" quality, respectively, on the
basis of relative repayment capacity.
INVESTMENT LIMITATIONS
No Portfolio may:
1. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of total assets. The California Tax
Exempt Portfolio has a fundamental policy that to the extent such borrowing
exceeds 5% of the value of the Portfolio's total assets, borrowing will be
done from a bank and in accordance with the requirements of the 1940 Act.
This borrowing provision is included solely to facilitate the orderly sale
of portfolio securities to accommodate heavy redemption requests if they
should occur and is not for investment purposes. All borrowings of the
Portfolios, in excess of 5% of its total assets, will be repaid before
making additional investments and any interest paid on such borrowings will
reduce income.
2. Purchase securities of other investment companies except that the
Intermediate-Term Municipal, Pennsylvania Municipal, Pennsylvania Tax Free,
and Kansas Tax Free Income Portfolios may only purchase securities of money
market funds and the New York Intermediate-Term Municipal Portfolio may
purchase securities of other investment companies, in either case, as
permitted by the 1940 Act and the rules and regulations thereunder.
3. Make loans, except that any Portfolio may purchase or hold debt instruments
in accordance with its investment objective and policies and may enter into
repurchase agreements, provided that repurchase agreements maturing in more
than seven days, restricted securities and other illiquid securities are not
to exceed, in the aggregate, 10% of the Portfolio's net assets, except for
the Intermediate-Term Municipal and New York Intermediate-Term Municipal
Portfolios for which it cannot exceed 15% of the Portfolio's net assets.
4. Pledge, mortgage or hypothecate assets except to secure temporary borrowings
permitted by (1) above in aggregate amounts not to exceed 10% of the net
assets of such Portfolio taken at current value at the time of the
incurrence of such loan.
5. Invest in companies for the purpose of exercising control.
6. Acquire more than 10% of the voting securities of any one issuer.
7. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts including futures contracts. However,
subject to its permitted investments, any Portfolio may invest in municipal
securities or other obligations secured by real estate or other interests
therein.
8. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Portfolio may obtain short-term
credits as necessary for the clearance of security transactions.
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9. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
10. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described in the Prospectuses and this
Statement of Additional Information or as permitted by rule, regulation or
order of the SEC.
11. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or any
investment adviser of the Trust owns beneficially more than 1/2 of 1% of the
shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 1/2 of 1% of such shares or
securities together own more than 5% of such shares or securities.
12. Purchase securities of any company which has (with predecessors) a record of
less than three years continuing operations (except (i) obligations issued
or guaranteed by the United States Government, its agencies or
instrumentalities, or (ii) municipal securities which are rated by at least
two nationally recognized municipal bond rating services or determined by
the Adviser to be of "high quality") if, as a result, more than 5% of the
total assets (taken at current value) would be invested in such securities.
13. Purchase warrants, calls, straddles, spreads or combinations thereof, except
as permitted by its Prospectus and this Statement of Additional Information.
14. Invest in interests in oil, gas or other mineral exploration or development
programs. The Institutional Tax Free Portfolio, the Kansas Tax Free Income
Portfolio and the California Tax Exempt Portfolio may not invest in oil, gas
or mineral leases.
15. Invest more than 25% of total assets in issues within the same state or
similar type projects (except in specified categories). This investment
limitation applies to the Intermediate-Term Municipal Portfolio, Tax Free
Portfolio, Institutional Tax Free Portfolio, and Pennsylvania Municipal
Portfolio. For the Pennsylvania Municipal Portfolio, this limitation does
not apply to the extent stated in its investment objective and policies.
The foregoing percentages will apply at the time of the purchase of a security.
These investment limitations and the investment limitations in each Prospectus
are fundamental policies of the Trust and may not be changed without shareholder
approval, except that for the Kansas Tax Free Income Portfolio and New York
Intermediate-Term Municipal Portfolio investment limitations 2, 4, 8, 11, 12, 13
and 14 are not fundamental and do not require shareholder approval to be
amended. It is a fundamental policy of the Intermediate-Term Municipal and
Pennsylvania Municipal Portfolios to abide by the maturity restrictions and to
invest solely in the permitted investments described in this Statement of
Additional Information and in their respective Prospectuses.
STATE SPECIFIC DISCLOSURE
The following information constitutes only a brief summary, and is not
intended as a complete description.
S-8
<PAGE>
SPECIAL CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL SECURITIES
The ability of issuers to pay interest on, and repay principal of, California
municipal securities ("California Municipal Securities") may be affected by (1)
amendments to the California Constitution and related statutes that limit the
taxing and spending authority of California government entities, and related
civil actions, (2) a wide variety of California laws and regulations, and (3)
the general financial condition of the State of California.
AMENDMENTS TO THE CALIFORNIA CONSTITUTION AND RELATED STATUTES. Certain of the
California Municipal Securities may be obligations of issuers who rely in whole
or in part on ad valorem real property taxes as a source of revenue. On June 6,
1978, California voters approved an amendment to the California Constitution
known as Proposition 13, which added Article XIIIA to the California
Constitution. The effect of Article XIIIA is to limit ad valorem taxes on real
property, and to restrict the ability of taxing entities to increase real
property tax revenues. On November 7, 1978, California voters approved
Proposition 8, and on June 3, 1986, California voters approved Proposition 46,
both of which amended Article XIIIA. Article XIIIA may require further
interpretation by both the Legislature and the courts to determine its
applicability to specific situations involving the State and local taxing
authorities.
OTHER RELEVANT CALIFORNIA LAWS. A wide variety of California laws and
regulations may affect, directly or indirectly, the payment of interest on, or
the repayment of the principal of, California Municipal Securities in which the
Portfolio may invest. The impact of such laws and regulations on particular
California Municipal Securities may vary depending upon numerous factors
including, among others, the particular type of Municipal Security involved, the
public purpose funded by the Municipal Security and the nature and extent of
insurance or other security for payment of principal and interest on the
Municipal Security. For example, California Municipal Securities which are
payable only from the revenues derived from a particular facility may be
adversely affected by California laws or regulations which make it more
difficult for the particular facility to generate revenues sufficient to pay
such interest and principal, including, among others, laws and regulations which
limit the amount of fees, rates or other charges which may be imposed for use of
the facility or which increase competition among facilities of that type or
which limit or otherwise have the effect of reducing the use of such facilities
generally, thereby reducing the revenues generated by the particular facility.
California Municipal Securities, the payment of interest and principal on which
is insured in whole or in part by a California governmentally created fund, may
be adversely affected by California laws or regulations which restrict the
aggregate insurance proceeds available for payment of principal and interest in
the event of a default on such Municipal Securities.
THE GENERAL FINANCIAL CONDITION OF THE STATE OF CALIFORNIA. Since the start of
the 1990-91 Fiscal Year, the State has faced the worst economic, fiscal, and
budget conditions since the 1930s. Construction, manufacturing (especially
aerospace), exports and financial services, among others, have all been severely
affected.
The recession has seriously affected State tax revenues, which basically mirror
economic conditions. It also caused increased expenditures for health and
welfare programs. The State has been facing a structural imbalance in its
budget with the largest programs supported by the General Fund - K-12 schools
and community colleges, health and welfare, and corrections - growing at rates
significantly higher than the growth rates for the principal revenue sources of
the General Fund. As a result, the State has experienced recurring budget
deficits.
S-9
<PAGE>
ADDITIONAL CONSIDERATIONS. With respect to Municipal Securities issued by the
State of California and its political subdivisions, as well as certain other
governmental issuers such as the Commonwealth of Puerto Rico, the Trust cannot
predict what legislation, if any, may be proposed in the California State
Legislature as regards the California State personal income tax status of
interest on such obligations, or which proposals, if any, might be enacted.
Such proposals, if enacted, might materially adversely affect the availability
of California Municipal Securities for investment by the Portfolios and the
value of the Portfolios' investments.
SPECIAL CONSIDERATIONS RELATING TO KANSAS MUNICIPAL SECURITIES
S-10
<PAGE>
STATE DEBT. The State does not issue general obligation debt but has issued
certificates of participation which are subject to annual legislative
appropriation. The State has also issued revenue bonds for the Highway and
Turnpike systems, for various Regents system higher education facilities and for
various state agency projects.
LOCAL GOVERNMENT DEBT. Local government in Kansas consists of numerous
individual units. Each unit is distinct and independent of other local units,
although they may overlap geographically. These various local governmental
units are empowered by statute to issue general obligation and/or revenue
supported debt. The degree to which overlapping debt exists will vary
considerably across the state and is a factor in evaluating the risk involved in
a given bond issue. Debt can be levied by counties, cities or townships,
schools and districts (e.g., fire, sewer, rural water, drainage, etc.). The
----
county treasurer is authorized to collect for and remit to the various issuers
in the county the tax receipts due.
TAX LAW CHANGES. The State Legislature passed a statute that made all Kansas
bond issues dated after December 31, 1987 exempt from Kansas income taxes.
Prior to the passage of that statute only certain issues, primarily state and
industrial development revenue bonds were exempt from Kansas income tax. This
change in the law has made the Kansas municipal bond market more homogenous and
deeper rather than segmented by tax status, as was the case previously. The
change has increased the number and amount of high quality, rated issues
available in the Kansas income tax-exempt market. The Legislature could change
the situation by reverting to a narrower base of Kansas income tax-exempt
issues, perhaps in response to budgetary constraints. This would make it more
difficult for the Kansas Tax Free Income Portfolio to invest in Kansas income
tax-exempt issues and would likely decrease the yield on the Portfolio's
subsequent purchases.
SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL SECURITIES
REVENUES AND EXPENDITURES. New York's Governmental Funds receive a majority of
their revenues from taxes levied by the State. Investment income, fees and
assessments, abandoned property collections, and other varied sources supply the
balance of the receipts for these Funds. New York's major expenditures are
grants to local governments. These grants include disbursements for elementary,
secondary and higher education, social services, drug abuse control, and mass
transportation programs.
S-11
<PAGE>
STATE DEBT. Under the State Constitution, the State may not, with limited
exceptions for emergencies, undertake long term borrowing (i.e., borrowing for
more than one year) unless the borrowing is authorized in a specific amount for
a single work or purpose by the Legislature and approved by the voters. There
is no limitation on the amount of long term debt that may be so authorized and
subsequently incurred by the State. The State may undertake short term
borrowings without voter approval (i) in the anticipation of the receipt of
taxes and revenues, by issuing tax and revenue anticipation notes, and (ii) in
anticipation of the receipt of proceeds from the sale of duly authorized but
unissued bonds, by issuing bond anticipation notes. The State Constitution
provides that the State may guarantee the repayment of certain borrowings to
carry out designated projects by the New York State Thruway Authority, the Job
Development Authority and the Port Authority of New York and New Jersey.
NEW YORK CITY. The fiscal health of the State is closely related to the fiscal
health of its localities, particularly the City, which has required and
continues to require significant financial assistance from the State.
SPECIAL CONSIDERATIONS RELATING TO PENNSYLVANIA MUNICIPAL SECURITIES
S-12
<PAGE>
REVENUES AND EXPENDITURES. The Constitution of Pennsylvania provides that
operating budget appropriations may not exceed the estimated revenues and
available surplus in the fiscal year for which funds are appropriated. Annual
budgets are enacted for the General Fund and for certain special revenue funds
which represent the majority of expenditures of the Commonwealth.
Pennsylvania's Governmental Funds receive a majority of their revenues from
taxes levied by the Commonwealth. Interest earnings, licenses and fees, lottery
ticket sales, liquor store profits, miscellaneous revenues, augmentations and
federal government grants supply the balance of the receipts of these funds.
Revenues not required to be deposited in another fund are deposited in the
General Fund. Pennsylvania's major expenditures include funding for education
and public health and human services.
S-13
<PAGE>
COMMONWEALTH DEBT. Current constitutional provisions permit Pennsylvania to
issue the following types of debt: (i) debt to suppress insurrection or
rehabilitate areas affected by disaster, (ii) electorate approved debt, (iii)
debt for capital projects subject to an aggregate debt limit of 1.75 times the
annual average tax revenues of the preceding five fiscal years and (iv) tax
anticipation notes payable in the fiscal year of issuance. All debt except tax
anticipation notes must be amortized in substantial and regular amounts.
S-14
<PAGE>
Pennsylvania engages in short-term borrowing to fund expenses within a fiscal
year through the sale of tax anticipation notes which must mature within the
fiscal year of issuance. The principal amount issued, when added to that already
outstanding, may not exceed in the aggregate 20% of the revenues estimated to
accrue to the appropriate fund in the fiscal year. The Commonwealth is not
permitted to fund deficits between fiscal years with any form of debt. All year-
end deficit balances must be funded within the succeeding fiscal year's budget.
Pending the issuance of bonds, Pennsylvania may issue bond anticipation notes
subject to the applicable statutory and constitutional limitations generally
imposed on bonds. The term of such borrowings may not exceed three years. The
Commonwealth currently has no bond anticipation notes outstanding.
STATE-RELATED OBLIGATIONS. Certain state-created agencies have statutory
authorization to incur debt for which legislation providing for state
appropriations to pay debt service thereon is not required. The debt of these
agencies is supported by assets of, or revenues derived from, the various
projects financed and the debt of such agencies is not an obligation of
Pennsylvania although some of the agencies are indirectly dependent on
Commonwealth appropriations.
LOCAL GOVERNMENT DEBT. Local government in Pennsylvania consists of numerous
individual units. Each unit is distinct and independent of other local units,
although they may overlap geographically. There is extensive general
legislation applying to local government. Municipalities may also issue revenue
obligations without limit and without affecting their general obligation
borrowing capacity if the obligations are projected to be paid solely from
project revenues. Municipal authorities and industrial development authorities
are also widespread in Pennsylvania. An authority is organized by a
municipality acting singly or jointly with another municipality and is governed
by a Board appointed by the governing unit of the creating municipality or
municipalities. Typically, authorities are established to acquire, own and
lease or operate one or more projects and to borrow money and issue revenue
bonds to finance them.
OTHER INVESTMENTS
The Trust is not prohibited from investing in obligations of banks which are
clients of SEI Corporation ("SEI"). However, the purchase of shares of the
Trust by them or by their customers will not be a consideration in determining
which bank obligations the Trust will purchase. The Trust will not purchase
obligations of any of the Advisers to the Trust. Distributions by a Portfolio
out of income from taxable securities will generally be taxable to shareholders
of such Portfolio as ordinary income.
THE MANAGER AND SHAREHOLDER SERVICING AGENT
The Management Agreement provides that SEI Financial Management Corporation (the
"Manager") shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to which the
Management Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Manager in the performance of
its duties or from reckless disregard of its duties and obligations thereunder.
The continuance of the Management Agreement must be specifically approved at
least annually (i) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Portfolio, and
S-15
<PAGE>
(ii) by the vote of a majority of the Trustees of the Trust who are not parties
to the Management Agreement or an "interested person" (as that term is defined
in the 1940 Act) of any party thereto, cast in person at a meeting called for
the purpose of voting on such approval. The Management Agreement is terminable
at any time as to any Portfolio without penalty by the Trustees of the Trust, by
a vote of a majority of the outstanding shares of the Portfolio or by the
Manager on not less than 30 days nor more than 60 days written notice.
The Manager, a wholly-owned subsidiary of SEI, was organized as a Delaware
corporation in 1969 and has its principal business offices at 680 East
Swedesford Road, Wayne, PA 19087. Alfred P. West, Jr., Henry H. Greer and
Carmen V. Romeo constitute the Board of Directors of the Manager. Mr. West
serves as the Chairman of the Board of Directors and Chief Executive Officer of
the Manager and of SEI. Mr. Greer serves as President and Chief Operating
Officer of the Manager and of SEI. SEI and its subsidiaries are leading
providers of funds evaluation services, trust accounting systems, and brokerage
and information services to financial institutions, institutional investors and
money managers. The Manager also serves as manager/administrator to these other
mutual funds: The Achievement Funds Trust; The Advisors' Inner Circle Fund; The
Arbor Fund; Bishop Street Funds; The Compass Capital Group; Conestoga Family of
Funds; CoreFunds, Inc.; CrestFunds, Inc.; CUFund; First American Funds, Inc.;
First American Investment Funds, Inc.; FFB Lexicon Funds; Insurance Investment
Products Trust; Inventor Funds, Inc.; Marquis/sm/ Funds; Morgan Grenfell
Investment Trust; The Pillar Funds; The PBHG Funds, Inc.; Rembrandt Funds(R);
SEI Daily Income Trust; SEI Index Funds; SEI Institutional Managed Trust; SEI
International Trust; SEI Liquid Asset Trust; 1784 Funds; Stepstone Funds; STI
Classic Funds; and STI Classic Variable Trust.
For the fiscal years ended August 31, 1993, 1994 and 1995, the Portfolios paid
management fees as follows:
<TABLE>
<CAPTION>
=============================================================================================================
FEES PAID (000) FEES WAIVED OR
REIMBURSED
PORTFOLIO (000)
--------------------------------------------------------------------
1993 1994 1995 1993 1994 1995
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio $1,123 $1,128 $ 991 $ 313 $ 353 $ 207
- -------------------------------------------------------------------------------------------------------------
Institutional Tax Free $1,457 $1,569 $1,548 $1,186 $1,482 $1,567
Portfolio
- -------------------------------------------------------------------------------------------------------------
California Tax Exempt $ 640 $ 145 $ 486 $ 427 $ 334 $ 330
Portfolio
- -------------------------------------------------------------------------------------------------------------
California Intermediate- * * * * * *
Term Municipal Portfolio
- -------------------------------------------------------------------------------------------------------------
Intermediate-Term $ 264 $ 357 $ 288 $ 85 $ 177 $ 125
Municipal Portfolio
- -------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal $ 168 $ 338 $ 132 $ 296 $ 224 $ 253
Portfolio
- -------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free * $ 6 $ 42 * $ 27 $ 33
Portfolio
- -------------------------------------------------------------------------------------------------------------
Kansas Tax Free Income $ 76 $ 68 $ 91 $ 0 $ 22 $ 3
Portfolio
=============================================================================================================
</TABLE>
S-16
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
FEES PAID (000) FEES WAIVED OR
REIMBURSED
PORTFOLIO (000)
--------------------------------------------------------------------
1993 1994 1995 1993 1994 1995
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Massachusetts $ 0 $ 11 $ 7 $ 18 $ 26 $ 17
Intermediate-Term
Municipal Portfolio
- -------------------------------------------------------------------------------------------------------------
New York Intermediate- * * * * * *
Term Municipal Portfolio
- -------------------------------------------------------------------------------------------------------------
Bainbridge Tax Exempt $ 223 $ 284 $ 341 $ 229 $ 247 $ 251
Portfolio
=============================================================================================================
</TABLE>
*Not in operation during the period.
THE ADVISERS
Each Advisory Agreement provides that each Adviser shall not be protected
against any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard of its obligations or duties thereunder.
The continuance of each Advisory Agreement after the first two (2) years must be
specifically approved at least annually (i) by the vote of a majority of the
outstanding shares of that Portfolio or by the Trustees, and (ii) by the vote of
a majority of the Trustees who are not parties to such Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. Each Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust or, with respect to a
Portfolio, by a majority of the outstanding shares of that Portfolio, on not
less than 30 days nor more than 60 days written notice to the Adviser, or by the
Adviser on 90 days written notice to the Trust.
For the fiscal years ended August 31, 1993, 1994 and 1995, the Portfolios paid
advisory fees as follows:
<TABLE>
<CAPTION>
=============================================================================================================
FEES PAID (000) FEES WAIVED OR
REIMBURSED
PORTFOLIO (000)
--------------------------------------------------------------------
1993 1994 1995 1993 1994 1995
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio $ 299 $ 259 $ 129 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------
Institutional Tax Free $ 344 $ 360 $ 334 $ 0 $ 0 $ 0
Portfolio
- -------------------------------------------------------------------------------------------------------------
California Tax Exempt $ 232 $ 91 $ 137 $ 0 $ 0 $ 0
Portfolio
- -------------------------------------------------------------------------------------------------------------
California Intermediate-Term * * * * * *
Municipal Portfolio
- -------------------------------------------------------------------------------------------------------------
Intermediate-Term Municipal $ 118 $ 163 $ 131 $ 43 $ 73 $ 60
Portfolio
=============================================================================================================
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
FEES PAID (000) FEES WAIVED OR
REIMBURSED
PORTFOLIO (000)
--------------------------------------------------------------------
1993 1994 1995 1993 1994 1995
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Pennsylvania Municipal $ 326 $ 233 $ 262 $ 5 $ 161 $ 4
Portfolio
- -------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free * $ 4 $ 8 * $ 0 $ 0
Portfolio
- -------------------------------------------------------------------------------------------------------------
Kansas Tax Free Income $ 0 $ 0 $ 0 $ 152 $ 180 $ 188
Portfolio
- -------------------------------------------------------------------------------------------------------------
Massachusetts Intermediate- $ 7 $ 8 $ 17 $ 6 $ 19 $ 0
Term Municipal Portfolio
- -------------------------------------------------------------------------------------------------------------
New York Intermediate-Term * * * * * *
Municipal Portfolio
- -------------------------------------------------------------------------------------------------------------
Bainbridge Tax Exempt $ 63 $ 65 $ 64 $ 0 $ 0 $ 0
Portfolio
=============================================================================================================
</TABLE>
*Not in operation during the period.
DISTRIBUTION
The Trust has adopted a Distribution Plan for Class A, Class B, Class C and
Class D shares of the Portfolios (the "Plans") in accordance with the provisions
of Rule 12b-1 under the 1940 Act which regulates circumstances under which an
investment company may directly or indirectly bear expenses relating to the
distribution of its shares. In this regard, the Board of Trustees has
determined that the Plans and the Distribution Agreement are in the best
interests of the shareholders. Continuance of the Plans must be approved
annually by a majority of the Trustees of the Trust and by a majority of the
trustees who are not "interested persons" of the Trust as that term is defined
in the 1940 Act and who have no direct or indirect financial interest in the
operation of a Distribution Plan or in any agreements related thereto
("Qualified Trustees"). The Plans require that quarterly written reports of
amounts spent under the Plans and the purposes of such expenditures be furnished
to and reviewed by the Trustees. The Plans may not be amended to increase
materially the amount which may be spent thereunder without approval by a
majority of the outstanding shares of the Portfolio or class affected. All
material amendments of the Plans will require approval by a majority of the
Trustees of the Trust and of the Qualified Trustees.
The Distribution Agreement and the Class A, Class B and Class C Distribution
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. The budget must be approved and monitored quarterly by
the Trustees including Qualified Trustees. The Class B and Class C Plans
provide for additional payments for distribution and shareholder services as
described below.
The Class B and Class C Plans, in addition to providing for the reimbursement
payments described above, provide for payments to the Distributor at an annual
rate of .30% of the Class B average daily net assets and .50% of the Class C
average daily net assets. These additional payments are characterized as
"compensation," and are not directly tied to expenses incurred by the
Distributor; the payments the Distributor receives during
S-18
<PAGE>
any year may therefore be higher or lower than its actual expenses. The
Distributor may use these additional payments to compensate Class B and Class C
shareholders that are institutions that provide administrative services to their
customers. These institutions may also charge separate fees for these and
related services. It is possible that an institution may offer different classes
of shares to its customers and thus receive compensation with respect to
different classes. Certain Class B and Class C shareholders offering shares to
their customers may be required to register as dealers pursuant to state laws.
The Class D Distribution Plan adopted by the Class D shareholders provides that
the Trust will pay the Distributor a fee of up to .30% of the average daily net
assets of the Portfolios' Class D shares and a fee of up to .25% of the Tax
Free, California Tax Exempt and Pennsylvania Tax Free Portfolios, which the
Distributor can use to compensate broker-dealers and service providers,
including SEI Financial Services Company and its affiliates which provide
distribution related services to Class D shareholders or their customers who
beneficially own Class D shares. The Class D Plan provides that, if there is
more than one portfolio of the Trust having a Class D class, expenses incurred
pursuant to the Class D Plan will be allocated among such several portfolios of
the Trust on the basis of their relative net asset values, unless otherwise
determined by a majority of the Qualified Trustees.
For the fiscal year ended August 31, 1995, the Portfolios paid the following
amounts pursuant to the Distribution Plans:
<TABLE>
<CAPTION>
==============================================================================================================================
Amount Paid
to Third Prospectus Costs
Parties by Printing & Associated
Total Basis Distributor of Sales Mailing with
Portfolio/Class Amount Points Distribution- Expenses Costs Registration
Related
Services
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio - $ 236,062 .07% $ 0 $190,896 $3,213 $41,953
Class A
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Tax $ 587,740 .07% $ 0 $492,408 $ 984 $94,348
Free Portfolio -
Class A
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Tax $ 80,972 .37% $ 65,707 $ 12,789 $ 26 $ 2,450
Free Portfolio -
Class B
- ------------------------------------------------------------------------------------------------------------------------------
California Tax $ 21,751 .06% $ 0 $ 19,203 $ 139 $ 2,409
Exempt Portfolio -
Class A
- ------------------------------------------------------------------------------------------------------------------------------
California Tax $ 19,628 .36% $ 16,068 $ 3,143 $ 23 $ 394
Exempt Portfolio -
Class B
- ------------------------------------------------------------------------------------------------------------------------------
California Tax $1,792,815 .56% $1,583,144 $185,108 $1,338 $23,225
Exempt Portfolio -
Class C
==============================================================================================================================
</TABLE>
S-19
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================================
Amount Paid
to Third Prospectus Costs
Parties by Printing & Associated
Total Basis Distributor of Sales Mailing with
Portfolio/Class Amount Points Distribution- Expenses Costs Registration
Related
Services
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
California * * * * * *
Intermediate-Term
Municipal Portfolio -
Class A
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts $ 5,803 .08% $ 0 $ 4,297 $ 63 $ 1,443
Intermediate-Term
Municipal Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
New York * * * * * *
Intermediate-Term
Municipal Portfolio -
Class A
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania $ 81,783 .08% $ 0 $ 65,353 $ 601 $15,829
Municipal Portfolio -
Class A
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax $ 13,662 .07% $ 0 $ 11,711 $ 176 $ 1,775
Free Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Intermediate-Term $ 80,128 .08% $ 0 $ 62,543 $3,670 $13,915
Municipal Portfolio -
Class A
- ------------------------------------------------------------------------------------------------------------------------------
Bainbridge Tax $ 18,865 .01% $ 0 $ 0 $1,329 $17,536
Exempt Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Kansas Tax Free $ 0 0% $ 0 $ 0 $ 0 $ 0
Income Portfolio -
Class A
- ------------------------------------------------------------------------------------------------------------------------------
Kansas Tax Free * * * * * *
Income Portfolio -
Class B
- ------------------------------------------------------------------------------------------------------------------------------
Tax Free Portfolio - $ 1,960 .27% $ 1,446 $ 416 $ 7 $ 91
Class D
- ------------------------------------------------------------------------------------------------------------------------------
California * * * * * *
Intermediate-Term
Municipal Portfolio -
Class D
- ------------------------------------------------------------------------------------------------------------------------------
California Tax * * * * * *
Exempt Portfolio -
Class D
==============================================================================================================================
</TABLE>
S-20
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================================
Amount Paid
to Third Prospectus Costs
Parties by Printing & Associated
Total Basis Distributor of Sales Mailing with
Portfolio/Class Amount Points Distribution- Expenses Costs Registration
Related
Services
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Massachusetts * * * * * *
Intermediate-Term
Municipal Portfolio
- - Class D
- ------------------------------------------------------------------------------------------------------------------------------
New York * * * * * *
Intermediate-Term
Municipal Portfolio
- - Class D
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania * * * * * *
Municipal Portfolio
- - Class D
- ------------------------------------------------------------------------------------------------------------------------------
Intermediate-Term $ 2,792 $ 33 $ 2,140 $ 509 $ 30 $ 113
Municipal Portfolio
- - Class D
==============================================================================================================================
</TABLE>
*Not in operation during the period.
The distribution-related services that may be provided under the Plans include
establishing and maintaining customer accounts and records; aggregating and
processing purchase and redemption requests from customers; placing net purchase
and redemption orders with the Distributor; automatically investing customer
account cash balances; providing periodic statements to customers; arranging for
wires; answering customer inquiries concerning their investments; assisting
customers in changing dividend options, account designations, and addresses;
performing sub-accounting functions; processing dividend payments from the Trust
on behalf of customers; and forwarding shareholder communications from the Trust
(such as proxies, shareholder reports, and dividend distribution, and tax
notices) to these customers with respect to investments in the Trust. Certain
state securities laws may require those financial institutions providing such
distribution services to register as dealers pursuant to state law.
Except to the extent that the Manager or Advisers benefitted through increased
fees from an increase in the net assets of the Trust which may have resulted in
part from the expenditures, no interested person of the Trust nor any Trustee of
the Trust who is not an interested person of the Trust had a direct or indirect
financial interest in the operation of the Distribution Plans or related
agreements.
For the fiscal years ended August 31, 1993, 1994 and 1995, the aggregate sales
charges payable to the Distributor with respect to the Class D shares were as
follows:
S-21
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
AGGREGATE SALES CHARGE AMOUNT RETAINED
PAYABLE BY
PORTFOLIO TO DISTRIBUTOR DISTRIBUTOR
1993 1994 1995 1993 1994 1995
=========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
California Intermediate-Term * * N/A * * N/A
Municipal Portfolio
- ---------------------------------------------------------------------------------------------------------
Intermediate-Term Municipal $16,328 $21,795 $38,648 $2,886 $ 508 $3,468
Portfolio
- ---------------------------------------------------------------------------------------------------------
Pennsylvania Municipal * * N/A * * N/A
Portfolio
- ---------------------------------------------------------------------------------------------------------
Massachusetts Intermediate- * * N/A * * N/A
Term Municipal Portfolio
- ---------------------------------------------------------------------------------------------------------
New York Intermediate-Term * * N/A * * N/A
Municipal Portfolio
=========================================================================================================
</TABLE>
*Not in operation during the period.
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and executive officers of the Trust and their principal occupations
for the last five years are set forth below. Each may have held other positions
with the named companies during that period. Unless otherwise noted, the
business address of each Trustee and executive officer is SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, PA 19087. Certain
trustees and officers of the Trust also serve as trustees and officers of some
or all of the following: The Achievement Funds Trust; The Advisors' Inner
Circle Fund; The Arbor Fund; Bishop Street Funds; The Compass Capital Group;
Conestoga Family of Funds; CoreFunds, Inc.; CrestFunds, Inc.; CUFund; First
American Funds, Inc.; First American Investment Funds, Inc.; FFB Lexicon Funds;
Insurance Investment Products Trust; Inventor Funds, Inc.; Marquis/sm/ Funds;
Morgan Grenfell Investment Trust; The Pillar Funds; The PBHG Funds, Inc.;
Rembrandt Funds(R); SEI Daily Income Trust; SEI Index Funds; SEI Institutional
Managed Trust; SEI International Trust; SEI Liquid Asset Trust; 1784 Funds;
Stepstone Funds; STI Classic Funds; and STI Classic Variable Trust, each of
which is an open-end management investment company managed by SEI Financial
Management Corporation and, except for Rembrandt/sm/ Funds, distributed by SEI
Financial Services Company.
ROBERT A. NESHER - Chairman of the Board of Trustees* - Retired since 1994.
Executive Officer -Executive Vice President of SEI, 1986-1994. Director and
Executive Vice President of the Manager and Executive Vice President of the
Distributor, September, 1981-1994.
RICHARD F. BLANCHARD - Trustee** - P.O. Box 76, Canfield Road, Convent Station,
NJ 07961. Private Investor. Director of AEA Investors Inc. (acquisition and
investment firm) June 1981-86, Director of Baker Hughes Corp. (oil service
company) 1976-88. Director of Imperial Clevite Industries (transportation
equipment company) 1981-87. Executive Vice President of American Express
Company (financial services company), responsible for the investment function,
before June 1981.
WILLIAM M. DORAN - Trustee* - 2000 One Logan Square, Philadelphia, PA 19103.
Partner of Morgan, Lewis & Bockius LLP, counsel to the Trust, Manager and
Distributor, Director and Secretary of SEI and Secretary of the Manager and
Distributor.
S-22
<PAGE>
F. WENDELL GOOCH - Trustee** - P.O. Box 190, Paoli, IN 47454. President, Orange
County Publishing Co., Inc., since October 1981. Publisher of the Paoli News
and the Paoli Republican and Editor of the Paoli Republican since January 1981;
President, H & W Distribution, Inc. since July 1984. Executive Vice President,
Trust Department, Harris Trust and Savings Bank and Chairman of the Board of
Directors of The Harris Trust Company of Arizona before January 1981. Trustee
of STI Classic Funds.
FRANK E. MORRIS - Trustee** - 105 Walpole Street, Dover, MA 02030. Retired
since 1990. Peter Drucker Professor of Management, Boston College since 1989.
President, Federal Reserve Bank of Boston, 1968-1988. Trustee of The Arbor
Fund, Marquis Funds, Advisors' Inner Circle Fund, Advisors' Inner Circle Fund
II, Inc. and FFB Lexicon Funds.
JAMES M. STOREY - Trustee** - Ten Post Office Square, Boston, MA, 02109.
Retired since 1993. Formerly Partner of Dechert Price & Rhoads (law firm).
DAVID LEE - President, Chief Executive Officer - Senior Vice President of the
Distributor since 1993. Vice President of the Distributor since 1991.
President, GW Sierra Trust Funds prior to 1991.
CARMEN V. ROMEO - Treasurer, Assistant Secretary - Director, Executive Vice
President, Chief Financial Officer and Treasurer of SEI since 1977. Director
and Treasurer of the Manager and Distributor since 1981.
ROBERT B. CARROLL - Vice President, Assistant Secretary - Vice President,
Assistant Secretary of SEI, the Manager and Distributor since 1994. United
States Securities and Exchange Commission, Division of Investment Management,
1990-1994. Associate, McGuire, Woods, Battle and Boothe (law firm) prior to
1990.
KATHRYN L. STANTON - Vice President, Assistant Secretary - Vice President,
Assistant Secretary of SEI, the Manager and Distributor since 1994. Associate,
Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
SANDRA K. ORLOW - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of the Manager and Distributor since 1988. Corporate Legal
Assistant, Omni Exploration (oil and gas investment) prior to 1983.
S-23
<PAGE>
KEVIN P. ROBINS - Vice President, Assistant Secretary - Senior Vice President
and General Counsel of SEI, the Manager and the Distributor, and Assistant
Secretary of SEI since 1994. Secretary of the Manager and the Distributor since
1994. Vice President and Assistant Secretary of SEI, the Manager and
Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm) prior
to 1992.
JOSEPH M. LYDON - Vice President, Assistant Secretary - Director of Business
Administration of Fund Resources, SEI Corporation since 1995. Vice President of
Fund Group and Vice President of Dreman Value Management (investment adviser),
President of Dreman Financial Services, Inc. prior to 1995.
TODD CIPPERMAN - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of SEI, the Manager and the Distributor since 1995.
Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston & Strawn
(law firm), 1991-1994.
JEFFREY A. COHEN - Controller, Assistant Secretary - CPA, Director,
International and Domestic Funds Accounting, SEI Corporation since 1991. Audit
Manager, Price Waterhouse prior to 1991.
RICHARD W. GRANT - Secretary - 2000 One Logan Square, Philadelphia, PA 19103,
Partner, Morgan, Lewis & Bockius LLP, counsel to the Trust, Manager and
Distributor.
JOHN H. GRADY, JR. - Assistant Secretary - 1800 M Street, N.W., Washington, DC
20036, Associate, Morgan, Lewis & Bockius LLP, Counsel to the Trust, Manager and
Distributor. Associate, Ropes & Gray (law firm) prior to 1993.
- -----------------------------
* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the Investment Company Act of
1940.
** Messrs. Blanchard, Gooch, Morris and Storey serve as members of the Audit
Committee of the Trust.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
Compensation of officers and affiliated Trustees of the Trust is paid by the
Manager. For the fiscal year ended August 31, 1995, the Trust paid the
following amounts to the Trustees.
<TABLE>
<CAPTION>
=============================================================================================================
Total Compensation
Aggregate Pension or from Registrant and
Compensation Retirement Estimated Fund Complex Paid
From Registrant Benefits Accrued Annual to Directors for
Name of Person, for Fiscal Year as Part of Fund Benefits Upon Fiscal Year Ended
Position Ended 1995 Expenses Retirement 1995
=============================================================================================================
<S> <C> <C> <C> <C>
Edward W. Binshadler, $ 4,016.58 $ 0 $ 0 $18,750 for
Trustee/1/ services
on 7 boards
- -------------------------------------------------------------------------------------------------------------
Richard F. Blanchard, $15,191.59 $ 0 $ 0 $86,250 for
Trustee services
on 7 board(s)
- -------------------------------------------------------------------------------------------------------------
William M. Doran, $ 0 $ 0 $ 0 $ 0
Trustee
=============================================================================================================
</TABLE>
S-24
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
Total Compensation
Aggregate Pension or from Registrant and
Compensation Retirement Estimated Fund Complex Paid
From Registrant Benefits Accrued Annual to Directors for
Name of Person, for Fiscal Year as Part of Fund Benefits Upon Fiscal Year Ended
Position Ended 1995 Expenses Retirement 1995
=============================================================================================================
<S> <C> <C> <C> <C>
F. Wendell Gooch, $15,191.59 $ 0 $ 0 $86,250 for
Trustee services
on 7 board(s)
- -------------------------------------------------------------------------------------------------------------
Frank E. Morris, $15,191.59 $ 0 $ 0 $86,250 for
Trustee services
on 7 board(s)
- -------------------------------------------------------------------------------------------------------------
Robert A. Nesher, $ 0 $ 0 $ 0 $ 0
Trustee
- -------------------------------------------------------------------------------------------------------------
James M. Storey, $15,191.59 $ 0 $ 0 $86,250 for
Trustee services
on 7 board(s)
=============================================================================================================
</TABLE>
/1/ Retired - December 7, 1994
PERFORMANCE
From time to time, the Portfolios may advertise yield and/or total return. These
figures will be based on historical earnings and are not intended to indicate
future performance.
The current yield of the Portfolios that are money market funds is calculated
daily based upon the 7 days ending on the date of calculation ("base period").
The yield is computed by determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing shareholder account having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts and dividing
such net change by the value of the account at the beginning of the same period
to obtain the base period return and multiplying the result by (365/7).
Realized and unrealized gains and losses are not included in the calculation of
the yield.
The Portfolios compute their effective compound yield by determining the net
changes, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula: Effective Yield = {(Base Period Return + 1)/365/7/} - 1.
The current and the effective yields reflect the reinvestment of net income
earned daily on portfolio assets.
From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal,
Kansas Tax Free Income, California Intermediate-Term Municipal and New York
Intermediate-Term Portfolios may advertise yield. These figures will be based
on historical earnings and are not intended to indicate future performance. The
yield of these Portfolios refers to the annualized income generated by an
investment in the Portfolios 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. In particular, yield will be calculated according to the following
formula:
S-25
<PAGE>
Yield = 2([(a-b)/(cd) + 1)]/6/ - 1) where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of reimbursement);
c = the current daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share on
the last day of the period.
Actual yields will depend on such variables as asset quality, average asset
maturity, the type of instruments a Portfolio invests in, changes in interest
rates on money market instruments, changes in the expenses of the Portfolios and
other factors.
Yields are one basis upon which investors may compare the Portfolios with other
money market funds; however, yields of other money market mutual funds and other
investment vehicles may not be comparable because of the factors set forth above
and differences in the methods used in valuing portfolio instruments.
For the 7-day period ended August 31, 1995, the end of the Trust's most recent
fiscal year, the Money Market Portfolios' current effective and tax-equivalent
yields were as follows:
<TABLE>
<CAPTION>
=============================================================================================================
7-DAY TAX- 7-DAY
7-DAY EQUIVALENT TAX-EQUIVALENT
PORTFOLIO CLASS 7-DAY YIELD EFFECTIVE YIELD YIELD EFFECTIVE YIELD
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Tax Free Portfolio Class A 3.45% 3.51% 5.70% 5.80%
-------------------------------------------------------------------------------
Class D 3.10% 3.15% 5.12% 5.21%
- -------------------------------------------------------------------------------------------------------------
Institutional Tax Free Class A 3.68% 3.75% 6.08% 6.20%
Portfolio -------------------------------------------------------------------------------
Class B 3.38% 3.44% 5.59% 5.69%
-------------------------------------------------------------------------------
Class C * * * *
- -------------------------------------------------------------------------------------------------------------
California Tax Exempt Class A 3.40% 3.46% 6.87% 6.99%
Portfolio -------------------------------------------------------------------------------
Class B * * * *
-------------------------------------------------------------------------------
Class C 2.91% 2.95% 5.88% 5.96%
-------------------------------------------------------------------------------
Class D * * * *
- -------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free Class A 3.56% 3.63% 6.19% 6.31%
Portfolio
- -------------------------------------------------------------------------------------------------------------
Bainbridge Tax 3.72% 3.79% 6.15% 6.26%
Exempt Portfolio
=============================================================================================================
</TABLE>
*Not in operation during the period
For the 30-day period ended August 31, 1995, yields on the Portfolios other than
the Money Market Portfolios were as follows:
S-26
<PAGE>
<TABLE>
<CAPTION>
================================================================================
YIELD
30 DAY TAX
PORTFOLIO CLASS 30 DAY EQUIVALENT
================================================================================
<S> <C> <C> <C>
California Intermediate-Term Municipal Class A * *
Portfolio ------------------------------------
Class D * *
- --------------------------------------------------------------------------------
New York Intermediate-Term Municipal Class A * *
Portfolio ------------------------------------
Class D * *
- --------------------------------------------------------------------------------
Massachusetts Intermediate-Term Class A * *
Municipal Portfolio ------------------------------------
Class D * *
- --------------------------------------------------------------------------------
Pennsylvania Municipal Portfolio Class A 4.60% 8.00%
------------------------------------
Class D * *
- --------------------------------------------------------------------------------
Intermediate-Term Municipal Portfolio Class A 4.63% 7.65%
------------------------------------
Class D 4.10% 6.78%
- --------------------------------------------------------------------------------
Kansas Tax Free Income Portfolio Class A 4.99% 9.24%
------------------------------------
Class B * *
================================================================================
</TABLE>
*Not in operation during the period.
From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal,
Kansas Tax Free Income, California Intermediate-Term Municipal and New York
Intermediate-Term Municipal Portfolios may advertise total return. The total
return of a 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. In particular, total return will be calculated according to the
following formula: P(1 + T)n = ERV, where P = a hypothetical initial payment of
$1,000; T = average annual total return; n = number of years; and ERV = ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
designated time period as of the end of such period.
Based on the foregoing, the average annual total returns for the Portfolios from
inception through August 31, 1995 and for the one, five and ten year periods
ended August 31, 1995 were as follows:
<TABLE>
<CAPTION>
=====================================================================================================================
AVERAGE ANNUAL TOTAL RETURN
PORTFOLIO CLASS -----------------------------------------------
ONE FIVE TEN SINCE
YEAR YEAR YEAR INCEPTION
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
Tax Free Portfolio Class A/1/ 3.48% 3.21% 4.10% 4.32%
--------------------------------------------------------------------------------------
Class D--Offering Price/13/ * * * 3.24%
=====================================================================================================================
</TABLE>
S-27
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================================
AVERAGE ANNUAL TOTAL RETURN
PORTFOLIO CLASS -----------------------------------------------
ONE FIVE TEN SINCE
YEAR YEAR YEAR INCEPTION
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
Institutional Tax Free Class A/1/ 3.70% 3.53% 4.28% 4.42%
Portfolio --------------------------------------------------------------------------------------
Class B/2/ 3.39% * * 3.14%
--------------------------------------------------------------------------------------
Class C * * * *
- ---------------------------------------------------------------------------------------------------------------------
California Tax Exempt Class A/3/ 3.49% 3.31% * 3.47%
Portfolio --------------------------------------------------------------------------------------
Class B/4/ (closed 7/12/95) * * * *
--------------------------------------------------------------------------------------
Class C/5/ 2.97% * * 2.78%
--------------------------------------------------------------------------------------
Class D--Offering Price * * * *
--------------------------------------------------------------------------------------
Class D--Net Asset Value * * * *
- ---------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Class A/6/ 6.81% 7.06% * 6.71%
Portfolio --------------------------------------------------------------------------------------
Class D--Offering Price * * * *
--------------------------------------------------------------------------------------
Class D--Net Asset Value * * * *
- ---------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free Class A/7/ 3.60% * * 3.14%
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Intermediate-Term Class A/9/ 7.53% 6.78% * 6.54%
Municipal Portfolio --------------------------------------------------------------------------------------
Class D--Offering Price/8/ 3.32% * * 1.27%
--------------------------------------------------------------------------------------
Class D--Net Asset Value/8/ 7.11% * * 3.18%
- ---------------------------------------------------------------------------------------------------------------------
Kansas Tax Free Income Class A/10/ 7.23% * * 7.14%
Portfolio --------------------------------------------------------------------------------------
Class B * * * *
- ---------------------------------------------------------------------------------------------------------------------
Massachusetts Class A/11/ (closed 8/15/95) * * * *
Intermediate-Term --------------------------------------------------------------------------------------
Municipal Portfolio Class D--Offering Price (closed * * * *
8/15/95)
--------------------------------------------------------------------------------------
Class D--Net Asset Value * * * *
(closed 8/15/95)
- ---------------------------------------------------------------------------------------------------------------------
Bainbridge Tax Exempt/12/ 3.69% * * 2.90%
- ---------------------------------------------------------------------------------------------------------------------
New York Intermediate- Class A * * * *
Term Municipal --------------------------------------------------------------------------------------
Portfolio Class D--Offering Price * * * *
--------------------------------------------------------------------------------------
Class D--Net Asset Value * * * *
=====================================================================================================================
</TABLE>
S-28
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================================
AVERAGE ANNUAL TOTAL RETURN
PORTFOLIO CLASS -----------------------------------------------
ONE FIVE TEN SINCE
YEAR YEAR YEAR INCEPTION
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
California Intermediate- Class A * * * *
Term Municipal --------------------------------------------------------------------------------------
Portfolio Class D--Offering Price * * * *
--------------------------------------------------------------------------------------
Class D--Net Asset Value * * * *
=====================================================================================================================
</TABLE>
/1/ Commenced operations 2/1/84
/2/ Commenced operations 10/15/90
/3/ Commenced operations 5/14/90
/4/ Commenced operations 1/5/94
/5/ Commenced operations 5/11/94
/6/ Commenced operations 8/14/89
*Not in operation during period.
/7/ Commenced operations 1/21/94
/8/ Commenced operations 9/28/93
/9/ Commenced operations 9/5/89
/10/ Commenced operations 12/10/90
/11/ Commenced operations 9/18/92
/12/ Commenced operations 11/9/92
/13/ Commenced operations 11/1/94
Each Portfolio may, from time to time, compare its performance to other mutual
funds tracked by mutual fund rating services, to broad groups of comparable
mutual funds or to unmanaged indices which may assume investment of dividends
but generally do not reflect deductions for sales charges, administrative and
management costs.
DETERMINATION OF NET ASSET VALUE
Securities of the Tax Free, Institutional Tax Free, California Tax Exempt,
Bainbridge Tax Exempt and the Pennsylvania Tax Free Portfolios will be valued by
the amortized cost method which involves valuing a security at its cost on the
date of purchase and thereafter (absent unusual circumstances) assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuations in general market rates of interest on the value of the
instrument. While this method provides certainty in valuation, it may result in
periods during which value, as determined by this method is higher or lower than
the price the Trust would receive if it sold the instrument. During periods of
declining interest rates, the daily yield of a Portfolio may tend to be higher
than a like computation made by a company with identical investments utilizing a
method of valuation based upon market prices and estimates of market prices for
all of its portfolio securities. Thus, if the use of amortized cost by a
Portfolio resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in a Portfolio would be able to obtain a somewhat higher
yield than would result from investment in a company utilizing solely market
values, and existing shareholders in the Portfolio would experience a lower
yield. The converse would apply in a period of rising interest rates.
A Portfolio's use of amortized cost valuation and the maintenance of the
Portfolio's net asset value at $1.00 are permitted by Rule 2a-7 under the 1940
Act, provided that certain conditions are met. Under Rule 2a-7 a money market
portfolio must maintain a dollar-weighted average maturity of 90 days or less
and not purchase any instrument having a remaining maturity of more than 397
days. In addition, money market funds may acquire only U.S. dollar denominated
obligations that present minimal credit risks and that are "eligible securities"
which means they are (i) rated, at the time of investment, by at least two
nationally recognized statistical rating organizations (one if it is the only
organization rating such obligation) in the highest short-term rating category
or, if unrated, determined to be of comparable quality (a "first tier
security"), or (ii) rated according to the foregoing criteria in the second
highest short-term rating category or, if unrated, determined to be of
comparable quality ("second tier security"). The Advisers will determine that
an obligation presents minimal credit risk or that unrated instruments are of
comparable quality in accordance with guidelines established by the Trustees.
In the event a first tier security of the Tax Free Portfolio, Institutional Tax
Free Portfolio, California Tax Exempt Portfolio, Bainbridge Tax Exempt Portfolio
or the Pennsylvania Tax Free Portfolio is downgraded below first tier security
status after purchase or the Adviser of any such Portfolio becomes aware that an
unrated or second tier security has received any rating below the second highest
rating category after purchase, the Portfolio's Adviser will either dispose of
the security within
S-29
<PAGE>
five business days or the Board of Trustees will reassess whether the security
continues to present minimal credit risks. The Board may also delegate this
responsibility to the Portfolio's Adviser with respect to the downgrade of a
first tier security. The regulations also require the Trustees to establish
procedures which are reasonably designed to stabilize the net asset value per
unit at $1.00 for each Portfolio. However, there is no assurance that the Trust
will be able to meet this objective. The Trust's procedures include the
determination of the extent of deviation, if any, of each Portfolio's current
net asset value per unit calculated using available market quotations from each
Portfolio's amortized cost price per unit at such intervals as the Trustees deem
appropriate and reasonable in light of market conditions and periodic reviews of
the amount of the deviation and the methods used to calculate such deviation. In
the event that such deviation exceeds 1/2 of 1%, the Trustees are required to
consider promptly what action, if any, should be initiated; and, if the Trustees
believe that the extent of any deviation may result in material dilution or
other unfair results to shareholders, the Trustees are required to take such
corrective action as they deem appropriate to eliminate or reduce such dilution
or unfair results to the extent reasonably practicable. In addition, if any
Portfolio incurs a significant loss or liability, the Trustees have the
authority to reduce pro rata the number of shares of that Portfolio in each
shareholder's account and to offset each shareholder's pro rata portion of such
loss or liability from the shareholder's accrued but unpaid dividends or from
future dividends.
Securities of the Intermediate-Term Municipal, Pennsylvania Municipal, Kansas
Tax Free Income, California Intermediate-Term Municipal and New York
Intermediate-Term Municipal Portfolios are valued by the Manager pursuant to
valuations provided by an independent pricing service. The pricing service
relies primarily on prices of actual market transactions as well as trader
quotations. However, the service may also use a matrix system to determine
valuations, which system considers such factors as security prices, yields,
maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.
PURCHASE AND REDEMPTION OF SHARES
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or evaluation of the portfolio securities is not reasonably
practicable, or for such other periods as the SEC may be order permit. The
Trust also reserves the right to suspend sales of shares of a Portfolio for any
period during which the New York Stock Exchange, the Manager, a Portfolio's
Adviser, the Distributor and/or the Custodian are not open for business.
In calculating the sales charge rates applicable to current purchases of Class D
shares, members of the following affinity groups and clients of the following
broker-dealers, each of which has entered into an agreement with the
Distributor, are entitled to the following percentage-based discounts from the
otherwise applicable sales charge:
<TABLE>
<CAPTION>
Date Date
Offer Offer
Name of Group Percentage Discount Starts Terminates
- ------------- ------------------- ------ ----------
<S> <C> <C> <C>
Countrywide Funding Corp. 100% July 27, 1994 September 19, 1994
50% September 23, 1994 November 22, 1994
</TABLE>
Those members or clients who take advantage of a percentage-based reduction in
the sales charge during the offering period noted above may continue to purchase
shares at the reduced sales charge rate after the offering period relating to
each such purchaser's affinity group or broker-dealer relationship has
terminated.
Please contact the Distributor at 1-800-437-6016.
S-30
<PAGE>
SHAREHOLDER SERVICES
Stop-Payment Requests (Money Market Portfolios only): Investors may request a
stop payment on checks by providing the Trust with a written authorization to do
so. Oral requests will be accepted provided that the Trust promptly receives a
written authorization. Such requests will remain in effect for six months unless
renewed or canceled. The Trust will use its best efforts to effect stop-payment
instructions, but does not promise or guarantee that such instructions will be
effective. Shareholders requesting stop payment will be charged a $20 service
fee per check which will be deducted from their accounts.
The following is a description of plans and privileges by which the sales
charges imposed on the Class D shares of the Intermediate-Term Municipal
Portfolio Pennsylvania Municipal Portfolio, New York Intermediate-Term Municipal
Portfolio and California Intermediate-Term Municipal Portfolio may be reduced.
RIGHT OF ACCUMULATION: A shareholder qualifies for cumulative quantity discounts
when his new investment, together with the current market value of all holdings
of that shareholder in the Portfolios reaches a discount level. See "Additional
Information About Doing Business With Us" in the Prospectuses for the sales
charge on quantity purchases.
LETTER OF INTENT: The reduced sales charges are also applicable to the
aggregate amount of purchases made by any such purchaser previously enumerated
within a 13-month period pursuant to a written Letter of Intent provided by the
Distributor, and not legally binding on the signer or a Portfolio which provides
for the holding in escrow by the Distributor of 5% of the total amount intended
to be purchased until such purchase is completed within the 13-month period. A
Letter of Intent may be dated to include shares purchased up to 90 days prior to
the date the Letter of Intent is signed. The 13-month period begins on the date
of the earliest purchase. If the intended investment is not completed, the
Manager will surrender an appropriate number of the escrowed shares for
redemption in order to realize the difference.
DISTRIBUTION INVESTMENT OPTION: Distributions of dividends and capital gains
made by the Portfolios may be automatically invested in shares of one of the
Portfolios if shares of the Portfolio are available for sale. Such investments
will be subject to initial investment minimums, as well as additional purchase
minimums. A shareholder considering the Distribution Investment Option should
obtain and read the prospectus of the other Portfolios and consider the
differences in objectives and policies before making any investment.
REINSTATEMENT PRIVILEGE: A shareholder who has redeemed shares of any of the
Portfolios has a one-time right to reinvest the redemption proceeds in shares of
the Portfolios at their net asset value as of the time of reinvestment. Such a
reinvestment must be made within 30 days of the redemption and is limited to the
amount of the redemption proceeds. Although redemptions and repurchases of
shares are taxable events, a reinvestment within such 30-day period in the same
fund is considered a "wash sale" and results in the inability to recognize
currently all or a portion of a loss realized on the original redemption for
federal income tax purposes. The investor must notify the Transfer Agent at the
time the trade is placed that the transaction is a reinvestment.
EXCHANGE PRIVILEGE: A shareholder may exchange the shares of these Portfolios,
for which good payment has been received, in his account at any time, regardless
of how long he has held his shares.
Each Exchange Request must be in proper form (i.e., if in writing, signed by the
record owner(s) exactly as the shares are registered; if by telephone, proper
account identification is given by the dealer or shareholder of record), and
each exchange must involve either shares having an aggregate value of at least
$1,000 or all the shares in the account. Each exchange involves the redemption
of the shares of a Portfolio (the "Old Portfolio") to be exchanged and the
purchase at net asset value of the shares of the other portfolios (the "New
Portfolios") plus in certain cases, as disclosed in each Prospectus, any
applicable sales charge. Any gain or loss on the redemption of the shares
exchanged is reportable on the shareholder's federal income tax return, unless
such shares were held in a
S-31
<PAGE>
tax-deferred retirement plan or other tax-exempt account. If the Exchange
Request is received by the Distributor in writing or by telephone on any
business day prior to the redemption cut-off time specified in each Prospectus,
the exchange usually will occur on that day if all the restrictions set forth
above have been complied with at that time. However, payment of the redemption
proceeds by the Old Portfolio, and thus the purchase of shares of the New
Portfolios, may be delayed for up to seven days if the Portfolios determine that
such delay would be in the best interest of all of its shareholders. Investment
dealers which have satisfied criteria established by the Portfolios may also
communicate a shareholder's Exchange Request to the Portfolios subject to the
restrictions set forth above. No more than five exchange requests may be made in
any one telephone Exchange Request.
TAXES
The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated herein.
Each Portfolio will decide whether to distribute or retain all or part of any
net capital gains (the excess of net long-term capital gains over net short-term
capital losses) in any year for reinvestment. If any such gains are retained,
the Portfolio will pay federal income tax thereon, and, if the Portfolio makes
an election, the shareholders will include such undistributed gains in their
income and shareholders subject to tax will be able to claim their share of the
tax paid by the Portfolio as a credit against their federal income tax
liability.
A gain or loss realized by a shareholder on the sale or exchange of shares of a
Portfolio held as a capital asset will be capital gain or loss, and such gain or
loss will be long-term if the holding period for the shares exceeds one year,
and otherwise will be short-term. Any loss realized on a sale or exchange will
be disallowed to the extent the shares disposed of are replaced within the 61-
day period beginning 30 days before and ending 30 days after the shares are
disposed of. Any loss realized by a shareholder on the disposition of shares
held 6 months or less is treated as a long-term capital loss to the extent of
any distributions of net long-term capital gains received by the shareholder
with respect to such shares or any inclusion of undistributed capital gain with
respect to such shares.
Each Portfolio will generally be subject to a nondeductible 4% federal excise
tax to the extent it fails to distribute by the end of any calendar year at
least 98% of its ordinary income and 98% of its capital gain net income (the
excess of short- and long-term capital gains over short- and long-term capital
losses) for the one-year period ending on October 31 of that year, plus certain
other amounts.
Each Portfolio is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions, and redemptions) paid
to shareholders who have not certified on the Account Registration Form or on a
separate form supplied by the Portfolio, that the Social Security or Taxpayer
Identification Number provided is correct and that the shareholder is exempt
from backup withholding or is not currently subject to backup withholding.
Each Portfolio within the Trust is generally treated as a separate corporation
for federal income tax purposes, and thus the provisions of the Code generally
will be applied to each Portfolio separately, rather than to the Trust as a
whole. Net long-term and short-term capital gains, net income, and operating
expenses therefore will be determined separately for each Portfolio.
If a Portfolio fails to qualify as a regulated investment company ("RIC") for
any year, all of its income will be subject to tax at corporate rates, and its
distributions (including capital gains distributions) will be taxable as
ordinary income dividends to its shareholders, subject to the corporate
dividends received deduction for corporate shareholders. No dividends of any
Portfolio are expected to qualify for that deduction.
S-32
<PAGE>
As noted in the Prospectuses for the Portfolios, exempt-interest dividends are
excludable from a shareholder's gross income for regular federal income tax
purposes. Exempt-interest dividends may nevertheless be subject to the
alternative minimum tax (the "Alternative Minimum Tax") imposed by Section 55 of
the Code or the environmental tax (the "Environmental Tax") imposed by Section
59A of the Code. The Alternative Minimum Tax is imposed at the rate of 26% to
28% in the case of non-corporate taxpayers and at the rate of 20% in the case of
corporate taxpayers, to the extent it exceeds the taxpayer's regular tax
liability. The Environmental Tax is imposed at the rate of 0.12% and applies
only to corporate taxpayers. The Alternative Minimum Tax and the Environmental
Tax may be imposed in two circumstances. First, exempt-interest dividends
derived from certain "private activity bonds" issued after August 7, 1986, will
generally be an item of tax preference and therefore potentially subject to the
Alternative Minimum Tax and the Environmental Tax. The Portfolios intend, when
possible, to avoid investing in private activity bonds. Second, in the case of
exempt-interest dividends received by corporate shareholders, all exempt-
interest dividends, regardless of when the bonds from which they are derived
were issued or whether they are derived from private activity bonds, will be
included in the corporation's "adjusted current earnings," as defined in Section
56(g) of the Code, in calculating the corporation's alternative minimum taxable
income for purposes of determining the Alternative Minimum Tax and the
Environmental Tax.
The percentage of income that constitutes "exempt-interest dividends" will be
determined for each year for the Portfolios and will be applied uniformly to all
dividends declared with respect to the Portfolios during that year. This
percentage may differ from the actual percentage for any particular day.
Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Portfolios will not be deductible for federal income tax purposes to the
extent that the Portfolios distribute exempt-interest dividends during the
taxable year. The deduction otherwise allowable to property and casualty
insurance companies for "losses incurred" will be reduced by an amount equal to
a portion of exempt-interest dividends received or accrued during any taxable
year. Certain foreign corporations engaged in a trade or business in the United
States will be subject to a "branch profits tax" on their "dividend equivalent
amount" for the taxable year, which will include exempt-interest dividends.
Certain Subchapter S corporations may also be subject to taxes on their "passive
investment income," which could include exempt-interest dividends. Up to 85% of
the Social Security benefits or railroad retirement benefits received by an
individual during any taxable year will be included in the gross income of such
individual if the individual's "modified adjusted gross income" (which includes
exempt-interest dividends) plus one-half of the Social Security benefits or
railroad retirement benefits received by such individual during that taxable
year exceeds the base amount described in Section 86 of the Code.
Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by industrial development bonds or
private activity bonds should consult their tax advisors before purchasing
shares of the Portfolios. "Substantial user" is defined generally as including
a "non-exempt person" who regularly uses in trade or business a part of a
facility financed from the proceeds of industrial development bonds.
Issuers of bonds purchased by the Portfolios (or the beneficiary of such bonds)
may have made certain representations or covenants in connection with the
issuance of such bonds to satisfy certain requirements of the Code that must be
satisfied subsequent to the issuance of such bonds. Investors should be aware
that exempt-interest dividends derived from such bonds may become subject to
federal income taxation retroactively to the date thereof if such
representations are determined to have been inaccurate or if the issuer of such
bonds (or the beneficiary of such bonds) fails to comply with such covenants.
STATE TAXES
A Portfolio is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Depending upon applicable
state and local law, shareholders of a Portfolio may be exempt from state and
local taxes on distributions of tax-exempt interest income derived from
obligations of the state and/or municipalities in which they reside, but
shareholders may be subject to tax on income derived from obligations of other
jurisdictions. Each Portfolio will make periodic reports to shareholders of the
source of distributions on a
S-33
<PAGE>
state-by-state basis. Shareholders should consult their tax advisors concerning
the state and local tax consequences of investments in the Trust, which may
differ from the federal income tax consequences described above.
S-34
<PAGE>
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Advisers are responsible for placing orders to
execute Portfolio transactions. In placing orders, it is the Trust's policy to
seek to obtain the best net results taking into account such factors as price
(including the applicable dealer spread), size, type and difficulty of the
transaction involved, the firm's general execution and operational facilities,
and the firm's risk in positioning the securities involved. While the Advisers
generally seek reasonably competitive spreads or commissions, the Trust will not
necessarily be paying the lowest spread or commission available. The Trust's
policy of investing in securities with short maturities will result in high
portfolio turnover. The Trust will not purchase portfolio securities from any
affiliated person acting as principal except in conformity with the regulations
of the SEC.
S-35
<PAGE>
The Trust does not expect to use one particular dealer, but, subject to the
Trust's policy of seeking the best net results, dealers who provide supplemental
investment research to the Advisers may receive orders for transactions by the
Trust. Information so received will be in addition to and not in lieu of the
services required to be performed by the Advisers under the Advisory Agreements,
and the expenses of the Advisers will not necessarily be reduced as a result of
the receipt of such supplemental information.
The money market securities in which certain of the Portfolios invest are traded
primarily in the over-the-counter market. Bonds and debentures are usually
traded over-the-counter, but may be traded on an exchange. Where possible, a
Portfolio's Adviser will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Money market securities are generally traded on a net basis and do
not normally involve either brokerage commissions or transfer taxes. The cost
of executing portfolio securities transactions of the Portfolio will primarily
consist of dealer spreads and underwriting commissions.
It is expected that certain of the Portfolios may execute brokerage or other
agency transactions through the Distributor, a registered broker-dealer, for a
commission, in conformity with the 1940 Act, the Securities Exchange Act of
1934, as amended, and rules of the SEC. Under these provisions, the Distributor
is permitted to receive and retain compensation for effecting portfolio
transactions for a Portfolio on an exchange if a written contract is in effect
between the Distributor and the Trust expressly permitting the Distributor to
receive and retain such compensation. These provisions further require that
commissions paid to the Distributor by the Trust for exchange transactions not
exceed "usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." In addition, the Portfolios may direct commission business to
one or more designated broker-dealers, including the Distributor, in connection
with payment of certain of the Portfolios' expenses by such broker-dealers. The
Trustees, including those who are not "interested persons" of the Trust, have
adopted procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically.
Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Advisers may place portfolio orders with qualified broker-
dealers who recommend the Trust to clients, and may, when a number of brokers
and dealers can provide best price and execution on a particular transaction,
consider such recommendations by a broker or dealer in selecting among broker-
dealers.
Advisers may, consistent with the interests of the Portfolios, select brokers on
the basis of the research services they provide to the Adviser. Such services
may include analysis of the business or prospects of a company, industry or
economic sector or statistical and pricing services. Information so received by
the Advisers will be in addition to and not in lieu of the services required to
be performed by an Adviser under the Advisory Agreements. If in the judgement
of an Adviser the Portfolios, or other accounts managed by the Adviser, will be
benefitted by supplemental research services, the Adviser is authorized to pay
brokerage commissions to a broker furnishing such services which are in excess
of commissions which another broker may have charged for effecting the same
transaction. The expenses of an Adviser will not necessarily be reduced as a
result of the receipt of such supplemental information.
For the fiscal year ended August 31, 1995 , the Portfolios paid brokerage fees
as follows:
S-36
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
TOTAL $
TOTAL $ AMOUNT OF TOTAL $
AMOUNT OF BROKERED TOTAL $ AMOUNT TOTAL $
BROKERED TRANSACTIONS AMOUNT OF OF BROKERAGE TOTAL $ AMOUNT OF
TRANSACTIONS THROUGH BROKERAGE COMMISSIONS AMOUNT OF BROKERAGE
FOR YEAR AFFILIATES FOR COMMISSIONS PAID TO BROKERAGE COMMISSIONS
ENDED YEAR ENDED PAID IN YEAR AFFILIATES IN TRANSACTIONS PAID FOR
PORTFOLIO 8/31/95 8/31/95 ENDED 8/31/95 YEAR ENDED FOR RESEARCH RESEARCH
8/31/95
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio $1,764,444,102 $ 0 $ 0 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Tax $3,790,139,908 $ 0 $ 0 $ 0 $ 0 $ 0
Free Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
California $ 98,930,439 $ 0 $ 0 $ 0 $ 0 $ 0
Intermediate-Term
Municipal Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
California Tax $ 800,272,051 $ 0 $ 0 $ 0 $ 0 $ 0
Exempt Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Intermediate-Term $ 215,017,320 $ 0 $ 0 $ 0 $ 0 $ 0
Municipal Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Pennsylvania $ 152,469,177 $ 0 $ 0 $ 0 $ 0 $ 0
Municipal Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Kansas Tax Free $ 58,120,520 $ 0 $ 0 $ 0 $ 0 $ 0
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Massachusetts $ 26,590,185 $ 0 $ 0 $ 0 $ 0 $ 0
Intermediate-Term
Municipal Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Bainbridge Tax $1,101,619,796 $ 0 $ 0 $ 0 $ 0 $ 0
Exempt Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
New York * * * * * *
Intermediate-Term
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax
Free Portfolio
===========================================================================================================================
</TABLE>
For the fiscal year ended August 31, 1993, no Portfolio paid any brokerage
commissions. For the fiscal year ended August 31, 1994, the Portfolios paid the
following brokerage commissions:
S-37
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
TOTAL $ AMOUNT OF BROKERED TOTAL $ AMOUNT OF BROKERAGE
TRANSACTIONS IN YEAR ENDED COMMISSIONS PAID TO AFFILIATES IN
PORTFOLIO 8/31/94 YEAR ENDED 8/31/94
============================================================================================================
<S> <C> <C>
Tax Free Portfolio $1,295,056,630 $ 0
- ------------------------------------------------------------------------------------------------------------
Institutional Tax Free Portfolio $2,552,016,287 $ 0
- ------------------------------------------------------------------------------------------------------------
California Intermediate-Term Municipal * *
Portfolio
- ------------------------------------------------------------------------------------------------------------
California Tax Exempt Portfolio $1,629,542,628 $ 0
- ------------------------------------------------------------------------------------------------------------
Intermediate-Term Municipal Portfolio $ 126,688,721 $ 0
- ------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Portfolio $ 65,910,723 $ 0
- ------------------------------------------------------------------------------------------------------------
Kansas Tax Free Income Portfolio $ 9,027,575 $ 0
- ------------------------------------------------------------------------------------------------------------
Massachusetts Intermediate-Term $ 21,369,339 $ 0
Municipal Portfolio
- ------------------------------------------------------------------------------------------------------------
Bainbridge Tax Exempt Portfolio $ 560,801,616 $ 0
- ------------------------------------------------------------------------------------------------------------
New York Intermediate-Term Portfolio * *
- ------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free Portfolio $ 0 $ 0
============================================================================================================
</TABLE>
*Not in operation during the period.
It is expected that the portfolio turnover rate will normally not exceed 100%
for any Portfolio. A portfolio turnover rate would exceed 100% if all of its
securities, exclusive of U.S. Government securities and other securities whose
maturities at the time of acquisition are one year or less, are replaced in the
period of one year. Turnover rates may vary from year to year and may be
affected by cash requirements for redemptions and by requirements which enable a
Portfolio to receive favorable tax treatment.
For each of the fiscal years ending August 31, 1994 and 1995, the portfolio
turnover rate for each of the following Portfolios was:
<TABLE>
<CAPTION>
================================================================================
TURNOVER RATE
PORTFOLIO ---------------
1995 1994
================================================================================
<S> <C> <C>
Pennsylvania Municipal Portfolio 23% 25%
- --------------------------------------------------------------------------------
Intermediate-Term Municipal Portfolio 36% 58%
- --------------------------------------------------------------------------------
Kansas Tax Free Income Portfolio 18% 11%
- --------------------------------------------------------------------------------
Massachusetts Intermediate-Term Municipal Portfolio (closed -- 77%
8/15/95)
- --------------------------------------------------------------------------------
New York Intermediate-Term Municipal Portfolio * *
- --------------------------------------------------------------------------------
California Intermediate-Term Municipal Portfolio * *
================================================================================
</TABLE>
* Not in operation during the period.
S-38
<PAGE>
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Portfolio, each of which represents an equal proportionate
interest in that Portfolio. Each share upon liquidation entitles a shareholder
to a pro rata share in the net assets of that Portfolio, after taking into
account the Class B, Class C and Class D distribution expenses. Shareholders
have no preemptive rights. The Declaration of Trust provides that the Trustees
of the Trust may create additional portfolios of shares or classes of
portfolios. Share certificates representing the shares will not be issued.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or administrators, shall not be liable for any
neglect or wrongdoing of any such person. The Declaration of Trust also provides
that the Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with actual or threatened litigation in which
they may be involved because of their offices with the Trust unless it is
determined in the manner provided in the Declaration of Trust that they have not
acted in good faith in the reasonable belief that their actions were in the best
interests of the Trust. However, nothing in the Declaration of Trust shall
protect or indemnify a Trustee against any liability for his wilful misfeasance,
bad faith, gross negligence or reckless disregard of his duties.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust". Under Massachusetts law, shareholders of such a Trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the Trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because, the Declaration of Trust provides for indemnification out
of the Trust property for any shareholders held personally liable for the
obligations of the Trust.
5% SHAREHOLDERS
As of October 4, 1995, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Portfolios. The Trust believes that most of the
shares referred to below were held by the persons indicated in accounts for
their fiduciary, agency, or custodial customers.
<TABLE>
<S> <C> <C>
TAX FREE PORTFOLIO (Class A)
First Fidelity Bank, NA 14.13% 46,674,287.650
Attn: Joanne Monteiro
Broad & Walnut Streets
Philadelphia, PA 19109
Vose & Co. 18.64% 61,582,504.350
c/o Fleet/Norstar Services
One East Avenue
Rochester, NY 14638-0001
</TABLE>
S-39
<PAGE>
<TABLE>
<S> <C> <C>
EAMCO 14.54% 48,031,853.060
c/o Riggs National Bank
Attn: Jill Whitley
Trust Operations/Mutual Funds Dept.
1120 Vermont Avenue, NW
Washington, DC 20005
Smith & Co. 22.60% 74,661,323.320
c/o First Security Bank of Utah
Attn: Rick Parr
P.O. Box 30007
Salt Lake City, UT 84130
TAX FREE PORTFOLIO (Class D)
Reliance Trust Company 100.00% 308,165.290
P.O. Box 48449
Atlanta, GA 30362
INSTITUTIONAL TAX FREE PORTFOLIO
Bank of America NT & SA 7.14% 53,022,562.690
Attn: Common Trust Funds
Unit #8329
P.O. Box 3577 Terminal Annex
Los Angeles, CA 90051
First American Trust Company 8.39% 62,354,174.040
Attn: Jeff Eubanks
800 First American Center
Nashville, TN 37237-0801
Calhoun & Co. 11.28% 83,840,488.380
c/o Coamerica Bank
Attn: Dennis Miriani
P.O. Box 1319, 7th Floor
Detroit, MI 48231
River Oaks Trust Company 7.23% 53,700,903.000
Attn: Trust Operations
Securities Movement & Control
P.O. Box 4886
Houston, TX 77210-4886
Unit & Co. 8.08% 60,040,344.000
c/o US National Bank of Oregon
Attn: Jeanene Wine
P.O. Box 3168
Portland, OR 97208
</TABLE>
S-40
<PAGE>
<TABLE>
<S> <C> <C>
Eagle Trust Company 9.85% 1,531,846.160
Attn: Martha Schaffer
680 E. Swedesford Road
Wayne, PA 19087
Palm Beach National Bank & 11.87% 1,844,633.000
Trust Company
Attn: Diana Z. Hellmann
11760 US Highway One, #100
North Palm Beach, FL 33408
INSTITUTIONAL TAX FREE PORTFOLIO (Class B)
Muir & Co. 58.87% 9,151,581.660
c/o Frost National Bank
P.O. Box 2479
San Antonio, TX 78298-2479
Oltrust & Co. 17.98% 2,795,688.830
c/o Old Naitonal Bank in Evansville
Attn: David Crow
P.O. Box 207
Evansville, IN 47702
INSTITUTIONAL TAX FREE PORTFOLIO (Class C)
Enbecee Company 100.00% 5,102,803.370
c/o First National Bank of Commerce
Attn: Denise Marx
Cash Sweep Trust OPS
P.O. Box 61837
New Orleans, LA 70161-1837
CALIFORNIA TAX EXEMPT PORTFOLIO
The Bank of California NA 70.50% 28,412,366.300
Cash Management Services
475 Samsome Street, 11th Floor
Attn: Elena Aguba
San Francisco, CA 94111
Palsan Company 16.37% 6,597,583.210
c/o Sumitomo Bank of California
320 California Street, 3rd Floor
Trust Department - Stephen N. Emigh
San Francisco, CA 94104
CALIFORNIA TAX EXEMPT PORTFOLIO (Class C)
Southwest Securities Special 82.36% 275,359,804.700
Custody Act for Exclusive
Benefit of our Customers
Attn: Cathy Reames
P.O. Box 509002
Dallas, TX 75250
</TABLE>
S-41
<PAGE>
<TABLE>
<S> <C> <C>
City National Bank 17.64% 58,979,600.280
Attn: Michael Nunnelee
400 N. Roxbury Drive, Suite 700
Beverly Hills, CA 90210
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO (Class A)
PACO 7.62% 683,336.125
c/o Bank of America NT & SA
Attn: Mutual Funds 8615
P.O. Box 3577 Terminal Annex
Los Angeles, CA 90051
Transco & Company 14.17% 1,270,073.632
c/o Intrust Bank, N.A.
Attn: Pat Wills
P.O. Box 48698
Wichita, KS 67201
GARICO 7.46% 668,915.758
c/o American National Bank
of Chicago
Dept. 77-3272, Division 219
Attn: Wendy Kosek
Chicago, IL 60678-3272
ISTCO 6.19% 554,775.021
c/o Magna Trust Company
P.O. Box 523
Belleville, IL 62222-0523
Eagle Trust Company 9.53% 853,986.744
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087
Smith & Co. 6.80% 609,084.546
c/o First Security Bank of Utah, N.A.
Attn: Money Market/Mutual Fund Desk
P.O. Box 25297
Salt Lake City, UT 84125
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO (Class D)
Sumitomo Bank Trustee, FBO 7.70% 4,007.124
The Chiu 1981 Revocable Trust
373 First Street
Suite 200
Los Altos, CA 94022
</TABLE>
S-42
<PAGE>
<TABLE>
<S> <C> <C>
Sumitomo Bank Trustee, FBO 7.45% 3,872.515
Helen Loy Trustee
Helen Loy Trust U/A/D 12/90
757 El Cerrito Avenue
Hillsborough, CA 94010
Sumitomo Bank Trustee, FBO 5.67% 2,949.917
Etsuko M. Horio & Mike Horio Jtten
264 Belblossom Drive
Los Gatos, CA 95032
Sumitomo Bank Trustee, FBO 5.67% 2,949.363
Rose Kume
2309 Buena Vista Avenue
Belmont, CA 94002
Relico 20.77% 10,797.530
P.O. Box 48449
Atlanta, GA 30362
Sumitomo Bank Trustee, FBO 18.63% 9,683.696
Osamu & Daisy I Nagamine Trustees
Osamu & Daisy Iku Nagamine Rev Living
Trust U/A/D 05/31/78
375 Condit Lane
Watsonville, CA 95076
PENNSYLVANIA MUNICIPAL PORTFOLIO
ACO 83.06% 8,018,246.000
c/o Integra Trust Services
Attn: Karen White
Trust Securities Section 2-032
300 Fourth Avenue
Pittsburgh, PA 15278-2232
Meg and Co. 7.59% 732,846.081
c/o United States National Bank
Attn: Debbie Moraca
P.O. Box 520
Johnstown, PA 15907
PENNSYLVANIA TAX FREE PORTFOLIO
Eagle Trust Company 10.64% 2,668,160.190
Attn: Martha Schaffer
680 E. Swedesford Road
Wayne, PA 19087
</TABLE>
S-43
<PAGE>
<TABLE>
<S> <C> <C>
The Fulton Company 81.96% 20,552,075.080
c/o Fulton Bank Trust Dept.
Attn: Dennis Patrick
One Penn Square
Lancaster, PA 17602
KANSAS TAX FREE PORTFOLIO
Transco & Company 99.33% 6,154,928.049
c/o Intrust Bank, N.A.
Attn: Pat Wills
P.O. Box 48698
Wichita, KS 67201
BAINBRIDGE TAX EXEMPT PORTFOLIO
NationsBank 100.00% 147,525,045.160
c/o NationsBanc Services, Inc.
Attn: David Thayer/Deborah Goldman
1401 Elm Street, 11th Floor
Dallas, TX 75202-2911
</TABLE>
EXPERTS
The financial statements in this Statement of Additional Information and the
Financial Highlights included in the Prospectuses have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report, with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.
S-44
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
TAX FREE PORTFOLIO
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 103.8%
ALABAMA -- 1.0%
Birmingham, Baptist Medical Center, Special Care
Facilities, Baptist Health System, Ser A, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) $ 3,630 $ 3,630
---------
ALASKA -- 0.3%
Alaska State Housing Finance Corporation, Government
Purpose, Ser A, VRDN, RB 3.550%, 09/07/95 (A) (B)
(C) 1,200 1,200
---------
ARIZONA -- 2.2%
Arizona Health Facilities Authority, Pooled Loan
Program, VRDN, RB,
FGIC Insured
3.750%, 09/07/95 (A) (B) 800 800
Chandler Industrial Development Authority, Parsons
Municipal Series Project, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 3,900 3,900
Tucson, Industrial Development Authority, Tucson
Center Parking Garage, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 3,700 3,700
---------
8,400
---------
ARKANSAS -- 1.7%
Pine Bluff Industrial Development Authority, Camden
Wire Project, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) 6,300 6,300
---------
CALIFORNIA -- 3.7%
California Community College Financial Authority, Ser
A, TRAN
4.750%, 07/10/96 2,000 2,011
California State Pollution Control Revenue, San Diego
Gas & Electric, RB, 4.000%, 09/01/96 (A) (B) 1,000 1,000
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Face
Amount (000) Value (000)
- --------------------------------------------------------------------------
<S> <C> <C>
Los Angeles County, Multi-Family Housing, Malibu
Meadows Project, Ser A, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) $ 4,000 $ 4,001
Los Angeles Unified School District, TRAN
4.500%, 07/03/96 2,500 2,516
San Diego Community College, TRAN
4.500%, 07/06/96 3,500 3,513
Western Placer, Unified School District, TRAN
4.700%, 09/05/96 1,000 1,005
--------
14,046
--------
COLORADO -- 1.8%
Colorado Housing Finance Authority, Multi-Family
Housing, Cambray Park Project, VRDN, RB
3.700%, 09/07/95 (A) (B) 2,900 2,900
Colorado Housing Finance Authority, Multi-Family
Housing, Grants Plaza Project 1991A, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 1,200 1,200
Colorado Housing Finance Authority, Multi-Family
Housing, Windridge Project, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 1,000 1,000
Colorado River Authority, RB, Pre-Refunded @ 102
9.000%, 01/01/96 (C) (D) 1,000 1,036
Jefferson County Industrial Development Revenue,
Southwest Medpro Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 600 600
--------
6,736
--------
FLORIDA -- 8.4%
Boca Raton Industrial Revenue Authority, Parking
Garage, Ser 84A, VRDN, RB
4.075%, 09/07/95 (A) (B) (C) 3,125 3,125
Dade County, Aviation Revenue, Ser V, VRDN, RB
3.650%, 09/07/95 (A) (B) 10,955 10,955
</TABLE>
7
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
TAX FREE PORTFOLIO--CONTINUED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Florida Housing Finance Authority, Sarasota Beneva
Place, Ser C, VRDN, RB 3.675%, 09/07/95 (A) (B) (C) $ 2,975 $ 2,975
Florida Housing Finance Authority, VRDN, RB 3.800%,
09/07/95 (A) (B) (C) 2,300 2,300
Lee Industrial Development Authority, Christ Mission
Shell Point Village,
VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 11,155 11,155
Pasco County Housing Facility Authority, Multi-Family
Housing, Carlton Arms/Magnolia Valley, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,000 1,000
--------
31,510
--------
GEORGIA -- 6.7%
Clayton County, Multi-Family Housing Authority,
Summercourt Project,
VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,475 1,475
Cobb County, Housing Finance Authority, Summeroak
Project, Ser 1985G,
VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 6,675 6,675
Dekalb County Hospital Authority, Dekalb Medical
Center, Ser 1994, VRDN, RB 3.750%, 09/07/95 (A) (B)
(C) 6,160 6,160
Dekalb County, Development Authority Revenue, Dart
Container Project, VRDN, RB 4.050%, 09/07/95 (A) (B)
(C) 1,000 1,000
Dekalb County, Multi-Family Housing Revenue, Wood
Terrace Project, VRDN, RB 3.825%, 09/07/95 (A) (B)
(C) 4,690 4,690
Newton, Industrial Development Revenue, H.B. Fuller
Project, Ser 1984, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 3,100 3,100
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Rockdale County Hospital Authority, VRDN, RB, Revenue
Anticipation Certificates
3.750%, 09/07/95 (A) (B) (C) $ 2,000 $ 2,000
--------
25,100
--------
ILLINOIS -- 9.0%
Chicago, Multi-Family Housing Authority, Waveland
Project, Ser E, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 7,000 7,000
East Peoria, Multi-Family Housing Revenue, Radnor
East Project, VRDN, RB 3.950%, 09/07/95 (A) (B) 1,000 1,000
Illinois State Development Finance Authority,
Catholic Charities VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 7,500 7,500
Illinois State Development Financial Authority, Dart
Container Project, VRDN, RB 3.675%, 09/07/95 (A) (B)
(C) 1,300 1,300
Illinois State Health Facilities Authority, Midwest
Cambridge Project,
VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 3,600 3,600
Illinois State Health Facilities Authority,
University of Chicago Revolving Revenue Fund, TECP
3.900%, 02/08/96 (B) 3,900 3,900
Peoria Economic Development, North Point Shopping
Center Project, VRDN, RB
3.950%, 12/01/95 (A) (B) (C) 2,500 2,500
Saint Clair Industrial Building Revenue, Winchester
Apartments Project,
Ser 94, VRDN, RB
4.050%, 09/07/95 (A) (B) 3,000 3,000
Skokie, Industrial Development Authority, Fashion
Square Project, VRDN, RB
4.200%, 09/07/95 (A) (B) (C) 2,800 2,800
Springfield, Community Improvement Revenue, Kent
Family Project, VRDN, RB 3.700%, 09/07/95 (A) (B)
(C) 1,250 1,250
--------
33,850
--------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
INDIANA -- 9.7%
Bartholomew Consolidated Schools, TAW
5.750%, 12/29/95 $ 1,417 $ 1,419
Fort Wayne Community Schools, TAW
5.500%, 12/29/95 7,000 7,006
Fort Wayne Economic Development Authority, Georgetown
Place Venture, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 5,500 5,500
Gary Environmental Improvement, US Steel, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 9,800 9,802
Indiana Bond Bank Advance Refunding Project,
Ser B, BAN
3.750%, 01/10/96 2,086 2,086
Indiana State Housing Finance Authority, VRDN, RB,
Callable 03/01/96 @ 100 3.900%, 07/01/96 (A) 3,000 3,000
Indianapolis, Local Improvement Board, Ser D, Bank
Notes
4.250%, 01/11/96 (B) 4,875 4,888
Penn Harris Madison School District, TAW
5.000%, 12/29/95 1,000 1,001
Westfield, High School Building, Ser A, BAN 4.050%,
12/01/95 2,000 2,000
--------
36,702
--------
IOWA -- 3.6%
Iowa Finance Authority, Small Business Revenue,
Multi-Family Housing, Village Court Project, Ser
85A, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 6,645 6,645
Iowa State Finance Authority, Village Court Project,
VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 7,000 7,000
--------
13,645
--------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
KANSAS -- 1.1%
Kansas City, Industrial Development Revenue, Moderate
Income Housing Project, RB,
4.250%, 06/01/96 (A) (B) $ 1,000 $ 1,000
Leawood, BAN
4.000%, 03/15/96 2,500 2,500
Salina, Central Mall Dillard, Ser 84, VRDN, RB
4.075%, 09/07/95 (A) (B) (C) 495 495
---------
3,995
---------
KENTUCKY -- 0.8%
Perry County Health Facilities System, Appalachian
Regional Hospital,
VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 3,000 3,000
---------
MARYLAND -- 1.9%
Baltimore County, Pollution Control Revenue,
Baltimore Gas & Electric Project, TECP 3.600%,
10/03/95 (B) 2,000 2,000
Montgomery County, Multi-Family Housing
Opportunities, Community Housing, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 5,000 5,000
---------
7,000
---------
MASSACHUSETTS -- 1.5%
Massachusetts Bay Transportation Authority, RB
4.400%, 01/01/95 (A) (B) (C) 5,700 5,700
---------
MICHIGAN -- 2.3%
Grand Rapids, Educational Development Corporation,
Revenue Amway #2,
VRDN, RB
3.650%, 09/07/95 (A) (B) 1,060 1,060
Wayne County, Detroit School District, School Aid
Notes 4.500%, 05/01/96 (B) 5,000 5,021
Wayne County, Downriver System Sewer Disposal
Project, Ser B, TECP
4.350%, 09/26/95 (B) (C) 2,670 2,670
---------
8,751
---------
</TABLE>
9
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MINNESOTA -- 8.4%
Bloomington Commercial Development, Revenue Park
Project, VRDN, RB
3.860%, 09/07/95 (A) (B) (C) $ 2,975 $ 2,975
Cloquet Pollution Control Revenue, Potlatch Project,
VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 3,900 3,900
Golden Valley Industrial Development Revenue, Graco
Project, VRDN, RB 3.950%, 09/07/95 (A) (B) (C) 805 805
Minneapolis, Commercial Development Revenue, Thresher
Square Partnership II, VRDN, RB
3.710%, 09/07/95 (A) (B) (C) 4,335 4,335
Minneapolis, Ser A, VRDN, RB 3.610%, 09/07/95 (A) (B)
(C) 2,670 2,670
Minneapolis, Ser B, VRDN, GO 3.610%, 09/07/95 (A) (B)
(C) 13,000 13,000
Saint Paul, Water Revenue,
Ser 1994-D, VRDN, RB
3.660%, 09/07/95 (A) (B) (C) 4,000 4,000
--------
31,685
--------
MISSOURI -- 0.6%
Howell County Industrial Development Authority,
Safeway Project, VRDN, RB 3.800%, 02/01/96 (A) (B)
(C) 1,225 1,225
Missouri State Environment Improvement and Energy
Pollution Control, Union Electric Project, RB
4.000%, 06/01/96 (A) (B) (C) 1,000 1,000
--------
2,225
--------
NEBRASKA -- 0.8%
Nebraska Public Power District, Ser B, TECP
3.950%, 09/08/95 3,000 3,000
--------
NEW HAMPSHIRE -- 0.7%
New Hampshire Higher Education & Health Facilities
Authority, Dartmouth College, Ser 1995, RB, Putable
06/01/96 @ 100
4.100%, 06/01/16 (A) 2,500 2,500
--------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
NEW MEXICO -- 0.7%
Albuquerque, Industrial Development Revenue, Plastech
Project, Ser 94-B, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) $ 2,305 $ 2,305
Dona Ana County Industrial Development Authority,
Foamex Products Project, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 500 500
--------
2,805
--------
NEW YORK -- 2.4%
Campbell Savona Community School District, BAN
5.800%, 01/25/96 3,500 3,505
Nassau County, Ser F, BAN 4.500%, 03/15/96 1,500 1,505
New York State Pollution Control, Energy & Research
Development Authority, New York State
Electric & Gas, RB
4.650%, 03/15/96 (A) (B) 2,000 2,000
Ontario County Industrial Development Authority,
Seneca Foods Project,
VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 2,185 2,185
--------
9,195
--------
NORTH DAKOTA -- 0.6%
Fargo, Commercial Development Revenue, Cass Oil
Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,200 2,200
--------
OHIO -- 2.9%
Cincinnati & Hamilton County Port Authority, CEI
Realty Project, VRDN, RB
4.350%, 09/01/95 (A) (B) (C) 105 105
Montgomery County, Economic Development Revenue,
Wayne Town Center, VRDN, RB
4.500%, 10/01/95 (A) (B) (C) 1,065 1,065
North Olmstead, General Purpose Improvement,
Ser 1995, BAN
4.670%, 06/20/96 2,500 2,508
</TABLE>
10
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Ohio State, Court Street Center, Ser 1983, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) $ 1,000 $ 1,000
Summit County, Industrial Development Authority,
SGS Tool II Project, RB
4.350%, 11/01/95 (A) (B) (C) 375 375
Summit County,
Ser 1995-A, BAN
5.000%, 03/07/96 5,000 5,009
Toledo, Industrial Development Revenue, Countymark
Coop Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 900 900
--------
10,962
--------
OKLAHOMA -- 1.5%
Oklahoma City Industrial Development Authority,
Baptist General Convention Refunding, Ser 89, RB
4.000%, 03/01/96 (A) (B) (C) 1,940 1,940
Tulsa County Industrial Development Authority,
Laureate Psychiatric
Project, RB
3.750%, 12/15/95 (B) 2,000 2,000
Tulsa Parking Authority, Refunding First Mortgage
Williams Project 84, Ser A, VRDN, RB
4.300%, 11/15/95 (A) (B) (C) 540 540
Tulsa, University of Tulsa,
Ser 1985, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,100 1,100
--------
5,580
--------
OREGON -- 1.7%
Klamath, Electric Revenue,
Ser C, VRDN, RB,
Putable 05/01/96 @ 100
4.400%, 11/15/96 (A) 3,000 3,000
Port of Portland, Public Grain Elevator, Columbia
Grain, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 3,500 3,500
--------
6,500
--------
PENNSYLVANIA -- 8.7%
Allegheny County, Higher Education Building
Authority, University of Pittsburgh, Ser 85B,
VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 1,700 1,700
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Berks County Industrial Development Authority, Rilsaw
Industrial Project,
Elf Aquitaine, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) $ 400 $ 400
Clarion County Industrial Development Authority,
Specialized Development, Revenue Meritcare, MTC
Project, Ser A, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 1,000 1,000
Delaware County Industrial Development Authority,
British Petroleum Project, Ser 1995, VRDN, RB
3.250%, 09/01/95 (A) (B) 850 850
Delaware County, Industrial Development Authority,
Airport Facilities, United Parcel Service, Ser 85,
VRDN, RB
3.400%, 09/01/95 (A) (B) 1,700 1,700
Delaware Valley Regional Finance Authority, Local
Government, VRDN, RB
3.600%, 09/07/95 (A) (B) 2,100 2,100
Langhorne Hospital Revenue Authority, Franciscan
Health Systems Project, Ser C, VRDN, RB
3.400%, 09/01/95 (A) (B) (C) 2,600 2,600
Montgomery County Industrial Development Authority,
Pollution Control Revenue, TECP
3.900%, 09/07/95 (C) 1,000 1,000
Montgomery County, Higher Education & Health
Authority, Holy Redeemer Hospital, VRDN, RB
3.400%, 09/07/95 (A) (B) 2,600 2,600
Montour County Health System Authority, Geisinger
Authority, Ser 1992B, VRDN, RB
3.250%, 09/01/95 (A) (B) (C) 700 700
Moon Township Industrial Development Revenue,
Executive Office Project,
Ser 1991A, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 800 800
</TABLE>
11
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
North Cumberland County, Industrial Development
Authority, Atlas Development Project,
VRDN, RB
3.750%, 09/07/95 (A) (B) (C) $ 760 $ 760
Pennsylvania Hospital & Higher Education Facility
Authority, Thomas Jefferson University Project, Ser
C, RB
3.900%, 02/26/96 (A) (B) (C) 2,250 2,250
Pennsylvania State Infrastructure Investment
Authority, Penvest Loan Pool Project Ser 1994, VRDN,
RB
3.600%, 09/07/95 (A) (B) (C) 1,550 1,550
Philadelphia Industrial Development Authority, Multi-
Family Housing, Harbor View Towers Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 300 300
Philadelphia School District, Ser 1995, TRAN
4.500%, 06/28/96 7,000 7,030
Philadelphia, Hospital and Higher Education Facility
Authority, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 560 560
Philadelphia, Ser A, TRAN
4.500%, 06/27/96 2,000 2,009
Schuylkill County, Industrial Development Authority,
Westwood Energy Project, VRDN, RB
3.600%, 09/01/95 (A) (B) (C) 2,940 2,940
--------
32,849
--------
RHODE ISLAND -- 0.5%
Cranston, BAN
4.700%, 11/15/95 2,000 2,002
--------
SOUTH CAROLINA -- 2.9%
Florence County, Industrial Development Revenue,
La-Z-Boy Chair Project, VRDN, RB
3.763%, 09/07/95 (A) (B) 5,000 5,000
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Greenville Industrial Development Revenue, Edgecomb
Project, Ser 84, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) $ 3,100 $ 3,100
York County, Pollution Control Revenue, North
Carolina Electric Project, VRDN, RB
4.300%, 09/15/95 (A) (B) 3,000 3,000
--------
11,100
--------
TENNESSEE -- 1.3%
Memphis, Ser A, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 5,000 5,000
--------
TEXAS -- 5.6%
Bexar County, Health Facilities Development, Air
Force Village, Ser 85B , VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 3,985 3,985
Brazo River, Hoffman-Laroche Project, Ser 85, VRDN,
RB
3.800%, 09/07/95 (A) (B) 1,000 1,000
Dallas Waterworks and Sewer Systems, RB
6.000%, 04/01/96 (D) 1,135 1,148
Harris County, Multi-Family Housing, Woodgate
Project, VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 2,300 2,300
San Antonio, Electric & Gas Revenue, RB
7.000%, 02/01/96 300 304
Texas State, Ser A, TRAN 4.750%, 08/30/96 9,500 9,561
Trinity River, Industrial Development Authority,
Trinity River Project,
VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 2,900 2,900
--------
21,198
--------
UTAH -- 2.3%
Nephi Industrial Development Revenue, Refunding
Safeway Project, VRDN, RB
4.500%, 09/01/95 (A) (B) (C) 1,405 1,405
3.850%, 03/01/96 (A) (B) (C) 1,405 1,405
</TABLE>
12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Salt Lake City, Industrial Development Authority,
Devereaux Partners Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) $ 5,000 $ 5,000
West Valley City, Refunding Johnson Matthey Project,
Ser 144A, VRDN, RB
3.500%, 09/07/95 (A) (B) (C) 1,200 1,200
---------
9,010
---------
VERMONT -- 1.6%
Vermont State Student Assistance Loan Bonds,
Ser 1985, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 6,100 6,100
---------
VIRGINIA -- 1.3%
Fairfax County, Multi-Family Housing Revenue, Chase
Commons Project,
VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 5,000 5,000
---------
WASHINGTON -- 0.4%
Washington State Public Power Supply System, Nuclear
Project Number 3, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 1,400 1,400
---------
WEST VIRGINIA -- 0.3%
Keyser Industrial Development Revenue, Keyser
Project, VRDN, RB 3.700%, 09/07/95 (A) (B) (C) 1,200 1,200
---------
WISCONSIN -- 1.9%
Lacrosse, Industrial Development Revenue, Lacrosse
Properties,
VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 1,950 1,950
Oshkosh Area High School District, Ser A, TRAN
4.500%, 09/14/95 2,000 2,000
Random Lake School District, TRAN
4.530%, 09/29/95 1,300 1,300
Village of Menomonee, Industrial Development Revenue,
Maysteel Corporation, VRDN, RB 3.675%, 09/07/95 (A)
(B) (C) 1,900 1,900
---------
7,150
---------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ---------------------------------------------------------------------------
<S> <C> <C>
WYOMING -- 1.0%
Evanston, Industrial Development Revenue, Safeway
Project, RB
3.950%, 12/01/95 (A) (B) (C) $ 3,700 $ 3,700
--------
Total Municipal Bonds
(Cost $391,925,784) 391,926
--------
Total Investments -- 103.8%
(Cost $391,925,784) 391,926
--------
OTHER ASSETS AND LIABILITIES -- -3.8%
Other Assets and Liabilities, Net (14,502)
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no par
value) based on 377,333,054 outstanding shares of beneficial
interest 377,188
Portfolio shares of Class D (unlimited authorization -- no par
value) based on 271,607 outstanding shares of beneficial
interest 272
Accumulated Net Realized Loss on Investment (36)
--------
Total Net Assets: -- 100.0% $377,424
========
Net Asset Value, Offering Price and Redemption Price Per
Share -- Class A $ 1.00
Net Asset Value, Offering Price and Redemption Price Per
Share -- Class D $ 1.00
========
</TABLE>
BAN Bond Anticipation Note
FGIC Financial Guaranty Insurance Corporation
GO General Obligation
RB Revenue Bond
Ser Series
TAW Tax Anticipation Warrant
TECP Tax Exempt Commercial Paper
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
(A) Floating Rate Security -- the rate reflected on the Statement of Net Assets
is the rate in effect on August 31, 1995.
(B) Put and Demand Feature -- the date reported on the Statement of Net Assets
is the lesser of the maturity date or the put date.
(C) Securities are held in conjunction with a letter of credit from a major
commercial bank or financial institution.
(D) Pre-Refunded Security--the maturity date shown is the pre-refunded date.
13
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
CALIFORNIA TAX EXEMPT PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 97.9%
CALIFORNIA -- 97.9%
Bay Area Governments, Finance Authority, Non-Profit,
Lucile Saltier Project, VRDN, RB,
AMBAC Insured
3.200%, 09/07/95 (A) (B) (C) $ 7,950 $ 7,950
California Community College Financial Authority,
Ser A, TRAN
4.750%, 07/10/96 7,000 7,040
California Education Facility Authority, Stanford
University, VRDN, RB
3.200%, 09/07/95 (A) (B) 5,055 5,055
California State Health Facilities Catholic
Healthcare West,
Ser 1995 D, VRDN, RB
MBIA Insured
3.400%, 09/07/95 (A) (B) 5,000 5,000
California State Health Facilities Finance Authority,
Catholic Health Care, Ser B, VRDN, RB,
MBIA Insured
3.400%, 09/07/95 (A) (B) 2,000 2,000
California State Health Facilities Finance Authority,
Catholic Health Care, Ser C, VRDN, RB, MBIA Insured
3.400%, 09/07/95 (A) (B) 1,600 1,600
California State Health Facilities Finance Authority,
Sutter Health, Ser B, VRDN, RB
3.450%, 09/01/95 (A) (B) (C) 7,300 7,300
California State Health Facilities Financing
Authority, Catholic Health Care, Ser A, VRDN, RB,
MBIA Insured
3.400%, 09/07/95 (A) (B) 3,300 3,300
California State Health Facilities Financing
Authority, Kaiser Permanente, Ser A, VRDN, RB
3.350%, 09/07/95 (A) (B) 1,200 1,200
California State Health Facilities Financing
Authority, Kaiser Permanente, Ser B, VRDN, RB
3.350%, 09/07/95 (A) (B) 5,100 5,100
California State Health Facilities Financing
Authority, Memorial Health Services, VRDN, RB
3.400%, 09/07/95 (A) (B) 2,300 2,300
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
California State Health Facilities Financing
Authority, Saint Joseph Health System, Ser B, VRDN,
RB
3.200%, 09/01/95 (A) (B) $ 1,075 $ 1,075
California State Health Facilities Financing
Authority, Santa Barbara Cottage,
Ser B, VRDN, RB
3.300%, 09/07/95 (A) (B) (C) 2,900 2,900
California State Housing Finance Authority Multi-
Family Housing Revenue, Oakbrook Ridge Apartments,
Ser 93-A,
VRDN, RB
3.550%, 09/07/95 (A) (B) 4,830 4,830
California State Pollution Control Chevron USA
Project B, RB, Putable 6/15/96 @ 100
4.250%, 06/15/05 (A) 1,360 1,366
California State Pollution Control Finance Authority
Revenue, San Diego Gas & Electric, Ser H, RB,
Putable 8/1/96 @ 100,
FGIC Insured
4.250%, 12/01/07 (A) 6,300 6,300
California State Pollution Control Finance Authority,
San Diego Gas & Electric, RB
4.000%, 09/01/96 (A) (B) 2,750 2,750
California State Pollution Control Finance Authority,
Solid Waste Disposal, North County Recycling Center,
VRDN, RB
3.350%, 09/06/95 (A) (B) (C) 4,000 4,000
California State Pollution Control Financing
Authority, Chevron USA Project, RB, Putable 05/15/96
@ 100
4.500%, 05/15/02 (A) 5,500 5,513
California Statewide Community Development Authority,
Apartment Development Revenue, Ser 1995 A-4,
VRDN, RB
3.450%, 09/07/95 (A) (B) 5,000 5,000
California Statewide Community Development Authority,
Sutter Health Group, VRDN, RB,
AMBAC Insured
3.300%, 09/01/95 (A) (B) (C) 3,900 3,900
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Contra Costa County, Multi-Family Housing, Delta
Square Project, Ser A, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) $ 2,000 $ 2,000
Contra Costa County, Multi-Family Housing, VRDN, RB
4.050%, 09/07/95 (A) (B) 3,500 3,500
Contra Costa County, TRAN
4.500%, 07/03/96 1,000 1,007
Contra Costa County, Transportation Authority, Sales
Tax Revenue, Ser A, VRDN, RB
FGIC Insured
3.400%, 09/07/95 (A) (B) 5,500 5,500
Corona Redevelopment Agency, Crown Point Project, Ser
1985, RB, Putable 05/01/96 @ 100
4.750%, 05/01/15 (A) (C) 7,885 7,885
Corona, Multi-Family Housing, County Hills Apartment
Project, Ser 1995-B, VRDN, RB
3.350%, 09/07/95 (A) (B) (C) 1,655 1,655
East Bay, Utility District Water System, Revenue
Refunding Project, RB, Pre-Refunded
@ 102.50
6.750%, 03/01/96 (D) 3,000 3,107
Escondido, Community Development Multi-Family
Housing, Heritage Housing Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 3,350 3,350
Fairfield, TRAN
4.500%, 06/27/96 1,000 1,004
Fontana, GAF Tax Exempt Bond Grantor Trust, Ser Ga7,
VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 6,325 6,325
Freemont, Multi-Family Housing, Creekside Village
Apartments Project, Ser D, VRDN, RB
3.350%, 09/07/95 (A) (B) 7,300 7,300
Hermosa Beach,
Parking Authority,
VRDN, COP
3.400%, 09/07/95 (A) (B) 6,400 6,400
Independent Cities,
Lease Finance Authority,
Revenue Pooled Project,
VRDN, RB
3.300%, 09/07/95 (A) (B) (C) 5,605 5,605
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Irwindale, Industrial Development Revenue, Toys R Us
Project, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) $ 500 $ 500
Kern County, Panama-Buena Vista Union School
District, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 6,000 6,000
Kern County, Public Facilities Project, Ser C, VRDN,
RB
3.450%, 03/08/96 (A) (B) (C) 4,500 4,500
Kern County, Public Facilities Project, Ser D, VRDN,
RB
3.450%, 09/07/95 (A) (B) (C) 2,600 2,600
Livermore, Water Reclamation Plant Project, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 950 950
Loma Linda, Hospital Revenue, Loma Linda Medical
Center,
Ser 85-A, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 1,300 1,300
Loma Linda, University Medical Center #979, Ser 1985-
C,
VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 8,880 8,880
Los Angeles County, Metropolitan Transit Commission,
Ser A, VRDN, RB, FGIC Insured
3.200%, 09/07/95 (A) (B) (C) 1,150 1,150
Los Angeles County, Metropolitan Transit Commission,
TECP
3.850%, 09/29/95 (C) 5,000 5,000
Los Angeles County, Metropolitan Transportation
Authority, Sales Tax Revenue, Ser 1995-A, RAN
5.000%, 04/25/96 (C) 12,000 12,057
Los Angeles County, Metropolitian Transportation
Authority Revenue, Union Station Gateway-A, VRDN, RB
3.500%, 09/06/95 (A) (B) 5,000 5,000
Los Angeles County, Community Redevelopment Agency
Willowbrook Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 800 800
Los Angeles Housing Authority, Multi-Family Housing
Revenue, Var Sand Canyon Ranchester Project 1985,
Ser F, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 1,800 1,800
Los Angeles, Community Redevelopment Agency Baldwin
Hills Public Park, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 600 600
</TABLE>
15
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
CALIFORNIA TAX EXEMPT PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
Los Angeles, Equipment Acquisition Program,
Ser U, COP, AMBAC Insured
4.300%, 03/01/96 $ 375 $ 375
Los Angeles, Multi-Family Housing Malibu Meadows
Project II, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,700 2,700
Los Angeles, Unified School District, TRAN
4.500%, 07/03/96 10,000 10,064
Modesto, High School & City School District, VRDN,
COP 3.450%, 09/07/95 (A) (B) (C) 3,000 3,000
Monterey County, Finance Authority Revenue,
Reclamation & Distribution Program,
Ser A-95, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 5,000 5,000
Monterey, Regional Waste Management Authority,
VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 3,500 3,500
Oakland Redevelopment Agency, Central District Tax
Allocation, Ser B, GO, Pre-Refunded
@ 103, FGIC Insured
10.100%, 02/01/96 (D) 490 517
Oakland, Revenue Assessment Bay Area Government,
VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 2,365 2,365
Oxnard Redevelopment Agency, Channel Islands
Business, VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 4,685 4,685
Palm Springs Community Redevelopment Agency,
Headquarters Hotel-1,
VRDN, COP
3.700%, 09/07/95 (A) (B) (C) 1,070 1,070
Palm Springs Community Redevelopment Agency,
Headquarters Hotel-4,
Ser 7, VRDN, COP
3.700%, 09/06/95 (A) (B) (C) 1,000 1,000
Palm Springs Community Redevelopment Agency,
Headquarters Hotel-4,
Ser 4, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 1,800 1,800
Pico Rivera, Water Development Leasehold Mortgage,
RB, Pre-Refunded @ 103
8.000%, 12/01/95 (D) 320 332
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Pomona Public Finance Authority, Southwest Pomona,
VRDN, RB
3.600%, 09/07/95 (A) (B) (C) $ 2,300 $ 2,300
Redlands Redevelopment Agency, Parking Lease, VRDN,
RB
3.810%, 09/07/95 (A) (B) (C) 4,735 4,735
Redlands Redevelopment Agency, Tax Allocation, Ser A,
VRDN, RB
3.810%, 09/07/95 (A) (B) (C) 11,200 11,200
Riverside County, Industrial Development Advanced
Business Forms Project,
VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,050 2,050
Roseville, Joint Union High School District, VRDN,
COP
3.450%, 09/07/95 (A) (B) (C) 3,740 3,740
San Bernadino County, Industrial Development
Authority, Sandpiper Investments Project, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) 3,500 3,500
San Bernadino County, Multi-Family Housing Revenue,
Alta Loma Heritage Project,
Ser A, VRDN, RB
3.350%, 09/07/95 (A) (B) (C) 2,264 2,264
San Bernadino County, Multi-Family Housing Revenue,
Gold West Apartments,
Ser A, VRDN, RB
3.350%, 09/07/95 (A) (B) (C) 500 500
San Bernadino County, Transportation Authority,
Sales Tax, VRDN, RB
3.400%, 09/07/95 (A) (B) (C) 3,400 3,400
San Bernadino, Industrial Development Revenue,
Gate City Beverage District, VRDN, RB
3.750%, 09/07/95 (A)( (B) (C) 540 540
San Diego, Industrial Development Authority, San
Diego Gas & Electric Project, TECP
3.300%, 09/27/95 2,500 2,500
San Diego, Multi-Family Housing Revenue, La Cima
Apartments Project, Ser K, VRDN, RB
3.500%, 09/07/95 (A) (B) (C) 1,650 1,650
San Diego, Regional Transportation Commission, Sales
Tax Revenue, Second Sr-Ser A, RB,
FGIC Insured
4.750%, 04/01/96 5,000 5,021
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
San Dimas, Multi-Family Housing Revenue, Ser 1988-A,
VRDN, RB
3.680%, 09/07/95 (A) (B) (C) $ 5,670 $ 5,670
San Francisco City & County Redevelopment Agency,
Multi Family Housing Revenue, South Harbor Project,
VRDN, RB
3.575%, 09/07/95 (A) (B) (C) 300 300
San Francisco City & County Redevelopment Agency,
Multi-Family Housing Revenue, Bayside Village
Project,
Ser A, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 2,100 2,100
San Francisco City & County Redevlopment Agency,
Multi-Family Housing Revenue, Fillmore Center
Project,
Ser B-1, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 6,800 6,800
San Joaquin County, TRAN
4.750%, 10/18/95 4,500 4,503
San Luis Obispo County, Board of Education, TRAN
4.500%, 06/28/96 12,035 12,088
San Marcos Industrial Development Authority, Amistar
Project, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) 4,500 4,500
Santa Clara County Housing Authority, Benton Place
Central Apartments Project, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 1,800 1,800
Santa Clara, Electric Revenue,
Ser A, VRDN, RB
3.300%, 09/07/95 (A) (B) (C) 930 930
Simi Valley, Multi-Family Housing, Cochnan Street
Project 1985, Issue A, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 5,000 5,000
Southern California Public Power Authority,
Transmission Project, Ser 1991, VRDN, RB,
AMBAC Insured
3.150%, 09/07/95 (A) (B) (C) 11,000 11,000
Turlock Industrial Development Authority, Irrigation
District,
Ser A, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 6,350 6,350
Union City, Multi Family Housing Revenue, Sierra
Green Apartments, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 4,000 4,000
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Upland, Community Redevelopment Agency, Northwoods
Project, Ser B, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) $ 2,300 $ 2,300
Vacaville, Multi-Family Housing Revenue, Quail Run
Apartments, Ser 1988-A, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 7,300 7,300
Visalia Convention Center, VRDN, COP
3.750%, 09/07/95 (A) (B) (C) 1,300 1,300
Vista Community Development, BAN, Putable 11/01/95 @
100
4.500%, 10/01/97 (A) (C) 4,500 4,500
--------
Total Municipal Bonds
(Cost $351,503,175) 351,503
--------
Total Investments -- 97.9%
(Cost $351,503,175) 351,503
--------
OTHER ASSETS AND LIABILITIES -- 2.1%
Other Asests and Liabilities, Net 7,453
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no par
value) based on 30,944,611 outstanding shares of beneficial
interest 30,945
Portfolio shares of Class C (unlimited authorization -- no par
value) based on 328,011,753 outstanding shares of beneficial
interest 328,011
--------
Total Net Assets: -- 100.0% $358,956
========
Net Asset Value, Offering Price and Redemption Price Per Share --
Class A $ 1.00
Net Asset Value, Offering Price and Redemption Price Per Share --
Class C $ 1.00
========
</TABLE>
AMBAC American Municipal Bond Assurance Company
BAN Bond Anticipation Notes
COP Certificate of Participation
FGIC Financial Guaranty Insurance Corporation
GO General Obligation
MBIA Municipal Bond Insurance Association
RAN Revenue Anticipation Note
RB Revenue Bond
Ser Series
TRAN Tax & Revenue Anticipation Note
TECP Tax Exempt Commercial Paper
VRDN Variable Rate Demand Note
(A) Floating Rate Security -- the rate reflected on the Statement of Net Assets
is the rate in effect on August 31, 1995.
(B) Put and Demand Feature -- the date reported on the Statement of Net Assets
is the lesser of the maturity date or the put date.
(C) Securities are held in conjunction with a letter of credit from a major
commercial bank or financial institution.
(D) Pre-Refunded Security -- the maturity date shown is the pre-refunded date.
17
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
BAINBRIDGE TAX EXEMPT PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 102.3%
ALABAMA -- 2.3%
Birmingham, Baptist Medical Center, Special Care
Facility, Living Community Project,
Ser A, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) $3,500 $ 3,500
--------
ALASKA -- 1.3%
Alaska, Housing Finance Corporation, Government
Purpose Bonds, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 2,000 2,000
--------
ARIZONA -- 0.8%
Tucson, Multi-Family Housing Revenue, Lincoln Garden
Project, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) 1,130 1,130
--------
CALIFORNIA -- 4.5%
California Community College, TRAN
4.750%, 07/10/96 1,000 1,006
San Diego Community College, TRAN
4.500%, 07/06/96 1,500 1,506
San Francisco City & County, Bayside Village
Project, Ser 1985-B, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 4,200 4,199
--------
6,711
--------
COLORADO -- 5.0%
Colorado Housing Finance Authority, Multi-Family
Housing, Woodstream Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,500 2,500
Colorado Housing Finance Authority, Multi-Family
Housing, Windridge Project, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 4,915 4,915
--------
7,415
--------
FLORIDA -- 2.5%
Florida Housing Finance Authority, Multi-Family
Housing, River Oaks Apartment Project, Ser T, VRDN,
RB
3.550%, 09/07/95 (A) (B) (C) 1,900 1,900
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Orange County Industrial Development Authority,
Orlando Drive Partnership Project, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) $1,800 $ 1,800
--------
3,700
--------
GEORGIA -- 5.9%
Cobb County, Multi-Family Housing, Tobbaron Project,
Ser 1985, VRDN, RB
3.770%, 09/07/95 (A) (B) (C) 3,600 3,600
De Kalb County, Multi-Family Housing, Wood Terrace
Project, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 4,500 4,500
Evans County Industrial Development Authority,
Sherman Utilitity Structures, VRDN, RB,
3.750%, 09/07/95 (A) (B) (C) 700 700
--------
8,800
--------
ILLINOIS -- 1.0%
Saint Clair Industrial Development Authority,
Winchester Apartments Project, Ser 94, VRDN, RB
4.050%, 09/07/95 (A) (B) 1,550 1,550
--------
</TABLE>
<TABLE>
<S> <C> <C>
INDIANA -- 6.2%
East Chicago School City, TAW
5.750%, 12/29/95 1,500 1,501
Fort Wayne, Community Schools, TAW
5.500%, 12/29/95 2,500 2,509
Indiana Health Faciltites Finance Authority, Lutherwood Project,
VRDN, RB
3.800%, 09/07/95 (A) (B) (C) 900 900
Indiana State Housing Finance Authority, VRDN, RB
3.900%, 07/01/96 (A) (B) 1,400 1,400
Michigan City Area School, TAW
5.750%, 12/29/95 1,000 1,001
Penn-Harris-Madison, School District, TAW
5.000%, 12/29/95 1,000 1,001
Westfield, High School Building, Ser 1995, BAN
4.050%, 12/01/95 1,000 1,000
-----
9,312
-----
</TABLE>
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
IOWA -- 0.7%
Iowa Higher Education Loan Authority, Private
College Project, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) $1,000 $ 1,000
--------
KANSAS -- 0.7%
Leawood, BAN
4.000%, 03/15/96 1,000 1,000
--------
KENTUCKY -- 1.7%
Erlanger City, Industrial Development, Stronghold of
Kentucky Enterprise, VRDN, RB
4.350%, 11/01/95 (A) (B) (C) 910 910
Ohio County, Pollution Control, Big River Electric
Corporation, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) 1,700 1,700
--------
2,610
--------
LOUISIANA -- 1.9%
New Orleans Industrial Development, Spectrum Control
Technology Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,800 2,800
--------
MARYLAND -- 1.7%
Hyattsville, Industrial Development Revenue, Safeway
Project, RB
3.950%, 12/01/95 (A) (B) (C) 2,590 2,590
--------
MASSACHUSETTS -- 0.7%
Haverhill, VRDN, RB,
Pre-refunded @ 102
8.875%, 12/01/95 (A) (D) 1,000 1,032
--------
MICHIGAN -- 4.1%
Lansing Educational Development Center, Atrium
Office Building, VRDN, RB
4.350%, 11/01/95 (A) (B) (C) 770 770
McDonald Tax-Exempt Mortgage Trust #1, Michigan, RB
5.350%, 01/15/96 (A) (B) (C) 227 227
Michigan State Job Development Authority, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 2,600 2,601
Oakland County, Economic Development Center, Corners
Shop Center, RB
4.100%, 02/01/96 (A) (B) (C) 525 525
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Wayne County Detroit, School District, SAN
4.500%, 05/01/96 $2,000 $ 2,008
--------
6,131
--------
MINNESOTA -- 5.5%
Bloomington, Commercial Development, ATS II Project,
Ser 1993, VRDN, RB
4.025%, 09/07/95 (A) (B) (C) 4,315 4,315
Minneapolis, Ser B, VRDN, RB
3.610%, 09/07/95 (A) (B) (C) 3,000 3,000
Saint Paul, Housing and Redevelopment Authority,
Lutheran Social Service Project, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 870 870
--------
8,185
--------
MISSOURI -- 5.7%
Kansas City Industrial Development Authority,
Baptist Health Systems Project, Ser A, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 5,475 5,475
Missouri State Environment Input and Energy
Pollution Control, Union Electric Project, RB
4.000%, 06/01/96 (A) (B) (C) 1,000 1,000
West Plains, Industrial Development Authority, West
Plains Manor Project, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 2,000 2,000
--------
8,475
--------
NEBRASKA -- 0.3%
Oshkosh, Industrial Development Revenue,
Marshalltown Instruments Project, RB
4.450%, 12/01/95 (A) (B) (C) 505 505
--------
NEW HAMPSHIRE -- 1.3%
New Hampshire State Housing Finance Authority,
Hampshire Estates, Manchester Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,000 2,000
--------
NEW JERSEY -- 1.2%
New Jersey State Economic Development Authority,
Cincinnati Gear Project, RB
4.400%, 10/01/95 (A) (B) (C) 1,790 1,790
--------
</TABLE>
19
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
BAINBRIDGE TAX EXEMPT PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
NEW YORK -- 1.2%
Campbell-Savona, Community School District, BAN
5.800%, 01/25/96 $1,000 $ 1,001
Nassau County, Series F, BAN
4.500%, 03/15/96 750 753
--------
1,754
--------
OHIO -- 6.5%
Brecksville-Broadview Heights, Ohio City School
District, BAN
5.710%, 01/18/96 1,000 1,000
Clark County, Community Hospital Project, Ser B, RB
4.800%, 10/01/95 (A) (B) (C) 275 275
4.800%, 10/01/95 (A) (B) (C) 235 235
Clermont County, Economic Development Revenue, John
Q Hammons Project, RB
4.800%, 11/01/95 (A) (B) (C) 195 195
Cuyahoga County, Health Care Facilities, Visiting
Nurse Care Association, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 250 250
Franklin County, Industrial Development Authority,
Leveque & Associates Project, RB
4.200%, 12/01/95 (A) (B) (C) 1,475 1,475
Marion County, Pooled Lease Program, Hospital, RB
4.250%, 11/01/95 (A) (B) (C) 1,560 1,560
McDonald Tax-Exempt Mortgage Trust #1, Ohio, RB
5.350%, 01/15/96 (A) (B) (C) 1,061 1,061
Montgomery County, Economic Development Authority,
ND Motels Project, RB
4.200%, 12/15/95 (A) (B) (C) 455 455
North Olmstead, Various Purpose Improvement Notes
Ser 1995, BAN
4.670%, 06/20/96 1,000 1,003
Ohio State, Citizens Federal
Tax Exempt Mortgage Bond Trust, RB
5.050%, 09/01/95 (A) (B) (C) 280 280
Stark County Industrial Development Authority,
Belpar Professional Building, RB
4.700%, 10/01/95 (A) (B) (C) 280 280
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Summit County Industrial Development Authority,
Arlington Plaza Project, RB
4.500%, 09/01/95 (A) (B) (C) $1,610 $ 1,610
--------
9,679
--------
OKLAHOMA -- 2.4%
Creek County, Industrial Development Authority,
Indiana Glass Project, RB
4.250%, 12/01/95 (A) (B) (C) 2,175 2,175
Tulsa County, Industrial Development Authority,
Laureate Psychiatric Project, RB
3.750%, 12/15/95 (A) (B) 1,000 1,000
Tulsa, Industrial Development Authority, St. John's
Medical Center Project, VRDN, RB
3.825%, 09/01/95 (A) (B) 365 365
--------
3,540
--------
OREGON -- 3.1%
Port of Portland, Industrial Development Revenue,
Stinstzer Steel Project, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 1,000 1,000
Port of Portland, Public Grain Elevator Columbia
Project, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,250 1,250
3.950%, 09/07/95 (A) (B) (C) 2,350 2,350
--------
4,600
--------
PENNSYLVANIA -- 8.4%
Cumberland County Municipal Authority, United
Methodist Home Project, RB
3.950%, 07/01/96 (A) (B) (C) 1,000 1,000
Delaware County Industrial Development Authority,
British Petroleum Project, Ser 1995, VRDN, RB
3.250%, 09/01/95 (A) (B) 1,000 1,000
Delaware County, Industrial Development Authority,
United Parcel Services Project, Series 85, VRDN, RB
3.400%, 09/01/95 (A) (B) 1,100 1,100
</TABLE>
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Langhorne, Hospital Revenue Authority, Franciscan
Health Systems Project, Ser C, VRDN, RB
3.400%, 09/01/95 (A) (B) (C) $ 900 $ 900
McDonald Tax-Exempt Mortgage Trust #1, Pennsylvania,
RB
5.350%, 01/15/96 (A) (B) (C) 227 227
Montgomery County Higher Education and Health
Authority, Holy Redeemer Hospital Project, VRDN, RB
3.400%, 09/07/95 (A) (B) 500 500
Montgomery County Hospital, Abington Memorial
Hospital, RB
8.000%, 06/01/96 (D) 1,000 1,057
Pennsylvania Higher Education Facility Authority,
Thomas Jefferson University Project, Ser C, RB
3.900%, 02/26/96 (A) (B) (C) 1,000 1,000
Pennsylvania State Higher Educational Facilities
Authority, Temple University Project, VRDN, RB
3.250%, 09/01/95 (A) (B) (C) 1,100 1,100
Pennsylvania State Infrastruture Investment
Authority, Penvest Loan Pool Project Ser 1994,
VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 1,000 1,000
Pennsylvania State, Authority For Improvement In
Municipalities, Hospital Equipment Leasing,
Allegheny County Hospital Project, RB
3.500%, 09/07/95 (A) (B) 1,655 1,655
Philadelphia School District, TRAN
4.500%, 06/28/96 2,000 2,010
--------
12,549
--------
RHODE ISLAND -- 0.7%
Cranston, BAN
4.700%, 11/15/95 1,000 1,001
--------
SOUTH CAROLINA -- 6.1%
Charlestown Center Grantor
Trust #1, South Carolina, RB
3.850%, 02/01/96 (A) (B) (C) 2,000 2,000
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Greenville, Industrial Development, Ser 84, Edgecomb
Project, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) $3,100 $ 3,100
Rockhill, Utility Systems Project, VRDN, RB
3.550%, 09/07/95 (A) (B) 1,000 1,000
York County, Pollution Control Revenue, North
Carolina Electric Project, RB
4.300%, 09/15/95 (A) (B) 3,000 3,000
--------
9,100
--------
TENNESSEE -- 3.0%
Franklin County, Health & Education Facilities
Board, University of The South Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 4,500 4,500
--------
TEXAS -- 6.5%
Harris County Multi-Family Housing Authority,
Country Scape Development, VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 1,800 1,800
Houston, Health Facilities Development, Memorial
Northwest Pavillion Project, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) 545 545
Nacogdoches, South Central, Texas Health Facility,
VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 3,300 3,300
Texas State, TRAN
4.750%, 08/30/96 4,000 4,026
--------
9,671
--------
VIRGINIA -- 1.0%
Hampton, Redevelopment & Housing Authority, Chase
Hampton Village Project,
Ser 1984, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 1,460 1,460
--------
WASHINGTON -- 3.3%
Seattle Municipal Light & Power, TECP
4.300%, 10/05/95 (B) 1,000 1,000
</TABLE>
21
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
BAINBRIDGE TAX EXEMPT PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Washington State Housing Finance Commission, Mill
Plains Crossing Project,
Series 85, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) $1,000 $ 1,000
Washington State Housing Finance Commission, Multi-
Family Housing, Pacific First Federal Savings Bank
Project, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 1,475 1,475
Washington State Housing Finance Community, Pioneer
Human Services Project
Ser 1991, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 1,450 1,450
--------
4,925
--------
WASHINGTON, D.C. -- 0.2%
District of Columbia, Catholic University Project,
Ser A, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 300 300
--------
WISCONSIN -- 4.6%
Lacrosse, Industrial Development, Lacrosse
Properties, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 3,355 3,355
Oshkosh School District, TRAN
4.500%, 09/14/95 1,250 1,250
Racine, Promissory Notes, Series B, GO
4.900%, 12/20/95 2,200 2,200
--------
6,805
--------
WYOMING -- 0.3%
Cheyenne County, Holiday Inn Project, RB
4.800%, 10/01/95 (A) (B) (C) 490 490
--------
Total Municipal Bonds
(Cost $152,609,876) 152,610
--------
Total Investments -- 102.3%
(Cost $152,609,876) 152,610
--------
OTHER ASSETS AND LIABILITIES -- -2.3%
Other Assets and Liabilities, Net ( 3,377)
--------
NET ASSETS:
Portfolio shares of Class A (unlimited
authorization -- no par value) based on 149,227,433
outstanding shares of beneficial interest 149,227
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Accumulated Net Realized Gain on Investments $ 4
Undistributed Net Investment Income 2
--------
Total Net Assets: -- 100.0% $149,233
========
Net Asset Value, Offering Price and Redemption Price
Per Share --Class A $ 1.00
========
</TABLE>
BAN Bond Anticipation Note
GO General Obligation
RB Revenue Bond
SAN School Aid Note
Ser Series
TAW Tax Anticipation Warrant
TECP Tax Exempt Commercial Paper
TRAN Tax and Revenue Anticipation Note
VRDN Variable Rate Demand Note
(A) Floating Rate Security -- the rate reflected on the Statement of Net Assets
is the rate in effect on August 31, 1995.
(B) Put and Demand Feature -- the date reported on the Statement of Net Assets
is the lesser of the maturity date or the put date.
(C) Securities are held in conjunction with a letter of credit from a major
commercial bank or financial institution.
(D) Pre-Refunded Security--the maturity date shown is the pre-refunded date.
INSTITUTIONAL TAX FREE PORTFOLIO
<TABLE>
<S> <C> <C>
MUNICIPAL BONDS -- 104.7%
ALABAMA -- 0.9%
Birmingham Historical Reservation Authority,
Tutwiler Hotel Project, VRDN, RB
4.075%, 09/07/95 (A) (B) (C) $ 5,820 $ 5,820
Mobile Industrial Development Authority, IB Chemical
Project, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,350 1,350
--------
7,170
--------
ALASKA -- 2.8%
Alaska Housing Finance Corporation, Government
Purpose Bonds, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 18,000 18,000
Alaska Industrial Development & Export Authority,
Safeway Project, RB
3.950%, 12/01/95 (A) (B) (C) 4,760 4,760
--------
22,760
--------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
ARIZONA -- 0.4%
Chandler Industrial Development, Chandler Technology
Project, VRDN, RB
4.075%, 09/07/95 (A) (B) (C) $ 650 $ 650
Maricopa County Industrial Development Authority,
McLane Project, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 1,220 1,220
Pinal County Industrial Development Authority,
Evergreen Project, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 600 600
Tucson Industrial Development Authority, Tucson
Center Parking Garage Project, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,000 1,000
--------
3,470
--------
ARKANSAS -- 0.5%
North Little Rock Electric Company, Murray Lock &
Dam Hydro Project, RB,
Pre-refunded @ 102
7.400%, 07/01/96 (D) 1,000 1,044
Pine Bluff Industrial Development Authority, Camden
Wire Project, VRDN, RB
3.800%, 09/06/95 (A) (B) (C) 2,700 2,700
--------
3,744
--------
CALIFORNIA -- 5.2%
California Community College Financial Authority,
Ser 1995-A, TRAN
4.750%, 07/10/96 5,000 5,029
California PCR, San Diego Gas & Electric Project, RB
4.000%, 09/01/96 (A) (B) 3,000 3,000
Long Beach Housing Authority, Channel Point
Apartments,
Ser A, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) 2,500 2,500
Los Angeles Unified School District, TRAN
4.500%, 07/03/96 4,500 4,529
Placer Union High School District, TRAN
4.700%, 09/05/96 2,500 2,512
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Redlands Redevelopment Agency, Parking Lease
Project, VRDN, RB
3.810%, 09/07/95 (A) (B) (C) $ 1,950 $ 1,950
Redlands Redevelopment Project, Ser A, VRDN, RB
3.810%, 09/07/95 (A) (B) (C) 8,940 8,939
Rocklin, Unified School District, TRAN
4.700%, 09/05/96 2,000 2,010
San Diego Community College, TRAN
4.500%, 07/06/96 7,000 7,027
San Francisco City & County Multi-Family Housing
Authority, Rincon Center Project, Ser B, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 1,770 1,770
Santa Clara County Housing Authority, Benton Place
Central Apartments Project, VRDN, RB
3.450%, 09/07/95 (A) (B) (C) 2,200 2,200
--------
41,466
--------
COLORADO -- 3.2%
Adams County Housing Authority, Hunters Cove
Project, VRDN, RB
3.900%, 09/07/95 (A) (B) (C) 7,500 7,500
Colorado Housing Finance Authority, Multi-Family
Housing, Windridge Project, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 6,800 6,800
El Paso Multi-Family Housing Authority, Briarglen
Apartments Project, Ser 1994, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) 4,100 4,100
Englewood Industrial Development Authority, Safeway
Project, VRDN, RB
3.950%, 12/01/95 (A) (B) (C) 3,360 3,360
Fraser Industrial Development Authority, Safeway
Project, RB
3.950%, 12/01/95 (A) (B) (C) 1,965 1,965
Idaho Springs Industrial Development Authority,
Safeway Project, VRDN, RB
3.950%, 12/01/95 (A) (B) (C) 2,355 2,355
--------
26,080
--------
</TABLE>
23
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
DELAWARE -- 0.3%
Delaware Economic Development Authority, Commercial
Development Authority, Congoleum Project, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) $ 1,000 $ 1,000
Delaware State Economic Development Authority,
Winterthur Museum Project, RB
6.750%, 11/01/95 1,075 1,080
--------
2,080
--------
FLORIDA -- 3.7%
Boca Raton Industrial Development Authority, Parking
Garage Project,
Ser 84A, VRDN, RB
4.075%, 09/07/95 (A) (B) (C) 7,950 7,950
Brevard County Housing Finance Authority, Park
Village & Malobar Lakes Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 1,000 1,000
Broward County Housing Finance Authority, MFH Harbor
Town of Jacamanda Project, Ser B, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 3,000 3,000
Broward County Multi-Family Housing, Parkview
Partnership Project, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,100 1,100
Florida Housing Agency, Multi-Family Housing,
Lakeside South Project, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 2,600 2,600
Florida Housing Finance Authority, Sarasota Beneva
Place, Ser C, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 5,225 5,225
Florida Housing Finance Authority, Webb Road
Apartment, Ser 1984, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) 1,900 1,900
Jacksonville Hospital Authority, University Medical
Center, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 1,900 1,900
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Jacksonville Industrial Development Authority,
University of Florida Health Science Center, Ser
1989, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) $ 1,000 $ 1,000
Monroe County, TAN
4.000%, 06/05/96 1,750 1,750
Pasco County Housing Finance Authority, Multi-Family
Housing, Carlton Arms of Magnolia Valley, Ser 85,
VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 2,000 2,000
--------
29,425
--------
GEORGIA -- 6.1%
Athens Multi-Family Housing, Georgian Apartments,
VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 1,400 1,400
Clayton County Multi-Family Housing Authority,
Summercourt Tara Project, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 10,050 10,051
Cobb County Multi-Family Housing, Post Valley
Project, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 1,000 1,000
Cobb County Multi-Family Housing, Tibairen
Associates Project, Ser 1985-D, VRDN, RB
3.770%, 09/07/95 (A) (B) (C) 2,000 2,000
DeKalb County Industrial Development Authority,
Weyerhaeuser County Project, VRDN, RB
3.675%, 09/07/95 (A) (B) 3,500 3,500
DeKalb County Multi-Family Housing Authority,
Terrace Club Project, Ser 93-B,
VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 4,430 4,430
DeKalb County Multi-Family Housing, Wood Terrace
Project, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 4,015 4,015
Downtown Athens, Development Authority, Georgian
Apartments Project, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 1,000 1,000
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Glynn-Brunswick Memorial Hospital Authority, Camden
Medical Center Project,
Ser 1994, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) $ 8,700 $ 8,700
Gordon Industrial Development Authority, Federal
Paper Board Project, Ser 1992, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,000 2,000
Jefferson & Twiggs County Pollution Control, Nord
Kaolin Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 1,310 1,310
Marietta Housing Authority MFH, Falls At Bells Ferry
Project, RB
5.250%, 01/15/96 (A) (B) 4,500 4,521
Marietta Housing Finance Authority MFH, Franklin
Walk Apartments Project, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 1,600 1,600
Richmond County Industrial Development Authority,
Federal Paper Board Project,
Ser 1992, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 1,000 1,000
Rome, Ser 1995, TAN
4.250%, 12/29/95 2,500 2,501
--------
49,028
--------
ILLINOIS -- 6.5%
Chicago International Airport, General Airport
Project, RB
3.800%, 01/03/96 (A) (B) (C) 4,500 4,500
Chicago Multi-Family Housing Authority, Waveland
Project, Ser E, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 3,000 3,000
Chicago Tender Notes,
Ser C, TECP
3.900%, 11/27/95 (B) (C) 10,000 10,000
Illinois Industrial Development Authority, Miyano
Machinery Project, VRDN, RB
4.200%, 09/07/95 (A) (B) (C) 4,250 4,250
Illinois State DFA, Roosevelt University Project,
VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 9,000 9,000
Illinois State Health Facilities Authority,
University of Chicago, RB
3.900%, 02/08/96 (B) 8,000 8,000
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Illinois State Toll Highway, RB, Pre-refunded @ 102
7.375%, 01/01/96 (D) $ 2,000 $ 2,062
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 579 579
Paxton Industrial Development Authority, Merck &
Aircoil, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 900 900
Saint Clair Industrial Building Authority,
Winchester Apartments Project, Ser 94, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 8,000 8,000
Village of Streamwood Industrial Development
Authority, Olde Church Project, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 1,780 1,780
--------
52,071
--------
INDIANA -- 6.1%
Bartholomew Consolidated School, TAW
5.750%, 12/29/95 3,000 3,004
East Chicago School City, Warrants of 1995, TAN
5.750%, 12/29/95 9,000 9,019
Fort Wayne Community Schools, Warrants of 1995, TAN
5.500%, 12/29/95 8,400 8,432
Fort Wayne, Industrial Development--Avery
International, Ser 1983, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 4,750 4,750
GAF Tax Exempt Bond Grantor Trust Indiana, Ser A,
VRDN, RB
4.150%, 09/07/95 (A) (B) (C) 2,520 2,520
Gary Environmental Improvement, United States Steel,
VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 3,000 3,000
Hammond Multi-School Building Authority, BAN
3.950%, 10/05/95 2,500 2,500
Indiana State Housing Finance Authority, VRDN, RB
3.900%, 07/01/96 (A) (B) 4,000 4,000
Indianapolis Local Public Import,
Ser A, RB
5.100%, 01/10/96 1,555 1,561
</TABLE>
25
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Michigan City Area School, General Fund, TAW
5.750%, 12/29/95 $ 3,100 $ 3,104
Michigan City Economic Development Authority, Marley
Project, Ser 1984, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 100 100
Michigan City, Indiana Economic Development
Authority, Marley Project, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,225 1,225
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 66 66
Penn-Harris Madison School Warrants, TAW
5.000%, 12/29/95 3,000 3,006
Westfield High School Building, Ser 1995, BAN
4.050%, 12/01/95 3,000 3,000
--------
49,287
--------
IOWA -- 0.2%
Iowa Finance Authority, Small Business, Village
Court Multi-Family Housing, Ser A, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 1,355 1,355
--------
KANSAS -- 1.4%
Kansas City Industrial Development Authority,
Moderate Income Housing Project, RB
4.250%, 06/01/96 (A) (B) 2,700 2,700
Leawood, BAN
4.000%, 03/15/96 5,500 5,500
Topeka Multi-Family Housing, Topeka Retirement
Center Project, Ser 1985, VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 1,470 1,470
Wichita Pollution Control, CIC Industries Project,
VRDN, RB
4.200%, 09/07/95 (A) (B) (C) 1,590 1,590
--------
11,260
--------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
KENTUCKY -- 5.1%
Covington Industrial Building Authority, Atkins &
Pearce Project, Ser 1995, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) $ 2,465 $ 2,465
Lexington-Fayette Urban County, Government
Residential Facilities, Richmond Place Project, RB
4.500%, 04/01/96 1,665 1,665
Newport City MFH Mortgage, Hannaford Project, RB
4.300%, 12/01/95 (A) (B) 1,815 1,815
Ohio County Pollution Control, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) 25,000 25,000
4.000%, 09/07/95 (A) (B) (C) 6,700 6,700
Pendleton County Self Insurance, Kentucky Center,
Ser 87, VRDN, RB
4.000%, 01/01/96 (A) (B) (C) 1,700 1,700
Perry County Health Care System Appalachian Regional
Hospital, VRDN, RB
3.700%, 09/06/95 (A) (B) (C) 2,000 2,000
--------
41,345
--------
MAINE -- 0.2%
Portland Industrial Development Authority, W.W.
Grainger, Ser 1985, VRDN, RB
3.750%, 09/06/95 (A) (B) (C) 1,315 1,315
--------
MARYLAND -- 1.9%
Annapolis Forest Gemini Facilities Project, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) 2,500 2,500
Montgomery County Multi-Family Housing
Opportunities, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 13,000 13,000
--------
15,500
--------
MASSACHUSETTS -- 0.6%
Massachusetts Housing Finance Agency, Single Family
Housing Project, Ser 35, RB
4.100%, 12/01/95 (A) (B) 5,000 5,000
--------
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
MICHIGAN -- 5.0%
Birmingham Economic Development Authority, Brown
Street Project, Ser 1983, VRDN, RB
4.075%, 09/07/95 (A) (B) (C) $ 1,205 $ 1,205
Kalamazoo Education Development Authority, Wyndham
Project, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 2,200 2,200
McDonald Tax-Exempt Mortgage Trust #1, Michigan, RB
5.350%, 01/15/96 (A) (B) (C) 546 546
Michigan State Hospital Finance Authority, Hospital
Equipment Loan Program, Ser A, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 10,000 10,000
Michigan State Hospital Finance Authority, Hospital
Equipment Loan Project, Ser A, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 3,300 3,300
Michigan State Hospital Finance Authority, Hospital
Equipment Project, Ser A, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 3,400 3,400
Michigan Strategic Fund Obligation, Freezer Services
of Michigan, Ser 1993, VRDN, RB
4.100%, 09/07/95 (A) (B) (C) 1,100 1,100
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 162 162
Wayne County Downriver System Sewer Disposal
Project,
Ser B, TECP
4.350%, 09/26/95 (C) 5,500 5,500
Wayne County School District, City of Detroit, SAN
4.500%, 05/01/96 13,000 13,054
--------
40,467
--------
MINNESOTA -- 6.9%
Bloomington Multi-Family Housing, Hampshire
Apartments Project, Ser A-1991, VRDN, RB
3.860%, 09/07/95 (A) (B) 15,000 15,000
Brooklyn Center Development Project, Brookdale
Office Park, Ser 1984, VRDN, RB
3.710%, 09/07/95 (A) (B) (C) 2,860 2,860
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Golden Valley Industrial Development Authority,
Graco Project, Ser 1988, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) $ 1,215 $ 1,215
Minneapolis Ser A, VRDN, RB
3.610%, 09/07/95 (A) (B) (C) 21,700 21,700
Plymouth Industrial Development Authority, Banner
Engineering Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 1,800 1,800
Plymouth, Woodland Village Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 1,630 1,630
Saint Paul Housing And Redevelopment Authority,
Multi-Family Housing, Kendrick Housing Project,
VRDN, RB
5.250%, 09/07/95 (A) (B) (C) 3,395 3,395
Saint Paul Port Authority Energy, Park Tax
Increment,
First Lien, RB
3.900%, 02/01/96 1,615 1,615
Saint Paul Water Project,
Ser 1994-D, VRDN, RB
3.660%, 09/07/95 (A) (B) (C) 6,000 6,000
--------
55,215
--------
MISSISSIPPI -- 0.3%
Desoto County Industrial Development Refunding,
American Soap Project, VRDN, RB
4.860%, 09/07/95 (A) (B) (C) 2,400 2,400
--------
MISSOURI -- 2.2%
Howell County Industrial Development Authority,
Safeway Project, VRDN, RB
3.800%, 02/01/96 (A) (B) (C) 3,000 3,000
Kansas City Industrial Development Authority,
Baptist Health System, Ser A, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 2,025 2,025
Macon City Industrial Development Authority, Health
Care Realty Macon Project, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 1,640 1,640
</TABLE>
27
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Missouri State Economic Improvement & Energy
Authority PCR, Union Electric Project, VRDN, RB
4.000%, 06/01/96 (A) (B) (C) $ 3,500 $ 3,500
Missouri State Health & Educational Facilities
Authority SSM, Health Care Project,
Ser C, VRDN, RB,
MBIA Insured
3.500%, 09/07/95 (A) (B) 6,200 6,200
Saint Louis County Industrial Development Authority,
Schnuck Markets Kirkwood Project, VRDN, RB
4.200%, 09/07/95 (A) (B) (C) 1,250 1,250
--------
17,615
--------
MONTANA -- 0.4%
Great Falls Industrial Development Authority,
Safeway Project, RB
3.950%, 12/01/95 (A) (B) (C) 2,315 2,315
Montana Board of
Investments, GO
4.900%, 03/01/96 (A) (B) 1,000 1,002
--------
3,317
--------
NEBRASKA -- 0.8%
Nebraska Public Power District Ser B, TECP
3.950%, 09/08/95 6,600 6,600
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 52 52
--------
6,652
--------
NEVADA -- 0.8%
Henderson Public Improvement Trust Multi-Family
Housing, Pueblo Verde I+II Apartment Project, Ser
1995-B, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 6,700 6,700
--------
NEW HAMPSHIRE -- 0.1%
New Hampshire Educational & Health Facilities
Authority, Dartmouth Education Loan, Ser 1995, RB
4.100%, 06/01/96 (B) 1,015 1,015
--------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
NEW JERSEY -- 0.1%
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) $ 291 $ 291
--------
NEW MEXICO -- 0.4%
Albuquerque Metropolitan Redevelopment Authority,
Springer Square Project, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 3,000 3,000
--------
NEW YORK -- 2.2%
Campbell-Savona Community School District, BAN
5.800%, 01/25/96 4,500 4,507
Nassau County, Ser F, BAN
4.500%, 03/15/96 2,750 2,759
Ontario County Industrial Development Authority,
Seneca Foods Project,
Ser 1992, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 3,000 3,000
Wayne County Industrial Development Authority,
Seneca Foods Project,
Ser 1992, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 5,060 5,060
West Islip Unified Free School District, TAN
4.750%, 06/27/96 2,000 2,012
--------
17,338
--------
NORTH CAROLINA -- 0.9%
Buford Industrial Facility PCR, Texasgulf Project,
VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 2,000 2,000
Granville County Industrial Facility & Pollution
Control, Lenox Ser 1991, VRDN, RB
3.650%, 09/07/95 (A) (B) 5,465 5,465
--------
7,465
--------
NORTH DAKOTA -- 2.5%
Cass County Fargo Public
School District #1, GO
4.500%, 11/27/95 7,200 7,201
Fargo, Kelly Inn Project,
Ser 1993, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 1,255 1,255
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Oliver County Pollution Control, Minnesota Power &
Light Square Butte Project, RB
4.300%, 09/01/95 (A) $12,000 $ 12,000
--------
20,456
--------
OHIO -- 3.5%
Brecksville-Broadview Heights City School District,
BAN
5.710%, 01/18/96 2,500 2,501
Marion County Hospital Authority, Pooled Lease
Program, Ser 1991, RB
4.250%, 11/01/95 (A) (B) (C) 3,560 3,560
McDonald Tax-Exempt Mortgage Trust, Ohio #1, RB
5.350%, 01/15/96 (A) (B) (C) 2,548 2,548
Montgomery County Education Development Authority,
ND Motels Project, RB
4.200%, 12/15/95 (A) (B) (C) 1,785 1,785
North Olmstead, Various Purpose Improvement Notes,
Ser 1995, BAN
4.670%, 06/20/96 6,000 6,019
Ohio State Higher Education Facility Commission,
Ashland University Project, Ser 1995, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 4,030 4,030
Scioto County Healthcare Facilities Authority,
Hillview Retirement Project, RB
4.200%, 12/01/95 (A) (B) (C) 1,980 1,980
Stark County Canton Christian Home Project, Ser
1990, RB
4.500%, 09/01/95 (A) (B) (C) 1,410 1,410
Stark County Health Care Facilities, Canton
Christian Home Project, RB
4.450%, 09/15/95 (A) (B) (C) 1,645 1,645
Summit County, BAN
4.250%, 06/05/96 2,800 2,805
--------
28,283
--------
OKLAHOMA -- 3.3%
Oklahoma City Industrial Development Authority,
Baptist General Convention Project,
Ser 89, RB
4.000%, 03/01/96 (B) (C) 5,000 5,000
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Oklahoma City, Oklahoma University, Ser 1955, VRDN,
RB
3.925%, 09/07/95 (A) (B) (C) $ 8,500 $ 8,500
Oklahoma Mid-West Tax-Exempt Mortgage Bond Trust,
VRDN, RB
3.700%, 09/15/95 (A) (B) (C) 493 493
Tulsa County Industrial Development Authority,
Laureate Psychiatric Healthcare Project, RB
3.750%, 12/15/95 (A) (B) (C) 4,365 4,365
Tulsa Industrial Development Authority, Saint John
Medical Center Project, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 995 995
Tulsa Parking Authority, First Mortgage Williams
Project,
Ser 84-A, VRDN, RB
4.300%, 11/15/95 (A) (B) (C) 3,000 3,001
Tulsa Public Facilities Authority, Capital
Improvement Project, Ser 87-B, VRDN, RB
3.875%, 11/15/95 (A) (B) (C) 4,075 4,075
--------
26,429
--------
OREGON -- 0.9%
Klamath Electric, Falls Hydroelectric, Ser C,
VRDN, RB
4.400%, 05/01/96 (A) (B) 7,000 7,000
--------
PENNSYLVANIA -- 7.1%
Allegheny County Hospital Development Authority,
Harmarville Rehabilatation Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 900 900
Beaver County Industrial Development Authority,
Duquesne Light & Power, TECP
4.500%, 10/10/95 (C) 1,500 1,500
Cumberland County Municipal Authority, United
Methodist Home Project, RB
3.950%, 07/01/96 (A) (B) (C) 4,235 4,235
Delaware Valley Regional Finance Authority, Local
Government, Ser B, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 1,300 1,300
</TABLE>
29
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Delaware Valley Regional Finance Authority, Local
Government, Ser C, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) $ 1,000 $ 1,000
Delaware Valley Regional Government Finance
Authority, Ser A, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 1,000 1,000
Delaware Valley Regional Government Finance
Authority, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 5,100 5,100
Erie County Hospital Authority, Senior Living
Services Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 1,145 1,145
McCandless Industrial Development Authority,
Bradford Foundation Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 1,730 1,730
McDonald Tax-Exempt Mortgage Trust, Pennsylvania #1,
RB
5.350%, 01/15/96 (A) (B) (C) 546 546
Montgomery County Higher Education & Health
Authority, VRDN, RB
3.400%, 09/06/95 (A) (B) (C) 2,700 2,700
Montgomery County Industrial Development, Ikea
Property Project, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 3,300 3,300
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 118 118
Pennsylvania Higher Education Facility, Thomas
Jefferson University Project, Ser B, RB
3.900%, 02/26/96 (A) (B) (C) 4,000 4,000
Pennsylvania State Authority For Improvement In
Municipalities, Hospital Equipment Leasing,
Allegheny County Hospital Project, VRDN, RB
3.500%, 09/01/95 (A) (B) 1,545 1,545
Pennsylvania State Infrastructure Investment
Authority, Pennvest Loan Pool Program,
Ser 1994, RB
3.600%, 09/07/95 (A) (B) (C) 2,000 2,000
Philadelphia Hospital & Higher Education Facility
Authority, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 1,800 1,800
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Philadelphia School District,
Ser 1995, TRAN
4.500%, 06/28/96 $ 8,000 $ 8,036
Quakertown Hospital Authority, HPS Group Pooled
Financing Project, VRDN, RB
3.650%, 09/05/95 (A) (B) (C) 1,700 1,700
Sayre Health Care Facility Authority, Pennsylvania
Capital Financing Project, Ser D, VRDN, RB
3.500%, 09/07/95 (A) (B) (C) 400 400
Sayre Health Care Facility Authority, VHA Capitol
Finance Project, Ser I, VRDN, RB, AMBAC Insured
3.500%, 09/07/95 (A) (B) (C) 2,700 2,700
Schuylkill County Industrial Development Authority,
Gilberton Power Project, VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 6,900 6,900
Warren County, Warren General Hospital Project, Ser
1994-B, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 400 400
York County Industrial Development Authority, New
Edgecomb Project, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 3,865 3,865
--------
57,920
--------
RHODE ISLAND -- 0.8%
Cranston, BAN
4.700%, 11/15/95 4,119 4,124
Cranston, Sewer Project, RAN
4.750%, 07/05/96 2,000 2,010
--------
6,134
--------
SOUTH CAROLINA -- 3.8%
Charleston Center Tax Exempt Bond Grantor Trust #5,
VRDN, RB
4.550%, 09/01/95 (A) (B) (C) 3,535 3,535
Charleston Center Tax-Exempt Bond Grantor Trust #1,
VRDN, RB
3.850%, 02/01/96 (A) (B) (C) 7,263 7,263
Charleston Center Tax-Exempt Bond Grantor
Trust #4, VRDN, RB
4.250%, 12/01/95 (A) (B) (C) 7,268 7,268
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Charleston Center Tax-Exempt Bond Grantor
Trust #5, VRDN, RB
3.950%, 03/01/96 (A) (B) (C) $ 500 $ 500
Charleston Center Tax-Exempt Bond Guarantor Trust
#2, VRDN, RB
4.300%, 11/01/95 (A) (B) (C) 4,000 4,000
York County Pollution Control, North Carolina
Electric
Project, RB
4.300%, 09/15/95 (A) (B) 8,000 7,999
--------
30,565
--------
SOUTH DAKOTA -- 0.2%
Watertown Industrial Development Authority, Ramkota
Project, Ser 1993, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 1,345 1,345
--------
TENNESSEE -- 2.8%
Chattanooga-Hamilton County Hospital Authority,
Erlanger Medical Center, VRDN, RB
3.500%, 09/01/95 (A) (B) (C) 1,500 1,500
GAF Tax Exempt Bond Grantor Trust, Tennessee, Ser A,
VRDN, RB
4.150%, 09/07/95 (A) (B) (C) 4,480 4,480
Jackson Education & Hospital Facility, Delta
Properties
Project, RB
4.250%, 10/01/95 (A) (B) 1,600 1,600
Memphis Government Improvement, Ser 85-B, VRDN, RB
3.800%, 09/07/95 (A) (B) (C) 2,400 2,400
Memphis, Ser A, VRDN, GO
3.550%, 09/01/95 (A) (B) (C) 5,900 5,900
Nashville & Davidson County, Metro Government
Industrial Development Building, MFH Nashville
Apartment Property Project, Ser 2, VRDN, RB
4.250%, 09/01/95 (A) (B) (C) 3,000 3,000
Nashville Metropolitan Government, Industrial
Development Authority,
Toys 'R' Us Project, Ser 84, VRDN, RB
3.950%, 09/07/95 (A) (B) (C) 1,030 1,030
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Shelby County Health Education Housing, Rhodes
College, VRDN, RB
3.900%, 09/07/95 (A) (B) (C) $ 2,600 $ 2,600
--------
22,510
--------
TEXAS -- 5.9%
Arlington Industrial Development Authority, Dallas-
Fort Worth Newspapers Project, Ser 1985, VRDN, RB
4.050%, 09/07/95 (A) (B) (C) 3,500 3,500
Corpus Christi Industrial Development Committee,
Tex-Air Project, RB
3.900%, 02/01/96 (A) (B) (C) 4,915 4,915
Harris County Multi-Family Housing, Glenhollow
Project, VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 1,900 1,900
Harris County Multi-Family Housing, Greenhouse
Project, VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 2,400 2,400
Matagorda County Hospital District, RB
3.850%, 02/01/96 (A) (C) 4,900 4,900
North Carolina National Bank Tax Exempt Trust, Ser
1990-B, VRDN, RB
4.375%, 09/07/95 (A) (B) (C) 6,715 6,715
San Antonio Electric & Gas Project, Ser A, RB
6.000%, 02/01/96 1,585 1,599
Texas State, Ser A, TRAN
4.750%, 08/30/96 20,500 20,632
Trinity River Industrial Development Authority,
Trinity River Project, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 1,000 1,000
--------
47,561
--------
UTAH -- 1.7%
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 136 136
Salt Lake City Industrial Development Authority,
Deveraux Partners, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,500 2,500
</TABLE>
31
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Salt Lake City Industrial Development Authority,
Park View Plaza Project, VRDN, RB
3.810%, 09/07/95 (A) (B) (C) $ 4,450 $ 4,450
Utah County, TRAN
4.650%, 12/29/95 2,500 2,502
Webu County, Ser B, TAN
4.500%, 12/28/95 1,750 1,753
West Valley City Johnson Matthey Project, Ser 144-A,
VRDN, RB
3.500%, 09/01/95 (A) (B) (C) 2,350 2,350
--------
13,691
--------
VIRGINIA -- 0.8%
Hampton Redevelopment & Housing Authority, Chase
Hampton Village, Ser 1984, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 1,350 1,350
Norfolk Industrial Development Authority, Toys "R"
Us Project, Ser 1984, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 2,500 2,500
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 92 92
Stafford County Industrial Development Authority,
Safeway Project, VRDN, RB
3.950%, 12/01/95 (A) (B) (C) 2,335 2,335
--------
6,277
--------
WASHINGTON -- 1.2%
Kent Economic Development Authority, Northwest
Aluminum Products Project, VRDN, RB
3.900%, 09/07/95 (A) (B) (C) 1,700 1,700
Redmond Public Industrial Development Authority,
Integrated Circuit Project, Ser 1988, VRDN, RB
4.000%, 09/07/95 (A) (B) (C) 850 850
Seattle Industrial Development Authority,
Northwestern Industries, Ser 1992, VRDN, RB
4.200%, 12/01/95 (A) (B) (C) 2,300 2,300
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
Seattle Municipal Light &
Power, RB
3.850%, 05/01/96 (B) $ 1,000 $ 1,000
Seattle Municipal Light & Power, Ser 1990, TECP
4.300%, 10/05/95 3,750 3,750
--------
9,600
--------
WEST VIRGINIA -- 1.9%
Charleston Building Community Packing Facility,
Charleston Town Center Project, VRDN, RB
3.900%, 09/07/95 (A) (B) (C) 11,920 11,920
Parkersburg Industrial Development Authority, B-H
Associates Project, VRDN, RB
3.925%, 09/07/95 (A) (B) (C) 3,500 3,500
--------
15,420
--------
WISCONSIN -- 2.9%
Chippewa Falls Area, Unified School District, TRAN
4.560%, 09/29/95 4,750 4,750
Hartford Industrial Development Authority, IC
Products Project, VRDN, RB
3.850%, 09/07/95 (A) (B) (C) 5,000 5,000
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 141 141
Oshkosh Area High School District, Ser A, TRAN
4.500%, 09/14/95 4,000 4,000
Stevens Point Area School District, Callable
09/01/95 @ 100, BAN
5.500%, 09/01/95 4,000 4,000
Village of Menomonee Industrial Development
Authority, Maysteel Corporation, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 3,000 3,000
Village of Prentice Industrial Development
Authority, Blount Project, Ser 1992, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 2,363 2,363
--------
23,254
--------
</TABLE>
32
<PAGE>
- --------------------------------------------------------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Face
Amount (000) Value (000)
- --------------------------------------------------------------------------
<S> <C> <C>
WYOMING -- 0.2%
Cheyenne County Holiday Inn Project, RB
4.800%, 10/01/95 (A) (B) (C) $ 1,310 $ 1,310
Northwest Mutual Life Tax Exempt Mortgage Trust,
VRDN, RB
4.500%, 02/15/96 (A) (B) (C) 103 103
--------
1,413
--------
Total Municipal Bonds
(Cost $841,688,834) 841,689
--------
Total Investments -- 104.7%
(Cost $841,688,834) 841,689
--------
OTHER ASSETS AND LIABILITIES -- -4.7%
Other Assets and Liabilities, Net (37,728)
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no
par value) based on 789,040,395 outstanding shares of
beneficial interest 788,872
Portfolio shares of Class B (unlimited authorization -- no
par value) based on 15,082,335 outstanding shares of
beneficial interest 15,082
Accumulated Net Realized Loss on Investments (3)
Undistibuted Net Investment Income 10
--------
Total Net Assets: -- 100.0% $803,961
========
Net Asset Value, Offering Price and Redemption Price Per
Share -- Class A $ 1.00
Net Asset Value, Offering and Redemption Price Per Share --
Class B $ 1.00
========
</TABLE>
AMBAC American Municipal Bond Assurance Company
BAN Bond Anticipation Note
GO General Obligation
MBIA Municipal Bond Insurance Association
MFH Multi Family Housing
RAN Revenue Anticipation Note
RB Revenue Bond
SAN School Aid Note
Ser Series
TAN Tax Anticipation Note
TAW Tax Anticipation Warrant
TECP Tax Exempt Commercial Paper
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
(A) Floating Rate Security -- the rate reflected on the Statement of Net Assets
is the rate in effect on August 31, 1995.
(B) Put and Demand Feature -- the date reported on the Statements of Net Assets
is the lesser of the maturity date or put date.
(C) Securities are held in conjunction with a letter of credit from a major
commercial bank or financial institution.
(D) Pre-ReFunded Security--the maturity date shown is the pre-refunded date.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 104.6%
PENNSYLVANIA -- 104.6%
Allegheny County Hospital Development Authority,
Revenue Childrens Hospital,
Ser B, VRDN, RB, MBIA Insured
3.550%, 09/07/95 (A) (B) $1,000 $ 1,000
Allegheny County, University of Pittsburgh,
Education Buildings, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 570 570
Beaver County Industrial Development Revenue,
Dusquesne Light & Power, TECP, Swiss Bank Insured
4.500%, 10/10/95 (C) 500 500
Berks County Industrial Development Authority, Elf
Aquitaine Project, VRDN, RB
3.825%, 09/07/95 (A) (B) (C) 1,200 1,200
Bucks County Industrial Development Authority,
Edgecomb Metals, VRDN, RB
3.675%, 09/07/95 (A) (B) (C) 700 700
Bucks County Water & Sewer Authority, Neshaminy
Interceptor Sewer Systems Project, Escrowed to
Maturity, RB
7.700%, 12/01/95 (D) 1,000 1,010
Butler County Industrial Development Revenue,
Pennzoil Project, VRDN, RB
4.250%, 09/07/95 (A) (B) (C) 600 600
Delaware County Industrial Development Authority,
Philadelphia Electric Project, RB, FGIC Insured
4.150%, 10/20/95 400 400
Delaware County, GO
6.700%, 12/01/95 250 251
Delaware County, Industrial Development Authority,
British Petroleum Project, Ser 1995, VRDN, RB
3.250%, 09/01/95 (A) (B) 1,200 1,200
Delaware Valley, Regional Finance Authority, Ser B,
VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 1,000 1,000
Delaware Valley, Regional Finance Authority, Ser D,
VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 100 100
</TABLE>
33
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
PENNSYLVANIA TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Lackawanna River Basin, RB
9.375%, 09/01/95 (D) $ 555 $ 555
Lancaster Higher Education Authority, Franklin &
Marshall Project, Ser 1995, VRDN, RB
3.900%, 09/07/95 (A) (B) 600 600
Lebanon County Industrial Development Authority,
Environmental Improvement, Aluminum Company of
America, Ser 1992, VRDN, RB
3.650%, 09/07/95 (A) (B) 1,000 1,000
Lebanon County Industrial Development Authority,
Pollution Control, Aluminum Company of America
Project, Ser 1992, VRDN, RB
3.650%, 09/07/95 (A) (B) 1,020 1,020
Lehigh County Water Authority, VRDN, RB
3.400%, 09/07/95 (A) (B) (C) 885 885
Montgomery County Higher Education & Health
Authority, United Hospitals Project,
Ser B, Pre-Refunded
@ 102, RB
9.750%, 11/01/95 (D) 300 309
Montgomery County Higher Education & Health
Authority, VRDN, RB
3.400%, 09/07/95 (A) (B) (C) 1,100 1,100
Montgomery County Hospital Revenue, Abington
Memorial Hospital, Prerefunded
@ 103, RB
8.000%, 06/01/96 (D) 600 634
Montgomery County Industrial Development Authority,
Ikea Property Project, VRDN, RB
3.700%, 09/07/95 (A) (B) 500 500
Montour County Geisinger Health System Authority,
Ser 1992 B, VRDN, RB
3.250%, 09/01/95 (A) (B) (C) 900 900
North Umberland County Atlas Development Authority,
VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 100 100
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania Higher Education Facility Authority,
Thomas Jefferson University Project, Ser C, RB
3.900%, 02/26/96 (B) (C) $ 500 $ 500
Pennsylvania State Improvement Authority, Allegheney
County Hospital Project, VRDN, RB
3.500%, 09/01/95 (A) (B) 600 600
Pennsylvania State Infrastructure Investment
Authority, Penvest Loan Pool Program,
Ser 1994, VRDN, RB
3.600%, 09/07/95 (A) (B) (C) 1,100 1,100
Pennsylvania State University, University Project,
Ser 1994-A, RB
5.500%, 12/21/95 700 701
Philadelphia Industrial Development Authority,
Multi-Family Housing Revenue Bond For Harbor View
Towers Project, VRDN, RB
3.750%, 09/07/95 (A) (B) (C) 1,015 1,015
Philadelphia Industrial Development Authority,
Philadelphia Airport Hotel, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 500 500
Philadelphia School District, Ser 1995, TRAN
4.500%, 06/28/96 1,000 1,004
Philadelphia,
Ser A, TRAN
4.500%, 06/27/96 1,000 1,004
Quakertown Hospital Authority, HPS Group Pooled
Financing Project, VRDN, RB
3.650%, 09/07/95 (A) (B) (C) 500 500
Sayre County Health Care Facility Authority,
Pennsylvania Capital Financing Project, Ser D,
VRDN, RB
3.500%, 09/07/95 (A) (B) 1,120 1,120
Schuylkill County Industrial Development Authority,
Gilberton Power Project,
VRDN, RB
3.550%, 09/07/95 (A) (B) (C) 1,200 1,200
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Schuylkill County Industrial Development Authority,
Westwood Energy Project, VRDN, RB
3.600%, 09/01/95 (A) (B) (C) $ 300 $ 300
Warren County, Warren General Hospital Project, Ser
1994 B, VRDN, RB
3.700%, 09/07/95 (A) (B) (C) 500 500
West Perry School Dist,
Ser A, GO
6.350%, 04/01/96 (D) 150 152
West View Municipal Authority, RB
9.500%, 11/15/95 (D) 600 614
Williamsport Area School Dist,
Ser A, RB, MBIA Insured
6.900%, 03/01/96 (D) 200 203
Wilson Area School District, GO
6.700%, 02/15/96 (D) 100 101
-------
27,248
-------
Total Municipal Bonds
(Cost $27,248,421) 27,248
-------
Total Investments -- 104.6%
(Cost $27,248,421) 27,248
-------
OTHER ASSETS AND LIABILITIES -- -4.6%
Other Assets and Liabilities, Net (1,190)
-------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no par
value) based on 26,059,128 outstanding shares of beneficial
interest 26,059
Overdistributed Net Investment Income (1)
-------
Total Net Assets: -- 100.0% $26,058
=======
Net Asset Value, Offering Price and Redemption Price Per Share --
Class A $ 1.00
=======
</TABLE>
FGIC Financial Guaranty Insurance Corporation
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bond
Ser Series
TECP Tax Exempt Commercial Paper
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
(A) Floating Rate Security -- the rate reflected on the Statement of Net Assets
is the rate in effect on August 31, 1995.
(B) Put and Demand Feature -- the date reported on the Statement of Net Assets
is the lesser of the maturity date or put date.
(C) Securities are held in conjunction with a letter of credit from a major
commercial bank or financial institution.
(D) Pre-Refunded Security -- the maturity date shown is the pre-refunded date.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 99.8%
ALASKA -- 4.0%
Anchorage Electric Utility, RB, MBIA Insured
8.000%, 12/01/06 $1,775 $ 2,195
8.000%, 12/01/07 1,310 1,619
-------
3,814
-------
ARIZONA -- 1.2%
Mohave County School District #1, GO, AMBAC Insured
9.250%, 07/01/99 225 262
Tempe, GO
8.000%, 07/01/01 735 862
-------
1,124
-------
ARKANSAS -- 0.6%
Little Rock Capital Improvement, Ser 1995-A,
Callable 02/01/00 @ 100, GO
5.950%, 02/01/12 570 575
-------
CALIFORNIA -- 9.3%
Anaheim Public Finance Authority, Electric Utility
Project, Callable 04/01/03 @ 102, RB,
MBIA Insured
5.400%, 10/01/08 2,000 1,965
California State, Veterans Affairs, Ser AZ,
Callable 02/01/96 @ 100, GO
6.450%, 02/01/01 1,300 1,311
Los Angeles Department of
Water & Power, RB
9.000%, 10/15/02 2,000 2,475
Riverside, Electric Revenue, RB, Callable 10/01/01 @
102
6.600%, 10/01/05 1,000 1,089
University of California
Board of Regents, RB
6.500%, 09/01/02 1,995 2,152
-------
8,992
-------
CONNECTICUT -- 0.7%
Connecticut State Industrial Development Authority,
Pollution Control, Frito-Lay-Pepsi Project, RB
6.375%, 07/01/04 560 572
</TABLE>
35
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Connecticut State Multi-Family Mortgage, Callable
04/01/97 @ 100 RB
4.600%, 04/01/08 (B) $ 100 $ 100
-------
672
-------
FLORIDA -- 6.3%
Dade County, Aviation Revenue, Ser V, VRDN, RB
3.650%, 09/07/95 425 425
Dade County, Guaranteed Entitlement, Zero Coupon
Bond, RB, MBIA Insured
0.000%, 02/01/00 600 494
Florida State, Enviromental Preservation, RB,
AMBAC Insured,
Callable 07/01/05 @ 101
5.500%, 07/01/07 1,000 1,020
Hillsborough County Utility Authority, RB, Escrowed
To Maturity, MBIA Insured
9.750%, 12/01/03 1,425 1,831
Hillsborough County, Industrial Development
Authority, Tampa Electric Project, VRDN, RB
3.450%, 09/07/95 100 100
Jacksonville Electric Revenue Authority, Ser Two 1987
A-1, RB, Callable 10/01/97 @ 101.50
7.100%, 10/01/99 1,000 1,074
Volusia County, Master Lease Program, COP, FSA
Insured, Callable 08/01/01 @ 102
6.625%, 08/01/06 1,000 1,093
-------
6,037
-------
HAWAII -- 0.8%
Hawaii State, Ser BV, GO
5.700%, 11/01/99 750 786
-------
ILLINOIS -- 14.0%
Cook County, GO, MBIA Insured
7.250%, 11/01/07 2,000 2,350
Illinois Development Finance Authority, Prog
Community High School, Zero Coupon Bond, RB, MBIA
Insured
0.000%, 12/01/05 1,500 878
Illinois Multi-Family Housing Authority, Section 8,
RB
10.625%, 07/01/14 (B) 20 20
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Illinois State, Callable
08/01/99 @102, GO
6.375%, 08/01/00 $1,000 $ 1,081
Kane & Dekalb County, School District #301, GO,
AMBAC Insured
6.300%, 12/01/04 2,640 2,891
McClean County Law & Justice Center, GO
7.300%, 11/01/02 1,280 1,466
Metropolitan Pier & Exposition, RB
5.750%, 06/15/02 1,500 1,584
Schaumburg, Park District,
Ser B, GO, FGIC Insured
6.375%, 12/01/03 1,025 1,122
Springfield, Electric Revenue, Callable 03/01/96 @
102, RB
7.750%, 03/01/06 2,000 2,078
-------
13,470
-------
KENTUCKY -- 3.5%
Kentucky State Turnpike Authority, Ser A, RB,
Callable 07/01/96 @ 102
8.500%, 07/01/04 1,055 1,113
Kentucky State Turnpike Authority, TRAN, AMBAC
Insured
5.500%, 07/01/06 2,200 2,277
-------
3,390
-------
LOUISIANA -- 1.9%
Louisiana State, Ser A, GO,
Callable 08/01/97 @ 102
7.000%, 08/01/02 1,750 1,853
-------
MASSACHUSETTS -- 6.2%
Lowell, Callable
02/15/01 @ 103, GO,
FSA Insured
8.300%, 02/15/05 1,855 2,180
Massachusettes State Housing Finance Agency, Single
Family, Ser 1, Callable
12/01/95 @ 102, RB
9.375%, 06/01/12 240 247
Massachusetts Bay Transportation Authority, General
Transportation System, Ser A, RB
7.000%, 03/01/07 3,000 3,441
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts Municipal Wholesale Electric Company,
Ser A, RB, Mandatory Redemption @ 100
8.750%, 07/01/98 (A) $ 5 $ 6
8.750%, 01/01/99 (A) 5 6
8.750%, 07/01/99 (A) 5 6
8.750%, 07/01/00 (A) 5 6
8.750%, 01/01/02 (A) 5 6
8.750%, 07/01/02 (A) 5 6
8.750%, 01/01/03 (A) 5 6
8.750%, 07/01/03 (A) 5 6
8.750%, 01/01/04 (A) 5 6
8.750%, 07/01/04 (A) 10 12
8.750%, 07/01/05 (A) 5 6
-------
5,940
-------
MICHIGAN -- 3.0%
Michigan State Housing Development Authority,
Ser 1983-B,
Zero Coupon Bond, RB
0.000%, 02/01/15 5,630 774
Michigan State Public Power,
Bell River Project, RB
5.700%, 01/01/03 2,000 2,100
-------
2,874
-------
MISSISSIPPI -- 1.7%
Mississippi State Capital Improvement, Ser A, GO
5.100%, 08/01/07 1,685 1,679
-------
NEW JERSEY -- 2.2%
New Jersey State Housing & Mortgage Finance Agency,
Section 8, RB
6.000%, 11/01/02 2,000 2,065
-------
NEW MEXICO -- 3.4%
Albuquerque Gross Receipts Tax Refunding, Ser A, RB,
Callable 07/01/96 @ 102
7.500%, 07/01/01 725 759
New Mexico State Housing Authority, Single Family
Mortgage, Callable
07/01/02 @ 102, RB
6.850%, 07/01/10 1,430 1,483
Santa Fe, Saint Vincent's Hospital Project, RB, FGIC
Insured
7.500%, 07/01/02 (C) 855 998
-------
3,240
-------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
NEW YORK -- 4.0%
New York State Dormatory Authority, Ser N, Callable
11/16/95 @100, RB
6.700%, 07/01/03 $ 200 $ 201
New York State Medical Care Facility Agency, Ser A,
RB 6.000%, 02/15/97 190 194
New York State Medical, RB,
FHA Insured
5.200%, 08/15/05 725 730
New York State Urban Development Correctional
Facilities, Ser G, Callable 01/01/00 @ 102, RB
7.100%, 01/01/03 2,500 2,727
-------
3,852
-------
OHIO -- 4.7%
Franklin County Convention Facility Authority, RB,
Pre-Refunded @ 102,
MBIA Insured
7.000%, 12/01/00 (C) 2,000 2,278
Ohio State Public Facilities Commission Higher
Education, Ser B, RB, Callable
06/01/97 @ 102
7.000%, 06/01/99 2,100 2,231
-------
4,509
-------
OKLAHOMA -- 0.7%
Central Oklahoma Transportation & Parking Authority,
RB, Escrowed To Maturity
6.000%, 07/01/03 155 166
Tulsa Industrial Development Authority, St. Johns
Medical Center, RB,
Escrowed To Maturity
6.875%, 01/01/02 500 548
-------
714
-------
PENNSYLVANIA -- 3.4%
Delaware County, Industrial Development Authority,
United Parcel Services Project, Ser 85, VRDN, RB
3.400%, 09/07/95 1,000 1,000
Easton Joint School Authority, Sinking Fund, RB,
Escrowed To Maturity
5.350%, 04/15/02 370 386
</TABLE>
37
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia Children's Hospital, RB, Pre-Refunded
@ 102
6.500%, 02/15/02 (C) $1,150 $ 1,290
Westmoreland County Municipal Authority, GO, Escrowed
To Maturity
9.125%, 07/01/10 500 609
-------
3,285
-------
SOUTH CAROLINA -- 1.4%
South Carolina Public Service Authority, Electric
Improvement Revenue, Ser B, RB,
Callable 07/01/01 @ 102
6.700%, 07/01/02 1,220 1,359
-------
SOUTH DAKOTA -- 0.3%
South Dakota State Student Loan Assistance
Corporation,
Ser A, RB
7.000%, 08/01/98 250 259
-------
TEXAS -- 11.1%
Austin Independent School District, RB, Escrowed to
Maturity
9.000%, 07/01/99 645 750
Austin Utility Systems, RB, FGIC Insured
5.800%, 11/15/06 1,000 1,053
Austin Utility Systems, Ser 1992 B, RB, Callable
11/15/98 @ 102
7.250%, 11/15/03 1,175 1,288
7.750%, 11/15/08 600 666
Harris County, GO
10.000%, 10/01/00 1,850 2,309
Humble, GO
7.625%, 02/01/00 (B) 1,000 1,123
San Antonio, Electric & Gas Revenue, Callable
02/01/99 @ 101.5 RB
7.000%, 02/01/00 1,500 1,635
San Antonio, Water Revenue,
Zero Coupon Bond, RB, Pre-Refunded @ 49.8005
0.000%, 05/01/00 (C) 2,000 805
Texas Municipal Power Agency, RB, MBIA Insured
5.500%, 09/01/10 1,000 990
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Texas State Housing Finance Authority, Ser 1985-A,
Callable 01/01/96 @ 102, RB
8.900%, 09/01/98 $ 80 $ 82
-------
10,701
-------
UTAH -- 1.5%
Salt Lake City Airport, RB,
FGIC Insured
7.400%, 06/01/00 $1,320 $ 1,416
-------
VIRGINIA -- 1.2%
Virginia Beach, Ser C, GO,
Pre-Refunded @ 102
6.600%, 08/01/01 (C) 1,000 1,123
-------
WASHINGTON -- 4.4%
Grant County, Public Utility District #2, RB
5.625%, 01/01/07 2,470 2,529
King County Library Systems, Callable 12/01/04 @ 100,
GO
4.700%, 12/01/05 1,000 985
Washington State, Ser B, GO, Callable 08/01/00 @ 100
6.750%, 08/01/03 700 757
-------
4,271
-------
WASHINGTON, D.C. -- 2.8%
District of Columbia, Ser A, GO
5.125%, 06/01/99 1,000 968
District of Columbia, Ser A-3, GO
4.250%, 06/01/97 1,790 1,738
-------
2,706
-------
WISCONSIN -- 5.5%
Milwaukee, Ser BV, GO, Callable 06/01/99 @ 100
6.750%, 06/01/00 1,155 1,246
Wisconsin Municipal Insurance Commission, Ser 1987,
RB,
AMBAC Insured
8.700%, 04/01/07 200 216
Wisconsin State Clean Water Authority, Ser 1, RB
6.875%, 06/01/11 1,640 1,847
Wisconsin State Housing & Economic Development
Authority, RB
6.500%, 04/01/11 680 680
</TABLE>
38
<PAGE>
- --------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------
<S> <C> <C>
Wisconsin State Housing & Economic Development
Authority, Ser 1, RB,
Callable 07/01/02 @ 102,
FHA Insured
6.600%, 09/01/07 $1,300 $ 1,346
-------
5,335
-------
Total Municipal Bonds
(Cost $94,290,280) 96,041
-------
Total Investments -- 99.8%
(Cost $94,290,280) 96,041
-------
OTHER ASSETS AND LIABILITIES -- 0.2%
Other Assets and Liabilities, Net 182
-------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no
par value) based on 9,035,440 outstanding shares of
beneficial interest 95,686
Portfolio shares of Class D (unlimited authorization -- no
par value) based on 51,784 outstanding shares of
beneficial interest 574
Accumulated Net Realized Loss on Investments (2,178)
Net Unrealized Appreciation of Investments 1,751
Undistributed Net Investment Income 390
-------
Total Net Assets: -- 100.0% $96,223
=======
Net Asset Value, Offering Price and Redemption Price Per
Share -- Class A $ 10.59
Net Asset Value, Offering Price and Redemption Price Per
Share -- Class D $ 10.59
Maximum Offering Price Per Share -- Class D (10.59/96.5%) $ 10.97
=======
</TABLE>
AMBAC American Municipal Bond Assurance Company
COP Certificate of Participation
FGIC Financial Guaranty Insurance Corporation
FHA Federal Housing Agency
FSA Financial Security Assurance
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bond
Ser Series
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
(A) Mandatory Redemption -- the date reported on the Statement of Net Assets is
the mandatory redemption date.
(B) Security is held in conjunction with a letter of credit from a major
commercial bank or financial institution.
(C) Pre-Refunded Security -- the maturity date shown is the pre-refunded date.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 98.5%
GUAM -- 1.2%
Guam Government Highway, Ser A, GO, CGIC Insured
5.100%, 05/01/97 $ 500 $ 508
Guam Power Authority, RB, AMBAC Insured
5.400%, 10/01/03 750 782
--------
1,290
--------
PENNSYLVANIA -- 96.4%
Allegheny County Airport Revenue, Pittsburgh
International Airport, Ser A, RB
5.300%, 01/01/03 (B) 1,000 1,021
Allegheny County Hospital Development Authority,
Children's Hospital of Pittsburgh, Ser 1991, RB,
MBIA Insured
6.600%, 07/01/01 1,000 1,083
Allegheny County Hospital Development Authority,
Magee Women's Hospital, Callable 10/01/02 @ 102, RB,
FGIC Insured
6.000%, 10/01/05 1,525 1,624
Allegheny County Hospital Development Authority,
Magee Women's Hospital, Ser 1993, RB, FGIC Insured
5.200%, 10/01/05 1,000 1,033
Allegheny County Hospital Development Authority,
Mercy Hospital of Pittsburgh, Callable 10/01/96 @
102, RB, BIGI Insured
6.875%, 10/01/99 1,000 1,043
Allegheny County Hospital Development Authority,
St. Margaret Memorial Hospital, Callable
09/11/04 @ 100, RB,
Escrowed to Maturity
6.750%, 07/01/10 110 119
Allegheny County Institutional District, Ser 18, GO,
MBIA Insured
7.000%, 04/01/02 1,000 1,098
</TABLE>
39
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
PENNSYLVANIA MUNICIPAL PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Allegheny County Sanitary Authority, Ser 1992, RB,
FGIC Insured
5.200%, 12/01/00 $1,000 $ 1,029
Allegheny County, Ser C-38,
GO, AMBAC Insured
6.200%, 09/01/01 1,000 1,079
Allegheny Hospital Development Authority, Montefiore
Hospital, Callable 03/10/04 @ 100, RB,
Escrowed To Maturity
6.875%, 07/01/09 260 283
Allentown Hospital Authority, Sacred Heart Project,
Callable 03/21/04 @ 100,
RB, Escrowed to Maturity
8.000%, 03/01/09 70 81
Beaver County Hospital Authority, Medical Center
Project, RB, AMBAC Insured
6.100%, 07/01/01 1,000 1,069
Beaver County Housing Authority, First Mortgage
Guaranteed, Section 8, Callable 03/19/97 @ 100, RB,
MBIA Insured
7.875%, 07/01/99 435 432
Bensalem Township Water & Sewer Authority, Callable
07/13/05 @ 100, RB,
Escrowed to Maturity
6.750%, 12/01/14 75 81
Berks County Municipal Hospital Authority, Hospital
Revenue, Reading Hospital & Medical Center Project,
Ser 1993, RB, MBIA Insured
5.000%, 10/01/02 1,000 999
Berks County, Ser 1992, GO, FGIC Insured
5.150%, 11/15/01 750 767
Bucks County Industrial Development Authority,
Grandview Hospital, Ser 91, RB, Escrowed to
Maturity, AMBAC Insured
6.600%, 07/01/01 500 554
Bucks County Redevelopment Authority, Mortgage
Revenue, Warminster Heights, Section 8, Ser 1992-A,
RB, FHA Insured
5.750%, 08/01/97 100 101
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Bucks County Redevelopment Authority, Mortgage
Revenue, Warminster Heights,
Section 8-A, Ser 1992-A,
Callable 02/01/02 @ 100, RB, FHA Insured
6.250%, 08/01/02 $ 315 $ 324
Chartiers Valley Industrial Development Authority,
First Mortgage,
Colonial Building, Callable 12/01/97 @ 100, RB
5.625%, 12/01/15 960 961
Cumberland County Industrial Development Authority,
Crown America Project, RB
5.770%, 01/01/96 (A) (C) 635 639
Cumberland Valley School District, Ser A, GO
5.900%, 09/01/98 500 507
Dauphin County General Authority, Penncrest School
Project, RB, Mandatory
Tender 06/02/03 @ 100
6.600%, 06/02/26 915 982
Dauphin County General Authority, Phoenixville
Hospital, Hapsco Group Incorporated, Ser 1992-A,
Callable 07/01/02 @ 102, RB, FGIC Insured
5.900%, 07/01/05 845 895
Dauphin County General Authority, RB, Mandatory
Tender 06/01/04 @ 100
6.700%, 06/01/26 720 774
Delaware County Authority, Haverford College, Ser
1993, RB, MBIA Insured
3.500%, 11/15/96 145 144
Delaware County Industrial Development Authority,
Resource Recovery Project, RB
8.100%, 12/01/13 (A) 800 840
Delaware County, Callable 09/01/96 @ 100, GO
6.900%, 12/01/96 255 264
Delaware County, GO
6.900%, 09/01/96 (D) 245 252
</TABLE>
40
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Delaware River Port Authority, Callable 04/24/05 @
100, RB, Escrowed To Maturity
6.000%, 01/15/10 $ 200 $ 206
6.500%, 01/15/11 305 323
Erie County Hospital Authority, Hamot Medical Center,
RB, AMBAC Insured
6.700%, 02/15/02 500 549
Erie County Hospital Authority, Callable 04/14/05 @
100, RB, Escrowed to Maturity
6.750%, 07/01/11 70 75
Erie County, Ser 1991-A, GO, Escrowed to Maturity,
FGIC Insured
6.100%, 09/01/00 1,000 1,065
Fort Le Boeuf School District,
Ser A, GO, MBIA Insured
5.150%, 01/01/02 500 514
Greene County Industrial Development Authority,
Pollution Control Revenue, Monogahela Power-Hatfield
Ferry, Callable
02/19/99 @ 100, RB
6.300%, 02/01/02 1,000 1,004
Hampton Township, Callable 07/17/00 @ 100, GO
6.300%, 06/01/02 775 835
Harrisburg Authority, Lease Revenue, RB, CGIC
Insured, Pre-Refunded @ 101
6.250%, 06/01/01 (D) 1,000 1,065
Harrisburg Authority, Water Revenue, Ser 1992, RB,
FGIC Insured,
Escrowed To Maturity
6.500%, 07/15/00 1,000 1,094
Harrisburg Authority, Water Revenue, Ser B-1, RB,
FGIC Insured
5.100%, 07/15/02 1,000 1,001
Hopewell Township, Callable 11/01/03 @ 100, RB
5.800%, 11/01/08 815 775
Lackawanna River Basin Authority, Sewer RB, Escrowed
To Maturity
7.000%, 09/01/95 20 20
Lancaster Area Sewer Authority, Ser 1992, RB, MBIA
Insured
5.000%, 04/01/98 600 611
Lancaster Sewer Authority, RB
6.200%, 06/01/97 500 514
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Lehigh County General Purpose Authority, Saint Luke's
Hospital, Bethlehem Project, RB, AMBAC Insured
5.100%, 11/15/03 $1,000 $ 1,005
Luzerne County, GO,
FGIC Insured
6.800%, 09/15/02 500 550
Lycoming County Authority, Pennsylvania College of
Technology, Ser 1990, RB, AMBAC Insured
6.750%, 11/01/99 1,000 1,089
Montgomery County Higher Education & Health
Authority, Abington Memorial Hospital, Ser 1991-A,
RB,
AMBAC Insured
6.200%, 06/01/00 800 858
6.300%, 06/01/01 1,000 1,084
Montgomery County Industrial Development Authority,
Ecri Project,
Callable 06/16/05 @ 100, RB
6.850%, 06/01/13 2,165 2,151
Montgomery County Industrial Development Authority,
Star Dental Manufacturing, Callable 08/01/96 @ 100,
RB
7.000%, 08/01/98 150 151
Montgomery County Redevelopment Authority, Multi-
Family Housing, Gwynedd-Oxford Project, RB,
6.125%, 12/01/96 (C) 2,000 2,005
Norristown Area School District, Ser 1991, Bank
Qualified GO
6.650%, 09/01/02 100 111
North Allegheny School District, Ser 1990, GO,
AMBAC Insured
7.100%, 05/01/00 (D) 250 279
North Hills School District, Ser 1991, GO, MBIA
Insured
6.750%, 07/15/03 1,000 1,118
North Penn Water Authority, Ser 1992, RB, FGIC
Insured
5.650%, 11/01/04 1,000 1,041
Northampton County Higher Education Authority, Lehigh
University, Ser 1989, RB, MBIA Insured
6.750%, 11/15/99 1,000 1,091
</TABLE>
41
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
PENNSYLVANIA MUNICIPAL PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Northumberland County Authority, Commonwealth
Lease Revenue, Ser 1991, RB, MBIA Insured
6.400%, 10/15/00 $1,000 $ 1,078
Pennsylvania Commonwealth, COP
6.200%, 06/01/96 500 503
Pennsylvania Commonwealth, Ser 1993-A, COP,
AMBAC Insured
5.100%, 07/01/04 1,000 1,011
Pennsylvania Higher Education Assistance Agency,
Student Loan, Ser 1985-A, RB,
FGIC Insured
6.800%, 12/01/00 2,675 2,853
Pennsylvania Higher Education, Drexel University,
Callable 11/07/01 @ 100, RB,
MBIA Insured
7.000%, 05/01/02 1,000 1,076
Pennsylvania Higher Education, Student Loan, Ser A,
Callable 10/01/01 @ 102, RB
7.050%, 10/01/16 (B) 1,500 1,581
Pennsylvania Higher Education, Student Loan, Ser C,
Callable 10/01/01 @ 102, RB
7.150%, 09/01/21 (B) 500 528
Pennsylvania Higher Educational Facilities Authority,
College & University Revenue, Carnegie RIDC Regional
Growth Fund, RB
8.400%, 11/01/97 100 103
Pennsylvania Higher Educational Facilities Authority,
College & University Revenue, Drexel University,
First Ser 1990, RB, MBIA Insured
7.125%, 05/01/03 750 817
Pennsylvania Higher Educational Facilities Authority,
College & University Revenue, Hahnemann University
Project, RB, MBIA Insured
6.600%, 07/01/96 500 511
6.400%, 07/01/01 570 620
6.600%, 07/01/03 535 587
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania Higher Educational Facilities Authority,
College & University Revenue, Messiah College, Ser
1990, RB,
MBIA Insured
6.700%, 10/01/99 $ 500 $ 501
Pennsylvania Higher Educational Facilities Authority,
Dickinson College, Ser 1992, RB
5.600%, 08/01/98 500 518
Pennsylvania Higher Educational Facilities Authority,
State System of Higher Education, Ser E, RB, MBIA
Insured
6.450%, 06/15/01 400 441
Pennsylvania Higher Educational Facilities Authority,
Susquehanna University, Ser 1990, RB, AMBAC Insured
6.500%, 03/01/97 500 516
6.600%, 03/01/98 500 526
Pennsylvania Housing Finance Agency, Callable
10/01/00 @ 102, RB
7.800%, 10/01/20 100 105
Pennsylvania Housing Finance Agency, Rental Housing,
RB
5.450%, 07/01/06 2,000 1,988
Pennsylvania Housing Finance Agency, Single Family
Mortgage, Ser 1992-33, RB
5.700%, 04/01/98 330 331
Pennsylvania Housing Finance Agency, Single Family
Mortgage, Ser K, RB
6.000%, 10/01/96 200 201
Pennsylvania Housing Finance Agency, Single Family
Mortgage, Ser N, RB
7.500%, 10/01/99 200 205
Pennsylvania Industrial Development Authority,
Economic Development, Ser 1991-A, RB
6.400%, 07/01/97 1,000 1,035
</TABLE>
42
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania Intergovernmental Cooperation Authority,
Special Tax Revenue, City of Philadelphia Funding
Program, Ser 1992, RB,
FGIC Insured
6.000%, 06/15/00 $1,000 $ 1,065
5.050%, 06/15/04 1,000 1,006
Pennsylvania State, Philadelphia College of Pharmacy,
Ser A, MBIA Insured
6.750%, 09/01/99 500 530
Pennsylvania State University, Second Ser 1992, RB
4.800%, 08/15/99 500 507
Pennsylvania State University, Ser 1989, RB,
Pre-Refunded @ 102
6.750%, 07/01/99 (D) 1,000 1,103
Pennsylvania State, 3rd Series, Callable 11/15/04 @
101.5, GO
6.400%, 11/15/06 2,000 2,207
Pennsylvania Turnpike Commission, Pennsylvania
Turnpike Revenue, Ser H, RB, FGIC Insured
6.600%, 12/01/99 1,000 1,090
Peters Township School District, Zero Coupon Bond,
Callable 11/15/02 @ 100, GO
0.000%, 11/15/07 100 44
Philadelphia Hospital & Higher Education Authority,
Presbyterian Medical Center, RB, Escrowed To
Maturity
6.000%, 12/01/02 1,325 1,383
6.100%, 12/01/03 410 430
Philadelphia Industrial Development Authority,
Convention Project, PGH Development, Ser 1989,
Callable 03/11/97 @ 100, RB, AMBAC Insured
7.000%, 07/01/99 1,150 1,226
Philadelphia Municipal Authority, Justice Lease
Revenue, Ser 1991-B, RB,
FGIC Insured
6.700%, 11/15/01 1,000 1,114
Philadelphia Municipal Authority, Municipal Services
Building Lease Rental,
Ser 1990, RB, CGIC Insured
6.900%, 03/15/99 1,000 1,078
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia Regional Port Authority, Commonwealth
Lease Revenue, Ser 1993, RB, MBIA Insured
4.100%, 09/01/95 $ 500 $ 500
Philadelphia School District,
Ser 1991-B, Callable
03/14/03 @ 100, GO,
MBIA Insured
7.000%, 07/01/05 250 284
Philadelphia Water & Sewer Revenue, Ser 15, RB,
MBIA Insured
6.850%, 10/01/99 500 546
Philadelphia Water & Waste Water, RB,
MBIA Insured
4.600%, 08/01/98 1,000 1,010
Philadelphia, Airport Revenue, Callable 12/01/95 @
100, RB, MBIA Insured
5.900%, 06/15/96 135 136
Philadelphia, Airport Revenue, Ser A, RB, AMBAC
Insured
5.700%, 06/15/07 1,420 1,448
Philadelphia, Gas Works Revenue, 14th Ser, RB,
FSA Insured
6.250%, 07/01/08 1,000 1,051
Philadelphia, Hospital Revenue, Graduate Hospital
Project, Callable 10/03/04 @ 100, RB, Escrow To
Maturity
7.000%, 07/01/10 195 214
Philadelphia, Hospital Revenue, United Hospitals
Project, RB,
10.875%, 07/01/05 (D) 220 295
Philadelphia, Ser 1994-B, GO
5.100%, 11/15/00 1,000 1,023
Pittsburgh Parking Authority, Ser 1992-A, Callable
12/14/04 @ 100, RB,
FGIC Insured
5.750%, 12/01/05 500 523
Pittsburgh School District,
Ser 1993-A, GO,
FGIC Insured
4.850%, 09/01/03 500 489
Pittsburgh Stadium Authority, Lease Revenue, Callable
02/25/05 @ 100, RB,
Escrowed To Maturity
6.500%, 04/01/11 320 348
</TABLE>
43
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
PENNSYLVANIA MUNICIPAL PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Pittsburgh Urban Redevelopment Authority, Home
Improvement Loans, Callable 08/14/03 @ 100, RB, FHA
Insured
7.125%, 08/01/04 $ 835 $ 863
Pittsburgh Water & Sewer Authority, Ser 1993-A, RB,
FGIC Insured
4.900%, 09/01/07 2,000 1,930
Pittsburgh, Ser B, GO,
FGIC Insured
7.000%, 03/01/01 775 818
Sayre Health Care Facilities Authority, Guthrie
Health Care, Ser A, RB,
AMBAC Insured
6.800%, 03/01/03 1,000 1,100
Scranton Lackawanna Health & Welfare Authority,
Community Medical Center Project, Ser 1989, RB,
FGIC Insured
6.900%, 07/01/98 500 534
7.000%, 07/01/99 250 273
Scranton Lackawanna Health & Welfare Authority, Moses
Taylor Hospital, Callable 02/12/04 @ 100, RB,
Escrowed To Maturity
6.625%, 07/01/09 110 119
Scranton Lackawanna Health & Welfare Authority,
Callable 03/14/97 @ 100, RB,
BIGI Insured
7.250%, 07/01/99 835 911
Seneca Valley School District,
Ser B, GO, MBIA Insured
6.250%, 01/01/01 500 524
South Middleton Township Municipal Authority,
Guaranteed Sewer Revenue, Ser 1992, RB, MBIA Insured
5.000%, 02/01/98 135 137
South Middleton Township Municipal Authority,
Guaranteed Water Revenue, Ser 1992, RB, MBIA Insured
5.000%, 02/01/98 155 157
South Side Area School District, Ser 1991, GO, AMBAC
Insured
6.550%, 04/15/98 (D) 260 276
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
State Public School Building Authority, Lease
Revenue, RB, Escrowed to Maturity
10.375%, 11/01/06 (A) $ 10 $ 10
State Public School Building Authority, Reading
School District Project, Ser B, RB, MBIA Insured
5.450%, 07/15/98 1,000 1,033
5.600%, 07/15/99 500 521
State Public School Building Authority, Tuscarora
School District, Refunding Project,
Ser 1992-B, RB
5.500%, 10/15/00 510 520
Swarthmore Borough Authority, Swarthmore College,
Ser 1990, RB
6.650%, 09/15/99 250 272
6.750%, 09/15/00 250 276
Twin Valley School District,
Ser 1992-C, GO, FGIC Insured
5.600%, 10/01/04 520 532
University Area Joint Authority, Sewer Revenue, Ser
1990, RB, MBIA Insured,
Pre-Refunded @ 101
7.000%, 09/01/00 (D) 750 839
Upper Allegheny Joint Sanitary Authority, Sewer
Revenue, RB, FGIC Insured
5.700%, 09/01/05 1,095 1,126
Washington County Authority, Municipal Facilities
Lease Revenue, Pooled Capital,
Ser C, Subseries C-1A, RB, AMBAC Insured
7.000%, 12/15/00 400 450
Washington County Hospital Authority, Shadyside
Hospital Project, Ser 1992, RB,
AMBAC Insured
5.875%, 12/15/04 1,000 1,058
Washington School District,
Ser 1993-A, GO, FGIC Insured
5.250%, 09/01/02 1,000 1,009
5.700%, 09/01/06 1,000 1,016
Westmoreland County Industrial Development Authority,
Hospital Revenue, Ser 1992-A, RB, AMBAC Insured
5.900%, 07/01/05 595 625
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Westmoreland County Industrial Development Authority,
Hospital Revenue, Ser 1999-A, RB, AMBAC Insured
5.800%, 07/01/04 $ 565 $ 593
Westmoreland County, Henry Clay Frick Hospital, RB
7.000%, 12/01/05 460 461
Windber Area Authority, Hospital Revenue, RB,
FHA Insured
4.750%, 02/01/00 320 322
5.900%, 02/01/10 355 359
Wyoming Valley Sanitation Authority, Sewer Revenue,
Ser 1989, RB, BIGI Insured
6.800%, 11/15/98 495 534
York County Hospital Authority, Ser 1991, RB, AMBAC
Insured
6.400%, 07/01/98 500 534
--------
100,279
--------
PUERTO RICO -- 0.9%
Puerto Rico Commonwealth, Public Improvement, GO
7.125%, 07/01/02 905 962
--------
Total Municipal Bonds (Cost $98,672,283) 102,531
--------
Total Investments -- 98.5% (Cost $98,672,283) 102,531
--------
OTHER ASSETS AND LIABILITIES -- 1.5%
Other Assets and Liabilities, Net 1,563
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no par
value) based on 9,763,163 outstanding shares of beneficial
interest 100,413
Accumulated Net Realized Loss on Investments (628)
Net Unrealized Appreciation of Investments 3,859
Undistributed Net Investment Income 450
--------
Total Net Assets: -- 100.0% $104,094
========
Net Asset Value, Offering Price and Redemption Price Per Share --
Class A $ 10.66
========
</TABLE>
AMBAC American Municipal Bond Assurance Company
BIGI Bond Investors Guaranty Insurance Corporation
CGIC Capital Guaranty Insurance Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Corporation
FHA Federal Housing Agency
FSA Financial Security Assurance
- -----------------------------
Face Market
Amount (000) Value (000)
- -----------------------------
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bond
Ser Series
(A) Security is held in conjunction with a letter of credit from a major
commercial bank or financial institution.
(B) Income on bond may be subject to alternative minimum tax.
(C) Put and Demand Feature -- the date reported on the Statement of Net Assets
is the lesser of the maturity date or put date.
(D) Pre-Refunded Security -- the maturity date shown is the pre-refunded date.
KANSAS TAX FREE INCOME PORTFOLIO
<TABLE>
<S> <C> <C>
MUNICIPAL BONDS -- 97.9%
GUAM -- 2.1%
Guam Government Highway Bonds, Ser A, GO, CGIC Insured
5.100%, 05/01/97 $ 250 $ 254
5.500%, 05/01/99 200 208
6.300%, 05/01/12 100 104
Guam Government, Ser A, GO
5.300%, 08/15/96 250 253
4.700%, 11/15/02 350 331
Guam Power Authority, Ser A, RB, AMBAC Insured
4.600%, 10/01/97 250 252
-------
1,402
-------
KANSAS -- 95.0%
Anderson County, USD #365 Garnett, Ser 1991, GO,
AMBAC Insured
6.400%, 09/01/05 250 269
6.500%, 09/01/06 250 270
Arkansas City, GO
3.800%, 12/01/99 285 270
Belleville, Electric & Gas,
Ser A, RB
5.000%, 12/01/98 150 152
5.500%, 12/01/02 175 182
5.700%, 12/01/04 150 158
Butler County, Bank Qualified GO, CGIC Insured
4.150%, 10/01/01 250 240
4.300%, 10/01/02 250 241
Chanute, Electric Light, Water &
Gas, RB, MBIA Insured
6.900%, 11/01/05 600 647
</TABLE>
45
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
KANSAS TAX FREE INCOME PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Cherokee County, USD #499, GO, AMBAC Insured
5.800%, 10/01/09 $ 200 $ 206
5.900%, 10/01/10 215 221
5.950%, 10/01/11 225 231
Clay County, Clay Center,
Ser 1992, Bank Qualified GO
5.300%, 04/01/00 250 258
5.400%, 04/01/01 250 257
Clay County, Ser 1994-B, GO
6.200%, 10/01/15 250 254
Coffeyville, COP
5.875%, 10/01/14 250 250
Coffeyville, Water & Sewer,
Ser 1993, RB, AMBAC Insured
4.600%, 10/01/04 465 456
4.700%, 10/01/05 490 480
Cowley County, USD #465 School Improvement Bonds,
Winfields, Ser 1991, GO
6.000%, 11/01/97 250 259
Decatur County, Ser 1992,
Bank Qualified GO
6.000%, 09/01/01 250 264
Dickinson County, Abilene School District, Ser 1992,
Bank Qualified GO
5.400%, 04/01/01 265 269
5.600%, 04/01/03 300 302
Dodge City, Pollution Control Revenue, Excel Project,
RB
6.625%, 05/01/05 700 760
Dodge, USD #433, GO,
CGIC Insured
5.000%, 03/01/14 250 228
Dodge, USD #443, Ford County, GO, CGIC Insured
4.700%, 03/01/07 180 170
4.800%, 03/01/08 360 339
Douglas County, USD #497,
Ser 1993-A, GO
4.500%, 09/01/02 250 242
Emporia Sewer System,
Ser 1990, RB, Pre-Refunded
@ 100.50
7.100%, 06/01/98 (B) 300 324
Emporia, Ser B, GO
5.150%, 09/01/00 155 160
5.250%, 09/01/01 165 173
6.000%, 09/01/06 175 184
Finney County, Garden City Project, Ser 1991, GO
5.700%, 10/01/98 500 512
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------
Face Market
Amount (000) Value (000)
- --------------------------------------------------
<S> <C> <C>
Finney County, USD #457,
GO
5.500%, 10/01/99 $ 185 $ 192
5.550%, 10/01/00 250 263
Ford County, Single
Family Mortgage
Revenue, Ser A, RB
7.900%, 08/01/10 380 400
Garden City, Ser B, GO,
MBIA Insured
4.900%, 11/01/99 250 255
5.450%, 11/01/04 250 260
Garden City, Water &
Sewer, RB
6.500%, 11/01/00 125 135
6.750%, 11/01/03 125 135
Gardner, Electric
Utility Revenue, Ser
1992, RB
7.000%, 11/01/09 500 531
Gray County, USD #102,
GO
6.000%, 09/01/04 100 105
6.200%, 09/01/06 125 132
6.800%, 09/01/15 250 261
Great Bend, Ser B, GO,
FGIC Insured
5.900%, 09/01/98 250 255
Great Bend, Ser B, GO,
FGIC Insured
6.300%, 09/01/96 (B) 250 256
Halstead Hospital
Revenue, Active Sinking
Fund, RB
6.750%, 10/01/06 270 304
Hays, Internal
Improvement,
Ser A, GO
5.200%, 09/01/01 105 109
5.300%, 09/01/02 110 113
5.500%, 09/01/04 120 124
Hays, Water and Sewer
Revenue, Ser 1992,
Bank Qualified RB,
AMBAC Insured
5.600%, 09/01/99 100 104
Hays, Water And Sewer
Revenue, Ser 1992,
Bank Qualified RB,
AMBAC Insured
5.800%, 09/01/00 100 106
6.200%, 09/01/03 100 106
6.400%, 09/01/05 180 190
Holton, Electrical
Systems Revenue, Ser
1992-A, RB
6.400%, 12/01/06 150 164
6.500%, 12/01/07 150 165
Hutchinson, Single
Family Mortgage
Revenue,
Ser 1992, RB
6.500%, 12/01/09 485 502
</TABLE>
46
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
Hutchinson, Water & Sewer Revenue, Ser 1993, RB,
AMBAC Insured
6.850%, 12/01/05 $ 150 $ 173
5.000%, 12/01/11 225 211
Jackson County, Holton School Boards USD #336, Ser
1992, Bank Qualified GO
6.200%, 10/01/07 205 225
6.300%, 10/01/08 125 138
Jefferson County, USD #340, GO, CGIC Insured
6.000%, 09/01/06 300 318
6.100%, 09/01/07 320 339
6.200%, 09/01/08 330 349
Johnson County, Blue Valley Recreation Commission,
Ser 1991, COP
6.000%, 10/01/97 250 256
Johnson County, Blue Valley,
Ser 1991-A, GO
6.500%, 10/01/01 (B) 300 331
Johnson County, GO
6.800%, 09/01/99 1,000 1,094
Johnson County, Internal Improvement Bonds,
Ser A, GO
5.150%, 09/01/00 250 258
5.600%, 09/01/03 200 212
Johnson County, USD #233 Olathe, Ser 1989-B
7.000%, 03/01/03 500 548
Johnson County, USD #233 Olathe, Ser 1989-B, GO
7.000%, 09/01/99 (B) 500 548
Johnson County, Water District #001, RB
4.700%, 12/01/01 290 290
5.125%, 12/01/08 250 244
Johnson County, Water District #001, Ser A, RB
6.800%, 06/01/99 250 270
6.900%, 12/01/00 250 276
6.100%, 12/01/16 250 252
Junction City, Ser DD, Bank Qualified GO,
AMBAC Insured
6.200%, 09/01/06 515 534
Junction City, Ser DD, GO, AMBAC Insured
7.250%, 11/01/98 255 255
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Junction City, Water Revenue, Ser A, RB
4.900%, 04/01/01 $ 205 $ 205
4.900%, 10/01/01 210 211
Kansas City, COP
6.800%, 01/15/96 100 101
Kansas City, GO
6.500%, 03/01/96 (A) 500 505
5.500%, 02/15/99 (A) 500 521
Kansas City, Ser B, MBIA Insured, GO
5.375%, 09/01/10 500 494
Kansas City, Sisters of Charity Health Hospital, RB
4.850%, 08/01/97 250 252
Kansas State Department of Transportation Highway,
RB
5.000%, 03/01/04 250 255
Kansas State Department of Transportation Highway,
Ser 1992, Pre-Refunded
@ 102, RB
6.125%, 03/01/02 (A) (B) 500 548
Kansas State Department of Transportation Highway,
Ser 1992, RB, Pre-Refunded
@ 102
6.500%, 03/01/02 (B) 750 838
Kansas State Development Finance Authority,
Department of Corrections El Dorado Project L, RB,
MBIA Insured
5.625%, 02/01/03 250 259
Kansas State Development Finance Authority, RB
4.450%, 05/01/01 355 357
Kansas State Development Finance Authority, RB,
AMBAC Insured
5.125%, 06/01/06 250 249
Kansas State Development Finance Authority, Ser A,
RB
4.500%, 03/01/01 225 222
Kansas State Public Wholesale Water Supply District
#4, Mandatory Sinking Fund, GO, AMBAC Insured
7.000%, 02/01/09 250 257
Kingman, Electric Utility & Distribution System, RB
5.500%, 09/01/08 250 247
</TABLE>
47
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
KANSAS TAX FREE INCOME PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -----------------------------------------------------------------------------
<S> <C> <C>
Kingman, Water and Sewer, Callable 09/01/03 @ 100,
RB
6.125%, 09/01/15 $ 250 $ 253
Lawrence, GO
5.100%, 09/01/01 220 226
Lawrence, Memorial Hospital RB
4.850%, 07/01/97 250 251
Lawrence, Ser 1991-L, GO
5.200%, 09/01/95 135 135
5.600%, 09/01/98 175 182
Leavenworth County, USD #449, Ser A, Bank Qualified
GO
6.300%, 09/01/09 150 153
6.400%, 09/01/10 160 163
6.500%, 09/01/12 125 127
6.500%, 09/01/13 100 102
Leavenworth, Ser 1991-A, Bank Qualified GO
5.400%, 09/01/95 135 135
5.700%, 09/01/97 160 163
Leavenworth, Ser B, GO
5.050%, 09/01/00 210 214
Leawood, Ser 1992-A, GO
5.000%, 09/01/00 300 309
5.200%, 09/01/01 250 258
6.000%, 09/01/08 135 138
Lyon County, Hospital Revenue, Ser 1994, RB
5.200%, 02/01/02 115 111
5.200%, 08/01/02 250 240
5.300%, 02/01/03 100 96
Lyon County, USD #253 Emponia, RB
6.250%, 10/01/99 (A) (B) 250 268
Manhattan, Ser 189, GO
5.850%, 11/01/02 250 265
6.300%, 11/01/11 100 103
6.300%, 11/01/12 105 108
McPherson, Electric Systems Revenue, RB
6.700%, 03/01/98 100 101
McPherson, Electric Utility, Callable 03/01/00 @
100, RB, AMBAC Insured
5.550%, 03/01/09 550 551
McPherson, Electric Utility,
Zero Coupon Bond, RB,
AMBAC Insured
0.000%, 03/01/10 520 197
McPherson, Refunding & Import, Ser 115, GO,
AMBAC Insured
5.000%, 11/01/06 500 496
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Meade, Industrial Development Revenue, Dekalb
Agresearch Project, RB
6.500%, 10/01/06 $1,000 $ 1,098
Miami County, USD# 368 Paola, Ser 1992, GO, AMBAC
Insured
6.500%, 12/01/05 500 538
Miami County, USD# 416, Louisburg, Ser 1992, GO,
AMBAC Insured
6.000%, 09/01/02 250 263
Nemaha County, USD #441, Ser 1992, GO, AMBAC Insured
5.400%, 03/01/02 250 256
5.750%, 03/01/07 250 255
Neosho County, USD #413, GO
5.650%, 09/01/01 260 274
Newton, Waste Water Treatment System, Ser 1992,
Bank Qualified, RB
5.750%, 03/01/99 110 114
6.000%, 03/01/00 115 120
6.200%, 03/01/01 120 126
6.400%, 03/01/02 130 139
Olathe and Labette County, GNMA Collateral Mortgage,
Senior Ser 1991 B, RB
7.150%, 02/01/15 70 73
Olathe, Multi-Family Housing, Deerfield Apartments,
Ser 1994-A, RB
5.500%, 06/01/04 (A) 475 479
Olathe, Ser 182, GO
5.750%, 09/01/96 250 254
Olathe, Sewer Improvement,
Ser 184
4.600%, 10/01/99 275 276
Osborne, Ser 1992, Bank Qualified GO
5.500%, 12/01/01 135 138
5.600%, 12/01/02 140 142
5.700%, 12/01/03 150 152
5.800%, 12/01/04 155 157
Ottawa, Waterworks & Electric Systems, Ser 1991, RB,
MBIA Insured
6.000%, 12/01/99 500 531
6.150%, 12/01/00 250 270
6.250%, 12/01/01 250 273
Pawnee County, GO,
CGIC Insured
5.100%, 09/01/04 255 258
Phillips County, USD #325, GO
5.200%, 09/01/03 100 103
5.600%, 09/01/07 155 159
</TABLE>
48
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Pittsburg, Water & Sewer Systems, Ser 1991-A, RB
6.400%, 09/01/99 (B) $ 105 $ 113
6.500%, 09/01/99 (B) 110 119
Pottawatomie County, USD #320 Wamego, Ser 1990, GO,
AMBAC Insured
6.600%, 10/01/02 500 546
Pratt, Electrical System, Ser 1992, RB, AMBAC Insured
6.600%, 11/01/07 250 279
6.000%, 11/01/12 250 254
Reno County, GO
6.250%, 08/01/00 685 719
Reno County, Single Family Mortgage Revenue, Ser B,
Callable 09/01/01 @ 103, RB
8.700%, 09/01/11 250 269
Riley County, Hospital Revenue, Ser A, RB
4.750%, 09/01/98 110 111
5.150%, 09/01/00 100 101
Riley County, Ser 1992,
Bank Qualified GO
5.000%, 11/01/98 335 341
Riley County, Ser A, GO
5.000%, 09/01/99 165 166
Riley County, Ser B, GO
6.100%, 09/01/06 110 118
6.200%, 09/01/07 110 118
Riley County, Ser B, GO, Callable 09/01/04 @ 100
6.300%, 09/01/08 110 119
6.400%, 09/01/09 110 118
Sabetha, Electric Revenue Sinking Fund
7.200%, 03/01/97 (B) 500 523
Salina, Internal Improvement Bonds, Ser P-240, GO
4.900%, 10/01/96 125 126
5.500%, 10/01/99 100 104
Salina, Internal Improvement Bonds, Ser R-240, GO
4.650%, 10/01/95 100 100
4.900%, 04/01/96 110 111
Salina, Water & Sewer RB, MBIA Insured
5.000%, 09/01/07 330 316
Salina, Water & Sewer, RB
6.600%, 10/01/98 250 263
6.700%, 10/01/99 250 263
6.750%, 10/01/00 250 262
6.850%, 10/01/02 250 262
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Saline County, Sales Tax RB
3.500%, 06/01/96 $ 300 $ 299
3.700%, 12/01/96 100 100
Scott City, Water System, Ser A, Bank Qualified GO
5.250%, 09/01/04 130 130
5.400%, 09/01/05 140 140
5.600%, 09/01/06 140 140
5.700%, 09/01/07 150 151
5.800%, 09/01/08 145 146
Scott County, USD #466,
Ser 1993, GO
5.375%, 09/01/06 685 684
Sedgewick & Shawnee County, Single Family Housing
Revenue, RB
8.050%, 05/01/14 455 507
Sedgewick & Shawnee County, Single Family Revenue, RB
5.250%, 11/01/04 185 186
7.800%, 05/01/14 190 205
Sedgewick County, Ser B, GO
4.050%, 08/01/98 500 499
Sedgwick and Shawnee County, GNMA Collateral Mortgage
Revenue, Senior Ser 1991-A, RB
7.300%, 12/01/12 690 719
Sedgwick County, Airport Facilities Beech Aircraft,
Ser 1993, RB
5.625%, 03/01/99 1,000 1,033
Sedgwick County, GO
5.400%, 08/01/96 300 304
Sedgwick County, USD #262, Valley Center, Zero Coupon
Bond, GO, MBIA Insured
0.000%, 11/01/98 100 87
Seward County, Ser B, GO, AMBAC Insured
6.000%, 08/15/08 250 255
6.000%, 08/15/13 250 253
Seward County, Single Family Mortgage Revenue, Ser B,
RB
8.000%, 05/01/11 470 502
Seward County, USD #480,
Ser 1992, RB, MBIA Insured
5.000%, 12/01/00 500 506
Shawnee County, Ser 1992C, GO
5.600%, 09/01/04 500 516
Shawnee County, Sisters Charity Leavenworth, RB
4.700%, 12/01/04 230 225
5.000%, 12/01/10 360 331
</TABLE>
49
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
KANSAS TAX FREE INCOME PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Shawnee County, USD #345, GO
7.200%, 09/01/98 $ 250 $ 271
5.750%, 09/01/98 250 251
Shawnee County, USD #437 Auburn-Washburn, Ser 1992,
GO, FGIC Insured
6.250%, 03/01/03 700 754
Shawnee, Ser A, GO
4.400%, 12/01/05 500 473
Sumner County, Bridge Improvement Bonds, Ser 1992,
GO, AMBAC Insured
6.000%, 11/01/04 435 461
6.000%, 11/01/05 250 263
Thomas County, USD #315,
Ser 1993, GO, CGIC Insured
4.200%, 09/01/01 150 145
4.300%, 09/01/02 160 154
4.400%, 09/01/03 165 159
4.600%, 09/01/04 175 170
Topeka, Hospital Revenue, Storemont Vail Project,
Ser 1990B, RB
6.750%, 11/15/00 1,000 1,096
Topeka, Ser C, GO
5.500%, 08/15/05 250 255
Wellington, Electric & Water Revenue, Bank Qualified
RB, AMBAC Insured
7.050%, 05/01/06 $ 250 $ 289
6.250%, 05/01/12 250 258
Wichita, GO
6.750%, 06/01/96 350 358
Wichita, Hospital Facility St. Joseph Rehabilitation
Center, RB, Escrowed To Maturity-Sinking Fund
6.000%, 07/01/04 1,365 1,451
Wichita, RB, FGIC Insured
5.300%, 04/01/01 250 256
Wichita, Ser D, GO
3.800%, 03/01/98 250 246
Wichita, Single Family Mortgage Revenue, Ser B,
Callable 07/01/98 @ 100, RB
7.100%, 09/01/09 455 468
Wichita, Water and Sewer Improvement Revenue,
Ser B, RB
FGIC Insured
5.600%, 10/01/05 750 771
Wyandotte County, GO,
FGIC Insured
7.000%, 09/01/05 445 472
</TABLE>
The accompanying notes are an
integral part of the financial
statements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Face Market
Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
Wyandotte County, USD #203 Piper, GO
5.750%, 09/01/03 $ 140 $ 143
5.900%, 09/01/04 295 301
6.600%, 09/01/13 500 508
--------
62,542
--------
PUERTO RICO -- 0.8%
Puerto Rico, Public Buildings Authority, Ser I,
Callable 07/01/99 @ 100, GO
6.000%, 07/01/12 500 499
--------
Total Municipal Bonds
(Cost $62,389,129) 64,443
--------
CASH EQUIVALENTS -- 0.8%
Dreyfus Tax Exempt
3.500%, 554 554
--------
Total Cash Equivalents
(Cost $553,843) 554
--------
Total Investments -- 98.7%
(Cost $62,942,972) 64,997
--------
OTHER ASSETS AND LIABILITIES -- 1.3%
Other Assets and Liabilities, Net 837
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no par
value) based on 6,195,687 outstanding shares of beneficial
interest 63,628
Accumulated Net Realized Loss on Investments ( 135)
Net Unrealized Appreciation of Investments 2,054
Undistributed Net Investment Income 287
--------
Total Net Assets: -- 100.0% $ 65,834
========
Net Asset Value, Offering Price and Redemption Price
Per Share -- Class A $ 10.63
========
</TABLE>
AMBAC American Municipal Bond Assurance Company
CGIC Capital Guaranty Insurance Corporation
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
GNMA Government National Mortgage Association
GO General Obligation
MBIA Municipal Bond Investors Association
RB Revenue Bond
Ser Series
USD Unified School District
(A) Securities are held in conjunction with a letter of credit from a
commercial bank or financial institution.
(B) Pre-Refunded Security -- the maturity date shown is the pre-refunded date.
50
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
51
<PAGE>
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- For the year ended August 31, 1995
<TABLE>
<CAPTION>
--------- ---------- ----------
BAINBRIDGE
CALIFORNIA TAX
TAX FREE TAX EXEMPT EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $12,920 $13,147 $6,446
------- ------- ------
EXPENSES:
Management Fees 1,198 816 592
Waiver of Management Fees (207) (330) (251)
Investment Advisory Fees 129 137 64
Waiver of Investment Advisory Fees -- -- --
Custodian/Wire Agent Fees 42 40 18
Professional Fees 40 35 19
Pricing Fees 5 6 3
Registration Fees 42 26 18
Printing Fees 34 27 15
Trustee Fees 13 14 6
Distribution Expenses(1) 194 1,807 --
Amortization of Deferred Organizational Costs -- 8 6
Insurance Expense 8 6 3
Other Expenses 2 1 1
------- ------- ------
Total Expenses 1,500 2,593 494
------- ------- ------
NET INVESTMENT INCOME 11,420 10,554 5,952
------- ------- ------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) from Security
Transactions (5) -- 4
Net Change in Unrealized Appreciation of
Investment Securities -- -- --
------- ------- ------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $11,415 $10,554 $5,956
======= ======= ======
</TABLE>
/1/ Includes class specific distribution expenses.
/2/ The Massachusetts Intermediate-Term Municipal Portfolio closed on August
15, 1995.
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------- ------------ ------------- ------------ --------- -------------
MASSACHUSETTS
INTERMEDIATE- KANSAS INTERMEDIATE-
INSTITUTIONAL PENNSYLVANIA TERM PENNSYLVANIA TAX FREE TERM
TAX FREE TAX FREE MUNICIPAL MUNICIPAL INCOME MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO/2/
- ------------- ------------ ------------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C>
$34,235 $805 $5,842 $6,257 $3,549 $332
------- ---- ------ ------ ------ ----
3,115 75 413 385 94 24
(1,567) (33) (125) (253) (3) (17)
334 8 191 266 188 17
-- -- (60) (4) (188) --
103 2 33 17 10 6
98 2 10 11 6 1
15 -- 5 5 3 --
97 2 14 16 7 1
98 2 24 4 2 --
34 1 4 5 3 --
571 12 67 65 -- 4
2 -- 5 4 6 4
17 1 3 3 1 --
3 -- -- -- -- --
------- ---- ------ ------ ------ ----
2,920 72 584 524 129 40
------- ---- ------ ------ ------ ----
31,315 733 5,258 5,733 3,420 292
------- ---- ------ ------ ------ ----
(4) (1) (1,478) (311) (121) 148
-- -- 3,053 1,299 1,095 33
------- ---- ------ ------ ------ ----
$31,311 $732 $6,833 $6,721 $4,394 $473
======= ==== ====== ====== ====== ====
</TABLE>
53
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust--For the years ended August 31
<TABLE>
<CAPTION>
------------------------ ---------------------- -------------------- ------------------------
BAINBRIDGE INSTITUTIONAL
TAX CALIFORNIA TAX TAX
FREE TAX EXEMPT EXEMPT FREE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------ ---------------------- -------------------- ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
----------- ----------- --------- ----------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net Investment Income $ 11,420 $ 8,912 $ 10,554 $ 4,496 $ 5,952 $ 3,674 $ 31,315 $ 21,040
Net Realized Gain
(Loss) from Security
Transactions (5) (19) -- -- 4 -- (4) 1
Net Change in
Unrealized
Appreciation
(Depreciation) of
Investment Securities -- -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Net Increase in Net
Assets Resulting from
Operations 11,415 8,893 10,554 4,496 5,956 3,674 31,311 21,041
----------- ----------- --------- ----------- --------- --------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
Net Investment Income
Class A (11,398) (8,912) (1,158) (2,450) (5,950) (3,673) (30,581) (20,937)
Class B -- -- (170) (86) -- -- (724) (104)
Class C -- -- (9,226) (1,960) -- -- -- --
Class D (23) -- -- -- -- -- -- --
Net Capital Gains
Class A -- -- (1) -- -- -- -- --
Class B -- -- -- -- -- -- -- --
Class C -- -- (8) -- -- -- -- --
Class D -- -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Distributions (11,421) (8,912) (10,563) (4,496) (5,950) (3,673) (31,305) (21,041)
----------- ----------- --------- ----------- --------- --------- ----------- -----------
TRANSACTIONS:
Class A:
Shares Issued 1,502,741 1,668,938 193,641 570,692 256,460 185,338 5,130,777 5,667,715
Shares Issued in Lieu
of Cash Distributions 74 17 8 7 -- -- 1,645 1,033
Shares Redeemed (1,483,956) (1,725,612) (194,711) (1,078,968) (268,046) (184,584) (5,179,065) (5,596,273)
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class A Share
Transactions 18,859 (56,657) (1,062) (508,269) (11,586) 754 (46,643) 72,475
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Class B:
Shares Issued -- -- 41,150 29,525 -- -- 77,163 40,870
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- 69 --
Shares Redeemed -- -- (44,406) (26,269) -- -- (83,875) (22,184)
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class B Share
Transactions -- -- (3,256) 3,256 -- -- (6,643) 18,686
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Class C:
Shares Issued -- -- 675,735 447,323 -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- 6,682 -- -- -- -- --
Shares Redeemed -- -- (672,528) (129,201) -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class C Share
Transactions -- -- 9,889 318,122 -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Class D
Shares Issued 4,827 -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed (4,555) -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class D
Transactions 272 -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Increase (Decrease) in
Net Assets from Share
Transaction 19,131 (56,657) 5,571 (186,891) (11,586) 754 (53,286) 91,161
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Increase
(Decrease) in Net
Assets 19,125 (56,676) 5,562 (186,891) (11,580) 755 (53,280) 91,161
----------- ----------- --------- ----------- --------- --------- ----------- -----------
NET ASSETS:
Beginning of period 358,299 414,975 353,394 540,285 160,813 160,058 857,241 766,080
----------- ----------- --------- ----------- --------- --------- ----------- -----------
End of period $ 377,424 $ 358,299 $ 358,956 $ 353,394 $ 149,233 $ 160,813 $ 803,961 $ 857,241
----------- ----------- --------- ----------- --------- --------- ----------- -----------
SHARES ISSUED AND
REDEEMED
Class A:
Shares Issued 1,502,741 1,668,938 193,641 570,692 256,460 185,338 5,130,777 5,667,715
Shares Issued in Lieu
of Cash Distributions 74 17 8 7 -- -- 1,645 1,033
Shares Redeemed (1,483,956) (1,725,612) (194,711) (1,078,968) (268,046) (184,584) (5,179,065) (5,596,273)
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class A
Transactions 18,859 (56,657) (1,062) (508,269) (11,586) 754 (46,643) 72,475
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Class B:
Shares Issued -- -- 41,150 29,525 -- -- 77,163 40,870
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- 69 --
Shares Redeemed -- -- (44,406) (26,269) -- -- (83,875) (22,184)
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class B
Transactions -- -- (3,256) 3,256 -- -- (6,643) 18,686
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Class C:
Shares Issued -- -- 675,735 447,323 -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- 6,682 -- -- -- -- --
Shares Redeemed -- -- (672,528) (129,201) -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class C Share
Transactions -- -- 9,889 318,122 -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Class D:
Shares Issued 4,827 -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed (4,555) -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Total Class D
Transactions 272 -- -- -- -- -- -- --
----------- ----------- --------- ----------- --------- --------- ----------- -----------
Increase (Decrease) in
Capital Shares 19,131 (56,657) 5,571 (186,891) (11,586) 754 (53,286) 91,161
=========== =========== ========= =========== ========= ========= =========== ===========
</TABLE>
/1/ The Pennsylvania Tax Free Portfolio commenced operations on January 21,
1994.
/2/ The Massachusetts Intermediate-Term Municipal Portfolio closed on August
15, 1995.
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------- ------------------ ------------------ ---------------- -----------------
MASSACHUSETTS
PENNSYLVANIA INTERMEDIATE- KANSAS INTERMEDIATE-
TAX TERM PENNSYLVANIA TAX FREE TERM
FREE MUNICIPAL MUNICIPAL INCOME MUNICIPAL
PORTFOLIO/1/ PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO/2/
- ------------------- ------------------ ------------------ ---------------- -----------------
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 733 $ 217 $ 5,258 $ 6,359 $ 5,733 $ 7,875 $ 3,420 $ 3,215 $ 292 $ 438
(1) -- (1,478) (651) (311) (254) (121) 8 148 (146)
-- -- 3,053 (5,018) 1,299 (6,032) 1,095 (2,432) 33 (283)
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
732 217 6,833 690 6,721 1,589 4,394 791 473 9
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
(733) (217) (5,340) (6,267) (5,837) (7,949) (3,407) (3,199) (292) (438)
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- (41) (29) -- -- -- -- -- --
-- -- (15) (759) (4) (232) -- (96) -- (6)
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- (3) -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
(733) (217) (5,396) (7,058) (5,841) (8,181) (3,407) (3,295) (292) (444)
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
126,868 74,709 41,823 81,476 9,245 36,373 10,341 15,512 2,413 15,660
14 -- 1,102 1,387 153 130 -- 3 -- --
(119,535) (55,997) (76,186) (71,671) (31,265) (58,638) (7,840) (8,862) (11,536) (13,598)
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
7,347 18,712 (33,261) 11,192 (21,867) (22,135) 2,501 6,653 (9,123) 2,062
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- 26 1,658 -- -- -- -- -- --
-- -- 37 26 -- -- -- -- -- --
-- -- (630) (543) -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- (567) 1,141 -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
7,347 18,712 (33,828) 12,333 (21,867) (22,135) 2,501 6,653 (9,123) 2,062
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
7,346 18,712 (32,391) 5,965 (20,987) (28,727) 3,488 4,149 (8,942) 1,627
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
18,712 -- 128,614 122,649 125,081 153,808 62,346 58,197 8,942 7,315
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
$ 26,058 $ 18,712 $ 96,223 $128,614 $104,094 $125,081 $65,834 $62,346 $ 0 $ 8,942
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
126,868 74,709 4,110 7,664 889 3,360 994 1,454 239 1,505
14 -- 108 132 15 13 -- -- -- --
(119,535) (55,997) (7,494) (6,804) (3,027) (5,548) (754) (834) (1,123) (1,323)
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
7,347 18,712 (3,276) 992 (2,123) (2,175) 240 620 (884) 182
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- 2 156 -- -- -- -- -- --
-- -- 5 2 -- -- -- -- -- --
-- -- (61) (52) -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
-- -- (54) 106 -- -- -- -- -- --
- -------- -------- -------- -------- -------- -------- ------- ------- ------- --------
7,347 18,712 (3,330) 1,098 (2,123) (2,175) 240 620 (884) 182
======== ======== ======== ======== ======== ======== ======= ======= ======= ========
</TABLE>
55
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust
For a Share Outstanding Throughout the Year
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- ------------
TAX FREE PORTFOLIO
- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.034 $(0.034) -- $(0.034) -- $1.00 3.48% $ 377,152 0.45%
1994 1.00 0.022 (0.022) -- (0.022) -- 1.00 2.20% 358,299 0.45%
1993 1.00 0.022 (0.023) -- (0.023) -- 1.00 2.29% 414,975 0.45%
1992 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.32% 293,982 0.45%
1991 1.00 0.047 (0.047) -- (0.047) -- 1.00 4.81% 343,300 0.37%
1990(1) 1.00 0.032 (0.032) -- (0.032) -- 1.00 3.20%+ 356,814 0.45%*
FOR THE YEARS ENDED JANUARY 31,:
1990 1.00 0.059 (0.059) -- (0.059) -- 1.00 5.97% 464,389 0.54%
1989 1.00 0.049 (0.049) -- (0.049) -- 1.00 4.98% 790,629 0.46%
1988 1.00 0.042 (0.042) -- (0.042) -- 1.00 4.34% 938,484 0.53%
1987 1.00 0.041 (0.041) -- (0.041) -- 1.00 4.31% 1,143,083 0.56%
1986 1.00 0.051 (0.051) -- (0.051) -- 1.00 5.21% 503,891 0.57%
1985 1.00 0.058 (0.058) -- (0.058) -- 1.00 5.86% 263,325 0.58%
CLASS D
FOR THE YEAR ENDED AUGUST 31,:
1995(2) $1.00 $0.026 $(0.026) -- $(0.026) -- $1.00 2.68%+ $ 272 0.80%*
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.51% 3.43% 3.37% --
1994 0.53% 2.17% 2.09% --
1993 0.53% 2.24% 2.16% --
1992 0.55% 3.30% 3.20% --
1991 0.55% 4.70% 4.52% --
1990(1) 0.56%* 5.46%* 5.35%* --
FOR THE YEARS ENDED JANUARY 31,:
1990 0.59% 5.90% 5.85% --
1989 0.58% 4.90% 4.78% --
1988 0.54% 4.20% 4.19% --
1987 0.56% 4.10% 4.10% --
1986 0.57% 5.10% 5.10% --
1985 0.60% 5.80% 5.78% --
CLASS D
FOR THE YEAR ENDED AUGUST 31,:
1995(2) 0.86%* 3.13%* 3.07%* --
</TABLE>
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- ---------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.033 $(0.033) -- $(0.033) -- $1.00 3.49% $ 30,921 0.28%
1994 1.00 0.023 (0.023) -- (0.023) -- 1.00 2.32% 32,015 0.27%
1993 1.00 0.024 (0.024) -- (0.024) -- 1.00 2.41% 540,285 0.28%
1992 1.00 0.034 (0.034) -- (0.034) -- 1.00 3.44% 445,936 0.28%
1991 1.00 0.047 (0.047) -- (0.047) -- 1.00 4.92% 376,653 0.28%
1990(3) 1.00 0.016 (0.016) -- (0.016) -- 1.00 1.81%+ 275,095 0.28%*
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995(4) $1.00 $0.027 $(0.027) -- $(0.027) -- $1.00 2.65%+ 0 0.58%*
1994(5) 1.00 0.013 (0.013) -- (0.013) -- 1.00 2.07%* 3,257 0.51%*
CLASS C
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.029 $(0.029) -- $(0.029) -- $1.00 2.97% $ 328,035 0.78%
1994(6) 1.00 0.006 (0.006) -- (0.006) -- 1.00 2.14%* 318,122 0.67%*
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.42% 3.43% 3.29% --
1994 0.38% 2.28% 2.17% --
1993 0.37% 2.37% 2.28% --
1992 0.38% 3.34% 3.24% --
1991 0.40% 4.74% 4.62% --
1990(3) 0.51%* 5.27%* 5.04%* --
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995(4) 0.69%* 3.16%* 3.05%* --
1994(5) 0.81%* 2.05%* 1.75%* --
CLASS C
FOR THE YEARS ENDED AUGUST 31,:
1995 0.93% 2.93% 2.78% --
1994(6) 0.87%* 2.06%* 1.86%* --
</TABLE>
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- --------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
- ----------------------
BAINBRIDGE TAX EXEMPT PORTFOLIO
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $1.00 $0.036 $(0.036) -- $(0.036) -- $1.00 3.69% $ 149,233 0.30%
1994 1.00 0.025 (0.025) -- (0.025) -- 1.00 2.52% 160,813 0.30%
1993(7) 1.00 0.019 (0.019) -- (0.019) -- 1.00 1.95%+ 160,058 0.30%*
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.46% 3.62% 3.46% --
1994 0.47% 2.49% 2.32% --
1993(7) 0.48%* 2.39%* 2.21%* --
</TABLE>
56
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net
Value, Net Net Net Investments Asset Value, Assets, End
Beginning Investment Investment Realized Total and Capital End Total of Period
of Period Income Income Gain Distributions Transactions of Period Return (000)
- -----------------------------------------------------------------------------------------------------------------------
- ---------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $ 1.00 $0.036 $(0.036) -- $(0.036) -- $ 1.00 3.70% $788,877
1994 1.00 0.025 (0.025) -- (0.025) -- 1.00 2.51% 835,516
1993 1.00 0.026 (0.026) -- (0.026) -- 1.00 2.59% 763,040
1992 1.00 0.036 (0.036) -- (0.036) -- 1.00 3.66% 623,689
1991 1.00 0.049 (0.049) -- (0.049) -- 1.00 5.20% 448,390
1990(1) 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.32%+ 226,658
FOR THE YEARS ENDED JANUARY 31,:
1990 1.00 0.059 (0.059) -- (0.059) -- 1.00 6.11% 177,342
1989 1.00 0.048 (0.048) -- (0.048) -- 1.00 5.05% 99,774
1988 1.00 0.042 (0.042) -- (0.042) -- 1.00 4.28% 223,653
1987 1.00 0.041 (0.041) -- (0.041) -- 1.00 4.23% 255,147
1986 1.00 0.050 (0.050) -- (0.050) -- 1.00 5.11% 198,761
1985 1.00 0.056 (0.056) -- (0.056) -- 1.00 5.71% 162,676
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995 $ 1.00 $0.033 $(0.033) -- $(0.033) -- $ 1.00 3.39% 15,084
1994 1.00 0.022 (0.022) -- (0.022) -- 1.00 2.21% 21,725
1993 1.00 0.023 (0.023) -- (0.023) -- 1.00 2.29% 3,040
1992 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.35% 686
1991(8) 1.00 0.038 (0.038) -- (0.038) -- 1.00 3.89%+ 1,515
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
Ratio to Average Investment Net Assets
of Expenses Net Assets Income to Excluding Portfolio
to Average Excluding Average Fee Turnover
Net Assets Fee Waivers Net Assets Waivers Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.33% 0.52% 3.64% 3.45% --
1994 0.33% 0.50% 2.48% 2.31% --
1993 0.33% 0.49% 2.55% 2.39% --
1992 0.33% 0.51% 3.54% 3.36% --
1991 0.33% 0.53% 4.91% 4.71% --
1990(1) 0.33%* 0.56%* 5.64%* 5.41%* --
FOR THE YEARS ENDED JANUARY 31,:
1990 0.52% 0.60% 5.90% 5.82% --
1989 0.55% 0.57% 4.80% 4.78% --
1988 0.55% 0.56% 4.20% 4.19% --
1987 0.55% 0.56% 4.10% 4.09% --
1986 0.57% 0.57% 5.00% 5.00% --
1985 0.57% 0.59% 5.60% 5.58% --
CLASS B
FOR THE YEARS ENDED AUGUST 31,:
1995 0.63% 0.82% 3.32% 3.13% --
1994 0.63% 0.81% 2.31% 2.13% --
1993 0.63% 0.79% 2.22% 2.06% --
1992 0.63% 0.81% 3.22% 3.04% --
1991(8) 0.63%* 0.84%* 4.34%* 4.13%* --
</TABLE>
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net
Value, Net Net Net Investments Asset Value, Assets, End
Beginning Investment Investment Realized Total and Capital End Total of Period
of Period Income Income Gain Distributions Transactions of Period Return (000)
- -----------------------------------------------------------------------------------------------------------------------
- ---------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $ 1.00 $0.035 $(0.035) -- $(0.035) -- $ 1.00 3.60% $ 26,058
1994(9) 1.00 0.014 (0.014) -- (0.014) -- 1.00 2.37%* 18,712
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
Ratio to Average Investment Net Assets
of Expenses Net Assets Income to Excluding Portfolio
to Average Excluding Average Fee Turnover
Net Assets Fee Waivers Net Assets Waivers Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.35% 0.51% 3.54% 3.38% --
1994(9) 0.35%* 0.65%* 2.37%* 2.07%* --
</TABLE>
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net
Value, Net Net Net Investments Asset Value, Assets, End
Beginning Investment Investment Realized Total and Capital End Total of Period
of Period Income Income Gain Distributions Transactions of Period Return (000)
- -----------------------------------------------------------------------------------------------------------------------
- --------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $10.36 $ 0.52 $ (0.52) -- $ (0.52) $0.23 $10.59 7.53% $ 95,675
1994 10.84 0.49 (0.49) $ (0.06) (0.55) (0.42) 10.36 0.65% 127,509
1993 10.49 0.49 (0.50) (0.02) (0.52) 0.38 10.84 8.62% 122,649
1992 10.20 0.56 (0.54) (0.01) (0.55) 0.28 10.49 8.56% 63,210
1991 9.98 0.61 (0.63) -- (0.63) 0.24 10.20 8.82% 36,699
1990(1) 10.01 0.38 (0.37) -- (0.37) (0.04) 9.98 3.44%+ 12,781
FOR THE YEAR ENDED JANUARY 31,:
1990(10) 10.00 0.21 (0.16) (0.002) (0.16) (0.04) 10.01 1.72%+ 9,106
CLASS D
FOR THE YEARS ENDED AUGUST 31,:
1995 $10.36 $ 0.48 $ (0.48) -- $ (0.48) $0.23 $10.59 7.11% $ 548
1994(11),(**) 10.90 0.45 (0.42) $ (0.06) (0.48) (0.51) 10.36 (0.93%)* 1,105
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
Ratio to Average Investment Net Assets
of Expenses Net Assets Income to Excluding Portfolio
to Average Excluding Average Fee Turnover
Net Assets Fee Waivers Net Assets Waivers Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.55% 0.72% 4.96% 4.79% 36.05%
1994 0.53% 0.71% 4.65% 4.47% 58.39%
1993 0.55% 0.69% 4.79% 4.65% 63.04%
1992 0.55% 0.71% 5.56% 5.40% 61.56%
1991 0.55% 0.78% 6.18% 5.95% 111.82%
1990(1) 0.55%* 0.90%* 6.63%* 6.28%* 63.45%
FOR THE YEAR ENDED JANUARY 31,:
1990(10) 0.56%* 1.36%* 5.80%* 5.00%* 352.00%
CLASS D
FOR THE YEARS ENDED AUGUST 31,:
1995 0.95% 1.12% 4.57% 4.40% 36.05%
1994(11),(**) 0.93%* 1.07%* 4.34%* 4.20%* 58.39%
</TABLE>
57
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust
For a Share Outstanding Throughout the Year
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $10.52 $0.55 $(0.55) -- $(0.55) $0.14 $10.66 6.81% $104,094 0.48%
1994 10.94 0.53 (0.53) -- (0.53) (0.42) 10.52 1.14% 125,081 0.47%
1993 10.59 0.55 (0.55) $ (0.01) (0.56) 0.36 10.94 8.91% 153,808 0.48%
1992 10.29 0.57 (0.57) (0.01) (0.58) 0.31 10.59 8.89% 114,461 0.48%
1991 9.95 0.60 (0.60) (0.003) (0.60) 0.34 10.29 9.80% 83,054 0.50%
1990(1) 9.98 0.34 (0.34) -- (0.34) (0.03) 9.95 3.12%+ 64,531 0.60%*
FOR THE YEAR ENDED JANUARY 31,:
1990(12) 10.00 0.28 (0.23) (0.001) (0.23) (0.07) 9.98 2.11%+ 53,042 0.60%*
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.72% 5.21% 4.97% 22.62%
1994 0.71% 4.90% 4.66% 25.13%
1993 0.70% 5.15% 4.93% 15.26%
1992 0.72% 5.52% 5.28% 10.54%
1991 0.73% 5.98% 5.75% 19.17%
1990(1) 0.80%* 5.88%* 5.68%* 20.35%
FOR THE YEAR ENDED JANUARY 31,:
1990(12) 0.86%* 6.05%* 5.79%* 10.00%
</TABLE>
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 $10.47 $0.57 $(0.57) -- $(0.57) $0.16 $10.63 7.23% $ 65,834 0.21%
1994 10.91 0.57 (0.57) $ (0.02) (0.59) (0.42) 10.47 1.41% 62,346 0.21%
1993 10.50 0.58 (0.58) (0.05) (0.63) 0.46 10.91 10.38% 58,197 0.21%
1992 10.13 0.60 (0.59) (0.01) (0.60) 0.37 10.50 9.78% 45,609 0.22%
1991(13) 10.00 0.42 (0.37) -- (0.37) 0.08 10.13 5.12%+ 29,242 0.31%*
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995 0.51% 5.47% 5.17% 17.60%
1994 0.54% 5.36% 5.03% 10.57%
1993 0.51% 5.56% 5.26% 23.04%
1992 0.52% 5.87% 5.57% 12.69%
1991(13) 0.61%* 5.85%* 5.55%* 21.82%
</TABLE>
<TABLE>
<CAPTION>
Investment Net Realized
Net Activities Distributions and Unrealized
Asset ---------- ---------------------------------- Gain (Loss) on Net Net Ratio
Value, Net Net Net Investments Asset Value, Assets, End of Expenses
Beginning Investment Investment Realized Total and Capital End Total of Period to Average
of Period Income Income Gain Distributions Transactions of Period Return (000) Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
- ------------------------------------
MASSACHUSETTS INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995(14) $10.11 $0.42 $(0.42) -- $(0.42) $0.17 $10.28 5.83%+ 0 0.60%*
1994 10.41 0.42 (0.42) $ (0.01) (0.43) (0.29) 10.11 1.28% 8,942 0.60%
1993(15) 10.00 0.42 (0.42) -- (0.42) 0.41 10.41 8.43%+ 7,315 0.60%*
<CAPTION>
Ratio of
Net
Investment
Ratio Ratio of Income to
of Expenses Net Average
to Average Investment Net Assets
Net Assets Income to Excluding Portfolio
Excluding Average Fee Turnover
Fee Waivers Net Assets Waivers Rate
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
1995(14) 0.84%* 4.34%* 4.10%* 21.40%
1994 1.03% 4.13% 3.70% 76.69%
1993(15) 1.07%* 4.33%* 4.75%* 13.63%
</TABLE>
* Annualized.
** Total return does not reflect the sales charge on the Class D.
+ Return is for the period indicated and has not been annualized.
1 In August 1990, the Trustees changed the fiscal year end of the Trust from
January 31 to August 31.
2 The Tax Free Portfolio--Class D commenced operations on November 1, 1994.
3 The California Tax Exempt Portfolio--Class A commenced operations on May 14,
1990.
4 The California Tax Exempt Portfolio--Class B closed on July 12, 1995.
5 The California Tax Exempt Portfolio--Class B commenced operations on January
5, 1994.
6 The California Tax Exempt Portfolio--Class C commenced operations on May 11,
1994.
7 The Bainbridge Tax Exempt Portfolio--Class A commenced operations on
November 9, 1992.
8 The Institutional Tax Free Portfolio--Class B commenced operations on
October 15, 1990.
9 The Pennsylvania Tax Free Portfolio--Class A commenced operations on January
21, 1994.
10 The Intermediate-Term Municipal Portfolio--Class A commenced operations on
September 5, 1989.
11 The Intermediate-Term Municipal Portfolio--Class D commenced operations on
September 28, 1993.
12 The Pennsylvania Municipal Portfolio--Class A commenced operations on August
14, 1989.
13 The Kansas Tax Free Income Portfolio--Class A commenced operations on
December 10, 1990.
14 The Massachusetts Intermediate-Term Municipal Portfolio--Class A closed on
August 15, 1995. The NAV shown is as of the last day prior to liquidation.
15 The Massachusetts Intermediate-Term Municipal Portfolio--Class A commenced
operations on September 18, 1992.
The accompanying notes are an integral part of the financial statements.
58
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
1. ORGANIZATION
SEI Tax Exempt Trust (the "Trust"), was organized as a Massachusetts business
trust under a Declaration of Trust dated March 15, 1982.
The Trust is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company with eleven portfolios: the Tax
Free Portfolio, the California Tax Exempt Portfolio, the Bainbridge Tax Exempt
Portfolio, the Institutional Tax Free Portfolio, the Pennsylvania Tax Free
Portfolio (collectively "the Money Market Portfolios"), the Intermediate-Term
Municipal Portfolio, the Pennsylvania Municipal Portfolio, the Kansas Tax Free
Income Portfolio, the Massachusetts Intermediate-Term Municipal Portfolio, the
California Intermediate-Term Municipal Portfolio and the New York Intermediate-
Term Municipal Portfolio (collectively "the Fixed Income Portfolios"). The Cal-
ifornia Intermediate-Term Municipal Portfolio and the New York Intermediate-
Term Municipal Portfolio had not commenced operations as of August 31, 1995.
The Trust is registered to offer four classes of shares: Class A, Class B,
Class C and Class D. The assets of each portfolio are segregated and a share-
holder's interest is limited to the portfolio in which shares are held.
On August 15, 1995, the Massachusetts Intermediate-Term Municipal Portfolio
closed and all of the outstanding shares of the Portfolio were redeemed. SEI
Financial Management Corporation voluntarily agreed to bear the costs associ-
ated with the liquidation of the Portfolio which approximated $8,000 and in-
cluded the amount of unamortized organizational expenses.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by
the Portfolios.
Security Valuation -- Investment securities of each Money Market Portfolio
are stated at amortized cost which approximates market value. Under this valua-
tion method, purchase discounts and premiums on securities are accreted and am-
ortized ratably to maturity.
The market value for each security for each Fixed Income Portfolio is ob-
tained from an independent pricing service. Debt obligations exceeding sixty
days to maturity for which market quotations are readily available are valued
at the most recently quoted bid price. Debt obligations with sixty days or less
remaining until maturity may be valued at their amortized cost.
Federal Income Taxes -- It is each Portfolio's intention to continue to qual-
ify as a regulated investment company and to distribute all of its taxable in-
come. Accordingly, no provision for Federal income taxes is required in the ac-
companying financial statements.
Net Asset Value Per Share -- The net asset value per share of each Portfolio
is calculated on each business day. In general, it is computed by dividing the
assets of each Portfolio, less its liabilities, by the number of outstanding
shares of the Portfolio. The maximum offering price per share for the Class D
shares of the Intermediate-Term Municipal Portfolio is equal to the net asset
value per share plus a sales load of 3.50%.
Classes -- Class specific expenses are borne by that class. Income, expenses,
and realized and unrealized gains/losses are allocated to the respective class
on the basis of the relative net asset value each day.
Security Transactions and Investment Income -- Security transactions are ac-
counted for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of investment se-
curities are those of the specific securities sold. Interest income is recog-
nized on the accrual basis. Purchase discounts and premiums on securities held
by the Fixed Income Portfolios are accreted and amortized to maturity using the
scientific interest method, which approximates the effective interest method.
Distributions to Shareholders -- Distributions from net investment income are
declared on a daily basis and are payable on the first business day of the fol-
lowing month for the Tax Free, the California Tax Exempt, the Bainbridge Tax
Exempt, the Institutional Tax Free, the Pennsylvania Tax Free and the Massachu-
setts Intermediate-Term Municipal Portfolios. Distributions from net investment
income are declared each month and paid on the tenth day of
59
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
the following month for all other Portfolios. Any net realized capital gain on
sales of securities after capital loss carryovers is distributed to the share-
holders of the Portfolios at least annually. Effective in 1994, generally ac-
cepted accounting principles require that differences between undistributed net
investment income or accumulated net realized capital gains for financial re-
porting and tax purposes, if permanent, be reclassified to/from paid in capi-
tal. Accordingly, the following permanent differences, attributable to undis-
tributed net investment income and accumulated net realized capital losses,
have been reclassified to paid in capital:
<TABLE>
<CAPTION>
From From Net
Capital Investment
Losses Income
---------- ----------
<S> <C> <C>
Tax Free Portfolio $1,318,967 $1,078,360
Institutional Tax Free Portfolio $ 72,478 --
</TABLE>
3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES
The Trust and SEI Financial Management Corporation (the "Manager") are parties
to a Management Agreement dated May 23, 1986 under which the manager provides
management, administrative and shareholder services to the Portfolios for an
annual fee of .36% each of the average daily net asset value of the Tax Free,
Bainbridge Tax Exempt, Institutional Tax Free and Pennsylvania Tax Free Portfo-
lios, .23% of the average daily net asset value of the California Tax Exempt
Portfolio, .39% of the average daily net asset value of the Intermediate-Term
Municipal Portfolio, .35% each of the average daily net asset value of the
Pennsylvania Municipal and the Massachusetts Intermediate-Term Municipal Port-
folios, and .15% of the average daily net asset value of the Kansas Tax Free
Income Portfolio. However, the Manager has voluntarily agreed to waive a por-
tion of its fee so that total expenses of each Portfolio will not exceed cer-
tain annual expense limitations.
Organizational costs have been capitalized by the Trust and are being amor-
tized over sixty months commencing with operations. In the event any of the
initial shares of the Trust are redeemed by any holder thereof during the pe-
riod that the Trust is amortizing its organizational costs, the redemption pro-
ceeds payable to the holder thereof by the Trust will be reduced by the unamor-
tized organizational costs in the same ratio as the number of initial shares
being redeemed bears to the number of initial shares outstanding at the time of
redemption. These costs include legal fees for organizational work performed by
a law firm of which an officer and a Trustee of the Trust is a partner.
SEI Financial Services Company ("SFS") acts as the distributor of the shares
of the Trust under distribution plans which provide for the Trust to reimburse
SFS for certain distribution-related expenses incurred by SFS. With the excep-
tion of the Kansas Tax Free Income Portfolio, such expenses for the Class A
shares of the Trust may not exceed a budget approved and monitored by the Board
of Trustees.
In addition to providing for the reimbursement payments described above, the
Class B, C and D distribution plans provide for additional payments to the Dis-
tributor. These additional payments may be used to compensate financial insti-
tutions that provide distribution-related services to their customers. Distri-
bution-related expenses for the Class B, Class C and Class D shares of the
Money Market Portfolios may not exceed .60%, .80% and .55%, respectively. Dis-
tribution-related expenses for the Class B, Class C and Class D shares of the
Fixed Income Portfolios may not exceed .60%, .80%, and .60%, respectively.
Certain officers of the Trust are also officers and/or Directors of the Man-
ager. The Trust pays each unaffiliated Trustee an annual fee for attendance at
quarterly, interim and committee meetings. Compensation of officers and affili-
ated Trustees is paid by the Manager.
4. INVESTMENT ADVISORY
Weiss, Peck, and Greer Advisers, Inc. ("WPGA") act as the Investment Advisor on
behalf of the Tax Free, the California Tax Exempt, the Bainbridge Tax Exempt,
the Institutional Tax Free, the Pennsylvania Tax Free and the Intermediate-Term
Municipal Portfolios. For its services, WPGA receives a monthly fee equal to an
annual rate of .05% of the combined daily net assets up to $500 million, .04%
60
<PAGE>
- --------------------------------------------------------------------------------
on the next $500 million and .03% of such assets in excess of $1 billion of the
Tax Free, California Tax Exempt, the Bainbridge Tax Exempt, the Institutional
Tax Free and the Pennsylvania Tax Free Portfolios. For the Intermediate-Term
Municipal Portfolio, WPGA receives a monthly fee equal to an annual rate of
.18% of the daily net assets up to $150 million and .16% of such assets in ex-
cess of $150 million. WPGA has voluntarily agreed to waive a portion of its fee
in an amount proportionate to the Manager in order to limit operating expenses
in the Intermediate-Term Municipal Portfolio.
Prior to July 3, 1995, Bessemer Trust Company, N.A. ("Bessemer") served as
the Investment Adviser on behalf of the Pennsylvania Municipal Portfolio under
an Investment Advisory Agreement dated June 30, 1989. For its services, Besse-
mer received a monthly fee equal to an annual rate of .25% of the average daily
net assets of the Portfolio. Commencing July 3, 1995, Morgan Grenfell Capital
Management Incorporated ("MGCM") was appointed as the Investment Advisor of the
Pennsylvania Municipal Portfolio. For its services, MGCM receives a monthly fee
equal to an annual rate of .20% of the average daily net assets of the Portfo-
lio.
Under an Investment Advisory Agreement dated December 7, 1990, INTRUST Bank,
N.A. in Wichita serves as the Investment Adviser on behalf of the Kansas Tax
Free Income Portfolio. For its services INTRUST Bank receives a monthly fee
equal to an annual rate of .30% of the average daily net assets of the Portfo-
lio. INTRUST Bank has voluntarily agreed to waive the full amount of their fee
in order to limit operating expenses. The Manager has voluntarily agreed to
waive a portion of its fee in order to limit operating expenses of the Kansas
Tax Free Income Portfolio.
Under an Investment Advisory Agreement dated August 24, 1992, State Street
Bank and Trust Company ("State Street") served as the Investment Adviser on be-
half of the Massachusetts Intermediate-Term Municipal Portfolio. For its serv-
ices State Street received a monthly fee equal to an annual rate of .25% of the
average daily net assets of the Portfolio.
5. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than short-term investments for the period ended August 31, 1995, were as
follows:
<TABLE>
<CAPTION>
Intermediate- Kansas Massachusetts
Term Pennsylvania Tax Free Intermediate Term
Municipal Municipal Income Municipal
(000) (000) (000) (000)
------------- ------------ -------- -----------------
<S> <C> <C> <C> <C>
Purchases................. $35,712 $23,982 $13,669 $ 1,275
Sales..................... 66,267 46,027 10,711 10,064
</TABLE>
Subsequent to October 31, 1994, the Portfolios recognized net capital losses
for tax purposes that have been deferred and can be used to offset future capi-
tal gains at August 31, 1996. The Portfolios also had capital losses
carryforward at August 31, 1995, as follows:
<TABLE>
<CAPTION>
Capital Post
Loss October 31,
Carryover 1994
August 31, Expires Expires Deferred Net Capital
Portfolio 1995 2002 2003 Losses Losses
- --------- ---------- ------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Tax Free Portfolio.......... $30,967 $30,874 $93 $5,081 $36,048
Intermediate-Term Municipal
Portfolio.................. 927,882 -- 927,882 1,250,322 2,178,204
Pennsylvania Municipal
Portfolio.................. 330,828 -- 330,828 297,060 627,888
Kansas Tax Free Income
Portfolio.................. 18,302 -- 18,302 116,848 135,150
</TABLE>
For tax purposes, the losses in the Portfolios can be carried forward for a
maximum of eight years to offset any net realized capital gains.
The total cost of securities and the net realized gains or losses on securi-
ties sold for federal income tax purposes was not materially different from the
amounts reported for financial reporting purposes. The aggregate gross
unrealized appreciation on securities in which there was an excess of market
61
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- -----------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
value over cost, the aggregate gross unrealized depreciation on securities in
which there was an excess of cost over market value and the net unrealized ap-
preciation at August 31, 1995, for each Portfolio are as follows:
<TABLE>
<CAPTION>
Intermediate- Kansas
Term Pennsylvania Tax Free
Municipal Municipal Income
(000) (000) (000)
------------- ------------ --------
<S> <C> <C> <C>
Aggregate gross unrealized appreciation $2,120 $3,935 $2,276
Aggregate gross unrealized depreciation 369 76 222
------ ------ ------
Net unrealized appreciation $1,751 $3,859 $2,054
====== ====== ======
</TABLE>
6. LINE OF CREDIT
The Portfolios have a bank line of credit. Borrowings under the line of credit
are secured by investment securities of the Portfolios equal to 110% of such
borrowings which may not exceed 10% of the Portfolios' total assets.
7. CONCENTRATION OF CREDIT RISK
The Portfolios invest in debt instruments of municipal issuers. The issuers'
abilities to meet their obligations may be affected by economic developments in
a specific state or region.
The Trust invests in securities which include revenue bonds, tax exempt com-
mercial paper, tax and revenue anticipation notes, and general obligation
bonds. At August 31, 1995, the percentage of portfolio investments by each rev-
enue source were as follows:
<TABLE>
<CAPTION>
California Bainbridge
Tax Free Tax Exempt Tax Exempt
Portfolio Portfolio Portfolio
--------- ---------- ----------
<S> <C> <C> <C>
Revenue Bonds:
Education Revenue 5.50% 4.20% 9.00%
Health Care Facilities 6.60% 15.30% 14.00%
Housing Facilities 18.40% 22.30% 23.40%
Industrial Development 19.1% 7.30% 17.80%
Pollution Control 1.8% 4.10% 1.80%
Public Facility 4.00% 4.20% 5.10%
Transportation 3.90% 6.00% 0.00%
Utility Revenue 3.60% 7.10% 2.60%
General Obligation 2.00% 0.00% 1.40%
Tax Exempt Commercial Paper 3.20% 2.10% 0.70%
</TABLE>
<TABLE>
<CAPTION>
California Bainbridge
Tax Free Tax Exempt Tax Exempt
Portfolio Portfolio Portfolio
------------- ------------ -------------
<S> <C> <C> <C>
Anticipation Notes:
Bond 4.90% 1.30% 4.40%
Revenue 0.00% 3.40% 0.00%
Tax 2.20% 0.00% 3.30%
Tax & Revenue 7.20% 10.20% 5.60%
Other 17.60% 12.50% 10.90%
------ ------ ------
Total 100.00% 100.00% 100.00%
<CAPTION>
Intermediate-
Institutional Pennsylvania Term
Tax Free Tax Free Municipal
Portfolio Portfolio Portfolio
------------- ------------ -------------
<S> <C> <C> <C>
Revenue Bonds:
Education Revenue 4.80% 11.30% 5.20%
Health Care Facilities 8.20% 19.30% 3.90%
Housing Facilities 17.50% 3.70% 9.90%
Industrial Development 17.00% 19.50% 3.70%
Pollution Control 5.50% 3.70% 1.20%
Public Facility 4.20% 0.40% 4.70%
Transportation 1.20% 1.80% 8.80%
Utility Revenue 5.00% 18.60% 29.80%
General Obligation 0.90% 1.90% 31.30%
Tax Exempt Commercial Paper 4.20% 3.30% 0.00%
Anticipation Notes:
Bond 4.20% 0.00% 0.00%
Revenue 0.20% 0.00% 0.00%
Tax 4.60% 0.00% 0.00%
Tax & Revenue 6.80% 7.40% 0.00%
Other 15.70% 9.10% 1.50%
------ ------ ------
Total 100.00% 100.00% 100.00%
</TABLE>
<TABLE>
<CAPTION>
Kansas
Pennsylvania Tax Free
Municipal Income
Portfolio Portfolio
------------ ---------
<S> <C> <C>
Revenue Bonds:
Education Revenue 19.60% 1.20%
Health Care
Facilities 19.30% 6.40%
Housing Facilities 6.40% 6.60%
Industrial
Development 10.00% 2.90%
Pollution Control 0.00% 2.50%
Public Facility 3.00% 1.60%
Transportation 4.60% 4.10%
Utility Revenue 13.80% 19.30%
General Obligation 19.20% 52.10%
Tax Exempt
Commercial Paper 0.00% 0.00%
Anticipation Notes:
Bond 0.00% 0.00%
Revenue 0.00% 0.00%
Tax 0.00% 0.00%
Tax & Revenue 0.00% 0.00%
Other 4.10% 3.30%
------ ------
Total 100.00% 100.00%
</TABLE>
62
<PAGE>
- --------------------------------------------------------------------------------
Many municipalities insure their obligations with insurance underwritten by
insurance companies which undertake to pay a holder, when due, the interest and
principal amount of an obligation if the issuer defaults on its obligation. Al-
though bond insurance reduces the risk of loss due to default by an issuer,
there is no assurance that the insurance company will meet its obligations. Al-
so, some of the securities have credit enhancements (letters of credit or guar-
antees issued by third party domestic or foreign banks or other institutions).
At August 31, 1995, the percentage of the Portfolios' investments that were in-
sured and the percentage of the Portfolios' investments that had credit en-
hancements were as follows:
<TABLE>
<CAPTION>
Credit
Insured Enhancements
------- ------------
<S> <C> <C>
Tax Free 1.01% 71.40%
California Tax Exempt 16.15% 68.50%
Bainbridge Tax Exempt 2.51% 65.33%
Institutional Tax Free 2.54% 64.07%
Pennsylvania Tax Free 21.51% 56.86%
Intermediate-Term Municipal 32.20% 12.58%
Pennsylvania Municipal 74.96% 7.38%
Kansas Tax Free Income 33.26% 2.80%
</TABLE>
63
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND TRUSTEES OF SEI TAX EXEMPT TRUST:
We have audited the accompanying statements of net assets of the Tax Free, Cal-
ifornia Tax Exempt, Bainbridge Tax Exempt, Institutional Tax Free, Pennsylvania
Tax Free, Intermediate-Term Municipal, Pennsylvania Municipal and Kansas Tax
Free Income Portfolios of SEI Tax Exempt Trust as of August 31, 1995, and the
related statements of operations, statements of changes in net assets and fi-
nancial highlights for the periods presented. We have also audited the state-
ment of operations of the Massachusetts Intermediate-Term Municipal Portfolio
of SEI Tax Exempt Trust for the period ended August 15, 1995, and the related
statements of changes in net assets and financial highlights for the periods
presented. These financial statements and financial highlights are the respon-
sibility of the Company's management. Our responsibility is to express an opin-
ion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Au-
gust 31, 1995, by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Tax Free, California Tax Exempt, Bainbridge Tax Exempt, Institutional Tax Free,
Pennsylvania Tax Free, Intermediate-Term Municipal, Pennsylvania Municipal and
Kansas Tax Free Income Portfolios of SEI Tax Exempt Trust as of August 31,
1995, the results of their operations, changes in their net assets, and finan-
cial highlights for the periods presented, and the results of operations of the
Massachusetts Intermediate-Term Municipal Portfolio of the SEI Tax Exempt Trust
for the period ended August 15, 1995, and the changes in its net assets and fi-
nancial highlights for the periods presented, in conformity with generally ac-
cepted accounting principles.
Philadelphia, PA
October 6, 1995
64
<PAGE>
NOTICE TO SHAREHOLDERS
- -----------------------------------------------------------------
SEI Tax Exempt Trust -- August 31, 1995
For shareholders that do not have a August 31, 1995 tax year end, this notice
is for informational purposes only. For shareholders with a August 31, 1995 tax
year end, please consult your tax advisor as to the pertinence of this notice.
For the fiscal year ended August 31, 1995, each fund is designating the fol-
lowing items with regard to distributions paid during the year.
<TABLE>
<CAPTION>
(A) (B) (C)
LONG TERM ORDINARY (A+B)
CAPITAL GAINS INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
FUND (TAX BASIS) (TAX BASIS) (TAX BASIS)
---- ------------- ------------- -------------
<S> <C> <C> <C>
Tax Free Portfolio 0% 100% 100%
California Tax Exempt Portfolio 0% 100% 100%
Bainbridge Tax Exempt Portfolio 0% 100% 100%
Institutional Tax Free Portfolio 0% 100% 100%
Pennsylvania Tax Free Portfolio 0% 100% 100%
Intermediate-Term Municipal
Portfolio 0% 100% 100%
Pennsylvania Municipal Portfolio 0% 100% 100%
Kansas Tax Free Income Portfolio 0% 100% 100%
Massachusetts Intermediate-Term
Municipal Portfolio 0% 100% 100%
<CAPTION>
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
FUND DIVIDENDS(1) INTEREST TAX CREDIT
---- ------------- ------------- -------------
<S> <C> <C> <C>
Tax Free Portfolio 0% 100% 0%
California Tax Exempt Portfolio 0% 100% 0%
Bainbridge Tax Exempt Portfolio 0% 100% 0%
Institutional Tax Free Portfolio 0% 100% 0%
Pennsylvania Tax Free Portfolio 0% 100% 0%
Intermediate-Term Municipal
Portfolio 0% 100% 0%
Pennsylvania Municipal Portfolio 0% 100% 0%
Kansas Tax Free Income Portfolio 0% 100% 0%
Massachusetts Intermediate-Term
Municipal Portfolio 0% 100% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of each fund's total distribu-
tions.
** Items (D) and (E) are based on a percentage of ordinary income distributions
of each fund.
65
